Asia-Pacific markets pare gains on weaker China export data, skeptical over EU plan feasibility

Most of the Asia-Pacific stock markets closed first session of new week largely in diverse terrain despite a positive start, as investors opted to cashed early gains on skeptical over EU plan feasibility and after latest data showed China export growth slowed in November. Key bourse in Australia, New Zealand, Japan Singapore, South Korea, and Taiwan ended higher, but well below their intraday peak. On the other side, bourse in China, Hong Kong, Philippine, Malaysia, and India fell deeply in red.

Most of the regional markets started a day with positive bias as investors welcome Europe latest plan to fix the regions debt crisis, including tougher fiscal rules and increased resources for IMF, and as improved consumer confidence in the US.

 

Appetite for risk improved initially on relief over euro zone debt crisis after the EU leaders took a major step towards closer fiscal integration following their two-day summit. Except the UK, all the other 26 EU countries, including all the 17 eurozone members, resolved to negotiate a new agreement for tighter fiscal rules, push forward the 500 billion euro European Stability Mechanism, the region's permanent bailout fund, by a year to July 2012, and provide up to 200 billion euros to the International Monetary Fund to help countries in need. Meanwhile, market sentiments were further bolstered by improved consumer confidence in the US. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment raised more than expected to 67.7 in December from 64.1 in November.

But some of earlier gains were trimmed before finishing the day on concerns over a slowing Chinese economy after latest data showed slower export growth in November. Investors digest news from a European Union summit seen as crucial to containing the euro zone's debt crisis.

Chinese data at the weekend showed that growth of China's exports in November has dropped to its lowest level since December 2009 as demand for made-in-China goods shrank due to the escalating European debt crisis. China exports in November increased by 13.8% from a year ago to $174.46 billion, while imports growth slowed to 22.1% from 28.73% in October to 159.96 billion yuan. The trade surplus in November narrowed to $14.52 billion from $17.03 billion the previous month.

Investors unwilling to commit cash to the equity market on doubts that European leaders latest plan to fix the continent's sovereign-debt crisis will be enough. Sentiments also hit after a veto from Britain to the original 27-nation plan showed deep divisions remain between political leaders in Europe. European leaders have yet to come up with any concrete proposals to resolve their most imminent debt problems. Friday's agreements are all about forward-looking measures to support the nations' future fiscal health.

Investors are also like to hear word from Standard & Poor's on the latest EU summit because rating agency warned early this week that it could carry out a credit downgrade of EU's as well as euro zone countries en masse if their leaders fail to move decisively on solving the region's debt woes.

Back to countries, the Sydney tocks were up today, buoying the benchmark All Ordinaries Index 1.1% up at 4,311.40, as investors chased for bargain opportunity following heavy 1.72% selloff prior session. But gains were limited after some softer Chinese import and Australian export data. All sectors improved today with the exception of the consumer staples.

Chinese data at the weekend showed a slowing of imports, while Australian trade data on Monday pointed to a flat export performance as Chinese demand for Australian goods cooled in October.

Shares in Aston Resources jumped 1.4% to A$9.90, just below the merger valuation after it agreed to merge with Whitehaven Coal to create a A$5.1 billion coal miner. Whitehaven fell 1.4%.

Origin Energy shares climbed 3% to A$14.72 after its joint venture partner Sinopec agreed to increase its stake in the Australia Pacific LNG project to 25%.

The Australian Bureau of Statistics released mercantile trade data for October 2011, showing that the balance on goods and services in seasonally adjusted terms was a surplus of A$1,595m in October 2011, a fall of A$654m on the surplus in September 2011. In seasonally adjusted terms, goods and services credits fell A$49m to A$27,320m. Non-monetary gold fell A$197m (15%) and net exports of goods under merchanting fell A$3m (60%). Rural goods raised A$60m (2%) and non-rural goods raised A$14m. Services credits raised A$77m (2%). In seasonally adjusted terms, goods and services debits raised A$605m (2%) to A$25,725m. Non-monetary gold raised A$334m (57%), intermediate and other merchandise goods raised A$173m (2%), capital goods raised $60m (1%) and consumption goods raised A$48m (1%). Services debits fell A$10m.

In separate report, the Australian Bureau of Statistics released the latest monthly report on housing finance (the number of loans issued to people buying properties). The number of new owner-occupier housing loans (people living in the homes they have borrowed money to purchase) rose by 0.7% in October.

In New Zealand, the NZX 50 Index gained 28.05 points, or 0.9%, to 3299.51, joining a global rally on optimism the European Union will make progress in addressing the region's debt crisis after its weekend summit.

Air New Zealand shares fell to their lowest level since mid 2009 as faltering global economic growth reduced demand for travel and eroded airline margins. The stock fell as low as 91 cents today, bringing its decline this year to 39%, having traded at $1.53 in January.

Pumpkin Patch, the children's clothing chain, surged 10% to 65 cents. The retailer said last month that it would focus on cost-cutting, reducing bank debt and wringing the most it can out of Christmas while it expects continued difficult trading conditions.

