Asian Markets closes mixed

Investors booked profits following a rally yesterday buoyed by expectations of additional economic stimulus measures from China

Stock markets in Asian region closed mixed on Thursday, 5 March 2009, after investors booked some profits following a rally yesterday buoyed by expectations that China, the world's third largest economy, will announce additional economic stimulus measures. While assurances from China's Premier Wen Jiabao helped some markets extend the rally on Thursday, more sobering news on the global economy restricted big gains.

Stocks on Wall Street closed higher on Wednesday, despite foreboding unemployment numbers in the U.S., as an assist from China lifted the blue-chip indices off of multiyear lows. The Dow Jones Industrial Average rose 149.82 points, or 2.2%, to 6875.84, and the S&P 500 climbed 16.54 points, or 2.4%, to 712.87. The Nasdaq added 32.73 points, or 2.5%, to 1353.74.

Positive sentiment came after reports that the Chinese government will announce further stimulus measures, sending the Shanghai Composite Index higher by 6.1%, and after promising numbers on the Asian nation's economy. The official purchasing managers' index rose to 49.0 in February from 45.3 in January, according to the China Federation of Logistics and Purchasing. Although the index still indicates contraction, it's approaching the point, 50, of no change and is well above a record low of 38.8 last November.

In the commodity market, crude oil snapped its gaining streak of three days in New York, after extending yesterday’s surge in the morning session, as China said it will significantly increase investment in 2009 to boost its economy, potentially draining ample supplies of the fuel.

Oil climbed 9% yesterday after an official said Chinese Premier Wen Jiabao may announce new measures to spur expansion, adding to a 4 trillion Yuan ($585 billion) spending plan. A U.S. government report yesterday showed an unexpected decline in crude-oil inventories last week as OPEC cut production. Crude oil supplies fell 757,000 barrels to 350.6 million barrels in the week ended 27 February 2009, the Energy Department said in a report yesterday.

Crude oil for April delivery fell $1.09 cents, or 2.40%, to $44.99 a barrel at 10:09 a.m. London time on the New York Mercantile Exchange. Yesterday, futures rose $3.73 to $45.38.

Brent crude oil for April settlement decreased $1.32 cents, or 2.86%, to settle at $44.80 a barrel on London’s ICE Futures Europe exchange at 10:09 a.m.

Gold staged a modest bounce on Thursday after falling for eight days to a three-week low, but the rally lacked strength as the metal's safe-haven appeal appears to have waned in the wake of a rise in equities. Spot gold was at $US912.20 an ounce in Asian trade, up 0.61% from its notional close on Wednesday, when it fell as low as $US900.95, the lowest since 10 February 2009.

In the currency market, the Japanese yen was quoted at 99.4 against the US dollar.

The Hong Kong dollar was trading at HK$ 7.7585 against the dollar. Actually The Hong Kong dollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85 to the U.S. dollar.

In Sydney trades, the Australian dollar ended the local session higher on Thursday as investor sentiment rose on a fresh stimulus plan for China's economy. At the closing bell, the Australian dollar was at $US0.6433, up from Wednesday's close of $US0.6326. During the day, the unit moved between $US0.6415 and $US0.6497

In Wellington trades, the NZ dollar ended the day at US50.20c. The currency rose today, as investors felt more comfortable with the global economic outlook as they anticipated China will stimulate its economy more.

The South Korean currency fell against the U.S. dollar after reversing its four days losing streak yesterday. The local currency ended at 1568 won against the U.S. dollar, down 17 won from Wednesday's close of 1,551 won.

Foreign exchange trading by banks in South Korea fell at the fastest rate in almost 11 years last quarter due to increased currency market volatility; the central bank was quoted as saying by Yonhap News Agency – the national news agency.

The daily foreign exchange turnover averaged US$44.2 billion in the October-December period, down 22.5% from three months earlier and the sharpest quarterly drop since the first quarter of 1998, according to the Bank of Korea (BOK). For all of 2008, however, the daily trading volume rose 19.6% on-year to $55.4 billion, slowing from a 53.4% gain in 2007, it added.

The Taiwan dollar strengthened further as it was trading at NT$ 34.9620 up by NT$ 0.105 from yesterday’s close of NT$35.067

Philippines peso climbed to a six-day high level against the greenback in early trading hours. The dollar-peso pair that closed Wednesday's North American session at 48.61 is currently trading at 48.6850.

