Asia Pacific share markets drifted lower on Wednesday, January 16, 2013, as investors chose to cashed recent gains off the table due to worries about continued gridlock in Washington regarding the debt ceiling, weak German data, and downward revision of global growth prospect from the World Bank.
Risk aversion selloff took toll across the regional markets today as traders were increasingly nervous about a brewing fight in Washington over raising the U.S. debt ceiling. The US Treasury said that it will run out of money to pay all the government's obligations sometime in February or March if Congress doesn't raise the current $16.4 trillion limit on borrowing. While President Barack Obama has indicated that he will not debate on raising the debt limit, Republicans have called for any increase in the debt ceiling to be tied to additional spending cuts.
The declines for the regional markets coincided weak German data. The German economy was hit hard by the euro zone crisis in the final quarter of last year, shrinking more than at any point in nearly three years as traditionally strong exports and investment slowed, the Statistics Office said yesterday. Gross domestic product (GDP) shrank by 0.5% in the final three months of last year, the worst quarterly performance since Germany fell into a recession during the global financial crisis in 2008/09 and only the second contraction since it ended. The parlous fourth quarter pushed overall growth for the year down to 0.7%, a sharp slowdown from the 3% registered in 2011 and a post-reunification record of 4.2% in 2010.
Risk off selling fueled further after downward revision of global economic growth outlook from the World Bank on Tuesday. World Bank sharply cut its 2013 outlook for the world economy to 2.4% from its last forecast in June of 3.0%, blaming an unexpectedly sluggish recovery in developed countries for holding back global growth.
In the Asia Pacific region, shares on the Tokyo market nosedived on Wednesday, January 16, 2013, dragging the benchmark Nikkei Stock Average nearly 279 points down from 10,879.08 to finish at 10,600.44, its lowest close since Jan. 9, pressured by profit taking across the board on recent gains and the yen climbed against the dollar. The losses for the index coincided with some strength for the Japanese currency against the dollar, with the dollar weakened to the upper-87 yen range in Asia trading from 88.92 yen in late North American action on Tuesday.
Shares of Japanese exporters were hard-hit after the dollar depreciated near the 87 yen mark while the euro was changing hands around 117 yen level, both down from their respective peak levels the prior day well above 89 yen and 119 yen. Fanuc dropped 4.3% to 14,450 yen, Komatsu fell 4.6% to 2,265 yen, Tokyo Electron slipped 4.1% to 3,835 yen, and Canon surrendered 4.1% to 3,250 yen. Among car makers, Honda Motor lost 3% to 3,280 yen, while Toyota Motor fell 2.6% to 4,155 yen. Heavily weighted Fast Retailing dropped 4.6% to 22,720 yen following a Goldman Sachs downgrade to Neutral from Buy, citing company's strong medium-term earnings outlook has now largely been priced into the shares.
Australian share market closed modest higher on Wednesday, January 16, 2013, with the All Ordinaries Index up 0.5% to 4765.0, led by banks and financials heavyweights after domestic data showed sign of a consumer recovery. The Westpac/Melbourne Institute index of consumer confidence rose modestly in January, up 0.6% to 100.6. A reading above 100.0 indicates optimism.
Australian major banks all improved, with Commonwealth Bank of Australia (CBA) jumping 0.87% to A$62.29. National Australia Bank (NAB) rose by 0.54% to A$25.85, while both Westpac (WBC) and ANZ Banking Group (ANZ) edged higher by around 0.3%. Retailers were modest higher, led by supermarket giants Wesfarmers and Woolworths after a Deloitte reported said Wesfarmers had joined its rival among the top 20 retailers in the world. Wesfarmers rose 0.5% to A$37.83, while Woolworths was up 0.5% to A$30.41. Australian mining and energy companies declined today after iron ore price eased 1.1%, to US$152.90 per tonne, with BHP Billiton (BHP) down 0.77% to A$36.25 while the smaller Rio Tinto (RIO) slipped by 0.53% to A$65.55. Fortescue Metals dropped 1.5% to A$4.57.
New Zealand's share market fell down today on profit taking pressure, although investors continued to favor Fonterra tradable units and Trade Me, owing to index changes taking place next Monday. The NZX50 Index fell 1.72 points, or 0.4%, to 4169.23, on volume of 32.65 million shares, valued at NZ$101.8 million. Biggest gainer on the day was Oceana Gold, up 5.2% to NZ$3.48, while dual-listed APN News & Media, publisher of the New Zealand Herald and rarely traded on the NZX, had the second strongest gain, up 2.86% to 36 cents. Falling most were telecommunications component-maker Rakon, down 2.7% to 36 cents also, and outdoor equipment and clothing company Kathmandu down 1.85%, to NZ$2.12.
Fonterra Shareholders Fund tradable units will enter the NZX50, replacing lowest ranked Cavalier Corp, while Trade Me's rating will increase from 1.83% at present. In the last week, FSF units have risen from NZ$7.31 to NZ$7.49, and were up 0.8% today at a new record of NZ$7.49. The units sold at NZ$5.50 in last November's initial public offering and listed at NZ$6.67. Trade Me shares have risen 5.4% in the last week and closed today at NZ$4.16, up 1.5%.