In Japan, the Tokyo stockmarket closed higher, with the benchmark Nikkei Stock Average escalated 1.37% at 8,653.82, as investors chased for heavily battered stocks after a weekend summit appeared to have made some progress on the euro zone debt crisis. A pause in the yen's rise also encouraged market players to cover their short positions and take another look at a broad range of issues including exporters.

Olympus Corp closed 7.8% up at 1,300 yen after news report that auditors are expected to sign off on the camera and medical equipment maker's corrected financial statements. The company said it was trying to publish its accounts by a Wednesday deadline to avoid being delisted from Tokyo's stock exchange.

Toyota Motor closed 0.6% up at 2,617 yen. The automaker on Friday slashed its full-year net profit forecast by more than half as Japan's biggest automaker grapples with a strong yen, the impact of the March earthquake and record flooding in Thailand. The company cut its outlook to 180 billion yen, well down from its estimate in August of a 390 billion yen net profit.

Mitsui & Co was up 0.8% to 1,207 yen. The company said last Friday that it had closed the previously announced agreement for MEPTX to acquire a 12.5% working interest in SME's Eagle Ford property in Texas, USA.

Sojitz ended 1.6% lower at 125 yen. The company revised down its fiscal 2011 earnings outlook to a 12 billion yen net loss, compared to a prior view of a 16 billion yen net profit.

The Bank of Japan released corporate goods data on Monday, showing that Japan's corporate goods price index rose 1.7% from a year earlier in November, marking the 14th consecutive y/y rise, from a downwardly revised +1.6% in October. From the previous month, CGPI rose 0.1% in November, marking the first m/m rise in four months after falling a revised 0.8% in October.

The BOJ's overseas commodity index, composed of 17 items including crude oil, copper, gold, wheat and beef, stood at 193.8 in November, up 16.5% on year but slowing from +20.8% in October.

In China, Mainland stocks fell further in the afternoon after weaker performances in first half, dragging the benchmark Shanghai Composite index 1.02% down at 2,291.54, a lowest level not seen since Mar. 25, 2009, when index closed at 2,291.55, suffered by steep selloff in six out of last seven sessions. Risk aversion selloff continued on lingering concerns over a slowing domestic economy growth after latest data showed slower export growth in November.

General Administration of Customs said on Saturday that China's annual export eased for the fourth consecutive months to 13.8%. Imports grew at 22.1% to 159.96 billion yuan, and the surplus exports enjoyed over imports fell by 35%

The National Bureau of Statistics announced fixed asset investment data for November, showing that the investment in fixed assets (excluding rural households) in the first eleven months of this year reached 26,945.2 billion yuan, up by 24.5% year-on-year, or 0.4 percentage point lower than that in the first ten months of this year, in which the growth rate in November rose by 21.2%. The investment in fixed assets in November dropped 0.19% month-on-month. In the first eleven months of this year, the investment in primary industry, secondary industry and the tertiary industry was 625.6, 11,805.4 and 14,514.2 billion yuan, respectively went up by 28.8, 27 and 22.4%.

In separate report, the National Bureau of Statistics announced industrial production data for November, showing the total value added of the industrial enterprises above designated size was up 12.4% year-on-year, or 0.8 percentage points lower than that in October. From January to November, the total value added of the industrial enterprises above designated size surged 14.0%, dropped 0.1 percentage points as in the first ten months. In terms of month-on-month increase, the growth rate of the total value added of the industrial enterprises above designated size was 0.91% in November.

In Hong Kong, the benchmark Hang Seng Index closed 10.57 points, or 0.06%, lower at 18,575.66 after rising as high as 18,919.42 earlier in the session, as investors opted for cashed out intraday move on concerns over a slowing Chinese economy after latest data showed slower export growth in November and lingering doubts that European leaders' latest plan to fix the continent's sovereign-debt crisis will be enough.

In India, the key benchmark indices extended intraday losses in late trade as data showing decline in industrial production in October 2011 for the first time in more than two years and weak European stocks dampened sentiment. The barometer index, BSE Sensex, fell below the psychological 16,000 mark. The Sensex hit its lowest level in more than two weeks and the 50-unit S&P CNX Nifty hit 1-1/2-week low. The Sensex was provisionally down 354.15 points or 2.18%, off about 500 points from the day's high and up close to 20 points from the day's low. The market breadth was weak.

Index heavyweight Reliance Industries (RIL) fell nearly 4%. Except the BSE IT index, all the other 12 sectoral indices on BSE were in the red. Interest rate sensitive auto stocks fell on worries higher interest rates and slowing economy could crimp demand. Metal & mining stocks declined on worries global economic slowdown could hurt demand, with Sterlite Industries, Steel Authority of India, NMDC and Hindustan Copper hitting 52-week lows. Capital goods stocks extended losses after the latest data showed that capital goods output tumbled 25.5% in October 2011 over October 2010. Interest rate sensitive banking stocks reversed initial gains on worries over rising defaults in a slowing economy. IT stocks rose on strong economic data in the US.

Among other Asian bourses, the Singapore Strait Times index rose 0.26% to 2,701.72. Indonesia Jakarta Composite index was up 0.87% to 3,792.15. The South Korea KOSPI rose 1.33% to 1,899.75. The Taiwan TAIEX index put on 0.81% at 6,949.04. Philippine PSEi fell 0.38% to 4,276.34.

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