Asian Indices Down with Nikkei 225 and Pharmaceuticals Hit Hardest After Trump Speech
Markets had been waiting impatiently this week for President-elect Trump’s first official press conference yesterday. Solid information and strong clues on crucial policy areas such as international trade, taxation and infrastructure spending were all sought in the hope this would provide the impetus for continued optimism in markets. What they got in the end was a blustering and defensive scattergun approach with the main focus the rubbishing of recent salacious reports surrounding a dossier, the veracity of which’s contents does look highly dubious, on supposed Trump hijinks while in Moscow 5 years ago.
The main outcome of the press conference seems to have been that market participants are being forced to acknowledge that the Trump presidency will likely be an erratic period and not all spending-fuelled economic growth and tax cuts. This was reflected in a slump for the U.S. dollar, which had been recently at 14-year highs. It lost 1% against the yen, 0.5% against the euro and even 0.4% against the British pound, which has been in free fall this week.
The leap in yen strength against the dollar led to Japan’s Nikkei 225 index dropping sharply today, finishing 1.19% down. One policy area Trump did speak about specifically was that his administration would come down hard on pharmaceuticals prices leading to heavy losses for pharma companies around Asia. A number of pharma companies were in the Nikkei’s top 10 fallers list with Astellas Pharma (-4.19%), Shionogi (-3.71%), Kyowa Hakko Kirin (-3.44%) and Chugai Pharmaceutical (-3.41%) all seeing their share prices take a heavy downturn.
Retailers and exporters also suffered on the strengthening yen. Convenience store operator FamilyMart UNY Holdings was the day’s biggest faller, down 6.55% despite recently reporting record earnings. Toshiba lost 5.22% after the troubled company admitted that losses at its U.S. nuclear business could be heavier than previously expected as the result of write-downs at its Westinghouse Electric Co. subsidiary.
The best performing company on the Nikkei 225 on Thursday was silicon manufacturer and chemicals company Tokuyama Corp., which gained 2.88%. Petroleum and metals conglomerate was up 1.57% as oil prices showed gains and recent metals strength held. Companies with heavy exposure to base and industrial metals and chemicals generally fared well. Dowa Holdings gained 1.41%, Tosoh Corp. 1.22%, Ube Industries 1.15% and Mitsui Mining & Smelting 1%.
In Australia, the ASX 200 suffered only its second negative session of 2017 after an afternoon downturn led it to a 0.08% loss. Powdered milk and baby formula company Bellamy’s Australia continued to take a hammering following the lifting of a suspension on trading of its shares, taking a 17.8% loss to add to yesterday’s fall of over 9%. Gold miners didn’t have a good day either with most taking losses, the worst of which was Medusa Mining, down 8.5%. Following Trump’s new assertion that his administration will make cheap drugs a priority pharma and biotech firms suffered and on the ASX 200 Mayne Pharma Group took a 4.1% loss and biotech play CSL Limited 2.8%.
Gainers had a strong presence of base metals miners and traders with diversified mining giants BHP Billiton and Rio Tinto up 1.3% and 1% respectively. Smaller iron ore miners BC Iron and Atlas Iron soared with respective gains of 20% and 22%. Insurance broking network Steadfast group added 8.52%.
The Hang Seng lost 0.46% in London. Casino owners and operators Sands China and Galaxy Entertainment led the losers table, down 2.52% and 2.21%. Property companies have been seeing among the best gains this week on the Hang Seng but there were a couple of corrections today with Cheung Kong Property Holdings down 1.93%, Link REIT losing 1.41% and Wharf Holdings 1.12%.
The day’s biggest riser was technology company Lenovo, up 2.2%. Snack maker Want Want, which has been among the heaviest fallers most days this week managed to recover by 1.83% and a number of property companies continued to show strong gains. Hang Lung Properties was up 1.12%, as was China Overseas Land and Investment, Sun Hung Kai Properties 0.66%, China Resources Land 0.53% and New World Development 0.45%.
Singapore’s STI has finished down 0.26%. Real estate companies, who have also seen impressive gains this week saw a correction, all down bar one. CapitaCommercial Trust saw the heaviest fall, down 1.89%, followed by Capitamall Trust with a 1.49% loss. Casino operator Genting was down 1.6% and Yangzijiang Shipbuilding 1.78%. Palm oil company Golden-Agri Resources dropped by 1.16%.
The one property company that didn’t drop was the day’s strongest gainer. Global Logistics Properties, a warehouse and storage specialist, gained 3.98% on news U.S. private equity company Warburg Pincus is attempting to put together a consortium to bid for the company. Other strong gainers included agribusiness group Wilmar International is up 1.9% and SEMBCorp Industries with a 1.98% return.