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Asia Pacific Market: Stocks mixed ahead of Beijing summit, G7 finance meeting

13 May, 2017 5:22 AM
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Asia Pacific Market: Stocks mixed ahead of Beijing summit, G7 finance meeting

Asia Pacific share market finished the week with a mixed note on Friday, 12 May 2017, tracking overnight losses on Wall Street. Expectations of an interest rate hike by the US Federal Reserve next month also weighed on investor sentiment.

Investors were awaiting for the outcome of a meeting of world leaders in Beijing for the Silk Road summit this weekend and the G7 finance meeting in Italy.

U.S. equities closed lower on Thursday as weak earnings reports Macy's weighed on major U.S. retailers, causing the S&P 500 to decline 0.22% or 5.19 points to close at 2,394.44. Macy's earnings miss for Q1 led to shares of the retailer tumbling 17%.

Ahead, a weekend meeting of top finance chiefs from the world leading economies called the G7 will meet in Italy at the weekend with trade and currencies expected to be on the agenda.

Beijing prepares to host a number of world leaders, including Russian president Vladimir Putin, for a summit on China's ambitious One Belt, One Road (OBOR) initiative to link China to Europe via Central Asia and maritime routes this weekend. The summit comes as the U.S. and China unveiled a trade agreement that will boost U.S. exports of liquefied natural gas and beef, and work on improving access for electronic payment system providers in China.

This weekend sees the beginning of China's two day One Belt One Road (OBOR) summit involving more than 100 countries and organizations. 40 have already signed cooperation agreements and another 20 countries and more than 20 corporations are expected to sign agreements in the next few days in the global plan that covers around 65% of the world's population, one third of the world's GDP and around a quarter of all the world's trade. The plan itself is twelve times larger than the post WW2 Marshall plan and is the largest single economic policy ever conceived.

Australian equity market ended lower, as sentiment was weighed on by a slide in global markets overnight. Most of the ASX sector declined, with consumer discretionary, technology, healthcare, industrials, energy, realty and financials issues being notable losers, while strong gains in the gold and copper prices helped materials sector to close in green. The S&P/ASX 200 finished down 41.40 points, or 0.7%, at 5836.90. Falling stocks outnumbered advancing ones on the Australia Stock Exchange by 637 to 415 and 389 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was up 2.14% to 11.977.

Shares of financial companies closed down after news of the government's plans for a levy on the liabilities of the country's biggest lenders, with Australia & New Zealand Banking falling 0.3% to A$29.22, Westpac dropping 0.2% to A$32.57 and the Commonwealth Bank of Australia erasing 0.5% to A$81.67. The National Australia Bank was up 0.1% to A$32.33.

Bank executives have argued against the federal move to raise 6.2 billion Australian dollars (US$4.57 billion), saying they weren't consulted and that any taxes would ultimately get picked up by shareholders or borrowers. Keeping up the pressure on the government, the industry's lobby group on Friday called on the Treasury to release details of the levy and its economic impact.

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Shares of materials and resources were higher. Among the miners, BHP Billiton rose 0.6% to A$23.75 and Rio Tinto 0.4% to A$59.80 as copper prices touched a one week-high on Thursday after funds cut bearish bets. However, Fortescue was down 2.7% to A$4.74. Gold miner Newcrest added 2.4% to A$20.68 after the bullion price rose on Thursday having been flat or lower for the previous eight sessions.

The Japan share market finished session lower, as investors elected to cash profits after the benchmark hits 17-month high yesterday. Meanwhile, the yen's appreciation against the U.S. dollar and Wall Street's overnight decline also fuelled profit booking. However, losses were limited as investors focused on a slew of corporate earnings such as from automaker Nissan on a surprise hike in dividend. The 225-issue Nikkei Stock Average lost 77.65 points, or 0.39%, to close the day at 19,883.90. The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, dropped 6.15 points, or 0.39%, to end at 1,580.71. The 225-issue Nikkei average gained 2.3% for the week.

Trading volume on the main section on Friday came to 2,248.62 million shares, rising from Thursday's volume of 2,292.02 million shares. The turnover on the final trading day of the week totaled 2,964.5 billion yen.

