Asia Pacific Market: Stocks climbs on positive offshore lead, earnings

Headline equities of the Asia Pacific market advanced on Tuesday, 21 July 2015, taking heart from fresh high finish of Wall Street overnight and easing concerns over Greece. However, rising concerns about Federal Reserve moves closer to interest rates hike capped overall gains. The MSCI Asia Pacific Index added 0.5% to 144.99.

Risk sentiments improved as turmoil in Greece subsided. The IMF announced that Greece has repaid the roughly EUR 2bn that it owed. After making this payment, Greece is no longer in arrears to the IMF. Banks in Greece partially reopened today after a three-week closure. Capital controls remain in place, but Greeks can now withdraw up to EUR 420 per week as opposed to the previous withdrawal limit of EUR 60 per day.

 

But gain on the upside checked amid rising concerns that the Federal Reserve moves closer to its first interest-rates increase since 2006. Top Federal Reserve official commented on Monday that US interest rates could be raised as early as September. St. Louis Fed President James Bullard told on Monday that the central bank is likely to raise rates in September as inflation is set to climb toward its target and unemployment is poised to dip below 5%. Also, the Federal Reserve Chair Janet Yellen reiterated last week that U.S. interest rates will probably rise later in the year.

Among Asian bourses

Australia market jumps 0.3%

The Australian share market ended higher, as gains in the shares of IT, Healthcare, consumer discretionary, Consumer Staples, and financial heavyweights helped to offset losses in gold miners and resources stocks. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both advanced by 0.3% to 5706.70 points and 5688.50 points, respectively.

Shares of consumer goods and retailer players advanced after official data indicated Australian consumer confidence rose solidly in the week ended July 19. The ANZ Bank-Roy Morgan index of consumer confidence rose 4.5% to 111.8 during the week, partially recovering an 8% fall in the prior two weeks. Among blue chip retailer and consumer goods stocks, Woolworths gained 0.6% to A$28.76, Wesfarmers rose 0.7% to A$42.22, JB-Hi-FI 1.5% to A$20.71, Graincorp 1% to A$8.75, Billabong 1.7% to A$0.59, and Coca Cola Amatil 0.9% to A$9.12.

Material and resources stocks extended losses, with bullion mining players being top losers on tracking pullback in gold prices. Gold price dipped below the psychological mark of $1102.90 in early Asia hours on Tuesday, but quickly nudged above that level on bargain hunting. It was recently trading at $1,104.08/ ounce. Newcrest Mining declined 1.5% to A$11.69 and Perseus Mining lost 4.1% to A$0.355. Other heavyweight miners were also down, with BHP Billiton falling 0.6% to A$26.82 and Rio Tinto shrinking 0.9% to A$53.38. Fortescue Metals Group dipped 0.3% to A$1.74

Oil Search gained 3.9% to A$7.22 after lifting its full year production target. Oil and gas producer lifted its production targets from 26 million barrels or equivalent to 28mboe up to 27 to 29mboe.

Casino operator Echo Entertainment shares closed up at a record high A$4.87, up 0.6% on news it won a A$2 billion contract to build a casino in Brisbane, edging out rival Crown Entertainment.

Japan stocks up on yen softness

Japanese share market finished higher, registering sixth day of consecutive rise, thanks to continued softness for the yen against a basket of major currencies, and easing concerns over Greece. The Nikkei Stock Average advanced 191.05 points, or 0.93%, to end at 20841.97 points. The broader Topix index rose 0.66%, or 10.94 points, to close at 1673.88 points. Japanese stock market closed on Monday for national holiday.

Shares of export-related companies advanced the most in the Tokyo market, boosted by yen slide mid-124 level against the greenback. The Japanese currency slipped 0.2% to 124.47 per dollar and touched 124.48, the weakest since June 10. A weaker yen is positive for Japanese exporters as it makes products cheaper overseas and amplifies their profits when repatriated.

Among blue-chip advancers, Sony Corp jumped 1.8%, Sharp Corp 6%, Hitachi 0.8%, Casio Computer Co 0.6%, and Fujitsu 0.6%. Shares of Toshiba Corp rallied 6.1% after the company said an independent panel had put the overstatement of operating profit in 2008-14 at about $1.2 billion, apparently ending speculation on the size of the problem.

Drug makers were also received the bulk of investor bidding, with Eisai rising 2.8%, Shionogi & Co. up 2.4%, and Astellas Pharma adding 1.9%. Cosmetics maker Shiseido gained 3.4%.

Shares of Mitsubishi Materials Corp. dropped 1.6%, as China's state media called on the company to issue a public apology for its alleged use of Chinese forced labour after the company made a similar apology to U.S. prisoners of war made to work in the company's mines during World War II.

Lixil Group shares lost 4.4% after a Daiwa Securities downgrade its rating for home building materials maker to "2" (Outperform) from "1" (Buy), citing a loss of investor confidence in its long-term growth chances following the bankruptcy of its scandal-ridden Chinese subsidiary Joyou.

Shanghai Composite ends above 4K level

Mainland China's stock market finished the session higher after recouping early losses, marking a fourth consecutive session of winning streak, as slew of as government rescue measures helped to restore some stability to trading. Sentiment locally received a further boost from official data showing China's foreign direct investment rose better than expected 0.7% in June 2015.

