Asia-Pacific markets fall on profit taking

Asia-Pacific markets closed lower on Monday, October 31, 2011, with the Thomson Reuter Asia-Pacific index dropped 1.86% at 160.11 while the MSCI Asia index (excluding Japan) declined 1.02% at 497.91, as investors elected to cash in some profit after impressive rally prior week.

Asian pacific markets had risen sharply last week with the MSCI Asia Pacific index accumulated weekly gains of 7.5% on positive development in EU debt crunch solutions.



Profit taking pressure dominated the market since the start of the day as euphoria over the European debt agreement faded. While euro area leaders reached an agreement to leverage up the size of the European Financial and Stability Fund from EUR440 billion to EUR1 trillion and to recapitalize banks, and private investors also agreed to a 50% reduction in the value of their holdings of Greek debt after the EU summit on October 26, details of the plan will only be available in November.

Investor sentiment was also hit somewhat by a poor auction of Italian government debt. The latest debt auction of Italian 10-year bonds sold with a yield of above 6%, a new record high, reminded investors of the risk of a debt contagion to large eurozone nations, though the leaders of the eurozone earlier reached agreement on a plan to tackle the crisis.

US economic reports were mixed and had little impact on trading. US personal spending increased 0.6% in September, but personal income only rose 0.1%. The report also showed that US inflation cooled. The Fed's preferred inflation gauge, which excludes food and fuel costs, was little changed in September from the prior month.

Volume was relatively lighter as some investors retreated to the sidelines cautious ahead of a policy meeting of the U.S. Federal Reserve, as well as a key Group of 20 meeting later this week.

Back to countries, the Japanese sharemarket erased more than that accumulated during midmorning in the afternoon trade, weighing the benchmark Nikkei Stock Average down by 0.69% to 8,988.39, as investors opted for profit taking on renewed concerns about companies earnings after disappointing first half earning forecasts from major blue chips. The Nikkei225 index has accumulated impressive 3.31% gains in October after erasing 2.85% in September and falling in August.

The Nikkei225 index briefly advanced 100 points to 9,152 in midmorning trading after the Japanese Ministry of Finance intervened unilaterally in the foreign exchange market on Monday to curb the yen's strength. But upward momentum failed to hold longer amidst lingering concerns the Japanese currency will continue to strengthen and also ahead of upcoming corporate earnings reports. Many investors remain skeptics that yen to depreciate further amidst lingering speculation that the U.S. will ease its monetary policy. A lack of fresh incentives is also dampening market sentiment.

Japan Finance Minister Azumi confirmed intervention in a unilateral way, though without giving any details on the amount used. Azumi said he would act against speculation and plans to continue intervention until he is satisfied. Today after falling a postwar low of 75.32 yen earlier today the correction started, the pair is back again above 79.00, printing 79.16 at the time of writing report. The yen weakened to 111.21 per euro.

Panasonic Corp dropped 2.1% to 809 yen after the electronic company forecasted to suffer a 300 billion yen net loss in the year to March 2012, despite an initial forecast of net profit of 30 billion yen for the current fiscal year.

Daiichi Sankyo Co. sank 3.5% to 1,536 yen after the drug maker said its six month ended September fell 29% to 37 billion yen and revised downgrade full year revenue forecast of 3.9% decline to 930 billion yen from, compared with a July forecast of 970 billion yen.

All Nippon Airways Co. closed flat at 237 yen. The airline carrier cut its full-year sales forecast about 1% and planned to deepened cost cuts this fiscal year by 1 billion yen to compensate for an expected decline in sales. Airline carrier said its net income in the six months ended Sept. 30 jumped 72% to 22.9 billion yen.

Astellas Pharma Inc. ended 0.6% down at 2,887 yen. The drug maker reported net income of 51.3 billion yen in the six months ended Sept. 30.

Chubu Electric Power Co. rose slight 0.3% to 1,435 yen as the utility company reported net income for the six month was lesser than earlier estimation. Chubu reported a net loss of 19 billion yen in the six months ended Sept. 30, narrower than its loss estimate of 22 billion yen.

In Australia, the Sydney stockmarket ended last trading session of the October slight lower, with the benchmark All Ordinaries Index down 1.15% at 4,360.50 on Monday, October 31, 2011, as investors moved to take advantage of the sharp climb of domestic market in the previous week and stellar performance in October. The All Ordinaries index has accumulated impressive 4.9% gains previous week. Meanwhile index has accumulated 7.13% gains in October, registering first monthly gain since March 2011.

Australia market commenced trading tad lower, with the All Ordinaries index fell as low as 4,378.10 within couple off minutes after starting a day at 4,408, lower from prior day closing of 4.411.40. Though managed to recover looses during noontime, topping 4,416.60, but failed to hold and again sliding back during late afternoon to settling at 4,360.50 as lack of fresh incentives dampening market sentiment.