Panasonic lost ground after the electronics maker announced on Thursday a weaker-than-expected operating profit estimate for the fiscal year through March 2018.

Sumitomo Metal Mining declined after releasing a sluggish operating profit estimate for the current fiscal year. Also on the minus side were mega-bank groups Mitsubishi UFJ, Sumitomo Mitsui and Mizuho, automakers Toyota, Honda and Subaru, and electronics parts producer Murata Manufacturing.

By contrast, Nissan Motor surged on its plan to hike dividends although it forecast an unexpected fall in profits and its guidance was lower than analyst expectations. Retailer Seven & i Holdings, online shopping mall operator Rakuten and power firm Tepco Holdings were buoyant. Mobile phone carrier KDDI attracted buying a day after announcing a plan to buy back own shares.

The Mainland China equity market closed higher, as risk sentiments got boosted by central bank's move to inject funds into the market. Investors also get encouraged by the news that Belt and Road Forum for International Cooperation is going to be held this weekend. Shares of banking, insurance companies and those related to the Xiongan New Area were among the biggest gainers today. The benchmark Shanghai Composite Index gained 0.72%, or 22.01 points, to 3,083.51 and the Shenzhen Composite Index, which tracks stocks on China's second exchange, edged 0.06%, or 1.05 points, up to 1,820.20. Over the past week, the Shanghai Composite Index lost 0.63%.

China's central bank injected fresh funds through a medium-term lending facility on Friday while keeping a tight rein on short-term funding in what appeared to be a further effort to dampen speculative investment while keeping the economy adequately funded. The People's Bank of China injected 459 billion yuan (US$66.51 billion) into the financial system through medium-term lending facility tools today. The move is a positive signal for the stabilization of the market.

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The advance came as Beijing prepares to host a number of world leaders, including Russian president Vladimir Putin, for a summit on China's ambitious One Belt, One Road (OBOR) initiative to link China to Europe via Central Asia and maritime routes. The summit comes as the U.S. and China unveiled a trade agreement that will boost U.S. exports of liquefied natural gas and beef, and work on improving access for electronic payment system providers in China.

This weekend sees the beginning of China's two day One Belt One Road (OBOR) summit involving more than 100 countries and organizations. 40 have already signed cooperation agreements and another 20 countries and more than 20 corporations are expected to sign agreements in the next few days in the global plan that covers around 65% of the world's population, one third of the world's GDP and around a quarter of all the world's trade. The plan itself is twelve times larger than the post WW2 Marshall plan and is the largest single economic policy ever conceived.

Shares of banking, insurance companies and those related to the Xiongan New Area were among the biggest gainers today. China Merchants Bank Co rose 5.61% to 20.34 yuan, New China Life Insurance Co added 3.05% to 50.03 yuan, and Hebei Langfang Development Co climbed 2.37% to 13.41 yuan.

The Hong Kong stock market finished the week with a fifth successive gain, as investor sentiment lifted by tracking strength in Mainland bourses and continuous inflows from mainland China. Sector performance was mixed, with materials and utility shares falling, while IT stocks firmed. The Hang Seng Index rose 0.12%, or 30.79 points, to 25,156.34 - its highest finish since the end of July 2015. The China Enterprises Index gained 0.2%, to 10,282.65 points. For the week, the Hang Seng gained 2.8%, while HSCE rose 2.6%. Turnover decreased to HK$75.1 billion from HK$81.6 billion on Thursday.

Tencent (00700) gained 1% to HK$258.2 after hitting all-time high of HK$259.2. Citi Research has raised their target price for the internet giant to HK$302, expecting its income growth of 40% for 1Q. It was also reported that Russia has unblocked its messaging app Wechat.

Link REIT (00823) gained 1% to HK$58.1 after the company confirmed to acquire the Metropolitan Plaza in Guangzhou. HSBC (00005) edged up 0.2% to HK$68.1.

AAC Technologies (02018) sank 3% to HK$96 after yesterday's plunge triggered by a short seller report. The company said its net profit soared 72% to RMB1.06 billion for 1Q.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Also read: Market likely at bottom-end of the range: Expert

Source: business-standard.com

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