Asian Shares Widely Lower as Strong Yen Drags on Japan
02 June 2016 - 3:00PM
Dow Jones News
Japanese stocks slumped as yen strength persisted, while shares
elsewhere in Asia were choppy.
Japan's Nikkei Stock Average was off 2.3% Thursday, Australia's
S&P/ASX 200 was down 0.9% and the Shanghai Composite Index
slipped 0.2%. Korea's Kospi and Hong Kong's Hang Seng Index were
both up 0.1%.
Stocks in Japan fell as the yen extended gains against the U.S.
dollar. The currency had strengthened late Wednesday after Prime
Minister Shinzo Abe put off a national sales-tax increase,
scheduled for next year, until October 2019.
"People are pessimistic regarding this delayed tax," said
Margaret Yang, market analyst for CMC Markets. "Japan has a
relatively high GDP-to-debt ratio. If they can't increase [the] tax
rate, they may not be able to reduce debt burden further."
The yen was as strong as 108.93 to the U.S. dollar during early
Asian trading hours. A stronger currency makes Japanese exports
less competitive and erodes the repatriated earnings of Japanese
exporters. Shares of Toyota Motor Corp. were down 1.1%, Nissan
Motor Corp. was 1.9% lower and Honda Motor Co. was off 3%.
"I think the postponement of the sales tax hike may have led to
less expectations of more monetary easing" at the Bank of Japan's
policy meeting mid-June, said Qi Gao, a currency strategist for
Scotiabank.
Easing policies are designed in part to weaken the yen and boost
the economy, so the delay triggered an unwinding of bearish yen
bets, analysts said.
In China, the main stock benchmark in Shanghai looked on track
to book a fourth consecutive day of gains. Analysts said it was
partly due to continuing hopes that global index provider MSCI will
soon add mainland-listed stocks to an influential index.
"In the short-term, MSCI hopes will provide some buffer, some
cushion to equity markets in Hong Kong and Shanghai," Ms. Yang
said.
After U.S. stocks closed little changed overnight in thin
trading, analysts said markets in Asia had little direction to move
higher. An improvement in U.S. manufacturing activity data
overnight offset pessimism over a fall in U.S. construction
spending, but signs that the U.S. economy is recovering didn't
boost stocks.
On Thursday, traders in Asia were also waiting for an
Organization of the Petroleum Exporting Countries meeting later
Thursday in Vienna, where an oil production ceiling could be on the
table.
In other markets, most Asian currencies were, like the yen,
strengthening against the dollar, including the Korean won and
Singapore dollar. The ringgit, though, weakened as more funds
increased the size of their hedges against the risk of currency
depreciation and holdings of Malaysian government bonds, traders
said.
Hiroyuki Kachi and Ewen Chew contributed to this article.
Write to Dominique Fong at Dominique.Fong@wsj.com
(END) Dow Jones Newswires
June 02, 2016 00:45 ET (04:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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