HONG KONG, Nov 4:
Hong Kong and China shares gave up early gains today, with the Chinese property sector weak after the southern city of Shenzhen was reported to be raising minimum down payment on second home purchases in an attempt to stem rising prices.
Lackluster midday volumes pointed to underlying caution at the start of a busy week, which includes U.S. Jobs data and more China data this Friday and the start of a key Communist Party policy-setting meeting starting on Saturday.
By midday, the Shanghai Composite Index and the CSI300 of the leading Shanghai and Shenzhen A-share listings were each down 0.1 percent after starting the day higher.
The Hang Seng Index slipped 0.1 percent to 23,218.5 points, while the China Enterprises Index of the top Chinese listings in Hong Kong inched up 0.2 percent, off the day’s highs.
“It’s a slow start and people are cautious ahead of some key events later this week. All eyes are on China after all the talk of reform,” said Jackson Wong, Tanrich Securities’ vice-president for equity sales.
On Monday, Chinese property counters were put on the backfoot after the official China Securities Journal reported on Saturday that Shenzhen will raise minimum down payments on second home purchases from 60 to 70 percent.
The mood was further soured by a front-page editorial in the same newspaper on Monday that referred to rising home prices as a “bubble” that poses a “danger” to the world’s second-largest economy, advocating that Beijing should combine property controls with land and tax policy reforms.
China Vanke fell 1.6 percent in Shenzhen, while in Hong Kong, China Resources Land shed 2.2 percent, while Country Garden sank 1.9 percent.
The sector weakened on Monday, paring gains racked up late last week, after control measures announced by the Chinese president were taken to suggest that Beijing will stick with supply-side measures instead of demand-side ones.
Investors have been jittery on the sector despite its stellar quarterly earnings with home prices continuously rising ahead of a four-day third plenary meeting from Saturday, where major economic reforms are historically decided.
In Hong Kong, Chinese banking and mining counters were buoyed by a pledge from the mainland’s banking regulator to curb financial risks and to support any resultant merger and acquisition activity in Beijing’s drive to cut overcapacity.
Agricultural Bank of China rose 0.5 percent, while China Shenhua Energy Co Ltd climbed 1.5 percent.
There were also gains for Shunfeng Photovoltaic International Ltd, whose shares surged 16.5 percent to a record high after it announced an agreement to buy the main unit of Suntech Power for $492 million.
Fresh monthly China data is expected from Friday, including for money supply, loan growth, trade, inflation, urban investment, retail sales and industrial output.
Over the weekend, China’s official purchasing managers’ index (PMI) for the non-manufacturing sector expanded at the fastest pace in 13 months, rising to 56.3 in October from September’s 55.4.
(agencies)
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13.nb
Hawkish Fed woes hurt Asia
FX; politics drag baht lower
SINGAPORE, Nov 4:
Most emerging Asian currencies extended slides on Monday as investors added bearish bets on growing expectations that the U.S. Federal Reserve may start to scale back its stimulus this year after strong economic data.
A weaker euro also hurt emerging Asian currencies amid increasing views that the European Central Bank will be forced to cut interest rates to support growth. Regional currencies failed to find support from strong Chinese service sector activity data.
The Thai baht weakened on fears about heightening opposition against a political amnesty bill.
The Indonesian rupiah slid on lower stocks and bond prices, while the Philippine peso fell on catch-up selling.
“You get a stronger USD this month since the October data, which was expected to be weak from the U.S. (government) shutdown. But it isn’t having as much impact on the October economic data,” said Sean Yokota, head of Asia strategy at Scandinavian bank SEB in Singapore.
Emerging Asian currencies are expected to retreat further, Yokota added.
Last week, most regional units fell as solid U.S. Data revived expectations that the Fed might reduce its monthly bond-buying programme starting in December, rather than in March as many in the market currently anticipate.
The U.S. Manufacturing sector expanded at its fastest pace in more than two years in October, an industry report showed on Friday, spurring views on the Fed’s possible policy shift.
Still, some traders preferred a defensive stance ahead of policy meetings of major central banks this week including the ECB’s gathering on Thursday. Investors are also awaiting economic data such as U.S. October jobs data due on Friday.
“There is no reason for Asian currencies to be strong and the market stays long dollar versus Asia,” said a senior Malaysian bank trader in Kuala Lumpur.
“But this week, we got a lot of big events, so market will adjust positions.”
BAHT
The baht fell as Bangkok shares hit a near one-month low, underperforming peers in Southeast Asia, amid worries about political tension.
“There is going to be a demonstration this afternoon in central Bangkok, and there is some wariness about that,” said a trader for a Japanese bank in Singapore.
“I wonder whether this will be an issue that will last for a while. Especially in the case of topics related to politics, they often tend to simmer,” he added.
Five-year bond yield rose to 3.63 percent, the highest since Oct. 1.
Thousands of protesters took to the streets of the Thai capital on Friday after lawmakers approved a draft political amnesty bill that could allow the return of self-exiled former premier Thaksin Shinawatra, one of Thailand’s most polarising figures.
RUPIAH
The rupiah fell as Indonesian stocks and bond prices fell.
The 10-year bond yield rose to 7.853 percent from Friday’s 7.563 percent, while the five-year yield advanced to 7.269 percent from 7.031 percent. The three-year yield jumped to 7.106 percent from 6.647 percent.
The forward onshore market, or Jakarta Interbank Spot Dollar Rate (JISDOR), was fixed at 11,389 per dollar, compared with Friday’s 11,354.
Some foreign banks, however, bought Indonesian bonds, limiting the rupiah’s downside, traders said.
“Offshore investors still demand higher yields,” said a Jakarta-based trader, adding the rupiah is seen finding support around 11,400 per dollar.
PHILIPPINE PESO
The peso lost as much as 0.4 percent to 43.37 per dollar, its weakest since Oct. 2.
Investors added dollar positions against the Philippine currency. Local financial markets were closed on Friday when most other emerging Asian currencies fell.
The peso found some relief with three- and five-year bond yields lower, but traders looked to sell it on rallies.
“Buying dollar on dips is still preferred play on dollar/peso, given that the downside remains well defended by intervention,” said a senior Philippine bank trader in Manila.
The peso may weaken to 43.50 per dollar in a near term and eventually 43.70, the trader added.
The central bank had been spotted buying dollars to stem volatility when the peso was around 43.00 per dollar, traders said.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0430 GMT
Currency Latest bid Previous day Pct Move
*Japan yen 98.75 98.72 -0.03
Sing dlr 1.2423 1.2430 +0.06
Taiwan dlr 29.418 29.470 +0.18
Korean won 1061.95 1060.70 -0.12
Baht 31.28 31.19 -0.29
Peso 43.32 43.21 -0.25
Rupiah 11365.00 11330.00 -0.31
*Rupee 61.74 61.74 +0.00
Ringgit 3.1760 3.1725 -0.11
Yuan 6.0991 6.0995 +0.01
Change so far in 2013
Currency Latest bid End prev year Pct Move
Japan yen 98.75 86.79 -12.11
Sing dlr 1.2423 1.2219 -1.64
Taiwan dlr 29.418 29.136 -0.96
Korean won 1061.95 1070.60 +0.81
Baht 31.28 30.61 -2.14
Peso 43.32 41.05 -5.24
Rupiah 11365.00 9630.00 -15.27
Rupee 61.74 54.99 -10.93
Ringgit 3.1760 3.0580 -3.72
Yuan 6.0991 6.2303 +2.15
* Financial markets in India and Japan are closed for holidays. (agencies)
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