Asian bourses reverse gains as IPOs roil China stocks
HONG KONG–Asian stocks Tuesday reversed early gains, with China’s market taking fright and dropping more than four percent as new share issues raised the prospect of a sell-off.
Hong Kong’s main index closed down 368.28 points, or 1.31 percent, at 27,755.54, tracking China stocks which fell sharply as the upcoming new issues raised the prospect of funds being diverted from existing equities.
The benchmark Shanghai Composite Index plunged 4.06 percent, or 181.75 points, to end at 4,298.71.
“Today and tomorrow will be the peak for the latest round of IPOs so people may be selling down their holdings from the secondary market to use the money for IPO subscription,” Steven Leung, Hong Kong-based director of institutional sales at UOB Kay Hian, told Bloomberg News.
The Shanghai Composite has recorded an astonishing 118 percent gain over the past year, on expectations of further monetary easing in China.
Australia’s benchmark S&P/ASX200 closed flat at 5,826.5, dropping 1.0 point, or 0.02 percent, giving up earlier gains as bank stocks mostly drifted lower after the central bank cut interest rates to an historic low of 2.0 percent.
Tokyo and Seoul were closed for holidays, but early trade elsewhere in Asia had been energized by Wall Street, which put in a strong performance Monday on news of the first rise in US factory orders for eight months.
The Dow gained 46.34 points, or 0.26 percent, to 18,070.40 after the Commerce Department said new orders for manufactured goods rose 2.1 percent in March, after seven straight months of declines.
The Australian bourse gyrated around the central bank’s rate decision to cut official rates to a record 2 percent from 2.25 percent, as it tries to tamp down the Aussie dollar and stoke economic growth to offset a downturn in the key mining sector.
“At today’s meeting, the board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand,” Reserve Bank of Australia governor Glenn Stevens said in a statement.
Stevens said the Australian dollar, which has lost ground amid plunging commodity prices, needed to fall further.
“Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices,” he said.
The local unit eased to 77.88 US cents immediately after the decision but jumped back to over 79 US cents.
Analysts said the sharp rise reflected the market’s disappointment that the central bank did not include an easing bias in its statement, which could have pointed to further rate cuts.
The greenback was up against the euro and most other major Asian currencies in afternoon Asian trade on fresh expectations the US central bank may raise interest rates in the second half of the year.
The euro bought $1.1132, down from $1.1146 in New York late Monday. The greenback, however, eased to 120.09 yen from 120.14 yen.
Against the Japanese currency, the euro was changing hands at 133.68 yen from 133.92, but trade was thin with Tokyo markets closed.
Volumes were also thin in oil, with prices edging lower Tuesday as concerns over a global supply glut persisted and few fresh leads emerged.
US benchmark West Texas Intermediate for June delivery fell 12 cents to $58.81 while Brent crude for June eased 18 cents to $66.27 in afternoon trade.
Gold fetched 1,188.70 against $1,182.38 late Monday.
Thailand was also closed for a holiday.
In other markets:
— Taiwan fell 24.91 points, or 0.25 percent, to 9,820.13.
Taiwan Semiconductor Manufacturing Co. closed 0.34 percent lower at Tw$147.0, while Fubon Financial Holding lost 1.03 percent to Tw$67.5.
— Wellington rose 20.71 points, or 0.36 percent, to 5,787.79.
Air New Zealand lifted 3.93 percent to NZ$2.78 and Chorus was up 0.66 percent at NZ$3.07.
— Mumbai fell 0.18 percent, or 50.45 points, to end at 27,440.14 points.
Mahindra & Mahindra fell 2.27 percent to 1,172.05 rupees, while Sesa Sterlite rose 6.64 percent to 226.40 rupees.
— Kuala Lumpur rose 0.50 percent, or 9.15 points, to close at 1,827.42.
Maybank added 0.43 percent to 9.25 ringgit, Telekom gained 0.54 percent to 7.45 while Tenaga lost 0.56 percent to 14.28 ringgit.
— Jakarta ended up 0.37 percent, or 19.17 points, at 5,160.31.
Consumer goods maker Unilever Indonesia gained 2.73 percent to 44,175 rupiah, while telecoms provider Indosat slipped 2.63 percent to 3,895 rupiah.
— Singapore closed down 0.33 percent, or 11.51 points, at 3,471.19.
Commodity traders Noble Group rose 4.09 percent to Sg$0.89 while United Overseas Bank fell 0.94 percent to Sg$24.37.
— Manila jumped 102.77 points, or 1.31 percent, to close at 7,919.21.
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