Hong Kong’s benchmark Hang Seng Index was 0.7% higher in mid-afternoon trading boosted by a rebound in Apple supply chain-stocks which were hit yesterday on concerns about weak demand for the iPhone X. Smartphone lens maker Sunny Optical Technology (2382.HK) jumped 4.4%, while AAC Technologies (2018.HK) , which makes speaker components for Apple’s iPhone, gained more than 3%. Index heavyweight Tencent (700), best known for its WeChat social networking app, advanced 1.45%. Country Garden (2007.HK) was the best performer, surging more than 7% after the property developer entered a term loan agreement with BNP Paribas for HK$1.78 billion ($227.8 million). The loan, with a term of 36 months, will be used by its unit to buy a 12.35% stake in E-House China Enterprise Holdings, a real estate service provider registered in the Cayman Islands.   Geely Automobile (175.HK) accelerated 3.5% after announcing the acquisition of a a $3.24 billion stake in Swedish truck-and-bus maker Volvo, in what is being seen as another sign of the appetite among Chinese companies for global automotive assets. The Shanghai Composite was 0.7% higher, while the CSI 300, which tracks large cap companies in Shanghai and Shenzhen, was 0.9% higher.

It was a similar story in Taiwan with the tech-heavy TAIEX 0.77% higher in mid-afternoon trading with Apple assembler Hon Hai Precision (2317.TW), better known as Foxconn, gaining 2.3%, while smartphone lens maker Largan Precision (3008.TW) surged  more than 6%.

Japan’s blue-chip bellwether Nikkei 225 slumped 0.6% lower in afternoon trading as the Japanese yen rose to a one-week high. Financial stocks were among the worst performers with Mitsubishi UFJ Financial (8306.JP) and Fukuoka Financial Group (8354.JP) both dropping more than 2% each. Nippon Sheet Glass (5202.JP) fell 3.7% after the glass maker slashed its net profit forecast for the financial year ending march 2018 to JPY1 billion from JPY8 billion previously.

Australia’s bellwether S&P/ASX 200 hit a fresh 10-year high, closing at 6,088 with telecom and energy stocks leading the way.  SpeedCast International (SDA.AU) rallied 4% to a record high $5.46 a share. Last week broker Ballieu Holst said the satellite communications company is cheap compared to its peers and  “is well placed to continue growing earnings strongly over the next few years as it leverages its strong position in the market and conditions in key industry verticals continue to improve.” Embattled Retail Foods Group (RFG.AU) was the worst performer, with the owner of Brumby’s, Donut King and Gloria Jean’s brands falling 5.6%. The fast food franchiser’s shares had enjoyed a mild renaissance over the past couple of days following the recent allegations into the fast food franchiser’s business practices which sent the company’s share price into freefall.

Elsewhere, Korea’s Kospi rallied 1.26% boosted by a rebound in the shares of electronics conglomerate Samsung Electronics (005930.KR), which climbed 3.24%.

Hong Kong’s benchmark Hang Seng Index, after resuming trading following the four-day Christmas holiday, was a fraction up in mid-afternoon trading. Hong Kong-listed Chinese developers were among the best performers after recent comments from the Chinese Ministry of Housing and Urban-Rural Development indicated a supportive policy stance toward first-time home buyers. Country Garden (2007.HK) jumped more about 6%, while China Resources Land (1109.HK) gained around 3%. The surge in the price of oil overnight gave a boost to energy stocks with refiners CNOOC (863.HK) and PetroChina (857.HK) up 2.4% and 1.5%, respectively. Holding the index back was selling in some of the 2017’s best performing stocks: Smartphone component makers Sunny Optical (2382.HK) and AAC Technologies (2018.HK) both plunged almost 6% on concerns about weak demand for Apple’s flagship iPhone X. Index heavyweights Ping An Insurance (2318.HK) and Chinese tech giant Tencent (700.HK) fell 2.2% and 1%, respectively. The Shanghai Composite was 0.2% lower, while the CSI 300, which tracks large cap companies in Shanghai and Shenzhen, was flat.

