The S&P 500 and the Dow Jones Industrial Average both rallied to records yesterday as Internet and small-cap shares increased amid deals activity.
Among Asian bourses, Australian share market finished higher for the first time in three consecutive sessions on tracking strong lead form offshore after equity markets in the United States. A positive reception to moves by Chinese policymakers to accelerate planned financial system reforms also supported shares, particularly the miners. The benchmark S&P/ASX200 and the broader All Ordinaries each gained by 0.9%% to 5498.20 and 5475.40, respectively.
However, rise on the Sydney market was limited on caution ahead of Tuesday's federal Budget announcement. Strategists have warned a drop in taxation revenue as a result of a fall in the global market value of Australia's largest export, iron ore, could make tough fiscal policy harder for the economy to absorb.
Materials & recourses stocks were sharply higher, as base metal prices rose between 1.4-5.1% on the London Metal Exchange on Monday with nickel leading the way on on-going supply concerns. BHP Billiton lifted 2.2% to A$37.96, while main rival Rio Tinto added 3% to A$62.85 as the spot price for iron ore, landed in China, gained 0.3% to $US103 a tonne. OZ Minerals jumped 10% to A$4.08, and Sandfire Resources gained 7.5% to A$6.02.
Copper and gold producer PanAust (PNA) was a standout, rising 34.2% to A$2.12. The company has rejected a $2.30 full takeover offer from a majority shareholder, Guangdong Rising Assets Management, but allowed the company access to its books.
Aurora Oil and Gas (AUT) rose 6% to A$4.18 after the company has recommended shareholders to accept an increased A$4.20 per share offer from Baytex Energy.
Financials stocks finished higher, led by big four banks despite new evidence of slower growth in mortgage lending as a reduction in state government incentives leads to fewer first home buyers entering the housing market. Australian Bureau of Statistics data showed the number of loans for owner occupiers fell 0.9% in March, and the annual pace slowed to 7.3%. Commonwealth Bank of Australia added 0.7% to A$79.90, National Australia Bank 0.9% to A$34.50, ANZ Banking Group 0.7% to A$32.90 and Westpac Banking Corp 0.7% to A$35.14.
The number of new owner-occupier housing loans fell by 0.9% in March. The number of loans by owner-occupiers for the construction of homes rose by 2.1% in March. The value of owner-occupier construction loans rose by 3.5% in March.
The ABS has released figures on property prices across the capital cities. The average price of a residential home (houses and units) across Australia is $546,500, up 8.8% on a year ago.
In Japan, Japanese share market finished higher on Tuesday, 13 May 2014, in tandem with positive cues from offshore markets. Meanwhile, bright corporate forecasts from Nissan Motor, Sharp, and others also compelled investors to buy. The Nikkei 225 index soared 1.95% to 14425.44, while the Topix index of all first-section issues was up 1.77% at 1178.35.
Nissan Motor Co jumped 5.1% to 913 yen after the automaker said on Monday that its full-year net profit jumped 14% to 389 billion yen on 20% jump in sales revenue to 10.48 trillion yen for the fiscal year to March, driven by a recovery in major markets, cost-cutting efforts and the weaker yen. For the current fiscal year, Nissan forecasted slight gains in both profit and sales, projecting a 405 billion yen net profit and sales of 10.79 trillion yen in the year to March 2015.
Sharp Corp was up 5% to 272 yen after the electronics maker swung back to profit for the full year to March after two years of huge losses, thanks to stronger sales and cost-cutting. The Osaka-based company booked an 11.56 billion yen net profit in the 12-month period, reversing an eye-watering net loss of 545.35 billion yen a year earlier. Sales jumped 18.1% to 2.93 trillion yen on brisk demand for panels, including its popular IGZO displays for smartphones. For the current year to March 2015, Sharp now forecasts 30 billion yen net profit and 100 billion yen operating profit on 3 trillion yen sales.
Mitsui Fudosan was up 4.4% to 3273 yen after reporting an operating profit of 172.5 billion yen for its just ended business year, sharply higher than its own guidance and the street consensus. Its current operating profit guidance of 183 billion yen is also well above the street forecast.
