News Column

Asia off, Hong Kong up for month

May 30, 2014



Asia stocks were mostly lower on Friday, with Japan'sNikkei snapping a six-day winning streak, while Hong Kong closed positive on the last trading day of May.

Japan'sNikkei 225 index fell 49.34 points, or 0.3%, to end the day, week and month at 14,632.38. The yen strengthened versus the U.S. dollar, rising to 101.643 from 101.734 in the previous session. On the same day, data showed that Japan's household spending for April dropped 4.6% from a year ago, adjusted for price changes.

The Hang Seng Index in Hong Kong regained 71.51 points, or 0.3%, to 23,081.65. For the month of May, the index notched a 4.3% gain.

In Japan, market movers included semiconductor maker Renesas Electronics Corp., losing 2.8%, local peer Fujitsu, falling 1.9%, top investment bank Nomura Holdings, down 1.6%, and industrial robot maker Fanuc Corp., off 0.9%.

In Hong Kong, local developers helped lift the market, with top gainers including New World Development, climbing 2%, Cheung Kong (Holdings), rising 1.1%, and Hang Lung Properties, up 1%. Macau casino operators were also well bid, as Galaxy Entertainment Group rallied 4.7%, SJM Holdings jumped 3%, and MGM China Holdings traded up 2.5%.

The rush of Japanese economic data for April is out, and while consumer spending and industrial production were a bit of disappointing, the results weren't too far from what economists were expecting.

Perhaps the most important were the inflation figures: Japan's core consumer price index (which excludes volatile fresh-food prices) rose 3.4%, well ahead of March's 1.3% gain and above the 3.1% median forecast in a Wall Street Journal survey of economists.

And then there was the core CPI result for metropolitan Tokyo in the current month to date, watched as a leading indicator for the nation as a whole. This was up 2.8% for a year earlier, just below the 2.9% gain tipped in the Wall Street Journal survey but accelerating from a 2.7% increase in the previous month.

But it that was a bullish note in the data, then consumer spending was the bearish reply: Spending by households of two of more people dropped a price-adjusted 4.6% from a year earlier, swinging from a 7.2% jump in March.

This, of course, was due to consumers front-loading their purchases to beat the April 1 hike in the consumption tax, but all the same, it was worse than the forecast 3.3% drop.

On a similar note, industrial output fell 2.5% last month, trailing a forecast 2% drop in a Wall Street Journal survey of economists, and even farther behind a projected 1.4% retreat as tipped in the government's survey of manufacturers last month. In March, production had risen 0.7%.

Large passenger cars led the decline, with the overall drop likely linked to the April 1 consumption-tax hike.

Perhaps more important were the manufacturers' own predictions for the month ahead, as inaccurate as they sometimes are: For May, they see industrial output up 1.7%, but for June, they forecast a 2% drop.

Rounding out the statistical parade, the unemployment rate was unchanged for a third month in a row at 3.6%.

In other markets;

Shanghai's CSI 300 Composite inched up 1.30 points, or 0.1%, to 2,156.46

Taiwan's Taiex Index slipped 33.09 points, or 0.4%, to 9,075.91

Singapore's Straits Times Index ducked back 4.86 points, or 0.2%, to 3,295.85

Korea's Kospi index dropped 17.30 points, or 0.9%, to 1,994.96

New Zealand NZX 50 index gave back 4.73 points, or 0.1%, to 5,178.44

Australia's S&P/ASX 200 shed 26.93 points, or 0.5%, to 5,492.55


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Source: Baystreet Foreign Markets Wrap (Canada)