Japan’s blue-chip bellwether Nikkei 225 was also flat in mid-afternoon trading. Kawasaki Heavy Industries (7012.JP) was the best performer, surging more than 8% after broker Nomura upgraded  industrial machinery maker to buy from a neutral rating previously and hiked its target price to JPY4,800 a share from JPY 4,300.  J Front Retailing (3086.JP) was almost 7% up after the department store operator reported a 43% year-on-year jump in third quarter operating profit. Like elsewhere, commodity price strength gave a boost to energy and resources stocks:  Miner Toho Zinc (5707.JP) jumped 3.4%, Japan’s largest oil & gas exploration and production company Inpex (1605.JP) gained 3%, while miner Sumitomo Metal Mining rose 2.7%.

Australia’s benchmark S&P/ASX 200 closed flat with gains in energy and materials stocks being offset by losses in almost every other category. Overnight gains in metals prices boosted the big miners, with BHP Billiton (BHP.AU) gaining 0.86%, while Rio Tinto (RIO.AU) rose 0.46%. Other miners to perform well included Lynas Corp (LYC.AU), (+6.7%), St Barbara (SBM.AU) (+4.8%), Syrah Resources (SYR.AU) (+4.1%), Resolute Mining (RSG.AU) (+4%) and Pilbara Minerals (PLS.AU) (+4%). The best performer was Retail Food Group (RFG.AU), which continued its renaissance following the recent allegations into the fast food franchiser’s business practices which sent the company’s share price into freefall. The owner of Brumby’s, Donut King and Gloria Jean’s brands surged more than 9% today after reaching an agreement to extend its three-year AUD150 million debt facilities, which were due to mature in December 2018, into longer dated maturities.

Korea’s Kospi index rebounded in afternoon trading to be 0.13% up, despite shares in Hyundai Heavy Industries (009540.KR) plummeting 29%. The world’s largest shipbuilder announced plans for a USD1.2 billion rights offering to raise funds for operations. It also said it intends to list its refining unit Hyundai Oilbank. Shares in affiliate Hyundai Mipo Dockyard (010620.KR) also plunged 16%. Coming to the index’s rescue was index heavy-weight Samsung Electronics (005930.KR) which rebounded in late afternoon trading to close just over 2% up. It had slumped as much as 3% in the morning session on reports of muted demand for Apple’s iPhone X, whose screen is thought to be provided exclusively by Samsung.

Australia’s bellwether S&P/ASX 200 gained 0.2% to just below its 10-year high, which it achieved earlier this week. Energy stocks were among the best performers buoyed by stronger oil prices with Beach Energy (BPT.AU) and Oil Search (OSH.AU) both gaining more than 2%. BHP Billiton (BHP.AU) is up 0.8% despite pledging to provide total financial support of USD181 million to its Samarco joint venture in Brazil as well as to the non-profit foundation it has set up in the wake of the the 2015 mine dam collapse. Embattled fast food franchiser Retail Food Group (RFG.AU) was the best performer as it continued to recoup some of the steep losses it has incurred since the allegations regarding its business model –  shares in the owner of Brumby’s, Donut King and Gloria Jean’s brands rebounded 10% today after yesterday’s 31% surge. However, it still remains 84% behind its share price of AUD4.40 prior to the allegations. Aveo Group (AOG.AU) jumped more than 4% after the operator of retirment communities announced the sale of its Gasworks Plaza complex in Newstead, Brisbane, to AMP Capital for AUD248.4 million.

Hong Kong’s stocks rallied in the final session before Christmas with the benchmark Hang Seng Index and the Hang Seng China Enterprises Index, known as the H-share index, both up 0.36% in mid-afternoon trading. Property stocks were among the best performers with Country Garden (2007.HK) gaining 2% and China Resources Land (1109.HK) up 1.8%. The Shanghai Composite was 0.15% higher, while the CSI 300, which tracks large cap companies in Shanghai and Shenzhen, was flat.

