The return of risk appetite in the Asia Pacific markets was largely due to speculation of loser monetary policy from the People's Bank of China after a disappointing private survey of Chinese factory activity.
The flash, or preliminary, PMI slid to an eight-month low of 48.1 in March, compared with 48.5 in February. A reading below 50 suggests a slowdown in the manufacturing sector. Economists had been expecting a reading of 48.7. The shortfall highlights the growing concern that China will miss its GDP target of 7.5%.
However, upward movement across the regional markets were limited amidst worries of a slowdown in the world's second largest economy and on caution ahead of world leaders gathering in The Hague to discuss tension over Ukraine. Leaders of the U.S., the European Union, China, Japan and others meet today, as concern grows that Russia is massing soldiers on its neighbour's border.
Among Asian bourses, Australian stock market finished slight higher as strength in miners and financial helped overcome early losses after negative lead from Wall Street Friday and weaker than expected Chinese data. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each rose nearly 0.2% to 5346.90 and 5362.10, respectively.
Shares of materials companies closed higher, with resources giant BHP Billiton up 0.5% to A$35.74. Main rival Rio Tinto added 0.2% to A$61.50 while iron ore miner Fortescue Metals Group gained 2.2% to A$5.09.
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Shares of Australian lenders and financial companies also finished higher. Commonwealth Bank of Australia added 0.4% to A$75.95, Westpac Banking Corp 0.1% to A$33.62, ANZ Banking Group 0.5% to A$32.40, and National Australia Bank 0.6% to A$34.87.
Macquarie Group lifted 2.9% to A$56.42 after the investment firm announced it expects full year profit to be up 45% on last year's result thanks to improved financial market conditions. MQG is seeing particular improvement in its fixed income, currencies and commodities businesses.
Camping and adventure gear retailer Kathmandu Holdings climbed up 11.3% to A$3.45 after showing interim net profit rose by 10.7% and lifting full year forecasts despite earnings being diluted by a stronger New Zealand dollar. Total sales lifted one% during the half while same store-sales rose 5.4% at a comparable exchange rate. KMD shareholders will receive an interim dividend of NZ3c per share, fully franked for Australian shareholders.
Australia's biggest oil producer Woodside Petroleum added 0.6% to A$38.64 on tracking rise in crude oil prices. Brent crude oil edged down 0.3% to $US106.65 a barrel on the expectation US sanctions against Russia and protests at Libyan ports will limit global energy supply.
In Japan, Japanese share market closed sharp higher on the back of bargain buying following six-week low last week, and as of weaker yen which bolstering exporter earnings outlook. The benchmark Nikkei-225 index added 1.77% to 14475.30, while the Topix index of all first-section shares climbed 1.49% to 1163.04.
Top gainers in the Nikkei225 index were Unitika (7.4%), Isetan Mitsukoshi Holdings (7.3%), Pacific Metals Co (7.1%), Tokyo Electron (6.9%), and Sapporo Holdings (6.9%). Whilst, major losers in the Nikkei225 index included NTN Corp (4.6%), Astellas Pharma Inc (4.3%), Mazda Motor Corp (3.4%), Shinsei Bank (3.2%), and Mitsubishi Heavy Industries (3.2%).
Exporters were broadly higher , with blue-chip tech stocks led the gains with Nintendo and Sharp more than 5% higher. Panasonic rose 6% while Sony climbed 2.3%. Yamato jumped 3.5% to 2,110 yen after the Nikkei newspaper reported the delivery service will tie up with China Post to ship products bought online to homes in that country.
In China, Mainland China stock market closed higher for second consecutive session, lifted by, speculation that Beijing will use the latest batch of weak Chinese economic data as a prompt for some kind of stimulus. Meanwhile, risk sentiment rose further after the China Securities Regulatory Commission announced on Friday that it will expand its bank financing options in a bid to boost market sentiment. The benchmark Shanghai Composite Index climbed up 0.91% from prior day closure to finish at 2066.28 .
China issued rules on 21 March 2014 for a trial program allowing companies to sell preferred stock, expanding financing options for the country's banks as they seek to address tougher capital requirements. Companies will be able to issue the shares if they are included in the Shanghai Stock Exchange 50 A-Share Index, the China Securities Regulatory Commission said in a statement on its official microblog.
Shares of banks and financials climbed up, with Bank of Beijing Co. and Haitong Securities Co. lead an advance after regulators announced plans to allow companies to sell preferred shares. China's securities regulator Friday issued rules for a pilot program allowing listed companies to issue preferred shares, paving the way for the long-awaited program to be launched soon in what the regulator called a major capital market reform. Three types of listed companies would be allowed to issue preferred shares either to the public or to institutional investors via private placements. The firms include the 50 largest capitalized firms in the Shanghai Stock Exchange's blue-chip SSE50 index, the China Securities Regulatory Commission (CSRC) said in a statement.
