Asia Pacific Market: Stocks up on Greek bailout optimism

Asia Pacific share market closed mostly higher on Tuesday, 23 June 2015, echoing gains on Wall Street and in Europe in overnight trading on growing investor optimism that Greece will eventually reach an agreement with its creditors.

Market participants are optimistic about an agreement between Greece and its creditors after European leaders held an emergency summit on Monday. European leaders agreed to step up talks to secure a breakthrough and end a standoff over aid for Greece before a debt payment is due June 30. A key sticking point in a deal is the rate of value-added tax, with the proposed target for 2016 short of creditor demands, according to two European Union officials.

European Commission President Jean-Claude Juncker reportedly said yesterday, 22 June 2015, that he is convinced an agreement between Greece and its international creditors over the country’s bailout program would be finalized this week.

Among Asian bourses

Australia market extends gain

The Australian share market closed higher for third straight session, as investor confidence strengthened on tracking rally on the Wall Street and in Europe overnight after growing hopes of a debt deal between Greece and its creditors. . Creditors have suggested for the first time that a deal to avert bankruptcy was in sight after Athens submitted a new proposal that made a significant concession on pension cuts. All of the sectors finished higher, with health and telecommunications leading the standouts. The benchmark S&P/ASX 200 Index advanced 74.10 points, or 1.32%, to 5684.30, while the broader All Ordinaries Index gained 68.30 points, or 1.22%, to 5671.40.

Shares of banks and financial advanced on the Greek optimism. Westpac Banking Corp rose 1.8% to A$33.70, Australia & New Zealand Banking Group 1.6% to A$33.43, National Australia Bank 1.9% to A$34.40, and Commonwealth Bank of Australia 2.1% to A$86.76.

Travel agency Flight Centre slumped 13.6% to A$37.51 after it warned its earnings for the year through June would be lower than previously forecast due to slower-than-normal sales growth and discounting. The company said it expected its pre-tax underlying profit to be between A$355 million and A$365 million for the year to June 30, well off its previous forecast of A$360 million to A$390 million.

Nikkei up 1.9%

Japanese share market finished the session higher, echoing gains on offshore markets in overnight trading on growing investor optimism that Greece will eventually reach an agreement with its creditors. A slightly weaker yen also supported the advance. The Nikkei Stock Average escalated 381.23 points, or 1.87% to 20809.42, its highest closing level since 12 April 2000. The Topix index of all Tokyo Stock Exchange First Section issues jumped 1.69%, or 27.79 points, to close at 1676.40. Shares of financial players advanced the most in Tokyo, with top lenders leading the rally. Mizuho Financial Group climbed 4.6% after company executives hinted during a shareholder meeting that the company may boost profits by selling off some of its vast trove of strategically held shares. Mitsubishi UFJ Financial Group added 2%, Dai-ichi Life Insurance up 3.4%, and Nomura Holdings up 2.5%.

Export-related stocks were also up, thanks to slightly weaker yen, with the greenback changing hands for 123.41 yen, bouncing back from its 122.90 yen level at the previous Tokyo stock close. Among blue chips exporters, Casio Computer Co added 4.1%, Nintendo Co rose 4.8%, and Honda Motor Co climbed up 2.1%. Shares of Sony Corp. rose 2.6% as the company said it would begin selling a new PlayStation 4 game console with a massive 1 terabyte of storage. Softbank Corp added 1.5% amid news of its plans to launch a solar-power joint venture in India with about $20 billion.

Apparel maker Onward Holdings and electronics retailer Laox each added 5.2% after the pair announced plans to establish a joint venture in September to generate sales from the rising number of foreign tourists to Japan–in particular Chinese middle-class consumers. In 2014, foreign tourists increased 29% to 13.41 million, generating sales of over Y2 trillion, up 43%, according to government data.

Shin-Etsu Chemical rose 3.8% after a JPMorgan Securities Japan upgrade to Overweight from Neutral, citing undervaluation and the firm’s strong net cash position.

Mitsubishi Chemical Holdings added 6.3% after a Morgan Stanley MUFG Securities upped its target price by 36% to Y950, projection a larger-than-expected rise in profits in the current FY.

China market ends 2.2% up after volatile ride

Volatility ruled the Mainland China share market, with the key bourses falling nearly 5% at one point in the morning before finishing in the green territory. After falling 13% last week, the Shanghai Composite Index fell as much as 4.8% intraday, before finishing up 2.2% at 4576.49. The Shenzhen Component Index gained 2.04% to close at 16,045.99 points. The ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, rose 2.38% to end at 3,393.94 points. Mainland markets were closed Monday for a holiday.

