News Column

Asian Stocks Rise On China Data

June 3, 2014



CANBERA (Alliance News) - Asian stocks ended mostly higher on Tuesday as investors digested solid US and Chinese manufacturing data as well as monetary policy decisions in Australia and India. Overall gains, however, were muted heading into Thursday's ECB meeting and the US employment report due later this week.

Japanese shares closed at a fresh two-month high, with a weaker yen and gains on Wall Street overnight underpinning sentiment. The benchmark Nikkei average rose 0.66% to 15,034.25, its first close above 15,000 since April 4, while the broader Topix Index advanced 0.67%. Exporters gained ground, with Panasonic, Nikon, Toyota Motor, Suzuki Motor, Fujitsu, Mazda Motor and Hitachi rising between 0.3% and 3.3%. Heavyweight Fast Retailing and Fanuc rose about 1.5% each, while SoftBank shares advanced 1.8%.

Dai-ichi Life Insurance gained a percent on bargain hunting after falling 5% on Monday on news it was considering an acquisition of a US life insurance company. Daio Paper Corp. plummeted 7.1% on equity dilution worries after the company said it would sell shares to raise as much as 22.4 billion yen.

Chinese shares ended on a flat note as trading resumed following a holiday. The benchmark Shanghai Composite Index edged down 0.04% to 2038.31, as property developers retreated offsetting gains in resource stocks on signs of stabilization in the world's second-largest economy.

Activity in China's vast manufacturing sector deteriorated slightly in May, the latest purchasing managers' index from HSBC and Markit Economics revealed. The final PMI reading came in with a score of 49.4, down from the earlier flash reading of 49.7, but up from 48.1 in April. Total new orders stabilized as new export order growth touched a 49-month high, the survey showed.

Separately, China's service sector grew at its fastest pace in six months in May, government figures showed, allaying fears of a sharp slowdown. The non-manufacturing PMI rose to 55.5 from 54.8 in April.

Hong Kong'sHang Seng Index rose 0.91% to 23,291.04 after China moved to lower the reserve requirement for banks which lend to the agricultural sector and small enterprises in a bid to shore up flagging growth.

Australian shares fell the most in two weeks, as weakness in prices of iron ore overshadowed upbeat current account data. The benchmark S&P/ASX 200 Index slid 0.7% to finish at 5479.70. Mining giant BHP Billiton shed half a percent on a report it is preparing to cut 500 jobs from across three coal mines in the Illawarra region. Forescue Metals slipped 0.2%, Newcrest declined half a percent, Regis Resources tumbled 5.4% and Alumina lost 2.1%, while Rio Tinto gained 0.7% and rare earths miner Lynas soared 9.7%.

Banks ANZ, Commonwealth and Westpac fell between 0.1% and half a percent as the Reserve Bank of Australia retained its key rate at a record low for the tenth consecutive month as widely expected by economists, saying that monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. "The exchange rate remains high by historical standards, particularly given the further decline in commodity prices," the RBA said in a statement accompanying the rate decision.

National Australia Bank declined 0.7% after a "technical error" in its payment system resulted in double charging for some of its Visa debit cards customers. Telstra Corp shed 0.6% after Credit Suisse cut its rating on the stock.

In economic releases, Australian retail sales rose a seasonally adjusted 0.2% in April from the previous month, the Australian Bureau of Statistics said, missing economists' expectations for a 0.3% increase. Another report showed that the country's current account deficit narrowed to AUD5.67 billion in the March quarter from AUD11.7 billion in the December quarter, beating forecasts for a shortfall of AUD7.0 billion boosted by record shipments of iron ore and coal.

Seoul shares ended a choppy session higher ahead of a market holiday on Wednesday for elections. The benchmark Kospi average closed up 0.3% at 2,008.56. KCC Corp., which holds a 17% stake in Samsung Everland, soared 11% after the de facto holding firm of Samsung Group said it would seek an initial public offering next year. Samsung Electronics gained a percent and Samsung SDI Co jumped 4.3%.

On the economic front, South Korea's consumer inflation rose 1.7% year-over-year in May, Statistics Korea said - up from 1.5% in April and touching a 19-month high. The Bank of Korea expects inflation to rise 2.3% for all of 2014, although the central bank for now maintains its official target band of 2.5 to 3.5%.

New Zealand shares fell modestly despite positive cues from other regional markets. The benchmark NZX-50 Index eased 0.28% to 5,164. Pacific Edge tumbled 9.4% to a seven-month low, extending declines for the seventh day. Outdoor clothing Company Kathmandu Holdings fell 4.2% to a two-month low after Postie Plus Group went into voluntary administration.

New Zealand Oil & Gas rose 1.9% after the company said it has started drilling in the Oi-1 exploration well in Petroleum Mining Permit 38158, approximately 37 kilometers off the coast of Taranaki. Air New Zealand gained 0.9% after signing a deal to purchase 13 next generation Airbus A320 aircraft. Heavyweight Telecom Corp added 1.1% and Fletcher Building, the nation's largest construction company, closed up 0.7%.

In economic news, New Zealand's terms of trade climbed 1.8% in the first three months of 2014 from the previous quarter, lifting the gauge of the country's purchasing power to its highest level in more than 40 years, official figures showed.

India's Sensex was rising 0.3% after the Reserve Bank of India kept its key policy rate unchanged, but reduced the mandatory statutory liquidity ratio (SLR) requirement for banks by 50 basis points to help improve credit offtake.

Elsewhere, the key benchmark indexes in Indonesia, Malaysia and Taiwan were up about half a percent each, while Singapore's Straits Times Index was declining 0.2%.

On Wall Street, stocks ended mixed showing little change overnight after the Institute for Supply management issued two corrections to its monthly manufacturing report, leaving investors confused. A separate report from the Commerce Department showed that construction spending increased modestly in April, helped by increase in home building and government construction that lifted total activity to the highest level in five years.



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Source: Alliance News