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=ASIA MARKETS: Asian Stocks Fall After US Federal Reserve’s Hawkish Minutes

HONG KONG (Oct 18) -- Asian stocks outside of Japan fell on Thursday after minutes of the U.S. Federal Reserve’s latest meeting indicated more interest rate increases were likely.

The Nikkei Asia300 Index fell 0.6% to 1,200.07. Concerns over capital outflows from the region intensified after the dollar and the yield on U.S. Treasury notes rose Wednesday, following the release of the minutes from the Fed’s September meeting. The central bank, which last month raised rates for a third time this year, said all policymakers unanimously backed the move. The minutes also said that “participants generally anticipated that further gradual increases” in interest rates would likely be consistent with sustained economic expansion and strong labor market conditions, and that inflation will be near 2% in the medium term.

Nikkei’s country gauge for South Korea fell 1.7%. The Bank of Korea on Thursday kept interest rates unchanged at 1.50%, as was widely expected, but said two of its seven board members had voted for a rate increase. The central bank cut the nation’s gross domestic product growth forecast for the year to 2.7% from 2.9%.

“With growth headwinds building and inflation benign, it will be increasingly difficult for the BoK to justify tightening,” Krystal Tan, an economist at ANZ Research, wrote in a note. “We continue to expect the central bank to remain on hold through 2018.”

Taiwan Semiconductor Manufacturing fell 0.8% in Taipei after the contract chipmaker on Thursday reported a 0.9% decline in third-quarter net profit.

Singaporean property developers UOL Group and City Developments dropped 1.6% each. The city-state’s Urban Redevelopment Authority on Wednesday revised certain guidelines, aimed at increasing the minimum size of apartments in private residential projects outside the central area, while reducing their total number. The changes will take effect in January.

The country gauge for Singapore lost 0.6%, while the Nikkei Asia300 ASEAN Index for southeast Asian companies also dropped 0.6%.

China Petroleum & Chemical lost 4.3% in Hong Kong despite saying it expects profit for the nine months ended Sept. 30 to have risen by up to 56.6% from a year ago.

Offshore oil producer CNOOC shed 2% after Brent crude futures declined 1.7% on Wednesday.

Coal miner China Shenhua Energy fell 2.7% even as September coal sales rose 11.6% from the year-ago period.

Bank of East Asia ended unchanged. The lender said a court in Madrid has opened a criminal investigation against Spain’s CaixaBank, some of its executives and directors, and Bank of East Asia’s Chairman David Li and non-executive Director Isidro Faine Casas. The investigation is related to certain transactions undertaken by CaixaBank. Bank of East Asia said Li and Faine consider the allegations to be “unfounded and without merit.” Li had resigned as director of CaixaBank in 2014 and Faine in 2016.

Shanghai Electric Group declined 2.4%. The company on Wednesday said it contributed about 500 million yuan ($72.1 million) to subscribe to 76.3 million new A-shares issued by Huaneng Power International, about a 0.49% stake. The Hong Kong-listed shares of Huaneng Power advanced 1.7%.

India’s financial markets were closed on Thursday for a local holiday.

- By Hong Kong Newsroom; hkeditorial@nikkeinewsrise.com; +852 3960 5150
- Edited by Suzannah Benjamin and V. Phani Kumar
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