After a lacklustre start to the day, Asia-Pacific equities managed to end mostly higher, with Japan reaching a four-month high on the back of some better-than-expected earnings, large share buybacks and a weakening yen.
The Nikkei 225 finally broke back into 14,000 territory after only a brief glimpse of the level in early May. The index closed up 1.2 per cent at 14,118.55, while the broader Topix gained 1 per cent to 1,373.04.
“It’s probably too simplistic to talk about decoupling, and there is the feeling that in the general scheme of things, Japan is not immune to any renewed selling overseas,” said Pelham Smithers in a report. “However, today was the second time this week that the Tokyo market shrugged off a weak performance on Wall Street and once again earnings were an important consideration.”
NTT’s share buyback, representing a maximum of 3.3 per cent of its outstanding shares, was received with so much investor enthusiasm that the stock shot up its daily limit of 11 per cent to Y498,000. The company’s dividend hike announcement was an added bonus.
Nikon rallied for a second day after pleasing results, closing 2.2 per cent higher at Y3,260.
Meanwhile, the yen was on a weakening trend throughout the day, bolstering shares in exporters such as Honda, which rallied 3.1 per cent to Y3,320 and Canon, which gained 2.2 per cent to Y5,530.
Each market carried its own specific theme, with Shanghai paring back Tuesday’s declines to close up 2.7 per cent at 3,657.432, after the market declined Wednesday following the devastating earthquake in the Sichuan province, which has so far claimed the lives of more than 12,000 people.
Glenn Maguire, chief Asia economist at Societe Generale in Hong Kong, said that in terms of the economy, while the short-term impact of the earthquake would be disruption to production and output, in the medium term, it would be positive for the economy due to significant infrastructure rebuilding and replacement investment.
Banks rallied leading the Shanghai Composite up, with Merchants Bank gaining 4.9 per cent to Rmb32.55, Industrial Bank jumping 6.5 per cent to Rmb37.08 and Minsheng bank up 4.4 per cent to Rmb8.07.
Shanghai zinc futures jumped the daily limit of 4 per cent, according to Reuters, following up gains in London over supply concerns following the devastating earthquake in Sichuan.
The gains bolstered related shares back in Japan, where Toho Zinc gained 3.5 per cent to Y585 and Sumitomo Metal Mining gained 2.7 per cent to Y1,867.
Over in Australia, M&A rumours led stocks up. The first was focussed on one suggesting a Chinese company was to acquire a stake in BHP Billiton, sending the stock up to a record high of A$48.56, a 6.1 per cent leap on the day. Rio Tinto also surged 4.6 per cent to A$151.100 after speculation that BHP would raise its bid for Rio Tinto.
The S&P/ASX 200 closed up 1 per cent at 5,872.7.
Over in Hong Kong, the Hang Seng managed to claw back earlier losses to close down just 0.1 per cent at 25,533.48, after closing for the midday break down 1.3 per cent. The index of mainland shares traded in the territory closed unchanged at 13,980.24. In Mumbai, shares were recently trading up 0.9 per cent at 16,908.49.
Back in Tokyo, not all news was good news. A 3.7 per cent surge in Japan’s wholesale prices in April added to concerns about rising material costs and their impact on company earnings and consumer spending. Coupled with the fall in US treasuries overnight, June 10-year JGB futures tumbled and closed the day down 1.14 at 134.97, after earlier sliding to as low as 134.32, about a seven-month low.
Pioneer’s announcement on Wednesday that restructuring costs would cause its Y18bn loss in the year just ended to widen to Y19bn this year, prompted a big sell off in the stock, which plunged 18 per cent to Y909, wiping out Wednesday’s 8.3 per cent gain.
After a local report that Mitsubishi UFJ could post extra subprime-related losses, that stock lost 2 per cent to Y1,055. The company announces earnings on May 20.
Singapore shares were 0.1 per cent higher at 3,204.92, while Taiwan gained 0.3 per cent to 9,018.42 and New Zealand lost 0.7 per cent to 3,628.558.