Asia Pacific share market dropped on Tuesday, February 05, 2013, in response to a series of potentially destabilizing political revelations in Europe. Risk Aversion selloff front seated after corruption allegation in Spain and enhanced support for Silvio Berlusconi rekindled jitters that it could disrupt the euro zone's efforts to resolve its debt crisis. the MSCI Asia Pacific Index was down 1.1% late afternoon.
Risk off selloff triggered across the regional market on renewed potential threats to euro zone stability and growth after Spain opposition leaders demanded for the Prime Minister's resignation amid emerging corruption allegations of secret payments. Rumours that Spanish Prime Minister Mariano Rajoy has been receiving secret cash payments over the past two decades led to renewed uncertainty in the Iberian nation, and raised the prospect of an unplanned general election.
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In addition, markets were also unsettled by the latest polls news that Italy's former Prime Minister Silvio Berlusconi is gaining support in the upcoming Italian election thanks to his pledge to abolish the unpopular property tax. Under Mario Monti's technocratic governance Italy has regained a lot of trust from traders, however the improved possibility that Berlusconi could return to office dented market confidence.
Among the regional bourses, stocks in Hong Kong and Tokyo hit particularly hard on renewed worries about euro zone political stability and growth. Hong Kong's Hang Seng tumbled 2.3% for its biggest single-day percentage loss of this year, while Japan's Nikkei Stock Average 1.9%. South Korea's Kospi, New Zealand's NZX50, and Singapore's STI fell 0.8% each. Australia's All ordinaries, India's Sensex, and Taiwan's Taiex all lost 0.5% each. Malaysia's KLSE Composite fell marginal 0.1% and Indonesia's Jakarta Composite dropped 0.3%.Ranking among the gainers, China's Shanghai Composite advanced 0.2% after a choppy trading session.
Back to country wise, Japanese shares tumbled heavily on Tuesday, February 05, 2013, dragging the benchmark Nikkei Stock Average 213.43 points from prior day closure to 11046.92, registering first time in six straight sessions, as investors opted to book profit after the benchmark surged to 34-months peak prior day and political uncertainty in Europe.
Almost all sectoral heavyweights in Tokyo declined today, with export related stocks hammered the most. Sony Corp fell 0.7% to 1447 yen, Sharp Corp 3.5% to 335 yen, Mazda Motor Corp 3.2% to 271 yen, and Toyota Motor Corp 1.2% to 4540 yen.
Hitachi plunged 6.4% to 531 yen after the tech-and-industrial conglomerate posted earnings that missed expectations and cut its full-year outlook. The electronic maker reduced its full-year profit forecast after announcing fall in quarterly profit by 38% from a year earlier, citing sluggish capital spending from semiconductor and technology companies amid economic weakness in Europe and slowing growth in China and India.
Fujitsu lost 3.8% to 385 yen on reports the company would post a consolidated net loss of almost 100 billion yen ($1.1 billion) for the fiscal year ending March 31 due to mounting costs for revamping its ailing semiconductor business.
Tokyo Electric Power Co dropped 2.4% to 204 yen after the utilities predicted a loss of 120 billion yen for the current fiscal year, more than twice its previous forecast, citing that the yen's recent weakness exacerbated the high cost of fuel imports.
Panasonic Corp shares surged 3.9% to 719 yen, extending yesterday's 17% gain, as investors gained confidence that restructuring efforts and the yen's recent weakness are providing the foundation for a recovery in Japan's electronics sector. The company on Friday reported that it swung to a net profit for its latest quarter from a hefty loss a year earlier. Panasonic on Friday reported a net profit of 61.4 billion yen ($661.4 million) for fiscal third quarter ended December, recovering from a year-earlier net loss of 197.5 billion yen.
In Australia, Australia share market fell down for second day in row, as investors continued booking profit on discouraging US factory orders and political troubles in Spain and Italy. Selloff pressure increased further by weaker than expected earnings from domestic blue chips companies. However fall on the downside were limited after the Reserve Bank's kept its main cash rate steady at a record-matching low of 3% on Tuesday, but said a benign inflation outlook meant there was scope to ease policy further if needed.
The S&P/ASX 200 index finished the day 24.8 points lower at 4,882.7. The benchmark index hit an intraday high of 4,951 but ended down 13.6 points at 4,907.5 on Monday. The All Ordinaries index dropped 0.54% to 4902.
Resources were among the weakest stocks in the Australian market, with BHP Billiton, Rio Tinto, Woodside Petroleum and Fortescue Metals all falling between 1%-1.7%. Banks were mostly down. Westpac Banking Corp slipped 0.1% and the Commonwealth Bank of Australia fell 0.6%. National Australia Bank posted a loss of 0.9%. Australia New Zealand Banking Corp bucked the trend, rising 0.4%.
Cochlear shares dropped 9.3% to A$72.96, retracing recent gains, after the firm said it returned to a profit in its fiscal first half, but at a lower level then market expectation. The company stated its net profit for the six months to December 31 rose to A$77.7 million, compared to a A$20.4 million loss in the previous corresponding period when it was forced to issue a costly mass recall of its bionic ear products.
Transurban gained 1% to A$6.16 after announcing its first-half earnings rose 7% to A$416.9 million, broadly in line with expectations, as a robust performance from its Australian toll roads offset a disappointing start for new express lanes surrounding the U.S. capital Washington D.C.
In New Zealand, the NZ shares fell following a selloff on Wall Street and as investors pondered whether the looming earnings season will show results that warrant high stock prices. Telecom and Fletcher Building led the slide. The NZX 50 Index fell 34.455 points, or 0.8% to 4211.946. The index reached a five-year high of 4252.65 on Jan. 31.
