Asia report: China, NZ buck regional losses

Most Asian markets ended up lower on Tuesday, with Australian shares finally catching up with the uncertainty surrounding Saturday’s federal election outcome.

Japan’s Nikkei 225 finished down 0.67% at 15,669.33 as the yen gained strength.

It was last 0.85% stronger against the greenback at JPY 101.69 per USD.

The carmakers finished mixed, with Honda down 1.11%, Mazda losing 2.66%, Nissan adding 0.15% and Toyota up 0.51%.

Shares in Isuzu Motors rose 1.65%, Mitsubishi Motors slid 4.05% and Yamaha Motor lost 0.86%.

Analysts at Deutsche Bank upgraded Nissan shares from ‘hold’ to ‘buy’ during the session, and maintained Toyota’s ‘buy’ rating, albeit with lower price targets.

The analysts said the post-Brexit selloff created a buying opportunity for Nissan stock.

Deutsche said Nissan earnings are not without their risks, “but even so on our figures the company is being valued lower than even its global financial crisis levels,” the note read.

Mitsubishi’s sizeable drop came after Credit Suisse downgraded the stock from ‘neutral’ to ‘underperform’.

The note said they were looking for the carmaker to begin “toward a return to normality by regaining customer confidence and stabilizing operations."

Mitsubishi admitted in April that it falsified data from fuel economy tests to make emissions levels appear better.

Credit Suisse upgraded Isuzu Motors from ‘neutral’ to ‘outperform’, citing the firm’s strong position in “key local markets” such as Thailand and the Japanese commercial vehicles sector.

Going against the grain were the mainland markets, with the Shanghai Composite Index up 0.62% to 3,007.11 and the Shenzhen Composite managing a 0.23% gain to 2,006.37.

The Caixin services Purchasing Managers’ Index for June rose to 52,7 in June, from 51.2 in May, which was the fastest increase in the services sector in 11 months.

In Korea, the Kospi slipped 0.27% to 1,989.85, while Hong Kong’s Hang Seng Index lost 1.46% to 20,750.72.

Oil prices were lower during the session, with Brent crude last down 2.1% at $49.07 per barrel and West Texas Intermediate losing 2.22% to $47.70.

In Australia, the S&P/ASX 200 finished down 1.02% at 5,228, with the weighty financials subindex dragging the chain, losing 1.27%.

The major banks were under increased pressure, with National Australia Bank the biggest loser, down 1.56%.

It’s understood the ongoing political uncertainty in Australia has been weighing on the prospects of the region’s big banks.

The federal election, held on Saturday, failed to produce a clear majority, with the current Prime Minister Malcolm Turnbull saying on Tuesday that it would still be several days before the count finishes.

Rumours swirled during the session that the ongoing political and economic uncertainty in the sunburnt country could also see it lose its AAA credit rating.

Stocks in New Zealand also bucked the regional trend, with the benchmark S&P/NZX 50 rising 0.4% to 6,970.99.

Local analysts pointed to the growing prospect of interest rates remaining low as drawing investors to the market, though turnover was weak given the lack of a tailwind from the US markets.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.6% at AUD 1.3344 per USD and the Kiwi retreating 0.48% to NZD 1.3902.