Asian markets higher; HK gaming stocks tumble on Macau revenue declines

Asian markets gained on Tuesday after a key indicator of China’s private manufacturing showed robust gains in December, while Hong Kong gaming stocks tumbled on Macau gambling revenue declines.

Mainland Chinese shares started the New Year on stronger footing, with the Shanghai composite up 0.78 percent and the Shenzhen composite rising 0.705 percent. The Shanghai composite tumbled in 2016, to end the year down 12.3 percent, its worst year since 2011.

China’s Caixin Manufacturing Purchasing Managers’ index (PMI) rose 51.9, compared to 50.9 in November and beating forecasts for 50.7, on the back of increased demand. A reading above 50 represents expansion in a sector, whereas a reading below 50 represents contraction.

The private manufacturing survey results come after figures at the weekend showed China’s official PMI fell to 51.4 in December, slightly weaker than expectations.

In Hong Kong, the Hang Seng was up 0.76 percent after initially opening lower. The Hong Kong benchmark had struggled to finish positive, ending last year just up 0.39 percent.

Hong Kong-listed gambling stocks were lower, after Macau government data showed on Sunday that gambling revenue fell 3.3 percent in 2016, which was in line with Reuters analysts forecasts of declines around three to four percent. One bright spot in the data was that December revenue jumped 8 percent from the previous year.

Wynn Macau was down 1.46 percent to 12.14 Hong Kong dollars per share, while Sands China fell 1.63 percent to HK$33.15 and MGM China plunged 6.47 percent to HK$15.04.

Australia’s ASX 200 surged 1.19 percent or 67.4 points to close at 5,733.2, supported by broad gains across all sub-indexes. The benchmark is currently at a 16-month high, after ending 2016 up 6.99 percent, its best annual performance since 2013.

Shares of ANZ were up 1.71 percent to A$30.94 each, after the Australian lender announced it had reached a deal to sell 20 percent stake in Shanghai Rural Commercial Bank to China COSCO Shipping and Shanghai Sino-Poland Enterprise Management Development.

In South Korea, the Kospi gained 0.71 percent, likely due to the weaker Korean won as it benefits exporters when overseas profits are repatriated.

South Korean automakers Hyundai Motor and its affiliate Kia Motors were both higher, up 2.33 percent at 153,500 won per share and 3.16 percent to 40,750 won per share respectively.

On Monday, both Hyundai Motor and Kia Motors announced a higher combined sales target in 2017 of 8.25 million vehicles globally, compared with its 2016 goal of 8.13 million vehicles which both automakers missed.

“Hyundai and Kia’s December shipments were weak as expected, mainly due to the high base in 2015 driven by the end of the purchase tax cut. Considering the high base, we believe [both automakers’] domestic sales were resilient,” said Angela Hong, research analyst at Nomura, in a note on Monday.

Moreover, the annual growth targets set for both automakers will be hard to achieve. For Hyundai, Korean and other emerging markets remain stagnant, while for Kia, there is still some uncertainty about whether Kia’s Mexican production will be able to be exported into the U.S., Hong said.

New Zealand, Japan and Thailand markets will be shut for public holidays.

Stateside, markets were shut for New Year holidays on Monday, but the Dow Jones industrial average last closed at 19,762.6, while the S&P 500 finished at 2,238.83 and the Nasdaq ended at 5,383.12.

In currency markets, the dollar index, which tracks the greenback against a basket of currencies, was up 0.42 percent at 102.64 as of 1:30 pm HK/SIN, after falling for the past three straight sessions.

Against the dollar, the yen weakened to 117.32 compared to 106 levels seen last week, while the Australian dollar strengthened at $0.7229, above levels below $0.73 seen yesterday The dollar/won was trading at 1,202.3, an 10-month high.

The People’s Bank of China set the daily yuan midpoint at 6.9498 against the dollar, its first fixing after China changed the way the currency basket would be calculated in order to set the yuan midpoint. The yuan was trading at 6.9541 against the dollar as of 11:16 am HK/SIN.

Over the weekend, Chinese regulators also announced new measures to curb capital outflows, which have a growing problem since Donald Trump’s surprise election win spurred sharp dollar strength.

The new rules state that Chinese banks and other financial institutions will have to report all domestic and overseas cash transactions valued at more than 50,000 yuan, compared to the previous amount at 20,000 yuan. Banks will also have to report any overseas transfers by individuals of more than $10,000.

The government said these checks on transactions are targeted at cracking down on money laundering, terrorism financing and fake outbound investment transactions, and not normal legitimate business activities, Reuters reported.

During Asian trade, U.S. crude rose 0.58 percent to $54.04 per barrel , while global benchmark Brent was up 0.56 percent at $57.14.

“There is limited upside at least in the first half of 2017, and a lot of it just hinges on what OPEC does and whether it will comply with the agreement it made late last year,” Azlin Ahmad, crude oil editor of Argus Media, said to CNBC.

Ahmad added that Organization of Petroleum Exporting Countries production (OPEC) cuts will only be evident towards the end of January, which might mean volatile trading for the new few weeks.

Source: CNBC