Month: November 2015

Asian equities were trading mixed on Monday morning as investors remained cautious following a mixed performance from Wall Street last Friday.

The Chinese stock market, which saw its worst weekly performance last week since August, trimmed early gains and was back in negative territory as ongoing investigations into brokerages on short-selling and speculation charges hurt sentiment.

US stocks closed mixed on Friday due to a 3 percent decline in oil prices. Oil tumbled USD 1.33, or 3.09 percent, to USD 41.71 a barrel as the dollar index, which hit a fresh eight-month high, added additional pressure to an oversupplied market.

The Dow Jones Industrial Average closed 15 points, or 0.08 percent, lower at 17,798.5 while the S&P 500 was up by 1.24 points, or 0.06 percent, to 2,090. The Nasdaq was up 11.4 points, or 0.22 percent, at 5,128.

Chinese stocks back in negative territory

The Shanghai Composite dipped into the red, down 17 points, or 0.48 percent, at 3,420 as investors continue to remain concerned over the ongoing investigations of Chinese brokerages by regulators.

Last week, the China Securities and Regulatory Commission formally launched investigations into brokerages to weed out short selling and speculation.

Brokerages were trading firmly in red. Shares of Citic Securities were down 2.18 percent while Founder Securities and China Merchants saw their early gains trimmed and were down 0.11 percent and 2.37 percent respectively. Haitong Securities, which was not trading on Friday, plunged 9.93 percent.

Chinese banks were all trading in positive territory, boosted by the news of the likely inclusion of the yuan into the Special Drawing Rights (SDR) basket of currencies by International Monetary Fund (IMF). It would make the yuan an officially recognized reserve currency.

Shares of ICBC, Agriculture Bank of China, Bank of China, CCB, and Bank of Commerce were up between 0.48 and 1.27 percent.

The smaller Shenzhen Composite was down 0.5 percent; the tech-heavy Chinext was down 0.4 percent; and the blue chip-heavy CSI 300 Index was down 0.5 percent.

Away from the mainland, Hong Kong’s Hang Seng Index was down 0.13 percent.

Nikkei trades 0.38 percent lower

Japan’s Nikkei 225 traded 74 points, or 0.38 percent lower at 19,807 despite official data released this morning showing an uptick in industrial production and retail sales for October.

Japanese blue chip companies opened mixed, with most of them trading flat or in the red. Shares of Sony, Canon, and Mitsubishi Electric were down while Toyota was flat. Toshiba shares were up 3.31 percent as the struggling company said last week it would consider selling stake in its semiconductor business to raise funds as it recovers from its accounting scandal earlier this year.

Kospi dips over 1 percent

The Seoul Kospi was down 1.64 percent on Monday morning, as investors remain cautious over Asian equities.

Blue chip and tech companies were mostly down on the back of a surprise decline in industrial output for October. Industrial output fell 1.4 percent from the previous month as manufacturing lagged.

Shares of consumer electronics giant Samsung, steel manufacturer Posco, and KB Financial Group, SK Hynix, and Hyundai Motor were down, seeing between 0.3 and 2.8 percent declines. LG Electronics was up 0.18 percent.

Elsewhere, shares of Kakao Corp and KT Corp rallied after a consortium led by the two companies won a preliminary license from the Financial Services Commission (FSC) to launch South Korea’s first internet-only bank, according to reports.

The International Monetary Fund’s (IMF) Executive Board meets on Monday to discuss a staff proposal to include China’s yuan, or renminbi as it’s also known, in an exclusive group of currencies that make up the basket of the IMF’s Special Drawing Rights (SDR).

The prospects of inclusion, which will represent public acknowledgement of China’s heft in the global economy, look pretty high given that the US, a major investor in the fund, has backed the move, as has the IMF’s Managing Director Christine Lagarde.

Here’s what you need to know about why this change matters to global markets.

The SDR is a type of international reserve asset that the IMF created in 1969 to buttress the Bretton Woods system of fixed exchange rates that was established at the end of World War II.

Back then, countries could use gold holdings and widely accepted currencies to buy their local currencies overseas in order to maintain their exchange rates. But the supply of gold and the dollar could not keep pace with the growth in world trade or new developments in financial markets. So the IMF created an asset that could be exchanged for freely usable currencies.

Countries are allocated SDRs in proportion to the IMF quotas they pay. They can use SDRs to make payments for future quota increases, to settle debts they owe to the IMF, which uses SDRs as a system of account, or to rebalance their reserves.

The importance of SDRs waned somewhat after the Bretton Woods system collapsed in 1973 and countries let their currencies move more freely in line with market forces. Still, SDRs came in handy during the global financial crisis when they helped supplement member countries’ official reserves. As of September 2015, SDRs worth USD 204.1 billion had been created and allocated to IMF’s members. This number is equivalent to about USD 280 billion.

Currently, the value of an SDR is based on a basket of four currencies: the euro, Japanese yen, pound sterling, and the dollar. At Monday’s meeting, a decision will be made on whether the yuan should be added to this group.

It’s important to note that the SDR is not a currency nor a claim on the IMF. Instead, holders of SDRs can exchange them for currencies that make up the basket, through deals with other SDR holders.

