Asian Indices Continue on Santa Rally as Wall Street Sets More New Records

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Asian equities continued their positive trend of the past few days on Thursday with indices across the region up. The Down Jones and S&P 500 both closing to new record highs during Wednesday’s U.S. session set the backdrop to gains on the Nikkei 225, ASX 200 in Australia, the Hang Seng and STI.

Expectations that the ECB will today announce the extension of its asset-buying QE programme beyond March 2017 is another factor providing impetus to global equities. If that announcement goes to script, equities can most likely expect a strong close to the year, the oft-termed ‘Santa Rally’, which appears to have begun in earnest this week.

In Japan, the Nikkei 225 finished the day up 1.45%. This was despite a strengthening of the yen against the dollar and economic data readings coming in below forecast. GDP for Q3, which had been forecast for 0.5% growth, was revised down to 0.3%. The bank lending reading also came in a touch below expectations with 2.4% growth for November when 2.5% was forecast. In one positive announcement, Japan’s current account surplus for October was 1.719 trillion yen, better than the forecast 1.545 trillion.

Tokyo Electric Power Co. (Tepco), saw its share price leap by a massive 17.51% on Thursday on the announcement that the Japanese government will increase an interest-free loan facility provided to the company by more than a third, up to $123 billion. The loan facility was made to help the company absorb the huge cost of cleaning up the Fukushima nuclear plant site, destroyed in the March 2011 earthquake and subsequent tsunami.

The day’s biggest faller was pharmaceuticals company Shionogi. The company registered a 5.08% loss following the announcement of the repurchase of 6.8 million shares at 35 million yen. Another pharma company, Sumitomo Dainippon, was the day’s second biggest loser, down 3.91%, followed by advertising and PR company Dentsu with a 3.02% loss.

Down Under, the ASX 200 recorded a similarly positive session to record a 1.23% return for Thursday. Economic influencers included the AUD strengthening against the USD and a seasonally adjusted October merchandise trade deficit of A$1.541 billion, when A$610 million had been forecast. While exports rose 1% over the month, this was outweighed by a surprising 2% increase in imports. The worry is that the negative reading could knock up to 1% off Q4 GDP growth. If that leads to a second month of GDP contraction, Australia would officially be in recession following September negative 0.5% GDP growth reading. Despite that worry, equity markets chose to follow an upward trajectory.

The strongest gainer on the day was miner Galaxy Resources, which rose by 9.57% after the company announced 24-hour production at its Western Australia Mt Cattlin Lithium Project. Costa Group Holdings, which grows, packs and sells fresh fruit and vegetables gained 4.55%. It was announced in early December that the company would, in partnership with investment bank Macquarie, acquire Avocado Ridge, an avocado grower. Qbe Insurance Group gained 4.84% after it was announced that a subsidiary of Nasdaq-listed Enstar Group Limited has entered into a conditional agreement with a subsidiary of QBE to reinsure its U.S. multi-line property and casualty business pending regulatory approvals.

The worst performers were Estia Health, which fell 3.62%, M Pharma Fp, down 2.38% and oil and gas company Santos, with a 2.06% loss.

In Hong Kong, the Hang Seng recorded a more modest 0.27% gain with the index trending gently down over the day from a strong opening position. The strongest gainer was Bank of Communications Co., up 2.03%, followed by China Mengniu Dairy Co, which rose by 2.01%. Real estate companies continued the week’s positive trend with China Resources Land up 1.93%, Cheung Kong Property Holdings up 1.86% and China Overseas Land and Investment up 1.82%.

After strong recent gains, insurers were down on Thursday with AIA Group showing a 1.88% slide and China Life Insurance Holdings down 1.11%. HSBC Holdings, yesterday’s strongest riser, was down 0.23% today.

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