Asia Pacific share markets closed mostly lower after reversing early gains on Friday, January 11, 2013, as investors chose to take some cash off the table after a sizeable increase in Chinese inflation faded speculation of policy easing there. Markets largely shrugged off news Japanese cabinet approval for 20 trillion yen of spending to revive the world third largest economy.
Japanese Prime Minister Shinzo Abe fresh stimulus measures provided a boost in early trade, but the regional markets surrendered initial gains to end on a flat to negative note on Friday following the decisions of both the ECB and the BoE to maintain their respective interest rates and after a sizeable increase in Chinese inflation.
The Japanese Cabinet approved a fresh stimulus package of more than 20 trillion yen ($224 billion) on Friday, aiming to lift the economy out of recession and create 600,000 new jobs. The 20 trillion yen stimulus package includes 10.3 trillion yen ($117 billion) in central government spending, about half of which will go to public works. Prime Minister Shinzo Abe announced the decision at a news conference where he said the new measures were intended to add 2% to Japan's real economic growth. Abe urged the central bank to move more aggressively to encourage lending and meet a clear inflation target to break out of the economic doldrums that have plagued Japan for two decades.
European Central Bank President Mario Draghi warned the euro zone's economy wasn't out of the woods, despite considerable progress in repairing a broken banking system. The easing of tensions in credit markets appeared to have squelched an interest-rate cut in the near future--no one on the bank's 23-strong governing council had argued for a cut Thursday, in contrast to December's meeting--but Mr. Draghi appeared to leave the door open to a further easing of monetary policy if the improvements in financial markets fail to feed through to a real economy that is still struggling with negative growth and record unemployment.
The Bank of England left its monetary levers untouched on Thursday as concerns about persistently high inflation trump signs of a renewed economic downturn. The U.K.'s central bank said its Monetary Policy Committee left the BOE's benchmark interest rate at 0.5% and the limit for its bond-buying stimulus program at 375 billion pounds ($600.8 billion pounds) following its two-day policy meeting.
The National Bureau of Statistics stated today that China's inflation jumped to 2.5% on year in December, a six-month high, driven by a surge in food costs due to unusually cold winter weather. The headline inflation increased from 2% in November. On month, CPI was up 0.8%. The bureau also noted that producer prices were down 1.9% on year after shedding 2.2% in the previous month.
In the Asia Pacific region, Japan's shares advanced fro third straight day, sending the benchmark Nikkei Stock Average 148.93 points higher from 10,652.64 to finish Friday's session at 10,801.57, while the broader Topix index escalated 9.67 points to finish at 898.69. Investors continued hunting riskier assets after Abe's government endorsed 20.2 trillion yen stimulus package and a turnaround in the US dollar against the yen to multi-month high.
The yen tumbled to multi-year lows against its major counterparts Friday in Asia, on mounting expectations for policy easing steps from central bank after nation's suffered wider-than-expected current account deficit in November. The deficit in the current account, the broadest measure of trade with the rest of the world, stood at 222.4 billion yen in November before seasonal adjustment, much worse than the 33.5 billion yen deficit expected.
The US dollar was closed today's trading at 88.96 yen after rising to 89.35 early today, its highest level since June 2010. The greenback was at 88.78 yen late Thursday in New York. The euro was at 117.94 yen after hitting 118.58 yen, the highest since May 2011, from yesterday's 117.84 yen. The Australian dollar was at 94.12 yen after rising to 94.54 yen, the highest since August 2008, from 94.08 yen.
Investors found buying impetus on currency-sensitive Japanese exporters issues as the yen's latest multi-year low. With the dollar briefly surpassed 89 yen mark, investors bought exporter shares on hopes prolonged yen weakness would boost the sector's competitiveness.
Nikon Corp surged 3.3% to 2,721 yen and Panasonic Corp 4.2% to 551 yen. Sony Corp advanced 1.6% to 983 yen and Canon Inc 2.3% to 3,370 yen. Honda Motor Co rose 1.5% to 3,380 yen, Toyota Motor Corp 1.3% to 4,260 yen, and Mazda Motor Corp 4.6% to 204 yen. Bridgestone Corp added 1.5% to 2,398 yen. Meanwhile, Fast Retailing Co rose 4.8% to 23,640 yen after hiking its full-year profit outlook Thursday. Sharp Corp skyrocketed 12.6% to 330 yen after the firm denied a report saying that it returned to an operating profit in the three months to the end of December.
Australian share market declined today, as profit taking emanated after Chinese inflation rose more than expected and as concerns about damage from Cyclone Narelle. Materials and resources heavyweights suffered heavy losses, while defensive stocks finished the day's mostly higher. Banks and financials and energy stocks ended mixed. At closing bell, the S&P/ASX 200 index fell 13.5 points, or 0.3%, to 4709.5, posting a loss of 0.3% for the week. The broader All Ordinaries slipped 11.4 points, or 0.2%, to 4733.8, a fall of 0.2% over the week, following last week's 1.2% gain.
Australian resources players went lower on concerns about damage from Cyclone Narelle on the Pilbara Coast. Rio Tinto (RIO) shut down key iron ore export terminals, while BHP Billiton (BHP) suspended work on offshore oilfields. RIO shared closed down 2% to A$65.80 while BHP was also off 2% to A$36.68.
