Asia markets close mixed as China shares turn higher
Asian markets closed mixed Friday after swinging between gains and losses following early volatility in Chinese shares.
The Shanghai Composite was up 2.17 percent after trading down as much as 1.89 percent and up as much as 3.32 percent shortly after the market open. The Shenzhen Composite was up 1.49 percent, while CSI 300 index ticked up 2.16 percent. All three indexes see-sawed wildly from positive to negative in the first 30 minutes after trade started. Hong Kong’s Hang Seng Index rose 0.64 percent.
Elsewhere, Australian markets initially tracked China gains, but quickly returned to negative territory, with the ASX 200 closing down 19.54 points, 0.39 percent, at 4,990.80. Australia saw its dollar fall below the closely watched $0.70 support in overnight trade, but the Aussierecovered to around $0.7055 in Asian hours. The dollar-yen pair recovered to trade at 118.31 after falling as low as 117.47.
Japan’s Nikkei 225 was flat in late afternoon trade before slipping to close down 69.38 points, or 0.39 percent, at 17,697.96. Korea’s Kospiadded 13.29 points, 0.7 percent, to 1,917.62. In New Zealand, the main index closed down 0.89 percent.
Traders were keeping a close eye on Chinese stocks, which were suspended from all trade Thursday after the CSI 300 tumbled more than 7 percent, triggering the market’s newly-implemented circuit breaker for a second time this week after only around 15 minutes worth of actual trading.
This led the China Securities Regulatory Commission (CSRC) to latersuspend the recently implemented market-calming system, a regulatory tool designed to limit how far stocks can fall.
Mizuho said China’s markets were due a “reflexive rebound as stretched positions are reversed.” But it added in a note Friday, “the greater uncertainty is how this week’s episode has damaged investor sentiment, and thus capital outflow pressures might linger on.”
Another factor on China shares’ radar was the expiry today of the selling ban on large investors in Chinese stocks. The ban, in place since July, prevented shareholders from dumping shares into the market. To prevent a sell-off, the CSRC issued new rules on Thursday to restrict major shareholders in listed companies to selling no more than 1 percent of a company’s shares every three months, in an attempt to stabilize markets.
The weakening of the yuan has also weighed on the market. Before trading began, the People’s Bank of China (PBOC) set its yuan mid-point at 6.5636 against the dollar after Thursday’s fixing guided the yuan lower at its fastest pace since August’s devaluation. On Thursday, the dollar was fetching 6.5926 yuan at the close of trade.
“Market volatility this week suggests that nobody really knows what the policy is right now. Or if the government itself knows or is capable of implementing the policy even if there is one,” DBS said in a currency note Friday. “The market’s message was loud and clear that more clarity and less flip-flopping is needed going forward.”
Oil rallies in Asian trade
Also helping to support the gains around the region, oil prices rallied during Asian trade with the West Texas Intermediate (WTI) futures up 2.04 percent at $33.95 a barrel. The globally traded Brent was up 1.99 percent at $34.42 a barrel. Overnight, prices for both futures tumbled to 12-year lows.
Energy plays around the region traded mixed, however, In Australia,Woodside Petroleum, Oil Search and Santos closed up between 3.48 and 4.67 percent. Chinese oil plays were also in positive territory, with Hong Kong-listed CNOOC, PetroChina and Sinopec up between 0.93 and 4.11 percent.
But Japanese energy plays Inpex and Japan Petroleum closed lower. Reports said Japan’s Economy Minister Akira Amari said the continued decline in oil prices, though not a good sign for the world economy, would improve Japan’s terms of trade. The country’s finance ministry said foreign reserves at the end of December ticked up to $1.23 trillion.
Gold slips down 0.54 percent
Gold miners appeared to continue to benefit from market turmoil, with an uptick in share prices. Newcrest tacked on 1.52 percent and Alacer Gold rose 6.34 percent by the market close. Gold, a safe-haven investment during times of economic uncertainty, hit a nine-week high, with spot prices climbing up to $1,107.80 an ounce overnight.
But prices slipped in Asian trade by 0.54 percent at $1,102.6 an ounce after markets stemmed continued sell-off.
Meanwhile, Japan’s Fast Retailing saw its shares retrace some early losses to close down 2.33 percent after the company cut its full-year profit outlook to 180 billion yen ($1.5 billion) for the year through end-August. Reports said the company saw a 12 percent fall in December sales on year in its domestic Uniqlo outlets due to warm weather. Previous forecast estimated 200 billion yen in profit.
In South Korea, shares of heavyweight Samsung Electronics traded higher, rising 0.69 percent, despite the company missing expectations on its fourth quarter operating profits. The consumer electronics giant said its profits for the October-December quarter likely rose 15 percent on-year to 6.1 trillion won ($5.10 billion). A Reuters survey of analysts estimated that number to be at 6.6 trillion won.
Source: CNBC – Asia markets close mixed as China shares turn higher
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