Japan’s Nikkei 225 and the broader Topix index both remained flat, with mining and energy companies among the biggest gainers amid the commodity strength. Mining company Sumitomo Metal Mining (5703.JP) jumped 4%, while oil & gas major Inpex (1605.JP) gained 3.8%. Drug maker Eisai (4523.JP) plunged 14% after announcing that its anti-amyloid beta antibody BAN2401, developed with Biogen,  failed to meet the criteria for success during a phase II study of patients with prodromal or mild Alzheimer’s disease.

Elsewhere, Korea’s KOSPI gained 0.4, while Taiwan’s tech-heavy TAIEX was 0.4% higher.

]]> https://blogs.barrons.com/asiastocks/2017/12/22/asia-pacific-stocks-gain-ahead-of-holiday-weekend/feed/ 0 https://blogs.barrons.com/asiastocks/2017/12/21/australia-japan-offset-chinese-gains-to-lead-asia-dow-lower/?mod=BOLBlog https://blogs.barrons.com/asiastocks/2017/12/21/australia-japan-offset-chinese-gains-to-lead-asia-dow-lower/#respond Thu, 21 Dec 2017 08:23:35 +0000 http://blogs.barrons.com/asiastocks/?p=10984 Asia markets were mixed on Thursday after U.S. lawmakers passed the tax reform bill with Australia and Japanese markets trading lower, while gains by Chinese markets were not enough to prevent the Asia Dow from closing slightly lower.

Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, says that much of the optimism of the U.S. tax cut has already been priced in:

I believe this is a perfect example of buy the rumour sell the news. We may see a bit of profit taking coming into the back end of the year.

I believe the next catalyst for the upside will be reductions in regulations once Jerome Powell takes over the helm at the US Federal Reserve. The lack of reaction by the markets overnight is testimony the level of optimism already being priced in.

Australia’s benchmark S&P/ASX 200 closed 0.25% lower, snapping a three-day winning streak. Embattled fast food franchiser Retail Food Group (RFG.AU) surged 31% after issuing a clarification in response to a ASX query following its recent profit warning. Shares in the owner of Brumby’s, Donut King and Gloria Jean’s brands are still more than 100% below it’s trading price prior to the allegations regarding its business model. Mineral Resources (MIN.AU) jumped 4.4% after Australian oil and gas producer AWE (AWE.AU) accepted an improved AUD526 million bid from the mining-services company. Having jumped to a two-year high on Wednesday, AWE retreated 2.8% more toward Mineral Resources’ offer price. Shares in BlueScope (BSL.AU) rose 4.4% after the steel maker raised its profit guidance for the six months ended 31 December, 2017 and said that the new U.S. tax rate is likely to  boost earnings. Mining and resources stocks were mostly higher on the back of stronger commodity prices overnight with BHP Billiton (BHP.AU) gaining 1.41% and Rio Tinto (RIO.AU) closing 0.95% higher. Pilbara Minerals (PLS.AU) was the worst performer, falling 4.2% after being downgraded by Citi on valuation concerns.

Japan’s Nikkei 225 fell 0.11% while the broader Topix index was flat after the Bank of Japan decided to continue with aggressive monetary easing. The Japanese central bank voted 8 to 1 to maintain its target for 10-year Japanese government bond yields at around zero and its short-term deposit rate at minus 0.1% and also kept its pledge to buy government bonds at an annual rate of 80 trillion yen ($705 billion). Construction companies, which have come under scrutiny due to the ongoing investigation into antitrust violations related to bid rigging on a maglev train project, recouped some of their recent heavy losses today with  Taisei (1801.JP) gaining 3.1%, while peer Kajima (1812.JP) advanced 2.95% higher.

Hong Kong’s Hang Seng Index closed 0.5% higher led by index heavyweights. Ping An Insurance (2318.HK) gained 2.8%, Geely Automobile (175.HK) rose 2%, while smartphone component maker AAC Technologies (2018.HK) advanced 1.9%. The Shanghai Composite closed 0.38% higher, while the CSI 300, which tracks large cap companies in Shanghai and Shenzhen, rose 0.93%.