New Zealand shares ended higher for fifth straight session, as the local market continued to bask in its status as relatively high yielding in an economy that's growing modestly. Skellerup Holdings and Cavalier led gainers and Fletcher Building reached a 19-month high. The NZX 50 rose 12.67 points, or 0.3%, to 4131.754, a new five-year high. Skellerup, a manufacturer of milking equipment and rubber goods, raised 1.9% to NZ$1.64. The stock has a dividend yield of 7.3%. Cavalier, a carpet maker set to benefit from the Christchurch rebuild and a pick-up in building activity, rose 1.8% to NZ$1.71. Telecom raised 0.4% to NZ$2.31. The stock has a dividend yield of about 13%. Fletcher, the biggest company on the NZX 50, raised 0.6% to NZ$8.72, the highest since June last year. The company is rated 'outperform' based on the consensus of 11 recommendations compiled by Reuters.
South Korean shares ended weaker, weighing the benchmark Kospi Composite down 0.5% to 1,996.67. Auto makers were worst performer in the Seoul market as the lower yen raised the threat from Japanese rivals. Hyundai Motor Co lost 1.7%, with affiliate Kia Motors Corp down 2.2%.
Mainland China market tumbled, as investors opted took out some cash off the table on renewed concern monetary policy loosening will be limited after official report showed domestic inflation accelerated last month. The Benchmark Shanghai Composite index tumbled 40.66 points from 2,283.66 to finish session at 2,243.
Shares of Chinese property developers tumbled on profit taking, dragging the Real Estate Index 3.8% lower. Poly Real Estate declined 4.5% to 13.53 yuan and Gemdale Corp 4.1% to 6.81 yuan. Brokerages also declined after data from Wind Information Co showed the gross profit of 17 listed brokerages dropped 21% from a year earlier to 15.8 billion yuan in 2012 Citic Securities Co., the nation's biggest-listed brokerage, tumbled 3.9% to 12.71 yuan and Soochow Securities Co. dropped 6.1% to 7.42 yuan after the People's Daily reported that regulators warned Citic and Soochow for failing to make timely disclosures on profit declines.
China's vehicles sales for December rose 7.1% from a year earlier and total sales grew 4.3% year-on-year for 2012, the China Association of Automobile Manufacturers (CAAM) said. In 2011, auto sales in China reported a 2.5% increase. The association expected auto sales up 7% year-on-year in 2013 and passenger vehicles sales are anticipated to rise 8.5% from a year earlier.
Hong Kong shares settled mostly lower after reversing initial gain on Friday, January 11, 2013, as investors opted to take some cash off the table on tracing fall in mainland China bourses. Profit taking also triggered on cautious ahead of the start of December quarter earnings season. The benchmark Hang Seng Index was down 90.24 points from 23,354.31 to finish session at 23,264.07, while Hang Seng China Enterprises Index down 88.88 points to close at 11,842.59. 33 out of 50 blue chips shares declined today, while remaining 12 advanced and remaining 5 unchanged. Sino Land Co was largest gainer in the index, adding 1.3% to HK$15.26, while China Shenhua Energy Co was down 3.8% to HK$33.25, making it worst performer blue-chip.
Singapore shares closed lower, in line with other Asian bourses, as data showing rising inflation in China prompted some profit-taking after two consecutive sessions of gains. The Straits Times Index lost 0.3% to 3,216.50. Golden Agri-Resources was the biggest loser on the STI, falling 3% to S$0.64.
Nam Cheong shares fell 7% to S$0.265 after the Malaysian offshore vessel builder said it planned to issue 190 million new shares at S$0.255 each, representing a 9.7% discount to the weighted average price on Jan. 10. DMG & Partners raised its target price for Nam Cheong to S$0.33 from S$0.30 and kept its 'buy' rating, on expectations it will use the funds raised to expand its shipbuilding programme. The brokerage also said the equity raising will reduce its 2013 estimated net gearing from 85% to 60%, increasing its ability to issue more debt if needed to support growth.
Indian benchmark indices closed edged lower in choppy trade after the latest data showed decline in industrial production in November 2012 and contraction in merchandise exports in December 2012. The 50-unit S&P CNX Nifty hit its lowest level in almost 1-1/2 weeks. The market breath was weak. The BSE Small-Cap index dropped more than 1.5% and the BSE Mid-Cap index shed almost 1.5%. Index heavyweights ITC and Reliance Industries (RIL) extended intraday losses in late trade. The barometer index, BSE Sensex, was provisionally down 24.21 points or 0.12%, off close to 200 points from the day's high and up about 20 points from the day's low.
Indian IT major Infosys surged over 17% after the company's CEO and Managing Director S. D. Shibulal said at the time of announcement of the company's Q3 December 2012 results before trading hours that the management continues to gain confidence from a strong pipeline of large deals. His comments triggered rally in many other IT stocks. Shares of CMC, a subsidiary of TCS, hit 52-week high after strong Q3 results. Bank stocks fell across the board. Metal stocks declined for the second straight day. FMCG stocks also declined.
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