Coming back in equities, in Japan, equities gained for the second day in a row on Thursday. The regional markets rose sharply on short covering, led by automakers, exporters, shipping companies and construction and machinery stocks linked to the Chinese-economy. Japanese Nikkei 225 Stock Average index advanced 142.53 points, or 1.95%, to 7,433.49, while the broader Topix added 9.51 points, or 1.30%, to 741.55.

On the economic front, combined pretax profits at Japanese companies plummeted 64.6% on the year to 5.05 trillion yen in the October-December period of 2008 to mark the fourth straight quarter of decline, according to data released Thursday by the Ministry of Finance.

In Mainland China, shares markets closed the day higher than the previous closing as a 6-decade-high fiscal deficit budget was announced. The benchmark Shanghai Composite Index rose 1.04% or 22.97 points to close at 2221.08. The Shenzhen Component Index was up 0.18 %, or 14.59 points to 8242.28.

Chinese Premier Wen Jiabao announced at the opening of the parliament's annual session on Thursday morning a 950 billion Yuan (139.1 billion U.S. dollars) deficit budget, which was close to 3 percent of the country's gross domestic product (GDP).

The deficit budget is nearly three-fold of the previous record high deficit, which is 319.8 billion Yuan in 2003, but economists said it remained an expansion in a safe range and it would be necessary to spend even more if the country's economic growth further weakened in the second quarter of this year. The total fiscal deficit in 2008 was only 180 billion Yuan.

In Hong Kong, stock markets in Hong Kong turned lower, after ending the four days of losing streak on yesterday. The early gains were wiped out after Chinese Premier Wen Jiabao failed to announce new stimulus measures in a key address, dealers said. Wen said that he was confident China would still achieve growth of about 8% this year, but did not announce fresh measures on top of the 4 trillion Yuan or HK$4.53 trillion stimulus plan unveiled last year.

The Hang Seng Index ended slumped by 119.91 points, or 0.97%, to 12,211.24 - its lowest close since 27 October 2008 when market closed at 11015.84. The Hang Seng China Enterprise Index, which tracks H shares of Chinese companies, declined 47.62 points, or 0.69% to 6,900.75

In Australia, Stock market in Australia snatched its four days of losing streak, ushering an improvement in manufacturing index of China and a triple-digit gain on Wall Street overnight. Commodity and oil prices also climbed higher, while gold prices staged a modest bounce after falling for eight days. Australia’s market regulator extended a ban on the short selling of financial securities until 31 May 2009 supported the gains.

The benchmark S&P/ASX200 gained of 22.10 points or 0.7% ending the day at 3,188.40 – first positive closing since 26 February 2009. The broader All Ordinaries added 22.9 points or 0.7% closing at 3,148.80 – recovering from the lowest close since August 2003.

In a market related news, the Australian Securities and Investments Commission has extended the ban on short selling of financial stocks in place to 31 May 2009 in order to ease selling pressure on bank and investment stocks amid the global financial crisis. The ban was imposed on 22 September 2009, amid sharp drops in global banking stocks as the financial crisis gathered pace. Regulators in the US and UK imposed similar bans at the time and have since lifted them.

In New Zealand, share market continues its upward journey with the benchmark index up almost 1%. At the closing bell, the benchmark NZX50 advanced 0.89% or 22.058 points to close at 2491.401. The NZX 15 rose 1.14% or 52.893 points to 4709.409.

On the economic front, New Zealand’s seasonally adjusted total wholesale trade sales decreased 2.3% ($526 million) for the December 2008 quarter. This is the second consecutive quarterly fall in total sales, after a 1.0% ($237 million) decrease in the September 2008 quarter. Part of the sales decrease this quarter was due to a reclassification of some activity from primary product food wholesaling to manufacturing.

The largest contributors to this quarter's decrease were falls in metal and mineral wholesaling, down 19.1% ($197 million); electrical and electronic equipment wholesaling, down 11.4% ($121 million); and primary product food wholesaling, down 5.0% ($100 million).

Meanwhile, the economic downturn continues to impact on new vehicle sales in New Zealand with February passenger car registrations of 3,795 down 28% in January and also down by a massive 38.5% in February 2008. According to the motor industry association, commercial vehicle registrations of 1,263 fared slightly better with this number up on January but down 37% on the same month last year.

In South Korea, stock market closed the marginally lower, snapping its two days of gains, as banks stocks tumbled due to their exposures to ailing shipbuilders. The Korea Composite Stock Price Index decreased by 1.08 point or 0.1% closing the day at 1,058.18.

