Japan Declines, Bucks Overall Trend in Asia

Ivaylo
12 Jul, 2007
New York City

Asian markets finished higher Thursday with bid activity in the metal sector boosting stocks in South Korea and HK to records highs. Worries over U.S. subprime interest rates held Japan, which bucked the overall upward trend. In China, B shares of foreign-currency stocks pushed the market higher, while Sydney ended up on strong performance from miners.

[R]8:30AM Asian markets advance with South Korea, HK leading advancers, Japan falls.[/R]

Tokyo finished lower Thursday as Japanese brokerages pulled the market down after Deutsche Bank lowered its stock-price forecast for Nomura Holdings. The Nikkei 225 Average ended 0.4% lower at 17,984. Nomura lost 4.8%, while other brokers followed suit like Daiwa Securities Group down 1.8%.

In Hong Kong, the Hang Seng Index advanced 0.9% to settle at 22,809. China Mobile added 3.7% after Citigroup upped the stock to buy from hold. China Life Insurance Co., the biggest insurer in the country, gained 1% in Hong Kong. Ping An Insurance, the second biggest, added 4.2%.

South Korea also set a fresh high. The Kospi Index gained 1.1% to finish at 1,910. The stocks gained despite the fact that the central bank hiked its key interest rate to a six-year high of 4.75%. Samsung Electronics gained 1.7% and. Hynix Semiconductor Inc added 1.6%. Posco, steel producer, gained 3.6% on hopes of strong second-quarter earnings.

The Shanghai Composite Index in China advanced 1.3% to clsoe at 3,916. Huaxin Cement''s B shares rallied by the daily 10% limit, and Dahua Group Dalian Chemical Industry was also limit-up, soaring 10%.

In Australia, the benchmark S&P/ASX 200 rose 0.6% to 6,363. Rio Tinto rose 1% to settle at record high after the company said it had agreed to buy Alcan for $38.1 billion, outbidding New York-based Alcoa $27.7 billion hostile bid. BHP climbed 2.4%.

[R]7:30AM NY – 6:30PM Mumbai Sensex advances 181 points, Hindalco and Reliance Energy rally, IT shares dip.[/R]

The Sensex on BSE finished 181.42 points higher Thursday, or 1.22%, at 15,092.04.

The Sensex opened 53 points higher and trading was steady throughout the session. The benchmark index advanced to an intra-day high of 15,112.22 by late afternoon, and traded within a range of 148 points. Trading was not characterized by any volatility.

The market-breadth was very strong as there were two advancers for each decliner. From 2,713 stocks that were traded on the market 1,793 stocks advanced, 858 declined and 62 were unchanged. Of the 30 stocks in the Sensex, 25 advanced, while the rest declined.

The turnover on BSE soared to Rs 6,080 crore, much higher Rs 5,496 crore on Wednesday. On NSE, the turnover was Rs 12,882 crore, also higher than Rs 11,183 crore on Wednesday.

Economic news

Industrial production in India slowed its growth in May on higher interest rates which hurt demand, while the strong rupee impacted exports negatively. Industrial production advanced 11% from a year earlier, which is lower compared with the revised 12.4% rise in April and also missed analysts’ expectations for an increase of 12%.

Most Active

GMR Infrastructure was the most active stock with a turnover of Rs 454 crore followed by DLF and Time Technoplast.

Advancers of the Day

Aluminium and copper large-cap Hindalco Industries surged 7% to Rs 166 on hopes of consolidation of global aluminum industry. Other metal stocks also advanced following the purchase of Alcan by Rio Tinto for $30 billion, suggesting further consolidation in the sector. Tata Steel gained 2.6% to Rs 672, Sterlite Industries was up 5.4% to Rs 643, and Sail added 4.7% to Rs 144.

Reliance Energy gained nearly 7% to Rs 668 as the company plans to invest Rs 60,000 crore to add 15,000 MW of power over the next five years which will improve the company’s generation capacity almost 17 times from 941 MW now.