Bank of Beijing advanced 1.9% to 7.58 yuan. China Minsheng Banking Corp added 0.8% to 7.62 yuan. Haitong Securities, the second-biggest listed brokerage, climbed 2% to 9.54 yuan.
Realty developers shares went higher after China has lifted a ban on equity financing for listed property developers for the first time in four years, a step that could herald less government intervention in the sector and ease funding concerns as credit grows tight and the economy slows. Poly Real Estate, the second-largest developer by market value, rose 3.5% to 7.45 yuan.
Shares of material and infrastructure construction companies climbed up on news reports China might announce a free-trade zone plan for Beijing, neighboring Tianjin and Hebei province soon. Hebei Iron & Steel Co. and Tianjin Reality Development Group Co. soared 10%.
Oil major Sinopec fell nearly 1% after saying it will cut capital spending by 4.2% this year after reporting a lower than expected full year profit of 66 billion yuan.
In Hong Kong, HK market finished higher, amid speculation the Chinese government will take further steps to bolster the economy after a manufacturing index unexpectedly fell to eight month low. The Hang Seng Index closed 1.91% higher at 21846.45.
Among the HK 50 blue chips, 39 rose and 8 declined with 3 stocks closed steady. PetroChina Co jumped 5.47% to HK$8.29, becoming the top blue-chip gainer. Hutchison Whampoa dipped 5.05% to HK$101.60, becoming the top blue-chip loser, after agreeing to sell 25% stake in A.S. Watson & Coat valuation below market expectations.
Oil counters were higher on tracking rise in crude oil prices. Brent crude oil edged down 0.3% to $US106.65 a barrel on the expectation US sanctions against Russia and protests at Libyan ports will limit global energy supply. PetroChina (00857) jumped 5.5% to HK$8.29. Sinopec (00386) shot up 3.6% to HK$6.87.
Yanzhou Coal surged 6.6% to HK$5.99 as Credit Suisse raised its rating to neutral from underperform and lifted the target price to HK$6.40 from HK$4.60 after the energy producer's posted fiscal-year net income of 777.4 million yuan.
Li & Fung shares grew 3.5% to HK$12.04 after Standard & Poor's Ratings Services said today that its ratings on Li & Fung Ltd. (BBB+/Stable/--; cnA+/--)(00494) are not affected by the company's 2013 results and the acquisition of China Container Line (CCL), one of the largest sea freight forwarding companies in China. The credit rating agency also expects Li & Fung's new three-year plan (2014-2016) will provide better stability and visibility on the company's performance.
In India, Indian market extended gains and hit fresh intraday high in mid-afternoon trade on the back of strong foreign buying. The barometer index, the S&P BSE Sensex, hit fresh record high above the psychological 22,000 level.
At 14:15 IST, the S&P BSE Sensex was up 300.40 points or 1.38% to 22,055.72. The index jumped 319.02 points at the day's high of 22,074.34 in mid-afternoon trade, a record high for the barometer index. The index rose 72.18 points at the day's low of 21,827.50 in opening trade.
The advances in the Indian stocks came after the government exceeded its $3.1 billion asset sales target for this fiscal year and as investors bet that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at Centre.
The Indian government has reportedly raised about $905.7 million by selling 9% stake in Axis Bank through block deals on BSE on Friday, 21 March 2014. The stake sale is expected to help shrink the government's fiscal deficit. Finance Minister P. Chidambaram has forecast that the deficit won't exceed 4.6% of gross domestic product for the fiscal year ending 31 March 2014. The government earlier had planned to raise Rs 40000 crore by selling stakes in several state-run companies, but has subsequently lowered its expectations.
Investors are betting that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at the centre with support from some regional parties after Lok Sabha elections in April-May this year. The BJP with its prime ministerial candidate Narendra Modi is considered more pro-business and a more pro-reform party than the Congress party.
Index heavyweight and cigarette major ITC extended intraday gain in volatile trade. Many PSU stocks gained on renewed buying. Bharat Heavy Electricals (Bhel) edged higher after the company said it has bagged a large contract worth Rs 3000 crore from NTPC for the supply of 2x800 MW steam generators (boilers) with supercritical parameters for an upcoming power project in Odisha. United Spirits fell on profit booking.
Elsewhere in the Asia Pacific region, Taiwan's Taiex index added 0.33%. South Korea's KOSPI index rose 0.55%. Singapore's Straits Times index rose 1.25%. Indonesia's Jakarta Composite Index rose 0.43%. New Zealand's NZX50 fell 0.12%. Malaysia's KLSE Composite rose 0.43%.
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