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HONG KONG (Nikkei Markets) – Asian equities outside Japan edged down on Thursday against the decline of major Chinese companies, which offset that of the continental airlines.
The Nikkei Asia300 index of companies outside Japan fell 0.1% to 1,355.15. Tencent Holdings, a major player in social media, lost 0.5%, while property developer China Vanke lost 1.1%.
Shares of China-based Air China, China Eastern Airlines and China Southern Airlines rose at least 3.3% after the State Council announced a plan to reduce by half the amount of their contributions to an industrial development fund. This decision was part of a series of measures announced by the Council to ease the burden on domestic businesses in all sectors.
"According to our estimates, China Southern Airlines, China Air and China Eastern Airlines could each pay more than three billion yuan ($ 447 million) a year," Morgan Stanley said in a note. "Therefore, a 50% reduction in these fees would save significant amounts in annual costs – 1.5 billion yuan for the Big Three (Chinese airlines)."
Asian investors on Thursday observed developments related to the Washington trade talks between US and Chinese officials. Hopes for an agreement grew as a report indicated that the two countries had solved the main problems. However, obstacles remained to reach a final agreement. The Wall Street Journal reported Wednesday that the demand by President Donald Trump's government that tariffs on imports from China remain in place to ensure Beijing's compliance with the promulgation of the changes remains a major sensitive issue.
"The likelihood of a trade deal has clearly increased this week, although the issue of tariff removal remains unresolved for Asian markets to think about," said Jingyi Pan, a market strategist at IG Asia. The increased likelihood of a trade deal is prompting investors to get rid of disappointing US data, she added.
Data released yesterday showed that employment in the US private sector increased by 129,000 in March. The index of domestic service activity of the Institute for Supply Management posted a reading of 56.1, two estimates missing.
Genting Singapore tumbled 9.3% after increasing Singapore's entry tax on Singapore casinos by 50% for citizens and permanent residents. The casino operator planned to invest 4.5 billion Singapore dollars (3.3 billion dollars) to expand its resort in Singapore. Morgan Stanley said it had a negative impact of about 9%, unless the revenue / profit growth following the redevelopment is significant.
The Singapore Post has jumped 3.5% after announcing Wednesday night that it would sell its e-commerce business in the United States, Jagged Peak and TradeGlobal, as a result of a strategic review. Sing Post, whose shareholders include Singapore Telecommunications and Alibaba, plans to focus on Southeast Asia and the Asia-Pacific region.
The Malaysian conglomerate Genting lost 2.2%, a day after its Genting Malaysia unit announced the acquisition of a super yacht. The Public Investment Bank estimates that the acquisition of the yacht will bring only a limited benefit compared to the additional cost that would result, noting that the acquisition is expected to result in a 5% to 7% decline in 2019 net profit forecasts. -2021. Genting Malaysia shares closed down 0.9%.
At the same time, the Indian Monetary Policy Committee on Thursday lowered the benchmark interest rate by one percentage point, against a backdrop of poor inflation expectations. The country's benchmark, Sensex, was close to 0.5%, registering a record drop.
–Nimesh Vora
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