BHEL ended up over 4% to Rs 1,641. Auto makers also rallied on fresh buying. Maruti Udyog advanced 2.7% to Rs 828, Tata Motors was up 1% to Rs 740 and Mahindra & Mahindra rallied 2.9% to Rs 803. Motorcycle producer Bajaj Auto advanced 3.1% to Rs 2,195.

Banks gained on the belief that there would be no interest rate hikes in the near future. State Bank of India advanced 1% to Rs 1,557, while private sector banks ICICI Bank gained 1.3% to Rs 967 and HDFC Bank surged 4.4% to Rs 1,201.

Decliners of the Day

Ambuja Cements led the decliners, down 1.2% to Rs 126, while ONGC lost almost 1% to Rs 893. IT large-caps underperformed with Infosys 0.4% lower to Rs 1,922 and Satyam dipped 0.3% to Rs 480. Larsen & Toubro was almost flat and finished at Rs 2,377.

[R]6:30AM European markets advance with Alstom and Rio Tinto leading stocks higher.[/R]

European markets advanced in mid-day trading on Thursday. All but four national markets were lower, the other 14 gained with the U.K. FTSE 100 gaining 0.2%, Germany DAX adding 0.3% and CAC 40 in France climbing 0.4%.

Alstom SA soared the most since April after the company, which is maker of power plants, announced that sales grew 27%, fueled by increased investment in electricity grids. Miners were also upbeat with BHP Billiton, Xstrata and Rio Tinto leading the gainers. Rio Tinto has successfully completed the $38 billion deal of buying out Alcan of U.S. After Motorola in the U.S. posted a quarterly loss, Nokia advanced on the presumption that the U.S. company has lost market share to Nokia.

In Germany, Abbott Laboratories fell nearly 3% after General Electric called off a deal to buy two preventative health-care businesses valued at $8.13 billon. Also in Frankfurt, Alcoa rose on hopes that it could become a bid target.

In London, Man Group gained after saying second-quarter sales were $3.8 billion as assets under management rose. Cadbury Schweppes declined. The world biggest confectionery company bought a Florida bottler to expand distribution in the southeastern U.S. Royal Dutch Shell slid after UBS downgraded the stock.

In France, Alstom rose after it posted stronger first-quarter figures. Another riser was Schneider Electric, maker of circuit breakers. The company must be compensated after the European Commission wrongly rejected a 2001 merger, a court ruled yesterday.

Advancers of the Day

Alstom rose 5.5% and Nokia rose 2.5%. Miners were also higher with Vedanta Resources rising 3.4% and Xstrata adding up 2.6%. BHP jumped 0.9 % and Anglo American, climbed 0.8%. Man Group increased 1.9%.

Decliners of the Day

Despite providing strong impetus to the market Rio Tinto declined 1.4%. Shell lost 1.3%. Whitbread, owner of the Premier Travel Inn budget hotel chain, dropped 3.4%. Cadbury shares slid 1.1%.

Currencies and gold

The euro traded at $1.3782, up from $1.3761 late Wednesday. The British pound traded at $2.0330, down from $2.0334. The dollar bought 122.14 Japanese yen, up from 122.04. Gold traded in London at $663.00 per troy ounce, up from $660.48 late Wednesday.

[R]5:30AM Gold prices decline Wednesday, wheat and copper advance, oil retreats.[/R]

Gold gave up some of its recent gains after the metal advanced almost $10 an ounce over the past two days. The August gold contract fell $2.30 to settle at $662.10 on the Nymex.

September silver finished flat at $12.975 an ounce.

Copper prices firmed. Strikes at mines in Latin America have deepened worries about world copper supplies, as has the ongoing depletion of copper inventories held by the London Metal Exchange. Nymex copper gained 1.15 cents to settle at $3.6215 a pound.

In New York, energy futures declined after the Energy Information Administration released a worse-than-expected draw on crude oil stockpiles for the week ended July 6, and substantial growth in gasoline inventories. Crude oil for August delivery slipped 25 cents to settle at $72.56 a barrel on the New York Mercantile Exchange. Gasoline futures lost 6.31 cents to $2.3063 a gallon.

September wheat soared 20.25 cents to $6.22 a bushel on the Chicago Board of Trade. December corn dipped 1.5 cents to $3.555 a bushel.