Asian Markets, Fundamentals

Asian Stocks Tumble on Friday as Earnings Disappoint, Hang Seng Bucks Trend to Post Second Weekly Advance

Asia Session Key Developments

• Japan’s Consumer Confidence Stalls in October
• Hong Kong GDP Disappoints

The Asian stock market pushed lower on Friday on the back of global growth concerns paired with the slump in commodity prices. Industrial outputs in Japan rose 2.1% in September amid an initial forecast for 1.4% rise, while the capacity utilization rate grew 1.6% from the previous month versus forecasts for an increase of 2.3%. Moreover, Japanese consumer confidence stalled in October, with the headline reading holding flat at 40.5 for the second month as subdued wage growth paired with the downturn in the labor market discouraged household sentiment, and the data suggests domestic growth in the world’s second-largest economy may remain subdued going into the following year as wages pressures continue to deteriorate. Meanwhile, economic activity in Hong Kong expanded 0.4% in the third quarter amid expectations for a 1.9% rise, while the annual rate of growth contracted 2.4% from the previous year versus forecasts for a 1.4% drop in GDP.

Nikkei 225                          9,770.31

The Japanese equity markets traded lower for a second successive day, with the Nikkei 225 shedding 34.18 points (0.35%) to end the day at 9,770.31. Health care pushed 1.19% lower to lead the decline, followed by a 1.115 fall in oil & gas, while telecommunications rose 1.25% to taper the sell-off. Shares of Nippon Sheet Glass tumbled 8.24% after the company posted a first-half net loss of 26.2 billion yen, with GS Yuasa Corp declining 1.35% as the firm posted a 24% drop in sales. At the same time, Japan Airlines fell 0.9.% as the firm withdrew its earnings forecast after reporting a JPY 131.2B loss for the first-half, while Mitsui Chemicals declined 2.78% as the company reaffirmed it will sell new shares to raise as much as JPY 64.3B.

Hang Seng                        22,553.63

Hong Kong shares pushed higher on Friday to mark its second weekly gain, leading the benchmark equity index to climb 156.06 points (0.70%) and end the trade at 22,553.63 as 6 of its 9 components advanced on the day. Shares of Industrial & Commercial Bank of China and the Bank of China climbed 1.95% and 3.21% respectively as ICBC’s Chairman Jiang Jianqing does not see a risk of a bubble in China’s economy, while HSBC Holdings, Europe’s biggest bank advanced 1.78% as the company plans to sell its London headquarters building to South Korea’s National Pension Service for $1.3 billion (£800 million). Moreover, Cosco Pacific slipped 0.71% as Nomura Securities said the stock could be removed from the Hang Seng following the review, while PetroChina slipped 1.29% on the back of lower oil prices.

S&P/ASX 200 Index           4,706.40

Stocks in Australia traded lower on Friday following weak overseas leads and profit-taking among investors to mark its biggest slide in 9 trading days, leading the S&P/ASX 200 to fall 41.50 points (0.87%) and close at 4,706.40, with 7 of the 10 components trading lower on the day. Shares of Newcrest Mining and Sino Gold Mining plunged 2.84% and 2.08% respectively as gold prices fell back from its record highs in London, while Paladin Energy shed 2.60% as the uranium producer reported a loss of $20 million during the three-months through September from $5.1M in the previous year. Meanwhile, Westfield Group, the world’s largest owner of shopping malls dropped 1.20% as JP Morgan downgraded the company’s stock from “overweight” “neutral,” while BHP Billiton and Rio Tinto slipped 1.37% and 0.46% respectively on the back of lower commodity prices.

Notable Asian Session Event Risk / Economic Releases