Chinese equities opened higher on Monday, following their worst weekly performance last week since August. Elsewhere, other Asian equities traded mostly in the red, on the back of a mixed close from Wall Street last week.

US stocks closed mixed on Friday due to a 3 percent decline in oil prices. Oil tumbled USD 1.33, or 3.09 percent, to USD 41.71 a barrel as the dollar index, which hit a fresh eight-month high, added additional pressure to an oversupplied market.

The Dow Jones Industrial Average closed 15 points, or 0.08 percent, lower at 17,798.5 while the S&P 500 was up by 1.24 points, or 0.06 percent, to 2,090. The Nasdaq was up 11.4 points, or 0.22 percent, at 5,128.

Chinese stocks back in the green

The Shanghai Composite was back in positive territory in early morning trade, up 8 points, or 0.22 percent, at 3,444 although the limited gains suggest investors continue to remain concerned over the ongoing investigations of Chinese brokerages by regulators.

Last week, the China Securities and Regulatory Commission formally launched investigations into brokerages to weed out short selling and speculation.

Brokerages were trading mixed in early trade. Shares of Citic Securities were down 1.45 percent while Founder Securities and China Merchants were up 1.31 and 0.2 percent. Haitong Securities, which was not trading on Friday, plunged 9.34 percent.

Chinese banks were also mostly positive at the open as shares of Bank of China, CCB, and Bank of Commerce were up between 0.48 and 1.27 percent.

There was some optimism on the back of the news that the International Monetary Fund (IMF) is expected to announce its decision on Monday over the inclusion of the yuan into its Special Drawing Rights (SDR) basket of currencies, making the yuan officially recognized reserve currency.

Nikkei trades 0.32 percent lower

Japan’s Nikkei 225 traded 63 points, or 0.32 percent lower at 19,820 despite official data released this morning showing an uptick in industrial production and retail sales for October.

Japanese blue chip companies opened mixed, with most of them trading flat or in the red. Shares of Sony, Canon, and Mitsubishi Electric were down while Toyota was flat. Toshiba shares were up 2.29 percent as the struggling company said last week it would consider selling stake in its semiconductor business to raise funds as it recovers from its accounting scandal earlier this year.

Kospi dips over 1 percent

The Seoul Kospi was down 1.33 percent on Monday morning, as investors remain cautious over Asian equities.

Blue chip and tech companies were mostly down on the back of a surprise decline in industrial output for October. Industrial output fell 1.4 percent from the previous month as manufacturing lagged.

Shares of consumer electronics giant Samsung, LG Electronics, LG Display, steel manufacturer Posco, and KB Financial Group seeing between 0.7 and 3 percent declines. Shares of SK Hynix and Hyundai Motor bucked the trend and were up 1.25 and 0.33 percent.

Elsewhere, shares of Kakao Corp and KT Corp rallied after a consortium led by the two companies won a preliminary license from the Financial Services Commission (FSC) to launch South Korea’s first internet-only bank, according to reports.

Russian President Vladimir Putin on Saturday called for sanctions against Turkey, following the downing this week by Turkey of a Russian warplane.

The decree published on the Kremlin’s website Saturday came hours after Turkish President Recep Tayyip Erdogan had voiced regret over the incident, saying his country was “truly saddened” by the event and wished it hadn’t occurred.

The decree includes a ban on some goods and forbids extensions of labor contracts for Turks working in Russia as of Jan. 1.. It doesn’t specify what goods are to be banned or give other details, but it also calls for ending chartered flights from Russia to Turkey and for Russian tourism companies to stop selling vacation packages that would include a stay in Turkey.

Prime Minister Dmitry Medvedev earlier in the week had ordered his cabinet to develop a list of goods to be sanctioned.

Read More: Putin ‘fully mobilized’ to confront Turkey: Spokesman

Putin’s decree also calls for ending visa-free travel between Russia and Turkey and orders the tightening of control over Turkish air carriers in Russia “for security reasons.” A Kremlin statement said the decree was issued “to protect Russian citizens from crimes.”

Erdogan’s expression of regret Saturday was the first since Tuesday’s incident in which Turkish F-16 jets shot down the Russian jet on grounds that it had violated Turkey’s airspace despite repeated warnings to change course. It was the first time in half a century that a NATO member shot down a Russian plane and drew a harsh response from Moscow.

“We are truly saddened by this incident,” Erdogan said. “We wish it hadn’t happened as such, but unfortunately such a thing has happened. I hope that something like this doesn’t occur again.”

Brick and mortar retailers saw less foot traffic on Thanksgiving and the day after—the national retail extravaganza otherwise known as Black Friday—as consumers appeared to get an early start on holiday shopping and turned out in stores in fewer numbers, a retail tracking firm said on Saturday.

ShopperTrak’s preliminary figures estimated combined retail sales of USD 12.1 billion over Thanksgiving and Black Friday, a projected decrease from the comparable year-ago period. The firm added that Thanksgiving Day grossed just shy of USD 2 billion, while Black Friday pulled in more than USD 10 billion.

The firm expects brick and mortar sales to rise by 2.4 percent during this year’s holiday, it added. Separately, data from analytics firm RetailNext showed overall sales for both days fell 1.5 percent as customer traffic flattened, pushing down average spending per shopper by 1.4 percent.