NZ blue chips Telecom fell 2.9% to NZ$2.355 and Fletcher Building, the biggest company on the benchmark index, dropped 2.4% to NZ$8.97. Contact Energy, the biggest power company on the exchange, fell 1.1% to NZ$5.20.
In China, the Mainland China's market closed higher after recouping losses late afternoon, thanks to the HSBC data that showed China's non-manufacturing activity grew at the fastest pace in four months in January and the foreign exchange regulator accelerated approvals for overseas investors to enter China's capital market. However gains were largely limited as some participants chose to book some cash off the table after the benchmark Shanghai Composite index had risen nearly 24% from a three-year low on Dec. 3 on signs economic growth is accelerating.
The Shanghai Composite Index rose 4.98 points, or 0.2%, at 2,433.13. The Shenzhen Composite Index, which covers the smaller mainland exchange, recovered 11.20 points, or 1.2% from 935.80 to finish at 947.
HSBC China Service Purchasing Managers' Index (PMI), a gauge of non-manufacturing activity at private and export-oriented firms, rose to a four-month high of 54 in January, up from 51.7 in December, HSBC Holdings Plc said in a report today. A reading above 50 indicates the activity is expanding.
China's foreign exchange regulator in January granted a combined investment quota of US$25.4 billion to the Qualified Foreign Institutional Investors, much more than the US$14 billion yuan in December, the State Administration of Foreign Exchange said on its website yesterday.
Property developers and distilleries were top gainers in the Mainland China market, with China Vanke, the nation's biggest developer, climbed 3.6% to 12.33 yuan. Poly Real Estate, the second largest developer, rose 2.2% to 13.42 yuan. Gemdale Corporation jumped 7.6% to 8.19 yuan. Kweichow Moutai Co, a leading producer of high-end liquor in China, increased 5.3% to 184.43 yuan. Sichuan Tuopai Shede Wine Co rose 4.2% to 25.98 yuan. Shanxi Xinghuacun Fen Wine Factory Co added 4.4% to 34.92 yuan.
Banks were major drag on the Shanghai index today on renewed worries about spike in NPA on reports that the country's faltering steel sector struggles to repay loan to banks. Citigroup stated in a note two weeks ago that loans outstanding to steel traders in Shanghai, China's key metals trading hub, totaled around 180 billion yuan (US$28.9 billion) at the end of last year, and banks are highly unlikely to recoup roughly 20%-30% of the loans made as the country's faltering steel sector struggles to repay banks. Among lenders, Agricultural Bank of China dropped 1.2% to 3.19 yuan, China Construction Bank Corp 1.4% to 5.01 yuan, Bank of China 1.9% to 3.16 yuan, and Industrial & Commercial Bank of China 1.3% to 4.41 yuan.
In Hong Kong, blue chips shares tumbled at close, with the benchmark Hang Seng index wrapped the day at 23148.53, dropped 2.3% from yesterday's 21-months closing high of 23685.01, as risk aversion selloff on tracking big losses on Wall Street overnight owing to renewed concerns about Europe political problems particularly in Spain and Italy. Meanwhile selloff pressure intensified after steep plunge in Sinopec on a HK$24 billion placement plan.
Within the Hang Seng, 46 out of 50 blue chips shares declined today, China Petroleum & Chemical Corp dropped 6.4% to HK$8.74 on fears of equity dilution from its private placement, making it worst performer blue-chip. Hong Kong listed Chinese banks fell in line with the market. Agricultural Bank of China dipped 3.9% to HK$4.21, China Construction Bank Corp 2.6% to HK$6.50, Bank of China 3.9% to HK$3.79, and Industrial and Commercial Bank of China 2.9% to HK$5.72.
Economic news out from Hong Kong, HSBC/Markit PMI survey data showed that the private sector business conditions in Hong Kong registered the strongest improvement in January. Both output and new orders increased solidly over the month, with the rates of growth having quickened to 11-month highs. However, firms were cautious towards hiring, reducing their headcounts for the first time in four months in January. On the price front, both input costs and output charges increased since December, with the rate of input price inflation in particular the strongest in ten months. The seasonally adjusted headline HSBC Hong Kong Purchasing Managers' Index remained above the 50.0 no-change mark for the fourth consecutive month in January, signaling a further improvement in overall operating conditions. At 52.5, up from 51.7 in December, the PMI was consistent with a solid improvement in business conditions, with the rate of growth the strongest in 11 months.
In India, the Indian benchmark indices dropped for the fourth day in a row on concerns that PSU disinvestment and reduction of promoter stake to meet the Securities & Exchange Board of India (Sebi) mandated minimum public shareholding of 25% for private companies and 10% for state-run firms will result in supply of equity in the market over the next few months. The market breadth was weak. The barometer index, BSE Sensex, was provisionally down 83.29 points or 0.42%, off close to 50 points from the day's high and up about 35 points from the day's low.
Among Indian blue chips, Index heavyweight Reliance Industries (RIL) shed 1.13% to Rs 876.35. Cigarette maker ITC shed 1.58% to Rs 302.05. United Spirits edged higher on strong Q3 results. Some Pharma stocks rose on defensive buying. Sun Pharmaceutical Industries surged after the company said that USFDA has granted its subsidiary an approval for its Abbreviated New Drug Application (ANDA) for generic version of Doxil, Doxorubicin HCl Liposome Injection USP, 2mg/mL, packaged in 20 mg/10mL and 50 mg/25mL single-use vials. Telecom stocks declined. State-run Rural Electrification Corporation rose on good Q3 results. Most metal stocks declined.
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