Alibaba Cancels Logistic Unit IPO, Nikkei at Record Level After Yen Drops to a 34-year Low

Arjun Pandit
27 Mar, 2024
Mumbai

Stock markets in Asia diverged as investors prepared for the Easter holiday on Friday and Monday. 

In thin trading, market indexes in Japan advanced, in China declined, and in India rebounded from losses in the previous sessions. 

In a holiday-shortened week, investors avoided taking new positions and awaited the release of retail sales, industrial production, and unemployment data in Japan on Thursday. 

Profits at Chinese industrial companies rose in the first two months of 2024, but investor confidence was weak after BYD issued a cautious outlook and Alibaba canceled its logistics unit's listing in Hong Kong. 

India's current account deficit narrowed sharply in the December quarter after foreign remittances and service sector surpluses expanded. 

 

Nikkei Soars to a New Record High After Yen Trades at a 34-year Low

Stocks in Tokyo rebounded and trimmed losses in recent sessions on the continued weakness in the yen. 

The yen dropped to a 34-year low of 151.96 against the U.S. dollar as traders ramped up bets that the Bank of Japan will hold rates steady and the U.S. interest rates will stay higher for longer, increasing the difference between the two interest rates.

The latest decline in the yen prompted Japan's Finance Minister, Shunichi Suzuki, to warn financial markets that the government may take steps to support the currency if the yen fails to reflect economic fundamentals. 

Suzuki's comments follow similar comments from Vice Finance Minister Masto Kanda a day earlier. 

Stocks in Tokyo advanced on the hopes that a weaker yen would drive an increase in earnings for exporting companies. 

The Nikkei 225 Stock Average rose 1.3% to 40,919.93, and the Topix index advanced 1% to 2,809.05. 

Tech stocks led the gainers, and Tokyo Electron, SoftBank, Advantest, and Screen Holdings rose between 0.2% and 0.4%. 

Financials traded mixed, and Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Financial Group gained between 1% and 2%. 

General trading groups, also known as Sogo Shosha,  Marubeni, Mitsui & Company, Itochu, Mitsubishi Corp., and Sumitomo Corp., advanced between 0.5% and 1.5%. 

 

BYD Outlook Weighs on China Stocks; Alibaba Cancels Logistic Unit IPO

Stocks in Shanghai and Hong Kong traded down after market anxieties were compounded by weak corporate earnings. 

BYD, the electric vehicle maker, reported strong financial results, but the December quarter earnings growth slowed to 18.7%, the slowest increase in the last eight quarters. 

Investors overlooked the electric vehicle makers' record annual 2023 earnings and focused on the cautious sales and earnings outlook in the current year and weak consumer demand. 

BYD fell 6.4% to HK$202.20, and Li Auto declined 3.2% to HK$117.80. 

Moreover, market jitters amplified after Alibaba Group was forced to shelve the listing of its logistics unit Cainiao in Hong Kong after weak investor demand. 

Alibaba announced its plans to acquire stakes held by minority shareholders in its logistics unit, and the company stressed its strategic importance. 

Alibaba Group, with 8.3%, the second largest constituent in Hong Kong's benchmark index, declined 2.2% to $68.70. 

In light trading, benchmark indexes drifted lower ahead of the Easter holiday break on Friday and Monday. 

The decline in market indexes was limited after profits at Chinese industrial companies rose 10.2% in the first two months of the year, the statistics bureau reported Wednesday. 

The rise in industrial profit followed the increase in industrial production in the period, supporting the case for a stronger-than-estimated economic recovery. 

The CSI 300 index fell 0.5% to 3,527.41, and the Hang Seng index dropped 0.6% to 16,512.92. 

 

India Indexes Advanced in Cautious Trading

Stocks in Mumbai inched higher, and bond yields held steady amid rising geopolitical tensions. 

The Sensex and the Nifty indexes advanced in early trading as investors set aside the worry of elevated inflation and global interest rate uncertainties. 

The Sensex index increased 0.3% to 72,670.55, and the Nifty index edged up 0.3% to 22,070.80. 

On the Mumbai stock exchange, 49 stocks traded at their 52-week highs and 45 stocks traded at their 52-week lows.

 

India's Current Account Deficit Narrowed After Service Surplus Expanded

India's current account deficit fell sharply in the December quarter after service exports soared, according to the latest update released by the Reserve Bank of India on Tuesday. 

The current account deficit in the December quarter narrowed to $10.5 billion from $16.8 billion in the corresponding quarter a year ago. 

The service export surplus expanded to $45.0 billion from $38.7 billion, driven by the expansion of software, travel, and business services. 

However, the international goods deficit was nearly unchanged at $71.6 billion compared to $71.3 billion a year ago, due to persistently elevated energy and gold imports. 

The secondary income surplus, which reflects remittances by Indians employed abroad, expanded to $29.3 billion from $28.5 billion. 

The primary income gap, which reflects investment income transfers, rose to $13.2 billion from $12.7 billion. 

In the financial account, foreign direct investment recorded a net inflow that rose to $4.2 billion from $2.0 billion, and foreign portfolio investment increased to a net inflow of $12.0 billion from $4.6 billion a year ago. 

Overall, India's current account deficit declined to 1.2% of gross domestic product compared to 2.0% in the corresponding quarter a year ago.