Elsewhere, Korea’s KOSPI slipped 1.72% lower as index giant Samsung Electronics (005930.KR) shed 3.42%, while Taiwan’s tech-heavy TAIEX edged 0.15% lower.

European markets are lower, with the Euro STOXX 50 down 0.28%, the German DAX 0.05% lower, while the France CAC 40 is down 0.43%%.

The company also upgraded its profit guidance for the six months ended 31 December, 2017. It now expects earnings before interest and tax (EBIT) to be around AUD460 million compared to prior guidance of AUD420 million. Incoming managing director & CEO Mark Vasella attributed the increase mainly to:

• Australian Steel Products: higher steel prices and domestic volumes, higher contribution from export coke of approximately $20 million and improved productivity;
• TBSL, our Indian JV: recognition of previously impaired tax assets of $12 million
• Partly offset by lower contributions from Coated & Building Products ASEAN and ASEAN buildings due to volume, mix and lower margins.

Under the Tax Cuts and Jobs Act, passed by Congress on Wednesday (U.S. time) the top corporate tax rate, which affects publicly-traded companies, will drop from 35%—one of the highest top rates levied by developed nations—to 21% in 2018. Bluescope said it expects its U.S. earnings will benefit through the low federal tax rate, which it anticipates will be 7% lower in FY2018 and 11% lower thereafter. The benefit will be partly offset by a toll charge on foreign earnings which is not expected to e material, the company said.

YouTube has reached a new agreement with Sony and Universal Music Group on the royalty rates for professional music videos and user-uploaded clips, Bloomberg reported. The move will pave the way for YouTube to offer a new paid service after two years of tumultuous negotiations. It was previously reported that YouTube would launch its new music subscription service in March 2018. Universal confirmed the agreement saying the deal will give artists more flexibility and better pay, while Sony declined to comment, according to the report.

Sony’s music operations were growing rapidly even before the deal with YouTube, according to Jefferies’ analyst Atul Goyal:

Sony’s streaming’ revenue recorded a YoY growth of c. 68% and QoQ growth of 38% in 2Q. Streaming revenue (including digital audio, digital video and digital radio, both subscription and ad-supported services) reached ¥53b in 2Q. This is almost 50% of total recorded music revenue in 2Q, a big increase from c. 35% in 2Q last year. So far, most of these revenues are a result of revenue sharing agreements with Spotify, Apple, Amazon etc.

Deal with YouTube may drive upside to Music earnings. It appears the most prolific use of Music audio / videos is on YouTube. The music industry’s complaint has been Google / YouTube not paying a fair share of music consumption (c. 63% of music streaming is on YT, but Music companies receive only c. 11% of their revenue share from YT). This may change now that YouTube entered an agreement with Warner Music in May and has also just reached an agreement with Sony and Universal Music Group, according to Bloomberg. This could significantly increase Sony’s revenues and profits in Music business.

Goyal has a buy rating on Sony with a target price of JPY6,970 a share, implying 36% upside from the current price of around JPY5,101.

Sony shares have surged 55% this year driven by a strong performance from its Game & Network Services division which makes the PlayStation console.

The AWE board voted unanimously to accept a sweetened offer from Mineral Resources comprising 41.5 cents in cash and between 0.0198 and 0.0277 Mineral Resources shares per AWE share. The offer values AWE at 83 cents a share, an increase from Mineral Resources’ previous bid of 80 cents a share. Shareholders also have the option to receive either 100% cash or 100% in shares (scrip).

Commenting on the acquisition, Mr Kenneth Williams, Chairman of AWE said, “The acquisition price represents a highly attractive opportunity for AWE shareholders to realise a material premium for their AWE shares. Shareholders who receive Mineral Resources shares can choose to remain invested in the larger and more liquid Mineral Resources or they can choose to sell their new Mineral Resources shares for cash”.

Chinese rival CERCG withdrew its 71 cents per share bid for AWE on December 5.

