Foreign Investors Prefer Japan and India to China, BYD Earnings Soar

Arjun Pandit
30 Jan, 2024
Mumbai

Market indexes in Asia diverged as foreign investors rotated out of stocks in China into Japan and India.

The Nikkei index increased 0.2% to 36,089.38 and advanced for the second day in a row this week following the gains on Wall Street in New York.

The unemployment rate in December eased to 2.4% from 2.5% in the previous two months, and investors are looking ahead to the release of retail sales, industrial production, and consumer confidence data later in the week.

Advanced semiconductor-related stocks were among the leading gainers in Tuesday's trading.

Advantest, Disco, and Renesas Electronics gained between 1% and 3%.

Foreign investors have been increasing their holdings in Japan in the hopes that the revamped individual tax-free savings plan will attract more domestic investors to the stock market after three decades of losses.

Foreign investors added about 384 billion yen worth of Japanese stocks, and domestic retail investors sold 185.5 billion yen of Japanese stocks in the period between January 15 and 19, according to the data available from the Tokyo Stock Exchange.

The Nikkei index is trading at about 15 times the estimated earnings of index-member Japanese companies.

Elsewhere in the region, the KOSPI index in Seoul added 0.1% to 2,504.60, and the ASX 200 index in Sydney advanced 0.3% to 7,600.20.

 

Selling Resumes on Chinese Stock Exchanges

Indexes in mainland China and Hong Kong resumed their slide amid persistent selling by foreign investors and protracted weakness in the property market.

Foreign investors continue to sell China stocks on the worry that the government may not be able to provide sustained reforms and stimulus to support financial markets amid a weakening macroeconomic backdrop and worsening tensions with the U.S.

The weak support from the government and restrained consumer spending growth also stoked fears of weak corporate earnings growth.

China's official estimate of the manufacturing industry is likely to show on Wednesday a contraction for the fourth month in a row in December.

The CSI 300 index in Shanghai declined 1% to 3,270.66, and the Hang Seng index in Hong Kong dropped 2% to 15,762.04.

The Hang Seng index has lost about 7.5% this month, trailing only to the worst start of the year at 10% in 2016.

Market sentiment was dented after BYD, the largest electric vehicle maker in the world, estimated an 86% surge in profit in 2023 but fell short of investor expectations.

BYD fell 5.7% to HK$175.50 and dragged down Li Auto by 1.9% to HK$107.20.

Other leading tech stocks also declined, reflecting weak market sentiment.

Alibaba Group, Tencent, Baidu, and Meituan declined between 2% and 3%.

 

India Stocks In Holding Pattern, Crude Oil Refiners and Exporters Face Houthi Reality

Stocks in Mumbai lacked direction in early trading as investors digested a fresh batch of earnings and looked forward to the release of the interim budget later in the week.

The Sensex and the Nifty indexes traded in a tight range around the flatline after Bajaj Finance reported a strong rise in earnings but fell short of market expectations.

Aditya Birla Sun Life, ITC, NTPC, and Piramal Enterprises met or exceeded investor expectations.

Tensions in the Red Sea continue to dominate crude oil and refined crude products trading as shippers divert cargo away from the troubled waters.

The Yemen-based Houthi group's missile attack in the Red Sea set on fire an oil cargo ship owned by one of the largest commodities trading firms, Trafigura, on Saturday.

Moreover, India's diesel shipments to Europe are facing difficulties because all shipments travel through the Red Sea lanes.

European countries are relying on diesel shipments from India and Saudi Arabia to meet their daily shortfall of 650,000 barrels.

India's diesel exports are taking a hit because of the higher freight costs and longer delivery time to the region, and European customers are switching supplies from the U.S.

At the same time, Middle East suppliers are forced to divert shipments around South Africa to Europe, lengthening delivery times by two weeks and increasing freight costs by at least 50%.

Facing higher shipping costs to Europe, Middle East crude oil suppliers are offering discounts to refiners in India and China.

The largest diesel exporter, Reliance Industries, declined 1.5%, but ONGC, Mangalore Refinery, Hindustan Petroleum, and Bharat Petroleum jumped between 2% and 4%.

The Sensex index decreased 57.84 points to 71,883.73, and the Nifty index rose 22.60 points to 21,760.20.

On the Mumbai stock exchange, 281 stocks traded at their 52-week highs and 9 stocks traded at their 52-week lows.

Bajaj Finance declined 4.4% to ₹6,892.50 after the financial services company reported a surge in quarterly profit and revenue but missed investor expectations.

Net interest income in the December quarter jumped 29% to 7,655 crore, and net profit jumped 22% to 3,639 crore from a year ago, respectively.