Asia Pacific share market drifted down on Friday, 14 March 2014, as risk aversion selloff flared across the region on concerns about China's economic growth coupled with escalating tensions in the Ukraine. The MSCI Asia Pacific Index dropped 1.9%.
Investment rationale turned bearish amidst heightening concern about the outlook for the China economy after at least four investment banks cut their growth forecasts on the region's biggest economy.
Bank of America Corp., UBS AG, JPMorgan Chase & Co. and Nomura Holdings Inc. lowered forecasts for China's 2014 economic expansion after reports yesterday showed factory output rose in January and February at the slowest pace since the global financial crisis, while retail sales grew at the slowest rate for the period since 2004.
National Bureau of Statistics of China said on Thursday that factory production rose 8.6% in the January-February period from a year earlier. Retail sales advanced 11.8%, while fixed-asset investment excluding rural households was up 17.9%. The Thursday data releases confirm that the slowdown seen at the end of 2013 has extended into this year and suggest it is deepening.
At the same time, Premier Li Keqiang signaled that China's leaders are "not preoccupied" with hitting the official 7.5% economic growth target. Risk sentiments weakened further after PREMIER Li Keqiang signaled on Thursday that his government will not ride to the rescue of every troubled investment, by saying some loan defaults are hard to avoid in what he called a challenging economic environment. But Li, speaking at a news conference on the final day of the annual session of China's top legislature, hinted at some tolerance for slower economic expansion this year in order to push reforms aimed at providing longer-term and more sustainable growth, as long as enough new jobs are created. The GDP growth target is around 7.5%. 'Around' means there is some flexibility and we have some tolerance, Li said, adding that the lower limit on growth must ensure job creation. China wants to create 10 million new jobs in 2014 and Li has said that the economy must grow 7.2% annually to do that. Some 13 million new jobs were created last year, when the economy grew 7.7%.
Selling pressure intensified further on caution ahead of a public referendum in Crimea on Sunday to decide whether to break away from Ukraine and become part of Russia. The Black Sea region of Crimea votes on whether to leave Ukraine and rejoin Russia on March 16, with the U.S. and Germany stepping up pressure on Moscow over their support for the secession.
U.S. Secretary of State John Kerry said serious steps would be imposed by the U.S. and Europe if the referendum on Crimea joining Russia takes place on Sunday as planned.
Market sentiments also under pressure after the release of disappointing U.K. trade balance data. Official data showed that the U.K. trade deficit widened to 9.79 billion pound in January, from 7.66 billion pound in December, whose figure was revised up from a previously estimated deficit of 7.7 billion pound.
Meanwhile, investors were eyeing upcoming U.S. data due later in the day, after upbeat economic reports on Thursday eased concerns over the strength of the nation's economic recovery. On Thursday, the Commerce Department reported that retail sales rose 0.3% in February, ending two months of declines, while Core retail sales, which exclude automobile sales, also rose 0.2% last month, ahead of expectations for a 0.3% rise. Separately, the Department of Labor said the number of people filing new claims for unemployment benefits fell by 9,000 to a three month low of 315,000 last week, from the previous week's revised total of 324,000.
Among Asian bourses, Japanese share market stumbled the most in the region, as investors flew away from riskier stocks, particularly export related companies, amidst concerns about China's economic growth coupled with escalating tensions in the Ukraine. Meanwhile, hardening of yen against major currencies intensified selling in the local shares. The benchmark Nikkei-225 index tanked 3.3% to 14327.66, while the Topix index of all first-section shares retreated 3.22% at 1164.70.
Japanese exporter shares, especially those with close China links, declined sharply, with TDK topped a list of battered exporters, losing 4.5%. Komatsu fell 3.6% and Daikin Industries lost 3.9%.Toyota dropped 3% to 5,551 yen in Tokyo. Honda Motor Co. (7267), which gets about 83% of sales from overseas, decreased 3.1% to 3,607 yen. Sony Corp. (6758), the maker of Bravia televisions and PlayStation game consoles, sank 4.2% to 1,761 yen.
