Asia report: Markets mixed as Nintendo loses Pokemon sheen

Markets in Asia ended mixed on Monday, as the sheen came off Nintendo and traders kept an eye to upcoming central bank meetings in Japan and the US.

In Tokyo, the Nikkei 225 was virtually flat, closing down 0.04% at 16,620.29 while the broader Topix index was off 0.16% at 1,325.36.

Video games maker Nintendo slid 17.72%, bringing the stock 29% lower than its high of JPY 32,700 on 19 July.

The company had watched its share price soar with the runaway success of smartphone game Pokemon Go, but on Friday Nintendo told markets that the financial impact of the product will be “limited”.

It owns a stake in both the intellectual property holder The Pokemon Company and the developer of the augmented-reality game Niantic.

Data released on Friday from IHS Markit showed the number of short positions on Nintendo had tripled in little more than a week, suggesting the market was not expecting Nintendo to ride the wave of Pokemon popularity for too much longer.

Elsewhere in corporates, shares in Mazda Motor added 5.93% after the Nikkei reported the carmaker’s group operating profit looked to have dropped 6% to around JPY 50bn in the three months to 30 Jun as a result of yen’s strength.

The newspaper added that this still far exceeded the market consensus for JPY 33bn.

Official data for exports garnered a muted reaction in Tokyo, with Japan’s exports for June falling 7.4% year-on-year.

It was the ninth monthly fall in a row, though it was better than a Reuters-polled forecast for an 11.6% drop, and volumes increased for the first time in four months with a 2.9% positive reading for June.

Imports were down 18.8% over last year - marginally better than the 19.7% consensus forecast - and Japan’s trade balance hit a JPY 692.8bn surplus, compared with a JPY 494.8bn forecast.

“The improvement for exports partially reflected waning disruption caused by the Kumamoto Earthquake, as well as yen strengthening and uncertainties about the influence of Brexit on exports,” said IHS Global Insight principal economist Harumi Taguchi.

“The year-on-year effect from weak oil prices is likely to gradually soften and lift overall import prices, but this could be partially offset by weak domestic demand and the effect from yen strength.”

Market eyes were looking toward the Bank of Japan’s two-day monetary policy meeting, starting on Thursday, with serious expectations for monetary and fiscal stimulus from the central bank.

The yen had traded choppily throughout the day, and was last 0.15% weaker against the greenback at JPY 106.29 per $1.

Shares on the mainland were mostly higher, with the Shanghai Composite Index adding 0.13% to 3,016.80, and the Shenzhen Composite up 0.01% to 2,019.81.

The G20 summit took place in the southern metropolis of Chengdu over the weekend, where Bank of Japan governor Haruhiko Kuroda once again said that the central bank will not use so-called helicopter money - the printing and handing out of cash payments - to help meet domestic inflation targets.

South Korea’s Kospi added 0.1% to close at 2,012,32, while Hong Kong’s Hang Seng Index finished up 0.13% at 21,993.44.

Oil prices were lower during Asian trading, with Brent crude last 0.82% lower at $45.32 per barrel and West Texas Intermediate losing 0.8% to $43.84.

Traders in the region were also looking towards the US Federal Open Market Committee’s two-day monetary policy meeting, beginning on Tuesday, with markets anticipating a stand-pat approach.

“We expect the Fed to leave rates on hold as it seeks to gain more confidence that US growth is back on track and that the impact from Brexit will be minimal,” said AMP Capital chief economist Shane Oliver.

He said he is expecting the Fed to be gradual and cautious about rate hikes.

In Australia, the S&P/ASX 200 added 0.64%, with the weighty financials subindex rising 0.55%.

New Zealand’s S&P/NZX 50 reached yet another fresh record high, rising 1.3% to 7,317.30, led by global accounting software firm Xero which added 4.2% during the session.

The company has gained 9.8% since last Wednesday, when it revealed that it is migrating its platform to Amazon Web Services in a bid to both reduce operating costs and allow for further product expansion.

Against the greenback, the down under dollars were mixed, with the Aussie last 0.22% stronger at AUD 1.3361 per $1 and the Kiwi 0.1$ weaker at NZD 1.4317.