Asia Markets

Asian equities close mixed; late rally from China

A investor observes stock prices at an exchange hall in Hangzhou, China.
ChinaFotoPress | Getty Images

Asian equities closed mostly in the red on Monday as investors remained cautious following a mixed performance from Wall Street last Friday.

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

The 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 was up 11.4 points, or 0.22 percent, at 5,128.

Late rally in China as Shanghai Composite ends higher

The rallied late afternoon to close 9.3 points, or 0.27 percent, higher at 3,445 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, which saw the stock market register its worst weekly performance since August after a massive sell-off on Friday.

Brokerages pared back most of their morning losses and closed mixed. Shares of Citic Securities closed 1.51 percent lower; China Merchants was down 0.2 percent, while Founder Securities ticked back into the green, closing 3.27 percent higher. Haitong Securities, which saw the biggest plunge in its shares after trading resumed on Monday, closed near 9 percent lower.

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 0.64 and 3.8 percent.

Evan Lucas, market strategist at spreadbetter IG, said in a note investors will be watching a build-up of yuan devaluation again.

"Friday's intraday collapse on the Chinese markets has been put down to the investigations into 'margin financing and short selling' at the three largest brokerage firms in China," he wrote. "However the fact that price action went global (Chinese ADRs were punished on the weekend) suggests something bigger - this could be the next leg of the July - August move."

The smaller Shenzhen Composite was up 0.9 percent; the tech-heavy Chinext was up 1.4 percent; and the blue chip-heavy CSI 300 Index was up 0.26 percent.

Away from the mainland, both Hong Kong's Hang Seng Index and Taiwan's Taiex closed in the red.

Nikkei edged further from the 20,000 benchmark

Japan's continued losing ground and finished 137 points, or 0.69 percent, lower at 19,748, as investors remained unconvinced by the new set of data released in the morning.

Japan's October industrial production was up 1.4 percent from the previous month while retail sales rose 1.8 percent for the month, year-on-year, despite anemic domestic spending.

Harumi Taguchi, principal economist at IHS Global Insights, said in a note Monday afternoon that despite an uptick in monthly industrial production, due to increases in machinery and transportation equipment, the overall level will likely remain weak near term, "until demand strengthens, which will encourage companies to invest in machinery and equipment."

She added, "The industrial outlook suggests a growth of only 0.2% m/m for November due to downside revisions to themajority of industry groupings, particularly for capital and non-durable consumer goods and a decline of 0.9% for December."

Kospi closes near 2 percent lower

The Seoul Kospi closed down 1.82 percent on Monday, 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 steel manufacturer Posco, and KB Financial Group, SK Hynix, and Hyundai Motor were down, seeing between 1.17 and 3.24 percent declines.

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.

ASX closes 0.7 percent lower

The ASX 200 traded 36 points, or 0.7 percent lower at 5,167 in the afternoon, weighed by low oil and other commodities prices.

Resources producers closed mostly in red as iron ore, copper, and other metals retreated. Fortescue and Atlas Iron saw the biggest losses of 4.85 and 4.55 percent respectively.

BHP Billiton lost further ground, closing 3.62 percent lower as news broke that Brazil's federal and state governments plan to sue the miner for 20 billion reais ($5.24 billion) in damages for the disaster at the Samarco iron ore mine earlier this month.

A tailings dam burst in the mine, unleashing 60 million cubic meters of mud and mine waste, killing at least 13 people and polluting a major river valley, according to Reuters.

BHP co-owns Samarco with Vale, the biggest iron ore miner.

Gold miners felt the effects of lower gold prices, seeing heavy losses by afternoon. In Asian trade, spot gold continued to trade close to its lowest levels in six years, fetching $1,057 an ounce.

Newcrest Mining and Evolution Mining saw losses of 3.88 and 10.76 percent respectively while Alacer Gold and Kingsgate also closed in the resd.

Oil producers closed mixed as oil prices saw marginal uptick in Asian trade.

The IMF, the SDR and the yuan explained

Elsewhere, investors will be keeping an eye on the third quarter gross domestic product (GDP) data, the broadest measure of economic health, coming out of India later today.

The Nifty 50 lost its early morning gains and was down 0.12 percent while the Sensex was also in the red.