Global equity markets, including Asian shares, moved lower last week while gold rose as investors worried about the risk of US defaulting on its government debt, one of the core planks of the global financial system.
The MSCI Asia Pacific index rose 0.8 per cent, Japan’s Nikkei 225 Stock Average jumped 1.8 per cent and the Hang Seng increased 1.5 per cent. The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment decreased on Monday, with the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan falling 2.5 basis points to 113.5 basis points, according to Bloomberg.
Banks and exporters were boosted across the region on growing hopes for the US economic recovery, with Japanese banks were among the biggest gainers as they hold a substantial amount of US treasuries.
Mitsubishi UFJ Financial Group surged 4.1 per cent, Sumitomo Mitsui Financial Group advanced 3.0 per cent and Mizuho Financial Group jumped 3.2 per cent. Australian lenders also gained ground with Westpac Banking Corp up 1.7 per cent.
Toyota Motor, the world’s largest carmaker by sales that counts North America as its biggest market, rose 1.6 per cent. Fanuc, an industrial robot maker, surged to a record high of Y15,370 on a Nikkei report that the company has been enjoying strong sales of its machine tools in China.
Fuji Electric jumped 4.8 per cent after the Nikkei business daily said the company had developed a device that would enable radiation in fresh food to be measured in seconds without removing packaging. Riso Kagakua, a copy machine maker, surged 11.3 per cent on a share buy-back plan.
South Korea’s Kospi Composite index added 1.8 per cent as technology exporters surged on the US debt agreement with Samsung Electronics up 1.7 per cent and LG Electronics 1.1 per cent higher. Korea Line, a debt-stricken shipper under court receivership, surged by the daily limit of 15 per cent, after the company filed a restructuring plan to the court. Kia Motors, South Korea’s second-largest automaker, jumped 3.75 per cent after it reported bigger-than-expected quarterly profit on Friday.
Australia’s S&P/ASX 200 index jumped 1.9 per cent, led by miners and oil producers. BHP Billiton, the world’s biggest mining company by sales, advanced 2.1 per cent on hopes for higher metal demand.
Woodside Petroleum, Australia’s second-largest oil and gas producer by sales, added 1.2 per cent on higher oil prices while third-ranked Santos advanced 1.9 per cent. Macarthur Coal gained 1.9 per cent after ArcelorMittal and Peabody Energy announced a plan to put their A$4.7bn acquisition proposal for Macarthur to shareholders after talks for an agreed deal fell through over price. Origin Energy rose 1.5 per cent.
In Taipei, the Taiex gained 0.3 per cent but the gains were limited by the sharp declines in Formosa Plastics Group companies. Formosa Petrochemical Corp, Taiwan’s only publicly traded oil refiner, tumbled 6.9 per cent after its top executives resigned, following a fire at its plant at the end of June.
Formosa Chemicals & Fibre Corp sank 7 per cent and Formosa Plastics dipped 6.9 per cent while Nanya Plastics plunged 6.9 per cent. But rival companies gained ground after the Taiwanese government asked Formosa Plastics Group to suspend operations of facilities involved in seven work hazard incidents. China Petrochemical Developed surged 6.5 per cent and China General Plastics climbed 6.7 per cent.
China’s Shanghai Composite index inched up 0.1 per cent after Chinese manufacturing data in July showed signs of stabilising.
Commodity shares gained ground after the US debt agreement drove up energy and metal prices. Jiangxi Copper, China’s biggest producer of the metal by sales, rose 2 per cent and Aluminum Corp of China advanced 1.7 per cent. Property shares surged after the Oriental Morning Post said some cities may ease or cancel limits for home purchases next year.
China Vanke, the nation’s largest developer by market value, rose 1 per cent, the most since July 19. Poly Real Estate Group added 0.9 per cent. Banks lost ground after China Business News warned of slowing profit growth at local banks. Industrial & Commercial Bank of China, the world’s largest bank by market value, eased 0.5 per cent and China Construction Bank shed 0.4 per cent.
Hong Kong’s Hang Seng index was up 1.5 per cent as Alibaba.com shares climbed 4.24 per cent after its parent Alibaba Group forged a complex deal with Softbank and Yahoo on mobile payment unit Alipay. Insurance company AIA extended gains, rising 2.4 per cent after last week’s 6.5 per cent rise, after the company reported a 24 per cent rise in first-half results on strong growth in China and Thailand. Chinese solar firm GCL-Poly Energy climbed 5.2 per cent after China announced benchmark on-grid solar prices, providing clearer guidance for solar power project developers for their investment decisions.
In currency markets, the dollar was higher against the yen, buoyed by the US debt agreement. It was trading at Y78.00 from Y76.78 late Friday in New York. The yen was at Y112.05 per euro from Y110.05.
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