The minutes of the Feb. 17-18 policy meeting released on Friday, indicating many of the Bank of Japan's nine board members decided unanimously to double the scale of the two programs to help boost bank lending and extend the application period for these facilities by one year.
"Many members said that the bank had been stating that, implementing quantitative and qualitative monetary easing, it would examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate," the minutes said. "These members continued that the revisions discussed at this meeting should not be taken as such 'adjustments' to achieving the price stability target of 2% as expected.
The minutes for the February meeting also showed that the board agreed that the moderate recovery trend will continue, weathering an expected slump in domestic demand after the April sales tax hike. "A few members expressed the view that future economic developments depended on whether an increase in exports and business fixed investment could offset the reversal decline in private consumption following the consumption tax hike," the minutes said. "One of these members added that, in the event of a decline in household and business sentiment, it was necessary to closely monitor whether this would bring about a self-fulfilling economic downturn through a contraction in consumption and investment activities." Some board members said exports have been weak because some sectors have had to respond to strong domestic demand. "These members continued that exports might gain momentum in the April-June quarter of 2014, at which time domestic demand was projected to experience a reversal decline following the consumption tax hike," the minute said.
In Australia, Australian stock market closed sharp lower as investors flew away from riskier stocks, particularly commodity linked companies, on lingering concerns about weakness in the Chinese economy and tensions in Ukraine. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each were down 1.5% to finish at 5329.40 and 5347.10, respectively.
Material was the worst-performing sector, down 2.4%, as the base metal prices fell up to 1.4% on the London Metal Exchange on Thursday with copper and aluminium leading the declines. Resources giant BHP Billiton tanked 2% to A$35.66, while Rio Tinto, Australia's biggest iron ore miner, dropped 2.5% to A$61.50 and third force in iron ore, Fortescue Metals Group, dropped 2.7% to A$4.98.
Shares of Australian financial companies were also down. Commonwealth Bank of Australia declined 0.9% to A$75.25, Westpac Banking Corp 1.8% to A$33.65, National Australia Bank 1.2% to A$34.33 and ANZ Banking Group 1.1% to A$31.87.
Lend Lease shares fell 1.6% to A$11.32 following a fire at its $6 billion Barangaroo development in Sydney. It is likely the property group has insurance but the fire, which covered Sydney's central business district in smoke, will cause delays.
Shares in Leighton Holdings gained 3.1% to A$21.37, following the increase of a takeover offer from Hochtief, which raised its conditional bid to A$22.50%.
In China, Mainland China stock market finished weaker, after at least four investment banks cut their growth forecasts on the Asia's biggest economy. The Shanghai Composite Index dropped 0.73% to 2004.34.
Among SSE sectors, 9/10 sectors of the SSE index declined, with energy sector dropped the most amongst the SSE sectoral peers, down 1.5%, followed by healthcare down 1.1%, consumer staples down 1.1%, industrials down 1%, utilities down 1%, financials down 0.8%, telecommunication services down 0.5%, information technology down 0.4% and materials down 0.1%.
In Hong Kong, HK market declined for third consecutive day, amid mounting concern about the outlook for the China economy after at least four investment banks cut their growth forecasts on the region's biggest economy. The Hang Seng Index ended down 216.59 points to 21,539.
Among the HK 50 blue chips, 38 fell and 8 rose, with 4 stocks remaining unchanged. New World Development Co was down 14% to HK$8.27 on whammy of rights issue, while CITIC Pacific rose 4.9% to HK$11.68 on talks that the conglomerate looks for a up to HK$8.8bn 5-year loan with 13 banks, making themselves the biggest blue-chip loser and gainer.
New World sank 14% to HK$8.27, while New World China (00917) surged 29% to HK$6.63 after its parent announced plan to take it private at HK$6.8 per share.