The China stockmarket ended lower, with the Shanghai Composite index declined 0.21% at 2,468.25, registered first fall in six sessions in row, as investors elected to cash in some profit after the benchmark Shanghai Composite index had gained 6.74% prior week. In addition, concerns on companies' shrinking profits also triggered risk aversion selloff.

The Chinese index has registered first monthly gains of 4.62% in four months in row. The Shanghai Composite had fallen 8.11% in September, 4.97% in August, and 2.18% in July.

Profit taking pressure continued since the start of the day amid lingering economic uncertainties after Premier Wen Jiabao said the government should “firmly” maintain property curbs. Most of sectoral induces dived into the sea of red, with banks and financials, realty, steelmakers, and rail-linked stocks led retreat.

Rail related stocks tumbled after China's two largest train makers, China Railway Group and CNR posted disappointing third quarterly performance, after July's deadly train collision inspired the country to put the brakes on rapid development of its railways.

China CNR Corp fell 0.8% to 5.22 yuan after the train maker reported a 12.98 decline in net profits to 589.29 million yuan in the third quarter, compared with an upsurge of 145.03%, or 1.6 billion yuan in the first half of the year.

China Railway Group fell 1.9% to 3.12 yuan after builder of train lines said net profit for the quarter ended September slumped 49% to 1.14 billion yuan, citing mainly due to 15-fold jump in borrowing costs.

Train maker CSR Corp recouped morning losses to finish 0.6% higher at 5.48 yuan. Company reported net profits rose 9.66% year-on-year to 772.61 million yuan for the third quarter ended 30 September 2011, compared with an increase of 85.08%, or 2.04 billion yuan, in the first half of this year. For the first nine months of 2011, net profit rose 55.7% to 2.82 billion yuan.

Materials and resources went lower on weaker earnings report from steelmakers. Baoshan Iron & Steel dropped 1.7% to 5.27 yuan after steelmaker said third-quarter profit slid 51% to 1.24 billion yuan as increases in raw- material costs outpaced product-price gains.

Angang Steel Co sank 1.1% to 5.32 yuan after the steelmaker posted a net profit of 19 million yuan for the three months ended 30 September 2011, as compared to a loss of 178 million yuan for the same period of 2010. For the first nine months of 2011, the net profit plunged 90.7% to 239 million yuan.

In Hong Kong, the benchmark Hang Seng index dropped 0.77% to 19,864.87, registered first fall in seven trading sessions, as investors elected to cash in some profit after the index had gained 11.06% prior week. The HSI registered first monthly gains of 12.92% in three months in row. It had fallen 14.33% in September and 8.49% in August.

The HK Government announced today that expenditure for the period April to September 2011 amounted to HK$156.3 billion and revenue HK$150.9 billion, resulting in a deficit of HK$5.4 billion.

The Hong Kong Monetary Authority announced today that the total assets of the Exchange Fund amounted to HK$2,415.6 billion as at 30 September 2011. At the end of September 2011 the total assets of the Exchange Fund, at HK$2,415.6 billion, were HK$37.1 billion lower than at the end of August 2011. Foreign currency assets decreased by HK$14.8 billion and Hong Kong dollar assets decreased by HK$22.3 billion.

The Hong Kong Monetary Authority announced today total deposits with authorised institutions dropped 0.2% in September. As the contraction in savings deposits exceeded the expansion in demand and time deposits, Hong Kong-dollar deposits fell 0.3% during the month. Foreign-currency deposits also shrank slightly by 0.1% in September, although yuan deposits grew by 2.2% to Rmb622.2billion at the end of September.

In India, In India, the Bombay Stock Exchange SENSEX30 closed 0.56% down at 7,704.25, despite staging a short recovery during midmorning, as weak European stocks hitting sentiment adversely. Metals, oil and gas, and auto stocks saw most of the selling.

Interest rate sensitive banking stocks were higher after RBI hinting of a pause in interest rate hikes after raising its key policy rate by 25 basis points at a policy review last week. Shares of FMCG giant Hindustan Unilever jumped on good Q2 results. BPCL fell after poor Q2 results. Index heavyweight Reliance Industries edged lower. Wipro gained after forecasting 7.91% to 10.07% sequential revenue growth from IT services business in Q3 December 2011. Auto stocks fell on profit taking.

Among other Asian bourses, the Malaysia KLSE increased 0.68% to 1,491.89. The New Zealand NZX added 0.21% to 3,332.56. Singapore Strait Times index fell 1.72% to 2,855.77. Indonesia Jakarta Composite index was down 1.02% to 3,790.85. The South Korea KOSPI fell 1.06% to 1,909.03. The Taiwan TAIEX index dropped 0.37% to 7,587.69.