Mineral Resources deal for AWE gives mining-services company access to a natural-gas project in Western Australia’s Perth Basin that is estimated to be one of the five largest onshore gas fields ever discovered in the country, as well as stakes in gas operations in eastern Australia and in an oil project in the Northwest Natuna Sea off Indonesia.

Shares in AWE, having jumped to a two-year high of 88 cents apiece yesterday, are down 2.84% in Thursday morning trading to be closer to the offer price. Mineral Resources jumped 3.74%.

Here’s RBC Capital Markets’ analyst Ben Wilson’s take on the deal:

We believe the form of the revised bid somewhat mitigates many of the uncertainties attached to the initial scrip bid. While the revised offer from MinRes is below the implied A$0.86/share value based on MinRes’ closing price from yesterday, we expect the form of the revised bid will give shareholders increased certainty over the consideration with the value of the proceeds fixed at A$0.83/share if the MinRes VWAP is in the A$15-21/share range prior to the scheme vote. The variable cash and scrip components will likely promote higher acceptances from shareholders who can choose between cash proceeds or who may be looking for CGT rollover relief, although the split between cash and scrip will be uncertain until the scheme vote.

We think that the AWE Board is likely to have consulted with key shareholders on an acceptable bid price before entering into a binding Implementation Deed and the offer is therefore likely to receive shareholder approval subject to the MinRes share price movements before the scheme vote. The current MinRes offer is ~14% above the previous all cash A$0.73/share off-market takeover bid from CERCG (AWE Ltd: CERCG announces second takeover offer at A73cps) and MinRes would have the right of response to match any competing offer if CERCG or another party came back with a superior proposal.

After a slow start Australia’s benchmark S&P/ASX 200 pushed higher for the third straight day to its highest since January 2008, with mining and resources stocks leading the way. Rio Tinto (RIO.AU) gained 0.6%, while BHP Billiton (BHP.AU) closed 0.2% higher. Ardent Leisure (AAD.AU) was the best performer, surging 12% after agreeing to sell its Bowling & Entertainment division for AUD160 million to The Entertainment and Education Group.  Australian Agricultural Company (AAC.AU) jumped  5.5% after appointing former Westpac banker, Hugh Killen as its new CEO. Retail Food Group (RFG.AU) slumped 15.4% to its lowest since July 2009. Shares in the owner of Brumby’s, Donut King and Gloria Jean’s brands have plummeted more than 60% since allegations it is running its franchisees into the ground with a brutal business model. Meanwhile, Domino’s Pizza (DMP.AU) rebounded 3.9% after Morgan Stanley suggested the recent sell-off in the fast food franchiser’s shares was overdone.

Japan’s blue-chip Nikkei 225 index and the broader Topix remained relatively flat in mid-afternoon trading as gains by the major banks were offset by further weakness in construction stocks.  Resona (8308.JP) was the best performer among the banks, jumping more than 4%, while peers Mitsubishi UFJ Financial (8306.JP) and Mizuho Financial (8411.JP) gained 1.8% and 1.7%, respectively. Shares in Taisei (1801.JP) slumped a further 3.9% after being caught up in the ongoing investigation into antitrust violations related to bid rigging on a maglev train project. Shares in fellow construction companies Kajima (1812.JP), Shimizu (1803.JP) and Obayashi (1802.JP) fell 1.5%, 2% and 0.7%, respectively. Shares in Idemitsu Kosan (5019.JP) and Showa Shell Sekiyu (5002.JP) jumped 3.55% and 0.53%, respectively, after Reuters reported that Japan’s second- and fourth-biggest refiners will combine management of their key businesses.

Hong Kong’s Hang Seng Index edged down 0.04% by midday with selling in some of some of the index’s heavyweight stocks. Chinese social media and e-commerce giant Tencent (700.HK) was down 0.6%, smartphone component supplier Sunny Optical (2382.HK) dropped 1.82%, car maker Geely Automobile (175.HK) fell 0.6%, while insurers AIA Group (1299.HK) and China Life Insurance (2628.HK) both dropped about 0.8%. Snack food maker Want Want China (151.HK) was the best performer, gaining more than 4% after being named by CICC as an undervalued stock with the potential to rally more than 20% in 2018. The Shanghai Composite was also 0.04% lower at lunchtime, while the CSI 300, which tracks large cap companies in Shanghai and Shenzhen, nudged 0.06% higher.

