Nikkei 225 Records First Gain of the Week as Asian Indices Turn in Positive Performance

on Jan 11, 2017

A second lethargic session on Wall Street Tuesday, with the Nasdaq up again by 0.4% to the now daily new record high, the S&P flat and the Dow Jones recording a second minor drop, could not dampen spirits in Asia where the Nikkei and ASX shook off yesterday’s losses to record gains. The Hang Seng, which had moved to a one-month high during the previous session, put in another solid performance. The STI is flat as it heads towards the end of the trading day. Commodities and mining companies have generally been doing well with commodities prices up and oil also showed gains over the course of the Asian session.

The **Nikkei 225** finished the session up 0.33% as exporters were boosted by a weaker yen. Sony’s share price continued its weak of impressive returns with a gain of 3.42% today. Steel companies did particularly well on Wednesday with JFE Holdings topping the leaderboard, up 5.54%. Nippon Steel and Sumitomo Metal Corp gained 4.56%, Kobe Steel 3.85% and Japan Steel Works 3.46%. Sumitomo Metal Mining also registered a 3.67% return. China has announced its intention to shut down the country’s low quality induction furnace steel production facilities, which account for around 9% of total steel output. A number of electronics companies were also among the day’s strongest performers with semiconductor manufacturer Sumco up 4.36%, Toshiba 4.12% and Alps Electric 3.47%.

Real estate companies dominated the biggest fallers on Wednesday with the day’s biggest drop Sumitomo Realty and Development with a 2.54% loss. Mitsui Fudosan, a real estate developer, was next, down 2.25% and Mitsubishi Estate lost 1.86%. Construction company Obayashi was down 1.69% and Tokyo Tatemono, another real estate company, was down 1.51%. Video game, arcade and collectible cards giant Konami was one non-real estate company to figure among the day’s bigger losers with a loss of 2.06%.
In Sydney, the **ASX 200** recorded a modest 0.19% gain, keeping the index on an upward trajectory, though one that does seem to be beginning to run low on steam. The financial sector’s poor performance was compensated by metals and mining companies which were boosted by Chinese data.
Atlantic Pacific Securities’ Gary Huxtable commented:
_”Outside of the materials sector, there’s very little conviction in other sectors today”, and that a lack of broad based buying on Wednesday “indicates that there are many market participants who are beginning to question the sustainability of the recent rally.”_
Among the day’s best performers were nickel sulphide explorer Western Areas which gained 7.75% and copper and gold miner Sandfire Resources with a gain of 5.9%. Mining and commodities giants Rio Tinto, BHP Billiton and Fortescue Metals all had a great day, up 3.89%, 2.6% and 4.53% respectively.
The day’s biggest gainer however was powdered milk company A2 Milk Company, which rose by a whopping 9.25%. A2 Milk’s good fortune was at the expense of peer Bellamys Australia, another milk formula firm. Bellamys’ shares had been suspended from trading since December after a profit warning based on reduced market share in China resulting in revenues being significantly downgraded triggered a run on the company’s stock. Today was their first trading session back on the ASX and the company was punished by investors as it lost 19.76%. Investors looking for another play in the same market piled into A2, which resulted in the two companies’ markedly divergent fortunes.
Financials didn’t perform well with the second highest loss being sustained by Platinum Asset Management, which lost 3.18%. ANZ, National Australia Bank and Westpac lost 0.26%, 0.43% and 0.71% respectively, though Commonwealth Bank bucked the trend with a gain of 0.2%.
In contrast to Japan, property sector companies did well in Hong Kong today as the **Hang Seng** extended recent gains with a 0.84% return. Sino Land was the best performer, up 3.23% with New World Development (+2.88%), Cheung Kong Property Holdings (+2.37%), Hang Lung Properties (+1.95%), China Resources Land (+1.84%) and China Overseas Land and Investment (+1.82%) all among the top 10 gainers for Wednesday. Squeezed in among the property companies was Belle International, the shoe maker having another strong session to register a gain of 2.81% and China Life Insurance, up 2.13%.
Chinese telecommunications giant China Unicom Hong Kong was the heaviest faller with a loss of 1.87%, having similarly been among the tumblers yesterday. Another company on a losing streak was next with rice cakes and snack maker Want Want down 1.8%. One real estate company that didn’t do so well today was Link REIT, which has been among the best performing companies on the Hang Seng of late. The stock was down 0.19% today though.
The **STI** is flat in Singapore, down 0.17%. The property sector is also featuring prominently on the STI today with Hongkong Land Holdings the biggest faller, down 3.61%. Property companies are showing divergent fortunes though. Global Logistics Properties (-1.57%) is also down while Ascendas Real Estate Investment Trust is up 0.41%, as is City Developments (+0.58%), CapitaCommercial Trust (+1.6%) and CapitaLand (+0.32%) with Capitamall Trust flat. Port operator Hutchison Port Holdings Trust is down 1.14% and casino owner and operator Genting 1.06%.

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