Risk aversion selloff in the regional bourses triggered as latest GDP data from the US intensifying concerns of early tapering and on caution before the start of a China Communist Party meeting tomorrow.
The initial reading for U.S. economic growth in the third quarter came out well above expectations, with gross domestic product rising 2.8%, higher than the 2.5% seen in the second quarter and more than the forecast 2%. Markets reacted negatively to the data, as investors fretted that the Federal Reserve could start to roll back its bond-buying program earlier than expected.
The Fed is buying $85 billion of bonds every month to hold down interest rates and encourage hiring and borrowing. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. Another key economic report comes out on Friday, the government's jobs survey for October.
Selloff in the Asia Pacific bourses also fuelled on caution ahead of upcoming political meeting that will start in China this weekend, the so-called Third Plenum, where the new leadership is expected to provide an outline for economic policy for the next decade.
China's leaders are scheduled to meet in Beijing from Nov. 9-12 to craft a new blueprint for the world's No. 2 economy as the country heads for its slowest annual growth in more than two decades. Hopes are high that the plenum will announce changes to give private businesses a greater say in the economy but reforms will face resistance from officials and state companies who benefit from the status quo.
Asia Pacific market largely shrugged off better than expected China October trade data, with its exports rebounding sharply from a slump in September, while imports accelerated, adding to signs of a recovery in the world's second-largest economy.
The China General Administration of Customs said today that exports rose 5.6% over a year earlier to $185.4 billion, government figures showed Friday. That was a marked improvement over September's unexpected and rare decline of 0.3%, blamed on weak global demand. October imports expanded 7.6% to $154.3 billion, up from September's 7.4% growth. China's trade surplus was narrowed by about 3% from a year earlier to $31.1 billion. The trade surplus with the 27-nation European Union, China's biggest trading partner, widened 11% to $12 billion. The surplus with the United States widened 5.5% to $22.8 billion.
Among Asian bourses, Japanese share market closed lower, as investors continued withdrawing cash from the table on tracking weak cues from Wall Street overnight and yen appreciation against basket of major currencies. The benchmark Nikei225 index dropped 1% to finish the session at 14086 while broader Topix index shed 0.7% to 1176.42.
Shares of precious metal producers were top losers in the Australian bourses on the back of pullback in bullion prices in the international market. Gold fell on Thursday as the greenback rose with the Comex December futures gold price down by US$9.30 or 0.7pct to US$1,308.50 per ounce. Newcrest Mining fell 2.5% to A$9.88.
Fortescue Metals (FMG) shares melted 4.2% to A$5.46 as iron ore price fell by US20c a tonne or 0.1pct to US$136.90 a tonne on Thursday.
Australian banking and financial stocks were mixed as three of the big four traded without the rights to their upcoming dividend payments. Commonwealth Bank fell 0.3% to A$79.10. Westpac Banking Corp fell 3.1% at A$33.18 after trading without rights to an 88 regular dividend and 10 special dividend on Friday. Australia & New Zealand Banking Group rose 1% to A$32.71 and National Australia Bank 0.3% to A$34.78.
Australian retailers went lower. Coca-Cola Amatil dumped 7.1% to A$11.99 after forecasting full-year earnings to fall by up to 7%. Wesfarmers, owner of Bunnings and Coles, added 1.3% to A$43.50 after its executives told shareholders at the annual company meeting they expect strong Christmas trading. Rival supermarket operator Woolworths, which announced it has begun building 100 Masters hardware stores to compete with Bunnings, fell 0.3% to A$34.76.
In China, Chinese financial market drifted lower on Friday, November 08, 2013, as investors offloaded stocks from the table on caution before upcoming political meeting that will start in China this weekend the so-called Third Plenum where the new leadership is expected to provide an outline for economic policy for the next decade.
Shares of technology companies declined the most in Shanghai bourse on profit taking following sharp recent gain. Technology stocks have gained this year on speculation they will benefit from government reforms to spur innovation and make domestic consumption a bigger contributor to the economy. Sanan slumped 3.3% to 19.59 yuan. Goertek Inc. dropped 0.7% to 33.81 yuan after rallying 61% this year.
In Hong Kong, HK shares finished weaker as signs of strength in the US economy reinforced speculations that the Federal Reserve could start to roll back its stimulus earlier than expected. The Hang Seng Index fell 136.64 points to 22744.39 while the Hang Seng China Enterprises Index sank 83.60 points to 10390.73.
Among the HK 50 blue chips, 37 stocks fell and 11 rose, while remaining 2 finished steady. Cosco Pacific was top blue-chip loser, falling 2.5% to HK$11. The Bank of East Asia rose 1.4% to HK$33.75, becoming the top blue-chip winner. Market heavyweights were lower. HSBC Holdings fell 0.5% to HK$85.40. China Mobile declined 1% to HK$80.50. Shares in China Cosco Holdings Co sank 5% to HK$3.58 after China's biggest shipping firm said on Thursday that one of its executive directors is under investigation by relevant departments in China.
In India, Indian benchmark indices declined as weakness in European and Asian stocks hit sentiment adversely on the domestic bourses. The barometer index, the S&P BSE Sensex was provisionally down 179.01 points or 0.86%, up about 40 points from the day's low and off close to 175 points from the day's high.
Canara Bank shed 1.46% after the bank today, 8 November 2013, said it has raised interest rates on retail term deposits across maturities. Interest rate on deposits of less than Rs 1 crore on the maturity bucket of 270 days to less than one year has been raised to 8.25% from earlier 8%. For maturity bucket of above 1 year to less than 2 years, the interest rate has been hiked to 9.05% from earlier 8.75%. Canara Bank has also tweaked interest rates on bulk deposits of Rs 1 crore and above.
Punjab National Bank (PNB) fell 4.24% on weak Q2 result. The bank's net profit fell 52.56% to Rs 505.49 crore on 2.62% increase in total income to Rs 11632.84 crore in Q2 September 2013 over Q2 September 2012. The result was announced during trading hours today, 8 November 2013.
Power Finance Corporation (PFC) gained 2.16% on good Q2 result. The company's net profit jumped 22.89% to Rs 1273.79 crore on 27.33% growth in total income to Rs 5336.96 crore in Q2 September 2013 over Q2 September 2012. The result was announced during market hours.
Elsewhere in the region, New Zealand's NZX 50 index rose 0.58%. Indonesia's Jakarta Composite index fell 0.21%. South Korea's KOSPI fell 0.96%. Taiwan's Taiex index lost 0.65%. Malaysia's KLSE Composite shed 0.12%. Singapore's Straits Times index fell 0.78%.
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