Asia Pacific Market: Stocks slide on weak offshore cues, Iraq violence

Asia Pacific shares were down on Wednesday, 25 June 2014, as losses in the United States overnight and ongoing violence in Middle East dampened sentiment. The MSCI Asia Pacific Index fell 0.4%

Investors prompted to take profit off the table as fresh reports of violence in Iraq, including unconfirmed airstrikes by Syrian warplanes, raised fears that the conflict could spiral into a broader regional conflict.

Among Asian bourses

Commodity stocks weigh on Australia market

Australian share market lost ground for the second straight day, as investors continue to consolidate their portfolio due to drop in the US markets overnight, continued conflicts in Iraq and Ukraine and ahead of the end of the tax year next Monday. Most of the sectors descend, with shares of energy, materials and financials counters leading decline. The benchmark S&P/ASX200 dropped 0.57% to 5402 and the broader All Ordinaries sank 0.52% to 5386.80.

Australian investors also prompted to cash in their gains after an official monthly Australian government survey that showed a 1.3% decline in the number of employers advertising to fill skilled positions in May. The data was interpreted by many as a sign the federal budget has had a material effect on confidence.

Australian oil and gas producers were worst performer on the local bourse today, as Brent crude oil dipped to $US114.22 a barrel, while West Texas Intermediate crude oil lifted to $US106.67 a barrel. Australia’s second largest oil and gas producer, Woodside (WPL) was down 0.5% to A$41.38. Origin Energy sank 1.5% to A$14.39. Santos lost 1.5% to A$13.97.

Shares of material and resources companies declined Australia’s Bureau of Resources and Energy Economics cut its price forecasts for the nation’s biggest export. The official government forecast is now tipping the iron ore spot price will average $US97 a tonne in 2015, down from the $US103 estimated in March.

Resources giant BHP Billiton fell 0.7% to A$36.21 despite the company plan announced on Tuesday to cut an extra 500 plus jobs. Rio Tinto shed 0.8% to A$59.07, while iron ore miner Fortescue Metals Group was unchanged at A$4.36, after the spot price for iron ore, delivered in China, eased 0.1% to $US93.30 a tonne.

Aurizon shares lost 0.8% to A$4.96 after industrial rail haulage company announced it has stopped projects, cut more jobs and increased write-downs by up to A$160 million amid a more subdued earnings outlook.

Gold explorer Resolute Mining was down 9.2% to A$0.645, as US funds management firm Van Eck Associates revealed it has sold down its stake from 7.3% to zero in recent days.

Nikkei falls on overheating woes

Japan share market declined sharply from five month high, as a downbeat session on Wall Street overnight and market overheating woes dampened sentiment. Profit-taking accelerated during afternoon trade as technical signs pointed to an overheated market after the index gained nearly 10% over the last month. The Nikkei 225 index lost 0.71% to 15266.61, while the Topix index of all first-section issues fell 0.6% to 1260.83.

Reaction to Prime Minister Shinzo Abe’s long awaited policy speech on economic revitalization was seen as limited as much of its contents were already familiar to the market, with details expected to be fleshed out later in the year.

Shares of insurers, textile makers and consumer lenders suffered major losses in Tokyo. Dai-ichi Life Insurance Co. dropped 2.4% to 1,499 yen. Toray Industries Inc., which makes textile products, slid 2.3% to 671 yen. Financial services provider Aiful Corp. fell 3.2% to 570 yen.

Pioneer slumped 3.5% to 221 yen, paring yesterday’s 4.1% advance, on reports Onkyo Corp. will buy a stake in Pioneer’s audio-visual business

Shares of Kyocera Corp lost 1.9% to 4890 yen despite an announcement by President Goro Yamaguchi that the firm aims to boost pretax profit by around 40% over the last year’s figure to more than Y200 billion in fiscal 2017 by boosting its presence the smartphone, solar power and other growth markets for its components. But analysts expressed concern that the firm might be overly optimistic, while some investors were apparently disappointed that no dividend payout target hike was announced.

Furniture maker Nitori added 2.8% after announcing that its June nationwide sales rose 1.5% on-year–allaying fears that Japan’s April sales tax increase will have a prolonged effect. The company reports first-quarter results on June 27.

China stocks fall on IPO concerns

Mainland China share market declined, amid concerns new share sales will divert funds from existing shares. Meanwhile ongoing concerns over the health of China’s economy, downbeat session on Wall Street overnight and geopolitical concerns over Iraq also dampened risk sentiment. The benchmark Shanghai Composite closed 0.41% down from prior day to 2025.50. Trading turnover decreased to 55.99 billion yuan from yesterday’s 61.68 billion yuan. China’s first initial public offerings in four months will start trading from Thursday after bids for six companies locked up 563.9 billion yuan ($91 billion), fueling concern the deals may divert funds from existing shares. IPO sales cause a liquidity drain from the market and short-term volatility with investors selling existing shares, particularly small-caps, to subscribe to new shares.