The rebound was backed by fresh buying from local and foreign investors who took heart from reports by domestic state-run media that the bull run isn’t over. Meanwhile, expectations of further easing from the People’s Bank of China weak manufacturing data also supported the advance.

Earlier in the session, the Shanghai bourse shaved off as much as 214 points to hit its lowest level since May 29 following the release of China’s flash HSBC/Markit purchasing managers index (PMI). The preliminary HSBC China manufacturing purchasing managers’ index came in at 49.6 compared with a final reading of May of 49.2. A reading below the 50-level marks indicates contraction.

Total of nine out of ten SSE industry groups closed up, with consumer staple issue being top gainer, up 3.9%, followed by industrials (up 3.7%), financials (up 3.5%), energy (up 3.3%), healthcare (up 3.1%), utilities (up 2.3%), materials (up 1.2%), information technology (up 0.3%), and consumer discretionary (up 0.1%). The telecommunication service issue declined 0.6%.

Hong Kong market rises 0.93%

The Hong Kong stock market closed sharply higher, propelled by hopes for a resolution to Greece’s debt negotiations and on tracking intraday reversal of mainland market. The benchmark index opened slightly firmer and soared more than 300 points at one stage on hopes of the China central bank cut of reserve requirement ratio (RRR). The Hang Seng Index advanced 252.61 points or 0.93% to finish at 27333.46, off an intra-day high of 27406.41 and day low of 27008.51. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, added 225.79 points, or 1.69%, to 13609.47 points. Turnover increased to HK$136 billion from HK$90.6 billion on Monday.

Shares of utilities players were top gainers in the Hong Kong market, with Huadian Power rising 6.2% to HK$10.54 after Macquarie Research expects asset injections for the next three years. Among other utilities stocks, CR Power (00836) jumped 3.8% to HK$21.7. Huaneng Power (00902) shot up 3.9% to HK$10.54.

Financial players were higher on expectations of RRR cut. Both BOCHK (02388) and Bank of China (03988) added 3% to HK$33.25 and HK$5.4. ICBC (01398) put on 2.8% to HK$6.63. China Merchants Bank Co climbed 4.8% to HK$24.25, with the lender announcing Monday night its first employee stock-incentive plan, selling as many as 434.8 million Shanghai-listed shares to employees.

Railway-construction stocks rallied after Chinese Vice Premier Zhang Gaoli said on Monday during his visit to Lithuania that China hopes to participate in building rail lines in the Baltic region. Also helping the sector was China Railway Group recent signing of an agreement with Russia’s state-owned JSC Russian Railways to design a high-speed line in Russia. China Railway jumped 4% to HK$8.81. China Communications Construction Co jumped 3.9% to HK$12.26, China Railway Construction Corp 3.7% to HK$12.76, and CRRC Corp 5.1% to HK$12.40.

Sensex registers modest gains

Gains in index heavyweights HDFC, ITC and L&T and state-run banks helped key benchmark indices register modest gains. B The overall movement for the benchmark indices was within a relatively narrow range during the trading session. he barometer index, the S&P BSE Sensex, was provisionally up 76.29 points or 0.28% at 27,806.50.

Shares of public sector banks edged higher after Finance Secretary Rajiv Mehrishi reportedly said in an interview to a business TV channel that the government plans to inject about $3 billion into state-owned banks this fiscal year and potentially $6 billion next year to help recapitalise the sector and allow it to meet Basel III rules. Cement stocks edged higher.

Meanwhile, Japan headquartered telecommunications and Internet major SoftBank Corp. (SoftBank), leading Indian business conglomerate Bharti Enterprises (Bharti) and Taiwan-based top design and manufacturing services provider Foxconn Technology Group (Foxconn) yesterday, 22 June 2015, announced the setting up of a joint venture under the name SBG Cleantech to promote renewable energy projects in India. SoftBank Chairman & CEO Masayoshi Son and Bharti Enterprises Chairman Sunil Bharti Mittal reportedly said at a news conference in New Delhi yesterday, 22 June 2015, that the joint venture would aim to generate 20 gigawatts of electricity, which would translate to around $20 billion worth of investments.

Foreign portfolio investors (FPIs) bought Indian shares worth a net Rs 651.31 crore during previous trading session, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 94.03 crore during previous trading session, as per provisional data.

Elsewhere in the Asia Pacific region: Taiwan’s Taiex index rose 0.53% to 9391.14. South Korea’s KOSPI rose 1.27% to 2081.20. New Zealand’s NZX50 ended virtually flat at 5772.13. Singapore’s Straits Times index added 0.74% at 3339.78. Malaysia’s KLCI declined 0.34% to 1726.86. Indonesia’s Jakarta Composite index fell 0.44% to 4937.65.


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