Mainland China's market suffered modest contraction for the first time in three days, as investors pocketed some cash off the table after fresh data showed foreign investment in China shrank seven months in a row in December. The Ministry of Commerce data showed foreign direct investment in China fell for the seventh straight month in December to US$11.7 billion, a year-on-year drop of 4.5%,
Chinese developers shares dropped on concerns government would introduce property tax in many cities. China should gradually establish a property taxation system that covers trading and ownership, Premier Wen Jiabao said yesterday. Poly Real Estate, the second-biggest developer, lost 3.4% to 13.56 yuan. Gemdale Corp slumped 2.9% to 6.80 yuan.
Shares of china's consumer discretionary issue declined heavily, led by Kweichow Moutai Co, the biggest maker of baijiu liquor, retreating 2.3% to 206 yuan, after canceling a policy punishing retailers for cutting prices. The company canceled a policy that penalized retailers which lowered prices with quota cuts. Sichuan Tuopai Shede Wine Co decreased 2.6% to 29.43 yuan. Shanxi Xinghuacun Fen Wine Factory Co lost 2.7% to 41.12 yuan.
Chinese drugmakers companies shares advanced on speculation increasing H1N1 flu cases will spur demand for health care medicines. A total of 360 cases of the flu were reported between Dec. 1 and Jan. 6, including two deaths, prompting health officials to issue a flu shot warning, Shandong Dong-E E-Jiao, which makes traditional Chinese medicine, rose 5.8% to 46.35 yuan. Kangmei Pharmaceutical Co. surged 2.5% to 14.84 yuan.
Hong Kong's share market ended slight lower, with losses in financials, resources, and utilities blue-chips were mostly counterbalanced by gains in realty heavyweights on relief that there were no unexpected property-cooling measures in the city-state's chief executive's first policy address. The key Hang Seng Index dropped 24.52 points from 23,381.51 to finish at 23,356.99, while Hang Seng China Enterprises Index declined 99.30 points to 11,907.52.
In Hong Kong, Chief Executive Leung Chun-ying's first policy address did not bring too many surprises, especially on the much-anticipated measures for the property sector. Mr. Leung devoted a significant portion of his address to affordable housing--an important source of social concern. Still, most of the measures announced were largely in line with investors' expectations. On the demand side, no new measures to cool property prices were announced; on the supply side, Mr. Leung aimed to provide 67,000 new private residential units over the next three-four years, in line with the government's previous annual supply target of 20,000 units.
HK financials finish lower, with Bank of China erased 1.1% to HK$3.67, Bank of Communications Co 1.3% to HK$6.23, and Industrial and Commercial Bank of China 0.7% to HK$5.82. China Life Insurance Co dropped 0.9% to HK$26.70 and Ping An Insurance Co 0.7% top HK$68.85. HSBC Holdings plc advanced 0.4% to HK$84.15 on brokerage house rating upgrade. Credit Suisse raised its target price for HSBC to HK$95.4 from HK$89, and maintained its outperform call, citing its three fundamental sector drivers, namely deleveraging, funding and capital, shows that HSBC can have a potential earnings uplift of 4.4%.
HK developers ended stronger today, with New World Development Co added 0.3% to HK$14.14, Sino Land Co 0.9% to HK$15.16, China Overseas Land & Investment 1.2% to HK$24.70, and Hang Lung Properties 1.5% to HK$30.35.
Singapore's shares closed higher for the first time in four straight days, with the Straits Times Index was up 0.4% at 3,208.50, boosted by gains in Singapore Telecommunications as investors switched to defensive stocks on concerns over the health of global economic growth.
SingTel was the largest gainer on the STI, rising 2.4% to S$3.48. Another defensive stock, transport operator ComfortDelGro Corp, climbed 1.9% to S$1.885. CapitaLand rose 1.9% to S$3.80 while City Developments gained 1.4% to S$11.49 on bargain buying after falling earlier this week on news of a fresh round of government measures to cool housing prices. Yangzijiang Shipbuilding (Holdings) was the second most actively traded stock by value, dropping 7.3% to S$1.02, after it announced a plan to issue 330 million warrants at S$0.0605 each.
India's key benchmark indices slumped to hit fresh intraday low in late trade as comments on Tuesday, 15 January 2013, from Reserve Bank of India (RBI) Governor D. Subbarao tempered expectations of cut in key policy rate by the RBI at Third Quarter Review of Monetary Policy 2012-13 on 29 January 2013. Weakness in global stocks also weighed on sentiment on the domestic bourses as the 50-unit S&P CNX Nifty fell below the psychological 6,000 mark. The market breadth was weak. The BSE Mid-Cap and BSE Small-Cap indices dropped more than 1% each. The barometer index, BSE Sensex, was provisionally down 190.83 points or 0.95%, off close to 210 points from the day's high and up close to 15 points from the day's high. Except BSE Oil & Gas index, all the other sectoral indices on BSE were in the red.
Indian index heavyweight and cigarette maker ITC was slightly higher. Many other FMCG stocks declined. Index heavyweight Reliance Industries (RIL) edged higher. Auto stocks declined. Bajaj Auto dropped in choppy trade after the company reported muted 3% growth of net profit in Q3 December 2013. Metal stocks fell across the board.
Powered by Capital Market - Live News