On the economic front, South Korea's export-based economy is continuing to suffer due to the global financial crisis and ensuing recession, but the government will use all possible measures to help the nation make a turnaround, Seoul's finance minister said today.

Adding more to the gloom, South Korea's vehicle production skidded 15.2% in February as a global recession ravaged demand, an industry group said Thursday. Production of cars, trucks and buses dropped to 237,356 vehicles last month, marking the ninth consecutive monthly decline, according to statistics released by the Korea Automobile Manufacturers Association

In another development, credit card spending in South Korea slowed sharply in the first two months of the year as consumers tightened their belts amid an economic downturn. The Credit Finance Association said that the nation's total credit card bills stood at 47.99 trillion won ($31.2 billion) in the January-February period, up 5.2 percent from the same period last year. The annual increase rate was 9.1 percent for December and 18.1 percent for all of 2008, it said. The drastic slowdown in the use of plastic comes as a big blow to credit card companies that are suffering from a surge in overdue bills stemming from the slumping economy.

In Philippines, the stock market continued to take an uphill for the third consecutive day, overshadowing the dismal inflation figures, buoyed by the positive sentiments of investors, ahead of the monetary policy meeting of the Philippines monetary board today. The benchmark index PSEi soared 2.03% or 38.38 points to 1,924.30, while the All Share index climbed 1.76% or 21.40 points to 1,233.84

In Taiwan, stock market travel faster on the road of recovery, as after a Wall Street rally and as China's stimulus package triggered strong buying in tourism issues including hotel operator Formosa Hotel. The main Taiex share index continued upward momentum as it added 95.78 points or 2.11% at 4,637.20, posting the highest closing since 7 January 2009 when market spurted to 4789.84

On the economic front, Taiwanese businesses are expected to continue to reduce their work forces in the second quarter of this year, after the number of jobs in the economy fell by a net of nearly 120,000 over the previous two quarters. According to survey results released by the Council of Labor Affairs (CLA) conducted during 9-23 January among 3,025 businesses with 30 employees or more.

In another economic release, according to the statistics compiled by the ITRI (Industry & Technology Intelligence Services) of the Department of Industrial Technology, under Ministry of Economic Affairs, despite of the Big Three automakers teetered, with Saab also filing for bankruptcy and Opel feeling insecure due to GM`s woes, and the construction sectors in the USA and Spain reportedly battered, the hand tool makers in Taiwan still managed to turn out products valued at NT$59.26 billion or US$1.7 billion in 2008, a 0.4% growth, with its exports, however, dropping slightly by 0.7% annually to NT$55.7 billion.

Though hand toolmaker are showing some profits it should come as no surprise that Taiwan’s automotive industry including both assembled vehicles and auto parts is shifting into lower gear. In the fourth quarter of 2008, output in the industry plunged by 14.7% from the same period of 2007 to NT$88.28 billion US$2.59 billion, according to the government-sponsored Industry & Technology Intelligence Services of the Industrial Economics & Knowledge Center (IEK-ITIS) under the Industrial Technology Research Institute.

In India, a surprise cut in policy rates by the Reserve Bank of India (RBI) failed to lift spirits on the bourses with the Sensex tumbling to its lowest level in more than four months. Sustained selling by foreign funds, weak rupee and weak European markets weighed on the sentiment.

The BSE 30-share Sensex closed down 248.57 points, or 2.94%, to 8,197.92. At the day's low of 8,166.97, the Sensex lost 279.52 points in mid-afternoon trade; it’s lowest since 27 October 2008. The S&P CNX Nifty was down 68.50 points, or 2.59%, to 2,576.70.

Elsewhere, Malaysia's Kula Lumpur Composite index was up 0.27% or 2.31 points to 869.24, while Indonesia’s Jakarta composite decreased by 1.316 points or 0.10% to 1,288.07. In Thailand, the Thai Stock exchange fell 0.75 points or 0.18% to 417.11.

In other regional market, European shares declined on Thursday, as oil producers gave back some of the previous session's sharp gains, with interest rate decisions from the European Central Bank and the Bank of England on tap later in the session.

On a national level in Europe, the U.K. FTSE 100 index dropped 0.6% to 3,622.84, the German DAX 30 index declined 1% to 3,849.43 and the French CAC-40 index fell 0.6% to 2,660.19.