Asia report: Most markets higher, China falls on capital concerns

Markets in Asia finished mostly higher on Tuesday, although China and Hong Kong ended lower as concerns were raised over capital outflows from the People’s Republic.

In Japan, the Nikkei 225 was up 0.53% at 19,494.53, after the Bank of Japan confirmed its decision to stand pat on interest rates in the negatives.

The central bank also kept its 10-year government bond yield target to around 0%.

It was more upbeat on economic outlook in its statement, however, with investors hoping BoJ Governor Haruhiko Kuroda would match that enthusiasm in his news conference.

The yen was weaker against the greenback, and was last 0.67% behind at JPY 117.87 per $1.

On the mainland, the Shanghai Composite finished 0.5% lower at 3,102.48, while the Shenzhen Composite was 0.14% weaker at 1,981.32.

Investors in China have expressed increasing concern that capital outflows, which have picked up in the weeks since Donald Trump won the US election, as well as a weakening currency could put the kibosh on China’s recent relative stability.

The People’s Bank of China set renminbi’s onshore loose peg at CNY 6.9468 per $1 on Tuesday, strengthening from its close of CNY 6.9513 on Monday.

South Korea’s Kospi was up 0.17% at 2,041.94 at its close, while Hong Kong’s Hang Seng Index lost 0.47% at 21,729.06.

The drop brought Hong Kong’s losses to 5% in the last fortnight.

“The selling was accompanied by emerging market outflow as the U.S. dollar surged to a decade's high,” noted CMC Markets market analyst Margaret Yang.

“The fast depreciation of yuan has also urged outflow from the China market, further weighing on Hong Kong equities.”

Oil prices were higher, with Brent crude last up .97% at $55.46 per barrel and West Texas Intermediate 0.56% firmer at $53.36.

Australia’s S&P/ASX 200 added 0.52% to finish at 5,591.10.

It came after the release of minutes from the Reserve Bank of Australia’s December policy meeting, which showed the central bank as remaining cautiously optimistic about the country’s economy.

The bank appeared to be trying to balance lower interest rates against the risks associated with higher household debt.

“The fairly optimistic comments on domestic activity are outdated as we found out the day after the December meeting that GDP fell by 0.5 percent quarter-on-quarter in the third quarter,” noted Capital Economics chief Australia and New Zealand economist Paul Dales.

“The minutes confirm that the RBA had expected 'year-end growth … to decline before picking up,' but the drop in GDP was larger than the RBA expected.”

New Zealand’s benchmark S&P/NZX 50 rose 0.05% to 6,789.66, led higher by poultry producer Tegel, which was 2.9% firmer as it continued its recovery from a record low on Thursday last week.

Large-format discount retailer Warehouse Group was the worst performer, plummeting 8% after the country’s largest non-food retailer told the market it was looking at a 10-15% fall in first half profits.

The chain, known for its ubiquitous fire engine-red warehouse stores across the country, said the usually busy lead-up to Christmas was significantly weaker than expected.

Both of the down under dollars were weaker, with the Aussie last off 0.11% at AUD 1.3821 against the greenback, and the Kiwi 0.41% softer at NZD 1.4492 per $1.