Asia Pacific share market closed mostly lower on Monday, 31 August 2015, as prospects of higher interest rates and returns in the United States combined with China's slowdown diminished the appeal for riskier assets.
Investor were seems to be on risk averse mode on caution ahead of the China manufacturing PMI figure due to release later this week before making significant decisions. Traders are also on edge ahead of U.S. business surveys, factory orders, trade data and Friday's non-farm payrolls this week, after comments by a top Federal Reserve official suggested that a September rate rise was more likely than some investors expected.
At the weekend, US Federal Reserve vice chairman Stanley Fischer kept the door open to an interest rate rise in September 2015, surprising investors who had hoped the recent market turmoil would prompt the central bank to postpone its planned monetary tightening. "Given the apparent stability of inflation expectations, there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further," Mr Fischer said at the Kansas City Fed's annual retreat in Jackson Hole, Wyoming.
Among Asian bourses
Nikkei slips below 19K level
Japanese share market closed down for the first time in four consecutive sessions, as investors' booked partial profit after weak July industrial production figures. Risk sentiments also backpedalled on intensifying confusion over policy direction in the world's two largest economies. The Nikkei Stock Average declined 245.84 points, or 1.28%, to end at 18890.28 points, capping a 8.2% monthly loss, the worst since January 2014. The broader Topix index ended down 0.8% to 1,537.05 at the close in Tokyo, posting a 7.4% drop in August, the biggest such plunge since May 2012.
Preliminary industrial production released Monday by the Ministry of Economy, Trade and Industry, showing Japan industrial production down unexpectedly by 0.6% in July from the previous month, defying forecasts of a small increase following June's 1.1% rise, a preliminary reading on Monday showed. That followed a 1.1% increase in June.
Exporters dropped as the yen strengthened against the dollar after surging 1.9% last week as investors liquidate their positions for riskier currencies and other assets. A higher yen is typically negative for Japanese exporter stocks. Toyota dropped 2.1%, while TDK Corp, which gets 91% of revenue abroad, slid 1.7%. Electronic parts-maker Yaskawa Electric Corp. lost 3.3% after rallying 11% from Aug. 25 through Friday's close.
Oki Electric sank 6.2% after Goldman Sachs cut its rating on shares of the company to neutral from buy.
Convenience store-operator Three F Co. spiked by the daily limit, surging 20%, after reports that larger rival Lawson will form a partnership with the company. Shares of Lawson closed 1.8% higher.
Australia market falls 1.1%
The Australian share market finished deeply in red on first trading session of the week as risk aversion selloff triggered on caution ahead of key economic data from world top two economies. All ASX sectors posted losses, with consumer staples, financials, materials, and energy stocks being major drag of the day. The benchmark S&P/ASX 200 index declined 56.60 points, or 1.08%, to 5207 points. The broader All Ordinaries index closed 52.60 points, or 1%, down at 5222.10.
Woolworths dropped 3.6% to A$26.40 as news emerged that Moody's and Standard & Poor's downgraded the supermarket operator's credit rating. The downgrade came on top of an ongoing clean out at the board and executive manager level and amid the growing risk of a full-blown price war. On Friday, the retailer reported a 12.5% fall in full-year net profit to $2.15 billion
Ansell shares closed 0.8% higher at A$22.13 after glove and condom maker said it would buy back up to A$139 million worth of its shares to boost returns to shareholders.
China stocks falls ahead of PMI data
Mainland China's stock market declined, amid talk that Beijing will halt its controversial market intervention. Stocks also fell on caution ahead of manufacturing PMI data. Most of the blue chip stocks dropped, with gauges tracking consumer, material and technology companies slid the most. The Shanghai Composite Index was down by as much as 3.7% during the day but recovered to close down 0.8% at 3,205.99. The gauge lost 12% this month after sliding 14% in July. The index was down more than 30% over the past three months despite government efforts to halt a tumble in prices. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 3.06%, or 56.52 points, to 1790.31. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, lost 4.09%, or 85.26 points, to close at 1996.86.
The selloff in the mainland market sparked after reports that Beijing plans to abandon large-scale share purchases. As per reports, Beijing may now switch its focus from intervention to stopping those it believes are "destabilizing the market".
