Asian Markets shows Friday favor

Hang Seng, Nikkei keep losses as regional markets post weekly drop on Chinese concern

Stock market in Asian region edged higher on Friday, 21 August 2009, keeping a wary eye on volatile Chinese shares, ending the week on the sober note after a wild seesaw movement witnessed during the week.

On Wall Street, a better-than-anticipated reading on the Philadelphia Fed index helped stocks lock in a third consecutive day of gains as investors brushed off another unexpected rise in weekly jobless claims. The Dow Jones Industrial Average climbed 70.89, or 0.8%, to 9350.05, while the S&P 500 tacked on 10.91 points, or 1.1%, to 1007.37. The Nasdaq Composite edged up 19.98 points, or 1%, to 1989.22.

In the currency market, Japanese yen was lifted higher in Asian session today by news that China is setting rules to tighten bank capital requirements and made a new higher against dollar, but lacks follow through buying so far. Similar situation is found in dollar as the recovery earlier lacks sustainable momentum so far and recent consolidation is likely still in progress.

The Japanese yen strengthened against greenback and euro as Asian stocks dropped and China was said to be planning to tighten capital requirements for banks, boosting demand for Japan’s currency as a refuge. The Japanese yen was quoted at 93.57 per greenback, while 133.13 per euro on Friday.

The Hong Kong dollar was trading at HK$ 7.7512 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 trade, the Australian dollar dropped on Friday after investors sold out of the currency in response to reports suggesting Chinese authorities would slow lending among the country's banks. But the local currency staged a strong rebound late in the session after European markets opened to finish just shy of $US0.8300. At the local close, the dollar was trading at $US0.8295, down from Thursday's close of $US0.8310.

In Wellington trade, the New Zealand dollar stepped lower when risk aversion increased. The culprit this time was a report that China plans to tighten capital requirements for banks to curb the record lending that has fuelled a 60% rise in the nation's stock market. The speculation caused interest rate markets to rally and risk currencies to sell off, said Lloyd Cartwright, head of financial markets at Westpac Institutional Bank. At the time of closing, the NZ dollar was at US67.17c, down from US67.45c at the same time yesterday.

The South Korean won closed at 1,249.7 won to the U.S. dollar, down 2.8 won from Thursday's close as foreign investors shed the won on heightened risk aversion.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar gain against the US dollar as it was trading higher at NT$ 32.8980, up by NT$ 0.0680 from Thursday’s close of NT$32.9660.

In the commodity market, crude oil fell in New York, paring this week’s gains, after an unexpected increase in initial jobless claims in the U.S. raised concern that fuel demand may slow in the world’s biggest energy consumer.

Crude oil for October delivery fell as much as 88 cents, or 1.2%, to $72.03 a barrel in electronic trading on the New York Mercantile Exchange. It was at $72.48 at 2:42 p.m. Singapore time.

Brent crude oil for October settlement declined as much as 68 cents, or 0.9%, to $72.65 a barrel, on the London- based ICE Futures Europe exchange. It was at $73.05 a barrel at 2:42 p.m. Singapore time. The contract dropped $1.26, or 1.7%, to $73.33 a barrel yesterday.

Gold fell for the first time in three days after an unexpected increase in weekly U.S. jobless claims sent the dollar higher, eroding demand for bullion as an alternative investment. Silver was little changed. Gold futures for December delivery dropped $3.10, or 0.3%, to $941.70 an ounce on the Comex division of the New York Mercantile Exchange.

Coming back in equities, Asian markets closed mixed, but ended mostly lower for the week. Concerns that Beijing might be moving to tighten bank lending weighed on Hong Kong shares, though stocks traded on the Mainland ended higher, continuing a recent rebound after sharp losses so far this month. Japanese stocks ended lower Friday as the strengthened yen hurt exporters.

In Japan, the shares market dropped with benchmark indices touches three-week closing low on broad based selling pressure across the board on stronger yen and the US government decision to end cash-for-clunkers program. At the closing bell, the Nikkei 225 Stock Average index dropped 145.21 points, or 1.4%, to 10,238.20, meanwhile the broader Topix index dropped 11.25 points, or 1.17% to 947.34.

In Mainland China, share market surged after opening lower, boosted up by banks and financials after better than expected earning from Industrial & Commercial Bank of China and Shenzhen Development Bank. Shares of energy, materials, and industrials bounced after commodities and oil prices gained overnight and rekindled recovery sign. Properties spurted after China's new bank loans rebounded to about 500 billion Yuan in August after shrinking to 356 billion Yuan in July. Consumer staple and consumer discretionary sector surged on sign of government support for the sliding stock market.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, advanced 49.19 points, or 1.69% to 2,960.77, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, bounced 1.88%%, to 3,203.7. The Shanghai Composite index tumbled 86.2 points, or 2.83%, while the CSI 300 Index has lost 140.76 points or 4.2%, for the week ended Friday, 21 August 2009.