Hitachi declined by 2.9% to 710 yen on disappointment over earnings outlook for current fiscal. Hitachi net profit surged 51.1% to 264.98 billion yen in the full year to March, thanks to improved sales in information systems and its social infrastructure business. Operating profit rose 26.3% to 532.81 billion yen on sales of 9.62 trillion yen, a rise of 6.4% from a year earlier. Hitachi now expects a net profit of 230 billion yen for the full year to March 2015 on sales of 9.4 trillion yen.
Bank of Yokohama rose 5.4% to 543 yen as investors cheered an announced share buyback for up to 24 million shares, 1.86% of issued capital or Y10 billion worth of stock.
Bank of Japan has released monthly bank lending data on Monday, showing that outstanding bank loans in Japan rose 2.2% from a year earlier to Y414.02 trillion in April on solid domestic demand. But the pace of increase was decelerated further from +2.3% in March and +2.4% in February, as demand for funds dropped slightly after the fiscal year-end on March 31. Outstanding loans by major banks rose 1.1% on year, with the pace of growth also slowing from +1.3% in March and +1.6% in February.
The Cabinet Office on Monday released Japan's Economy Watchers' Survey for April, indicating key sentiment index for Japan's current economic climate posted the first drop in two months, plunging by 16.3 points to 41.6 in April from a record high of 57.9 in March, as the April 1 sales tax hiked dampened sales among some retail shops.
In China, Mainland China share market closed slight lower on Tuesday, 13 May 2014, as investors withdrew some gains off the table following sharp rally the previous day. Meanwhile, slower-than-estimated growth in industrial output, fixed-asset investment and retail sales also compelled investors to sell. The Shanghai Composite fell 0.1% to 2,050.73 at the close.
The National Bureau of Statistics said on Tuesday that China's factory production expanded 8.7% last month, compared with the brokerage houses estimate of 8.9% growth. Retail sales rose 11.9% in April, compared with the expectation of 12.2% growth. Fixed-asset investment for the first four months climbed 17.3%, compared with the expectation of 17.7% growth.
Shares of material and energy companies declined the most in Chinese market, dragged down by profit taking following sharp gains in previous day. Yunnan Chihong fell 4.6% after jumping 8.5% yesterday. Western Mining retreated 3.9% for the first decline in seven days.
China Shenhua Energy Co, the nation's largest coal producer, dropped 2.3%. China Coal Energy Co., the second biggest, lost 4%. The two stocks surged at least 4.7% yesterday.
PetroChina Co, the nation's biggest oil producer, rose 0.8% after it said it will sell assets valued at 39 billion yuan including the First and Second West-East Gas Pipelines, which carry natural gas from central Asian countries and the energy-rich region of Xinjiang to the nation's eastern cities.
Financial-related stocks were also weaker, after the People's Bank of China said yesterday after the market hour that aggregate financing was 1.55 trillion yuan ($249 billion) in April, compared with 2.07 trillion yuan in March. New local-currency bank loans were 774.7 billion yuan, down from 1.05 trillion yuan the previous month. ICBC fell 0.6% while China Citic Bank Corp. slid 0.9%.
Property developer shares were, however, finished higher, after the China Banking Regulatory Commission statement to banks to quicken home-loan approvals and loan distribution, and to price the loans reasonably. Vanke and Poly Real Estate, the nation's biggest listed property developers, advanced 2.9%.
In Hong Kong, shares in city's bourse finished modest higher on Tuesday, 13 May 2014, in tandem with record high closing of the Wall Street overnight, and on optimism state reforms will boost equity markets. But, slower-than-estimated growth in China's industrial output, fixed-asset investment and retail sales capped upside move. The benchmark Hang Seng Index jumped 90.77 points to 22352.38 on turnover of HK$50.71 billion.
Property developers shares climbed up with Mainland players were leading the rebounded on news that the China Banking Regulatory Commission asked banks to not stop granting mortgage loans. CR Land (01109) and COLI (00688) shot up 5.29% and 3.81% to HK$15.12 and HK$19.06. Cheung Kong (00001) rose 2% to HK$133.2. Henderson Land (00012), New World (00017) and Sino Land (00083) also rose between 1.7% and 3.4%. SHKP (00016) inched up 0.41% to HK$98.85.
PetroChina, operator of the country's largest pipeline network, added 2.8% to HK$9.24 after the company said it will transfer to a separate unit assets including the First and Second West-East Gas Pipelines, which carry natural gas from central Asian countries and China's energy-rich region of Xinjiang to the nation's eastern cities. The company will then sell the unit, PetroChina Eastern Pipelines Co.
