Encouraging Growth Data out of Japan means Nikkei 225 Best of a Mixed Bag for Asian Indices

on Nov 14, 2016

**Nikkei 225**

The Nikkei 225 finished last week with a 2.8 gain, its strongest week since late September, despite a muted Friday that finished only 0.18 up. Developed markets had a good week generally with initial fears that Donald Trump’s surprise election as the new U.S. president would cause a crash giving way to optimism. US, major European and Asian markets all saw strong gains. However, Matsui Securities’ Tomoichiro Kubota sounded a note of caution against over optimism before there is more substantial information on what Trump’s actual policies will be. “It’s very dangerous to have a large position in either direction.”

Nonetheless, Monday brought a positive start to the week for the Nikkei 225, which finished the session 1.71% up on the back of preliminary figures released for economic growth for the 3rd quarter. Figures released by the government today suggest that growth has comfortably surpassed expectations for a 0.9% seasonally adjusted annual rate of growth. The real figure looks like it will be around 2.2%, 1.5% more than growth over the 2nd quarter, with the 3rd quarter alone seeing Japan’s economy grow by 0.5%. Improved external demand and a 2% increase in exports, the best in a year, as well as a 2.3% increase in private residential property investment, which added 0.1 ppts to real GDP were all positives.

Figures on business investment were less positive, with a strengthening yen and general global uncertainty seemingly to blame.
The best performing sectors on the Nikkei were real estate, finance & investment and marine transport, while Citizen Watch Co. was the session’s biggest gainer adding almost 10%. The company had announced on Friday that it plans to retire 10 million shares (3.03 percent of outstanding) of its common stock on November 30th. Other big gainers were Nippon Yusen up 7.31% and SUMCO Corporation with a 7.30% gain. Shionogi & Co., was the day’s biggest loser, down 4.66%.
**ASX 200**
Australia’s ASX 200 index has started the week down 0.47% for Monday, its recent rally halted by investors taking pause for breath following last week’s U.S. election drama, a drop for mining stocks and 2 major banks going ex-dividend. Gold miners were hit by the strengthening US dollar and improving bond yields. As gold’s pot price hit a 5-month low Evolution Mining took the hardest hit of the day, losing 9.7%, closely followed by Northern Star Resources which saw 9.2% knocked off its value. Things were not much better for Newcrest Mining which fell by 7.2%. However, some analysts believe that gold may be set for a new bull market in the coming months as investors look for safe havens from the uncertainty that will dominate markets until Trump’s direction and policies become clear.
Two thirds of today’s losses were the result of banks Westpac and ANZ dropping 3.2% and 1.5% respectively as they went post-dividend, while the National Australia Bank and Commonwealth Bank gained 1% and 0.5% to balance the banking sector. Overall, telco and industrials sectors were the only broader sectors to finish up today at a respective 1 per cent and 0.7 per cent.
**Hang Seng**
Hong Kong’s Hang Seng index fared less well than its Japanese rival, finishing Monday on a 3-month low, after a 1.37% loss for the day. Real estate companies were the main drag on the index with expectation that U.S interest rates will increase at a quicker pace under Trump expected to weigh on demand for residential property. Wharf Holdings Ltd. Lost 2.1 percent, Sun Hung Kai Properties 1.6 percent and Cheung Kong Property also fell for a second day. China Petroleum and Chemical (Sinopec) lost 2% as oil price hit a seven week low on news of increased output from Iran and the U.S.
**FTSE China 50**
The China 50 USD finished Monday with a loss of just over 1%. China’s industrial output fractionally missed a median Bloomberg estimate for 6.2%, with retail sales also slowing to 10%, when 10.7% had been expected. Positive data coming out of China was spearheaded by fixed asset investment which is up 8.3% to the end of October.
**STI Singapore**
Singapore’s STI index started the week 0.28% down with the trend continuing throughout the trading session to close Monday with a 0.97% loss as Asian markets outside of Japan recorded losses. KGI Securities trading strategist Nicholas Teo told Singapore’s The Strait Times that he expects the market “will likely get its best clues from currency moves, which could see more volatility”. However, he expects Singapore to benefit from a capital flight to safety as problems deepen for emerging markets with an impending sell-down to impact the STI less than it will other regional markets. **Taiwan’s MSC**I closes today’s Asian markets round-up with a 0.21% Monday hangover.

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