On the economic front, the State Administration of Foreign Exchange said that China current account surplus of $130 billion in the first half of 2009, down 32% on year due to slumping exports and increasing outbound investments.

China's trade surplus in the first six months was $96.9 billion, down $2.1 billion from the previous year, with exports plummeting 21.8% during the period, according to the General Administration of Customs. Meanwhile, foreign direct investment in China shrank 17.9 % to $43 billion in January to June due to the global economic downturn.

In Hong Kong, benchmark index retreated as profit taker cashed in by selling major heavyweights after strong gains in the previous session and a disappointing second quarter performance from China Mobile. Energy sector shrunk with losses in heavyweight Sinopec, PetroChina, and CNOOC. Banks and financials fell as investors encouraged to locked gains on fears of a likely monetary policy tightening.

The Hang Seng Index dropped 129.84 points, or 0.64%, to 20,199.02, while the Hang Seng China Enterprise dived 54.11 points, or 0.47%, to 11,464.73. The Hong Kong benchmark Hang Seng Index surrendered 694.31 points or 3.32%, while Hang Seng China Enterprises Index succumbed 435.07 points or 3.66%, in the week ended Friday, 21 August 2009.

In Australia, the stock market dragged down by telecom heavyweight Telstra after a major shareholder sold a chunk of its stake. Lesser than expected earning and warning of further bad debt increase by Westpac Banks intensified selling pressure on other banks shares. Materials and resources tumbled after RIO reported a 65% drop in 1H earnings, below expectations. Consumer discretionary tumbled after Billabong International earning missed forecast.

At the closing bell, the benchmark S&P/ASX200 index tumbled 86.9 points, or 1.99%, to 4,290.6, meanwhile the broader All Ordinaries added 85.7 points, or 1.95%, to 4,305.7. The benchmark S&P/ASX200 index has lost 170.40 points or 3.82%, while the Broader All Ordinaries dropped 159.40 points or 3.57%, in the week ended Friday, 21 August 2009.

In New Zealand, stock market ended lower after witnessing flat start early today. Shares slipped as Telecom, the country's largest listed company, fell in early trading on the New Zealand stock exchange after the company reported its full year results negative. The share market registered its second consecutive decline to end week in the negative. The NZX50 was down 0.59% or 18.16 points to 3034.95. The NZX 15 declined 0.36% or 20.40 points to close at 5598.57

In South Korea, stocks ended higher, boosted by strong gains for auto and tech companies. Reversing falls in late trading, the benchmark Korea Composite Stock Price Index (KOSPI) climbed 4.59 points to close at 1,580.98.

In Singapore, the stock market tumbled after opening higher, dragged down by muted Asian peers and selling pressure on top banks and other blue chips shares. Meanwhile multi industries, construction, and manufacturing shares tumbled in line with market rally. China origin shares fell as investors encouraged to locked gains on fears of a likely monetary policy tightening. The blue chip Straits Times Index tumbled 14.71 points, or 0.57%, to 2,544.86.

In Taiwan, stock market finished the week lower as worries about a volatile Chinese market offset Taiwan's upbeat GDP data, with leading technology shares lower. The benchmark Taiex share index continued losing for the fifth session as it ended the session lower by 78.43 points or 1.16% in a day, closing the day at 6654.80, lowest closing since 13 July 2009 when market closed the day at 6530.82.

On the economic front, Taiwan’s economy will score a moderate growth of 3.92% in 2010, as export trade will jump 15% to serve as a major growth driver again, said Shi Su-mei, director general of budget, accounting, and statistics, yesterday (Aug. 19).

The Directorate General of Budget, Accounting, and Statistics (DGBAS), under the Executive Yuan, reported that the nation’s economy has bottomed out from the first quarter this year but will not regain positive growth until the fourth quarter, after five consecutive months of decline from the third quarter last year. It slightly revised upward its forecast for this year’s growth rate to negative 4.04%, from original negative 4.25%.

In Philippines, stock market was closed on the account of public holiday.

In India, broad-based buying propelled key benchmark indices to day's high in late trade in contrast to a subdued start. Revival of monsoon rains, gains in Chinese stocks, higher European markets and a rebound in US index futures triggered rally on the domestic bourses. The BSE 30-share Sensex was up 228.51 points or 1.52% to 15,240.83. The S&P CNX Nifty was up 75.35 points or 1.69% to 4,528.80.

Elsewhere, Malaysia's Kula Lumpur Composite index went up 0.03% or 0.36 points to 1163.79 while stock markets in Indonesia’s Jakarta Composite index ended the day higher at 2333.90.

In other regional market, European shares traded modestly higher on Friday as data fed into hopes for an improving economy. On a regional level, the U.K. FTSE 100 index advanced 1% or 46.91 points to 4,803, the German DAX index climbed 1.4% or 76.62 points to 5,388 and the French CAC-40 index rose 1.6% or 56.01 points to 3,561.