In India, key benchmark indices today, 13 May 2014, extended their recent strong gains after exit polls on Monday, 12 May 2014, signaled that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) would win a majority in the Lok Sabha elections which concluded on Monday, 12 May 2014. The market sentiment boosted by data showing that foreign funds made substantial purchases of Indian stocks on Monday, 12 May 2014. Gains in Asian and European stocks also underpinned sentiment on domestic bourses.
The S&P BSE Sensex garnered 320.23 points or 1.36% to settle at 23,871.23, a record closing high for the barometer index. The CNX Nifty garnered 94.50 points or 1.35% to settle at 7,708.75, a record closing high for the index.
GAIL (India) and Reliance Infrastructure hit 52-week high. Realty stocks edged higher. Bank of Baroda gained after good Q4 results. Dr. Reddy's Laboratories dropped after weak Q4 results. Bharat Heavy Electricals (Bhel) surged on reports that the Cabinet is likely to ratify today, 13 May 2014, the decision to sell 4.66% stake in the company through a block deal. Construction stocks rallied. Cement stocks edged higher, with Ambuja Cements scaling record high and ACC hitting 52-week high. Shares of Adani group companies surged after exit polls on Monday, 12 May 2014, signaled victory for the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) in the Lok Sabha elections which concluded on Monday, 12 May 2014.
Various exit polls on Monday, 12 May 2014, predicated that the NDA will be able to form the next government at the Centre by winning 272 or more seats or will bag just few seats lower than the majority 272 seats needed to form the next government in a house of 543. The exit polls were out on Monday evening after the 9th and the final phase of Lok Sabha elections got over at 18:00 IST on that day. If exit polls prove correct, NDA's prime ministerial candidate Narendra Modi will become India's next Prime Minister. The counting of votes will take place on Friday, 16 May 2014, and the results are expected on the same day. The term of the current Lok Sabha ends on 1 June and the new House has to be constituted by 31 May.
Modi, the prime ministerial candidate from the NDA, is perceived as being more business-friendly and decisive by the business community. As chief minister for the fast-growing state of Gujarat, Modi has built a reputation for getting things done. While campaigning for the Lok Sabha elections, Modi has pledged to reinvigorate the country's manufacturing sector, create more jobs and overhaul the country's inadequate infrastructure. Investors are hoping that the BJP-led government will be better at getting things done and more business-friendly than the current Congress-party-led coalition government.
Various post-poll surveys on Monday predicted an easy win for NDA with CNN-IBN forecasting about 280 seats, Headlines Today 272 seats, India TV 289 seats, ABP 281 and News 24 predicting up to 340 seats for NDA in a house of 543. The predictions of an NDA victory are primarily based on survey results showing BJP and its allies doing exceedingly well in Uttar Pradesh, Bihar and Maharashtra, which account for 168 seats and also in BJP's strongholds of Gujarat, Madhya Pradesh, Rajasthan and Chhattisgarh. Only Times NOW gave NDA cause for worry by not predicting a simple majority. It gave BJP and its allies 249-265 seats, still putting NDA in a comfortable zone, requiring just 20 or so seats from post-poll allies.
Investors are hoping that when the results of the Lok Sabha elections are out on Friday, 16 May 2014, a stable government which will complete its full term of five years in office comes to power. A party or a pre-poll alliance will need 272 MPs to form government at the Centre, which is a simple majority in 543-member Lok Sabha. Investors are expecting measures for revival of the economy, business-friendly policies and good governance from the new government that comes to power after the elections. Investors expect policy measures from the new government to put India on a high-growth path on a sustainable basis.
The BJP in its Lok Sabha polls manifesto has promised more business-friendly policies if the party comes to power after elections. The BJP has said that measures for the revival of the economy are its priority if the party comes to power after elections. India's GDP growth has slowed to a decade low of below 5%. The GDP grew 4.7% in Q3 December 2013.
Elsewhere in the Asia Pacific region, Taiwan's Taiex index rose 0.11%. South Korea's KOSPI index was up 0.92%. New Zealand's NZX50 added 0.72%. Indonesia's Jakarta Composite Index added 0.17%. Markets in Malaysia, Singapore, Thailand and Bangladesh were closed for a holiday.
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