Elsewhere, Korea’s KOSPI was 0.13% lower after the morning session dragged down by tourism and cosmetics stocks on fresh reports China will impose a ban on tour groups to the country. Hotel and duty free shop operator Hotel Shilla (008770.KR) fell 3.9%, while cosmetics stocks AmorePacific (090430.KR) and Cosmax (192830.KR) fell 3% and 0.8%, respectively. Meanwhile, Taiwan’s tech-heavy TAIEX was 0.33% higher in mid-afternoon trading.

]]> https://blogs.barrons.com/asiastocks/2017/12/20/asia-pacific-stocks-take-a-breather/feed/ 0 https://blogs.barrons.com/asiastocks/2017/12/19/greater-china-stocks-3-investment-themes-for-2018/?mod=BOLBlog https://blogs.barrons.com/asiastocks/2017/12/19/greater-china-stocks-3-investment-themes-for-2018/#respond Wed, 20 Dec 2017 03:33:40 +0000 http://blogs.barrons.com/asiastocks/?p=10980 Greater China stocks have grown about 40% year-to-date mostly on the back of global synchronized growth.

Chinese stocks grew almost 15% during the third quarter as China’s economy remained resilient with GDP growing by 6.8%. Meanwhile, Hong Kong and Taiwan’s economies both fared well.  Overall exports from Hong Kong soared thanks to the global economic upturn. Service exports and private consumption expenditure propelled year-on-year growth to 3.6% in the third quarter, marking the fourth consecutive quarter of above-trend economic expansion. Taiwan’s economy expanded by 3.1% year-on-year in the third quarter, beating market expectations on the back of higher exports and steady growth of domestic private consumption.

Kai-Kong Chay, Senior Portfolio Manager, Greater China Equities for Manulife Asset Management remains constructive on Greater China as he expects earnings growth in 2018 will remain solid – although growth rates will likely moderate due to a higher base. Kai-Kong says the following three investment themes will be key in 2018:

Environmental Protection: Natural Gas & Electric Vehicle Use Set To Grow

At the 19th National Congress of the CPC held in October, President Xi Jinping mentioned the phrase “environmental protection” more frequently than the term “the economy”,10 reflecting a shift in the central government’s policy focus.

To combat air pollution, the Chinese government introduced the “coal to gas” energy conversion program. “2+26” cities in Northern China have been banned from using coal for Winter heating on a pilot basis, which should boost natural gas usage and benefit gas distributors.11 With policy support, we believe annual gas consumption growth in the next two to three years will likely exceed 20%, which may completely nullify the effects of lower natural gas prices earlier this year and boost the overall income of distributors.

China has also been focusing on the development and promotion of electric vehicles, which is poised to lead the second-generation automobile market. We expect the manufacturing cost of electric vehicles to fall to petrol vehicle levels by 2025 – 2031. We also believe lower prices will drive a surge in demand and penetration of these vehicles.12 Renowned carmakers have postponed the introduction of new electric vehicle models to the first quarter of next year, but we remain optimistic regarding investment opportunities brought about by these vehicles and their related supply chains. This includes areas like rechargeable batteries and accessories for electric cars; and increased demand for advanced driving assistance systems in the region. Weight reduction in electric vehicles will help to improve their endurance performance, making them more appealing to consumers.

R&D & Innovation: Automation, Better Internet, Smartphone Tech & More

R&D spending has been rising rapidly in China. The country has undertaken strategically important research and development, focusing on artificial intelligence, automated production, and high value-added manufacturing industries. R&D expenditure accounted for around 2% of GDP in 2014.13 This is expected to increase gradually to 2.8% by 2030.14 We will look for opportunities arising from this trend.