Investors largely ignored supportive remarks from Premier Li Keqiang and new reforms over the weekend. In remarks published on Saturday, Li said China would "enact more targeted and responsive macro-regulation to offset downward economic pressure, and more robust reform and innovation efforts to energize the market." Meanwhile, parliament passed a plan to cap outstanding local government debt at $2.5 trillion this year in an effort to stem escalating borrowing. Local governments racked up around $2.9 trillion in debt as of end-June, according to official estimates.
Attention was on Beijing's official August purchasing manager's index (PMI) report due on Tuesday. The private Caixin/Markit August PMI, which tracks smaller companies, is also on tap Tuesday.
Brokerage company shares declined, led by Citic Securities Co, down 5%, after reports that its executives were detained on suspicion of insider trading. Among other brokerages, Haitong Securities Co. declined 5.4%, while Western Securities Co. slumped 5.2%.
Gree Electric Appliances Inc., China's largest manufacturer of air-conditioners, dropped 5.4% after saying its first-half net income rose 0.05% from a year earlier.
Hong Kong market closes higher
Hong Kong stock market ended firmer in volatile trade. The Hang Seng Index (HSI) opened up 180 points at 21,793, which marked the intra-day high, and pared all of its gains afterwards as the A-share market weighed. In afternoon trade, China Mobile (00941) and Tencent (00700) led the rally, lending support to the benchmark. However, market gain was limited as comments from Federal Reserve officials renewed speculation the U.S. might raise interest rates as soon as September. The Hang Seng Index ended higher by 58.19 points, or 0.27%, at 21670.58 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, sank 9.32 points, or 0.1%, to 9741.41 points. Turnover reduced to HK$94.5 billion from HK$113 billion on Friday.
Among HK blue chips, Tencent ended up 0.8% to HK$131.8 after hitting an high of HK$133.6. China Mobile was up 2.3% to HK$93.9, falling from day high of HK$95.6. CNOOC (00883) jumped 4% to HK$9.61, off its day high of HK$9.77.
Brokerages were down, with CITIC Sec (06030) leading losses, down 5% to HK$15.54 after the company confirmed that senior management are under investigation by public security authority. GF Securities (01776) also slid 1.8% to HK$13.28. Haitong Sec (06837) dipped 2.1% to HK$11.18. CGS (06881) slipped 2.6% to HK$5.31.
Chinese Auto makers were mixed. Geely Auto (00175) plunged 8.8% to HK$3. BAIC Motor (01958) sank 4.8% to HK$5.96. But Dongfeng Group (00489) jumped 3.6% to HK$7.8.
Casino operators were under pressured on caution before release of operating data for the gaming industry from the Macau government. Galaxy Ent (00027) dived 5.5% to HK$24.85. SJM Holdings (00880) slumped 4.8% to HK$7.01. Wynn Macau (01128) plummeted 7.57% to HK$11.96.
Nifty falls below 8,000 level
Amid divergent trend among various index components, key benchmark indices registered modest losses. The barometer index, the S&P BSE Sensex, lost 109.29 points or 0.41% to settle at 26,283.09. The 50-unit CNX Nifty lost 30.65 points or 0.38% to settle at 7,971.30. Benchmark indices witnessed intraday volatility. The Nifty fell below the psychological 8,000 mark. The Nifty had settled just a tad above the psychological 8,000 mark after registering modest gains during the previous trading session on Friday, 28 August 2015. The market breadth indicating the overall health of the market was negative.
Telecom shares witnessed mixed trend. Pharmaceutical shares edged higher. Bank stocks witnessed mixed trend after the Reserve Bank of India released quarterly statistics on deposits and loans of commercial banks. Shares of public sector oil marketing companies (PSU OMCs) edged higher as global crude oil prices fell. Shares of oil exploration and production companies edged lower as global crude oil prices declined. Realty stocks depicted a mixed trend after the Ministry of Housing and Urban Poverty Alleviation said a total of 305 cities and towns have been identified in nine states for beginning construction of houses for the urban poor under the central government's Housing for All (Urban) Mission.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 56.41 crore during the previous trading session on Friday, 28 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 847.43 crore on Friday, 28 August 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 1.9% to 8174.92. South Korea's KOPSI added 0.2% to 1941.49. New Zealand's NZX50 fell 0.3% to 5656.24. Singapore's Straits Times index dropped 1.2% at 2921.44. Indonesia's Jakarta Composite index grew 1.4% to 4509.61.
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