Asian markets came under pressure early in the trading hours on weaker than expected Japanese GDP growth. The Japanese economy expanded at an annualized 0.4% in Q2, less than the 2.3% economists surveyed by Bloomberg anticipated and sharply down from its 4.4% growth in Q1. Export growth slowed and consumer spending stalled and as a result, GDP grew only 0.1% from Q1, the slowest among the six major economies, thus placing the Chinese economy number two after the U.S. The news sent regional stocks lower and the yen higher. (See RGE Critical Issue: Will Japan Intervene to Weaken the Yen?). Chinese stocks, however, gained after Agribank exercised its greenshoe option to sell 3.34 billion additional shares propelling its IPO to the world’s largest with $22.1 billion.
The MSCI Asia Pacific Index fell 0.1% to 117.77 while the MSCI ASIA APEX 50 gained 0.06% to 746.59.
In Japan, stocks fell on disappointing economic growth. The Nikkei 225 lost 0.61% to 9,197. Sony sank 3% while Fanuc declined 1.9%
In Hong Kong, the Hang Seng Composite rose 0.19% to 2,960. Developers declined after the city tightened mortgage lending. Sun Hung Kai dropped 4%.
In mainland China, the Shanghai SE Composite surged 2.11% to 2,662 after Agribank sold additional IPO shares, sending bank shares higher; Agibank rose 0.7%. A shares gained 2.11% while B shares advanced 1.31%.
In India, the BSE SENSEX 30 declined 0.64% led by Reliance Communications (down 2.7%) after its quarterly profits in Q2 sank US $ 53.8million.
In Australia, the S&P/ASX 200 index lost 0.47% while in Korea, the KRX 100 lost 0.27% to 3,652.
On currencies the yen strengthened as investors fled high yielding assets. All other Asian majors fell on the flight to safety with the won and the ringgit both down 0.3%.
The yield on the 10-year JGB fell 3.5 bps as investors lost appetite for risky assets. Sovereign cash yield in the region fell except in Indonesia where the 10-year yield rose 0.7 bps.
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