Tencent plunged 4% to HK$564 after regulator's call to a halt of Tencent's virtual credit card products. The stock has dropped for three consecutive days. It has slid 12.7% from its all-time high of HK$646 on 7 March.
The Office of the Commissioner of Insurance on Friday said total gross premiums of the Hong Kong insurance industry in 2013 amounted to HK$290.7 billion, an increase of 13.9% over 2012. Gross and net premiums of general insurance business recorded a growth of 7.1% to HK$42.1 billion and 8% to HK$29.2 billion compared with 2012. Overall underwriting profit also recorded an increase from HK$2.2 billion in 2012 to HK$3 billion in 2013. Revenue premiums of Individual Life and Annuity (Non-Linked) business and Individual Life and Annuity (Linked) business rose 18.4% to HK$173.3 billion and by 9.5% to HK$54.7 billion. Contributions of Retirement Scheme business grew 2.3% to HK$17.1 billion. New office premiums (excluding Retirement Scheme business) of long term business for 2013 climbed 18.9% to HK$92.6 billion compared with 2012. Both Individual Life and Annuity (Non-Linked) and Individual Life and Annuity (Linked) business recorded premium growth, with the former rose 21% to HK$73.0 billion and the latter grew 11.7% to HK$19.1 billion in terms of new office premiums.
In Indonesia, shares in the Jakarta market surged sharply today, after main opposition PDI-P party named Jakarta's hugely popular governor, Joko Widodo, as its candidate for this year's presidential election. The Indonesian benchmark Jakarta Composite Index jumped 3.23% to 4878.54, extending its advance from an Aug. 27 low to 23%. That's above the 20% level that marks the common definition of a bull market.
Bank Indonesia held its benchmark reference rate unchanged at 7.50%, as widely expected, because pressures over the inflation rate and the rupiah have eased. The decision came after market close on Thursday.
In India, strong intraday rebound in late trade took the key benchmark indices to positive zone from negative zone. The market sentiment was boosted after the data showed that inflation based on the wholesale price index (WPI) eased to a nine-month low last month.
The barometer index, the S&P BSE Sensex, was provisionally up 22.55 points or 0.1%, up about 225 points from the day's low and off close to 55 points from the day's high. Among the 30 Sensex shares, 15 declined and rest rose. Bhel (up 2.73%), Tata Steel (up 1.68%), and Tata Motors (up 1.61%) edged higher from the Sensex pack.
Indian index heavyweight Reliance Industries (RIL) and ITC, both, reversed intraday losses. Shares of L&T scaled 52-week high and L&T Finance Holdings slumped after the offer for sale of shares of L&T Finance Holdings by L&T was oversubscribed. Among auto stocks, M&M scaled record high.
Indian economy can grow an annual 5.2% in the quarter to end-March on higher farm output growth, the chairman of the Prime Minister's Economic Advisory Council said today, 14 March 2014. C. Rangarajan also said he expects the economic growth to pick up to 5.5% to 6% in the fiscal year that begins on 1 April 2014. Inflation based on the wholesale price index (WPI) eased to a nine-month low of 4.68% in February 2014, from 5.05% in January 2014 and 7.28% during the corresponding month of the previous year, data released by the government today, 14 March 2014, showed. Build up inflation rate in the financial year so far was 5.17% compared to a buildup rate of 6.15% in the corresponding period of the previous year. The government revised upwards the rate of WPI inflation for December 2013 to 6.4%, from 6.16% reported on 15 January 2014.
Elsewhere in the Asia Pacific region, Taiwan's Taiex index dropped 0.69%. South Korea's KOSPI index fell 0.75%. New Zealand's NZX50 declined 0.64%. Malaysia's KLSE Composite declined 0.76%. Singapore's Straits Times index fell 0.25%. Indonesia's Jakarta Composite Index jumped 3.23%.
Source:-business-standard.com
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