Shandong Longda Meat Foodstuff Co, Wuxi Xuelang Environmental Technology Co. and Feitian Technologies Co. will start trading in Shenzhen tomorrow after the stocks were each oversubscribed by at least 120 times in online bidding, according to statements to the Shenzhen Stock Exchange.

Ten companies have started the process to list their shares since June 10, the China Securities Regulatory Commission said in a statement yesterday. The average price-to-earnings ratio of the companies is 17.76, or about 39% lower than the average of 48 IPOs at the start of this year, the CSRC said.

More than 600 companies have submitted IPO applications and over 400 have published draft prospectuses, the CSRC said in a statement last month. The securities watchdog plans to allow about 100 IPOs from June through the end of the year and the stock sales will be evenly spread over time, CSRC Chairman Xiao Gang said in a May 19 statement.

Tongling Nonferrous Metals Group Co, China’s second-biggest copper producer, plunged 4.4% after its chairman died. SAIC Motor Corp., the No.1 automaker, lost 1.7%. China Vanke Co., the nation’s largest-listed developer, jumped as much as 10% in its debut in Hong Kong.

Hong Kong stocks end marginally lower

Hong Kong share market closed marginally lower after fluctuating in and out of the neutral line on Wednesday, 25 June 2014, as weak cues from US markets overnight and escalating violence in the Middle East sapped demand for riskier assets. The benchmark Hang Seng Index closed 13.94 points lower from prior day to 22866.70. Trading turnover decreased to HK$43.97 billion from yesterday’s HK$43.99 billion.

CR Power (00836) was the top blue-chip winner, rising 2.2% to HK$21.05. China Vanke (02202) transferred to H-share platform today. It closed at HK$13.28, or 7% above its last closing price of HK$12.41 in Shenzhen B-share market. Its listing created pressure for COLI (00688) and CR Land (01109), which dipped 1.4% and 0.6% to HK$18.86 and HK$13.72 respectively. COLI was the top blue-chip loser today.

China Best’s (00370) chairman has been approached by independent third parties to acquire the stake in the company. The stock soared 34% to HK$0.149.

China South City (01668) and Tencent (00700) signed an E-commerce cooperation memorandum. China South City jumped 5% to HK$3.93, Tencent edged up 0.2% to HK$115.1.

Indian stocks fall ahead of derivative expiry

The Sensex and Nifty fell on Wednesday for a fifth session in six as caution ahead of expiry of June derivatives on Thursday and fears of more violence in Iraq prompted investors to pare positions. The benchmark Sensex provisionally closed 0.22% lower at 25313.74, while the broader Nifty lost 0.14% to close at 7569.25.

Shares of private banks declined. ICICI Bank (down 1.56%), HDFC Bank (down 0.62%), Axis Bank (down 0.65%), and Yes Bank (down 2.89%) declined. Kotak Mahindra Bank rose 0.65%.

IndusInd Bank rose 0.44% to Rs 573.50. The bank today announced its Currency Chest at Guindy, Chennai. This will enable the bank’s branches and ATMs in the Southern part of the country to handle larger volumes of cash, IndusInd Bank said. The bank has drawn up an ambitious plan for setting up a sizeable number of Currency Chests across India in line with the bank’s business growth.

Shares of automobile companies rose after news reports in late trade that Finance Minister Arun Jaitely has announced extension of the concessional excise duty on automobiles, capital goods and consumer goods by six months till 31 December 2014. Maruti Suzuki India (up 2.87% to Rs 2,485), Mahindra & Mahindra (M&M) (up 1.48% to Rs 1,184.50) and Tata Motors (up 0.74% to Rs 445.40) gained. Ashok Leyland surged 7.37% to Rs 38.60, which is also a52-week high for the counter. Among two-wheeler makers, Hero MotoCorp (up 1.43% to Rs 2,651) and TVS Motor Company (up 4.59% to Rs 148.20) gained. Bajaj Auto rose 2.72% to Rs 2,281.15 after hitting record high of Rs 2,294.85 in intraday trade.

TCS dropped 0.16% to Rs 2,302. The stock hit high of Rs 2,318 and low of Rs 2,295. The company said during market hours that it has been selected by Dutch insurance firm, REAAL N.V., to develop and modernize the mainframe applications and servicing the company’s life insurance portfolio. The five-year engagement will be focused on building a scalable and best in class technology platform for REAAL N.V. as it looks to increase agility across the business.

Parsvnath Developers rose by maximum permissible 5% upper limit at Rs 36.25 on BSE on reports that company plans to divest land parcels worth Rs 1000 crore to raise funds. However, company clarified during market hours that there are no specific negotiations going on in this regard and the company may either sell the non-core assets if the assets fetch a good price or enter into joint venture arrangements, in case such assets do not fetch a reasonably good price.

Elsewhere in the Asia Pacific region- Taiwan’s Taiex index edged down 0.04% to 9242.16. South Korea’s KOSPI index was down 0.63% to 1981.77. Indonesia’s Jakarta Composite Index declined 0.48% to 4838.98. Malaysia’s KLSE Composite shed 0.15% to1889.55. New Zealand’s NZX50 fell 0.33% to 5104.54. Singapore’s Straits Times index declined 0.02% to 3261.54.