Asian Shares Hit by Japan Bank Jitters, Oil -- 2nd Update
28 September 2016 - 6:35PM
Dow Jones News
By Kenan Machado
Stocks in Japan led declines across the region, dragged by weak
oil prices and jitters about the health of the nation's banks.
The Nikkei Stock Average closed Wednesday down 1.3%, with
energy, banking and export sectors leading losses. Korea's Kospi
closed down 0.5%, the Shanghai Composite Index ended 0.3% lower,
and Hong Kong's Hang Seng Index was flat.
An oil-price slide in the U.S. overnight Tuesday hit Japanese
energy stocks. Saudi Arabia's energy minister said the Organization
of the Petroleum Exporting Countries wouldn't reach a deal to curb
output during talks this week in Algiers.
Oil prices recovered slightly in Asian trade Wednesday, with
international benchmark Brent crude rising 0.4% to $46.17 a
barrel.
That helped Japanese oil explorer Inpex narrow its losses. It
ended down 0.4%, after being off 2.3% earlier. Japan Petroleum
Exploration Co. was down 2%.
"Crude oil is in focus today as the U.S. API [American Petroleum
Institute] will release its inventory figures and the OPEC meeting
is expected to conclude," said Alex Wijaya, a senior sales trader
at CMC Markets.
The fall in Japanese financial stocks followed a good run last
week on the idea that the Bank of Japan was rethinking negative
rates, partly due to their corrosive effect on bank profits.
However, traders seem to be slowly coming to the view that
negative rates continue to be a pillar of BOJ planning, and this
has hurt Japan financial stocks all week. Global worries about the
health of Deutsche Bank are compounding the selloff.
Mizuho Financial Group Inc. fell 1.8%, Sumitomo Mitsui Trust
Holdings Inc. ended down 2.4%, Dai-ichi Life Insurance Co. lost
2.5% and Nomura Holdings Inc. fell 2.8%.
Also weighing on Japan's Topix Index, which traded 1.4% lower,
was that more than half of the index companies traded without
dividend Wednesday.
The persistent strength of the yen has also weighed on Japanese
stocks, said Linus Yip, chief strategist at First Shanghai
Securities, calling the yen a "major focus for the Japanese
market." A strong yen makes Japanese exports less competitive and
diminishes profits earned overseas.
The yen gained against the dollar in Asian trade Wednesday but
was last trading 0.2% lower at Yen100.57 to the dollar.
Analysts had previously expected the perception that Hillary
Clinton won the first U.S. presidential debate on Monday to favor
risk-on trade that would help emerging markets and Asia, but that
dissipated quickly.
"Outside of the currency market, you didn't see much of a
reaction," said Daniel Morris, a senior investment strategist at
BNP Paribas Investment Partners. In equity markets, he said,
"Between the debates and the elections, the focus will be on
earnings and fundamentals."
In Hong Kong, Postal Savings Bank of China's shares held at its
listing price on its trading debut. The bank, China's sixth-largest
by assets, raised $7.4 billion in what will likely stand as the
biggest IPO globally this year. It was last trading at 4.76 Hong
Kong dollars (61 U.S. cents) a share, with nearly 672 million
shares changed hands.
In the fixed-income market, most Asian-Pacific government bond
yields fell on Wednesday, following the lead from U.S. Treasurys as
concerns over Deutsche Bank stoked demand for safe-haven assets.
The yield on the benchmark 10-year Japanese government bonds fell
to minus 0.090%, the lowest since Aug. 24.
Kosaku Narioka, Jenny Hsu, Carol Chan, Hiroyuki Kachi and Joanne
Chiu contributed to this article.
Write to Kenan Machado at kenan.machado@wsj.com
(END) Dow Jones Newswires
September 28, 2016 04:20 ET (08:20 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.