As social media sharing platforms and live streaming gain popularity, the compound annual growth rate, or CAGR, of global internet data usage is expected to reach 27% during the period between 2016 and 2021.15 This is likely to be supported by increasing demand for cloud computing, data center switching, and better internet speed. With that in mind, we see opportunities in Taiwanese tech companies, which are likely to benefit from increased R&D expenses and automation trends, such as high-speed interface chip design companies. We also see opportunities in the smartphone-related component supply chains – for instance, in areas such as dual-cameras, substrate-like printed circuit boards (SLP), and 3D-sensing technology.

State-Owned-Enterprise (SOE) Reforms & Public-Private Partnership

Successive SOE reforms have led to a drop in the number of central SOEs in China, dropping from 112 in 2015 to 98 currently. The trend is expected to continue, with the figure likely dropping further to about 80.

Some SOEs are starting to enjoy the benefits stemming from the reforms, providing for mixedownership. Benefits include enhanced core business performance, better corporate governance, and streamlined internal operations. In our view, relevant opportunities should begin to emerge in the next two to three years.

Hong Kong’s benchmark Hang Seng Index closed 0.7% higher as investors bought some of the index’s best performing stocks of the year. Ping An Insurance (2318.HK), which has surged 106% this year, gained a further 3.56%, Apple-supplier AAC Technologies (2018.HK), which is up 99% so far, added another 2.4%, while car maker Geely Automobile (175.HK), which has accelerated a massive 238%, rose 1.4%. Property developers were the worst performers with Country Garden (2007.HK) down 0.1%, China Resources Land (1109.HK) retreating 0.7% and New World Development (17.HK) falling 0.5%. Shares of Li & Fung slumped 4.5% after ratings agency Moody’s placed the Hong Kong-based trading firm on review for downgrade, calling the HK$8.5 billion ($1.1 billion) divestment of its product vertical business negative because the move reduces diversification, operating profit and equity base. The Shanghai Composite posted a solid 0.88% gain, while the CSI 300, which tracks large cap companies in Shanghai and Shenzhen, rallied 1.26% higher.

Following yesterday’s rally, Japan’s Nikkei 225 retreated 0.15%, while the broader TOPIX closed 0.2% lower dragged down by construction and railway stocks amid an ongoing investigation into antitrust violations related to bid rigging on a maglev train project. Shares in Taisei (1801.JP) slumped more than 6% on reports that the headquarters of the construction company had been raided  in relation to the investigation. Shares in fellow construction companies Kajima (1812.JP), Shimizu (1803.JP) and Obayashi (1802.JP) also fell. Medical robotics company Cyberdyne (7779.JP) jumped almost 10% after its Hybrid Assistive Limb (HAL) for lower limb medical use obtained approval from the US Food and Drug Administration.

Australia’s bellwether S&P/ASX 200 closed 0.5% higher, buoyed by mining and resources stocks following stronger overnight commodity prices. Among the biggest gainers were: graphite miner Syrah Resources (SYR.AU), which gained 5.6%, while lithium miners  Orocobre (ORE.AU)and Pilbara Minerals (PLS.AU) jumped  5.2% and 3.9%, respectively. BHP Billiton (BHP.AU) advanced 0.78%, while and Rio Tinto (RIO.AU) rose 1.3%. The positive sentiment extended to the big four banks – Commonwealth Bank of Australia (CBA.AU) was up 1.3% , ANZ (ANZ.AU) gained 0.7%, National Australia Bank (NAB.AU) advanced 0.54%, while Westpac (WBC.AU) rose 0.06%. Beleaguered Retail Food Group plummeted a further 25% after the owner of Brumby’s, Donut King and Gloria Jean’s brands warned that profits for 1H18 is expected to be AUD22 million, compared to AUD33.5 million for the same period last year.

Elsewhere, Korea’s KOSPI ended 0.13% lower , while Taiwan’s tech-heavy TAIEX closed 0.37% down.

European markets are mixed, with the Euro STOXX 50 flat, the German DAX 0.1% higher, while the France CAC 40 is a tad lower.