The benchmark Shanghai Composite Index advanced 25.56 points, or 0.64%, to finish at 4017.67 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, gained 1.56%, or 34.81 points, to 2265.10 points. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, rose 1.21% to end at 2882.9 points.

The benchmark gauge has rebounded 15% since July 8, following a 32% plunge that wiped out almost $4 trillion, as policy makers introduced a spate of measures to bolster equities.

Shares related to highways, airports and railways led the gains. Hubei Chutian Expressway surged by the daily limit of 10% to end the day at 6.55 yuan. China Railway Group and China Railway Construction Corp. both jumped 10% daily limit. Rastar Group and Top Resource Conservation Engineering Co. both locked at 10% upper circuit. Likewise, drop in crude oil prices helped China Southern Airlines, China Eastern Airlines and Hainan Airlines shares to raise 10% daily limit.

Hong Kong market jumps 0.5%

The Hong Kong stock market advanced in quiet trade, taking heart from fresh high finish of Wall Street overnight, with telecom stocks being major gainers. The Hang Seng Index advanced 131.62 points, or 0.52%, to finish at 25536.43 points, off an intra-day low of 25342.69. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, added 97.62 points, or 0.83%, to 11871.54 points. Turnover decreased to HK$80.84 billion from HK$84.94 billion on Monday.

Telecoms stocks gained after release of subscriber data for June 2015. China Mobile climbed up 4.1% to HK$102.20 after the company said its 4G subscribers jumped more than 11% in June from the previous month. Other, rival mobile carriers gained even more, with China Telecom Corp jumping 5.2% to HK$4.66 as its 3G and 4G users rose by 1.82 million in June. China Unicom (00762) shares gained 5.9% to HK$11.56 after the telecom operator said its net additions of mobile broadband subscribers, including 3G and 4G LTE users, in June rose to 5.001 million from 732,000, bringing the aggregate mobile broadband subscribers size to 157.788 million.

Gold mining companies were lower as gold price has registered losses for days. China Gold(02099) slipped 4% to HK$10.66. Both Zhaojin Mining (01818) and Lingbao Gold (03330) dipped 2% to HK$3.7 and HK$1.54.

China Pacific Insurance (CPIC) (02601) shares advanced 3.8% to HK$35.55 after the insurer forecasted to record a significant increase of around 63% in the unaudited accounts for the six months ended 30 June 2015 as compared to the net profit of Rmb6.848 billion for the corresponding period in 2014.

South China Financial (00619) shares moved up 2.9% to HK$0.143 after the company forecasted to post profit for the six months ended 30 June 2015 as opposed to the loss for the corresponding period in 2014. The improvement in the results is mainly attributable to the increase in revenue from the brokerage business and the fair value gain and trading gain on financial assets.

Dongfang Electric Corporation (01072) shares dropped 3.9% to HK$10.80 after the company forecasted to post a decline of 75% to 85% in the net profit for the six months ended 30 June 2015 as compared with that for the same period last year.

Sensex ends down

India's stock markets ended lower as 11% surge on Infosys failed to square off 15% drop on Sun Pharmaceutical Industries. As per provisional figures, the S&P BSE Sensex was down 230.44 points or 0.81% to 28,189.68. The CNX Nifty was down 74 points or 0.86% at 8,529.45, as per provisional closing.

Shares of IT major Infosys jumped after the company raised its full year revenue growth guidance in dollar terms at the time of announcing its Q1 June 2015 results during market hours today, 21 July 2015. The stock jumped 11.29% at Rs 1,115. Infosys now expects its revenue to grow 7.2%-9.2% in dollar terms for the year ending 31 March 2016 (FY 2016). At the time of announcing Q4 March 2015 results in April 2015, Infosys had forecast 6.2% to 8.2% growth in the company's revenue in dollar terms for FY 2016. The revenue growth guidance for FY 2016 has been kept unchanged at 10%-12% in constant currency terms. Infosys' consolidated net profit fell 2.1% to Rs 3030 crore on 7% growth in revenue to Rs 14354 crore in Q1 June 2015 over Q4 March 2015. The results are as per International Financial Reporting Standards (IFRS).

Sun Pharmaceutical Industries tumbled after the company said in a business update that its various consolidation initiatives globally due to the acquisition of Ranbaxy Laboratories are likely to adversely impact the company's revenue and profits during the current financial year. The stock tumbled 15.03% at Rs 804.50. Sun Pharmaceutical Industries after market hours yesterday, 20 July 2015, said that following the acquisition of Ranbaxy, the company has embarked on various consolidation initiatives globally to drive future growth and profitability and to enhance long-term shareholder value. However, these measures are likely to adversely impact the overall revenues and profits of the company for year ending 31 March 2016 (FY 2016), Sun Pharmaceutical Industries said. Consolidated revenue is expected to remain flat or show a decline in FY 2016, the company said. Consolidated profit may also be adversely impacted due to certain expenses/charges arising out of integration as well as remedial actions. These initiatives will help the company revert to a more sustainable growth trajectory post FY 2016, Sun Pharmaceutical Industries said.

Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 0.3% to 9005.96. South Korea's KOSPI added 0.5% to 2083.62. New Zealand's NZX50 added 0.3% at 5876.91. Singapore's Straits Times index fell 0.1% at 3371.41. Malaysia's KLCI jumped 0.7% to 1736.19.

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