WSJ: Asian Shares End Mostly Up; China Coal Mining Firms Gain
SINGAPORE (Dow Jones)--Asian stock markets ended mostly higher Thursday with Chinese coal mining companies gaining on hopes of industry consolidation.
Japan's Nikkei Stock Average ended 0.7% higher, China's Shanghai Composite rose 0.3%, Hong Kong's Hang Seng Index slipped 0.1%, Australia's S&P/ASX 200 gained 0.8% and South Korea's Kospi fell 0.3%.
Dow Jones Industrial Average futures were 23 points higher in screen trade.
"With the recent decline in global equity markets, there is a widespread view that shares in general are undervalued, so even a minor catalyst will trigger a technical rebound," said Hiroichi Nishi, general manager at Nikko Cordial Securities in Tokyo.
Coal miners gained in Shanghai trading on hopes the government will further speed up consolidation of the coal industry. The State Council Wednesday issued a statement stressing the need to push ahead with consolidation efforts.
The Council in April had said it aimed to close 8,000 small coal mines with a total output capacity of 200 million metric tons by the end of this year.
But some analysts were doubtful that the gains would last.
"It's uncertain how sustainable these gains are, as coal firms are strongly tied to the health of the overall economy," said Chen Jinren, an analyst at Huatai Securities.
China Shenhua Energy rose 0.5%, Datong Coal Industry added 1.4% and China Coal Energy gained 1.5%.
In Hong Kong, China Life Insurance tumbled 6.3% a day after it reported earnings. China Life reported a better-than-expected 7.4% growth in first-half net profit, but Citigroup and Credit Suisse cut the company's price targets on the insurer's investment losses during the period.
"Given (China Life's) weaker growth profile, we see little by way of near-term catalysts to help maintain its current premium price relative to peers," said Credit Suisse in a note.
The Japanese yen's pullback during Asia trading on Wednesday from sharp recent gains against the U.S. dollar and the euro lifted technology exporters in Tokyo, with Elpida Memory Inc rising 1.6% and Canon adding 1.3%, while Nikon Corp gained 1.9%.
Inpex Corp. gained 0.7% on Wednesday's rise in crude oil prices.
Suzuki Motor rose 2.9% after the company's Indian motorcycle subsidiary said Wednesday it will more than double its production capacity by 2012 and announced plans to introduce three more models.
But investors remained cautious on political uncertainty as Ichiro Ozawa, former secretary-general of the ruling Democratic Party of Japan, expressed his intention to run in the Sept. 14 internal election to pick the party president. The party's president is likely to become Japan's prime minister.
"The political risk that Ozawa's participation will further delay government policies (to stem the yen's rise) is weighing on the market," said Masayoshi Yano, senior market analyst at Meiwa Securities.
Australian shares were lifted by financial and consumer staple stocks, although mining stocks declined on cautious outlook statements from BHP Billiton and as investors remained concerned about the U.S. economy. BHP Billion dropped 0.1% and Oz Minerals gave up 0.4%.
Woolworths climbed 2.4% after announcing that it would conduct an off-market A$700 million. share buyback.
Financial stocks advanced, with Suncorp-Metway rising 3.6% after Goldman Sachs upgraded the stock to "buy," while Westpac Banking Corp rose 2.3%.
"Equity markets are still lacking confidence," said Macquarie investment adviser John Milroy. "There's still a lot of concern about the U.S. economy and there's no doubt the second half will be slower, but a double-dip recession is certainly not out base case."
Elsewhere in the region, New Zealand's NZX-50 rose 0.4%, Philippine stocks advanced 1.2%, Taiwan's main index ended 0.6% lower, India's Sensex gained 0.2% and Singapore's Straits Times Index was flat in afternoon trading. Indonesian shares were up 0.2% and Thailand's SET Index rose 0.2% by late afternoon.
In foreign exchange markets, the yen declined against the euro and rose slightly against the U.S. dollar, following an overnight retreat by the Japanese currency as risk aversion ebbed with the rise in U.S. stocks and weaker Treasurys Wednesday.
Capital Economics chief international economist Julian Jessop said the yen's gains recently may have been overdone and the dollar may rise back to Y90 by year-end. But he expected the dollar-yen pair could remain weak for now as demand for the yen remained due to the recent "collapse in the U.S. rate expectations, which has all but eliminated the differential between the U.S. and Japanese short-term yields."
The market also awaited comments from Federal Reserve Chairman Ben Bernanke Friday, when a meeting of central bankers and academic experts begins in Jackson Hole, Wyo. Traders said the Bank of Japan may not move to deliver additional monetary easing between now and at least Monday, as the central bank governor Masaaki Shirakawa will be attending the Jackson Hole policy symposium. The governor will return on Monday.
The dollar was at Y84.59, compared with Y84.78 in late New York trade Wednesday. The euro was at $1.2718 compared with $1.2655, and at Y107.59 from Y107.20.
Lead September Japanese government bond futures were down 0.24 at 142.82, weighed by the Nikkei's rise and Wednesday's weakness in U.S. Treasurys. The 10-year cash JGB yield climbed four basis points to 0.940%.
Spot gold was at $1,240.60 per troy ounce, up 60 cents from New York trade. ScotiaMocatta said that after the yellow metal rose to $1,240 and broke the previous high of $1,237, "gold is now open to the next leg higher from $1,256 to $1,265."
October Nymex crude-oil futures gained 80 cents to $73.32 per barrel.
-Dow Jones Newswires; +65-6415-4140; markettalk@dowjones.com
