WTI at Two-Year High on Concern Syria Unrest Will Spread

WTI crude surged to the highest price since 2011 on concern that conflict in Syria might spread to other parts of Middle East and threaten oil supplies. Futures gained as much as 2.1% in New York, extending yesterday’s 2.9% advance. Britain, France and United States stepped closer to military strike against Syria, laying the legal groundwork to justify action after the country allegedly used chemical weapons. Brent of London might rise as high as $150 per barrel if conflict causes supply disruptions, as per Societe Generale SA. National Oil Corporation of Libya said output might have dropped below 200,000 barrels per day, the lowest since 2011 uprising against Muammar Qaddafi.
Phil Flynn, Senior Market Analyst, Price Futures Group, Chicago said Syria fears dominated as traders pondered the “what if scenarios”. For October delivery, West Texas Intermediate climbed as much as $2.31 to $111.32 per barrel in electronic trading on NYME (New York Mercantile Exchange), the highest intraday price since 3rd May 2011. For October settlement, Brent advanced as much as 2.2% or $2.54 to $116.90 per barrel on London-based ICE Futures Europe Exchange after settling on Tuesday at the highest since 25th February. European benchmark crude was set at a premium of $5.77 to WTI from $5.35 from yesterday.
Syrian Unrest
Brent might rise briefly to $150 per barrel if the conflict in Syria spills over into other parts of Middle East, causing supply costs. Michael Wittner, Head of Oil Market Research at Bank’s New York-based said the concern is that attack on Syria will reverberate through the region, increasing the spill over into other nations and resulting in a bigger supply disruption elsewhere. Any armed response against Syria would be narrowly focused on the country’s weapons capabilities and wouldn’t be aimed at depositing President Bashar Al-Assad, United Kingdom and United States officials said. As per data from International Energy Agency, Middle East accounted for 35% of international oil output in the initial quarter of 2013.
Military Strike
Jeffrey White, Former Analyst at Defense Intelligence Agency said Tomahawk cruise missiles are likely to be introduced at night against hundreds of Syrian targets if America and allies launch a military strike in retaliation for the use of chemical weapons. Libyan oil production fell to 1/8th of its capacity as protests over pay and allegations corruption spread to fields operated by Repsol SA and Eni SPA. American gasoline supplies shrank by 1.13 million barrels past week. An Energy Information Administration report today might show stockpiles slid by 1.38 million barrels as per median estimate of 12 analysts in a Bloomberg News survey.
Crude inventories increased 2.47 million barrels. The report from EIA, the statistical arm of Energy Department will perhaps show that supplies gained by 750,000 barrels. API in Washington collects stockpiles information on a volatile basis from operators of pipelines, bulk terminals and refineries. Government needs those reports be filed with EIA for its weekly survey.

NASDAQ Shutdown Forces SEC’s White Into Fight With Market Perils

A 3-hour shutdown of NASDAQ Share Market marks the first test of Securities & Exchange Commission Chairman Mary Jo White’s ability to push through stronger technology safeguards for electronic trading. Mary, a former prosecutor who lacks a background in market regulation responded to the failure by vowing to finish a rule proposed in March to need exchanges to test the reliability of their technology. Exchanges want to limit the number of systems covered by the rule and how much info they have to report about glitches. SEC has grappled with how to enhance market stability since 2010 flash crash, when $862 billion in equity was erased in 20 minutes before share prices recovered.

Andrew M. Klein, Partner at Schiff Hardin LLP and Former Director of markets and trading at SEC said Mary needs to be convinced these guys, all of them take this with utmost seriousness. NASDAQ is starting to look like you cannot be stopped from having these issues and it needs to stop. White signaled in her Senate confirmation hearing in March that she would scrutinize the dispersed, high tech and high speed marketplace, so that it can be optimally and wisely regulated.

Connectivity Issue                                    

NASDAQ said its failure this week stemmed from a connectivity issue between the network and exchange, known as securities information processor, which offers data about prices and quotes. SIPs or such systems are owned by 2 most significant operators – NYX (NYSE Euronext) and NDAQ (NASDAQ OMX Group Inc.). The rule proposal of SEC called Regulation SCI would need exchanges, clearing firms and SIPs for adopting policies to prevent failures, stress test their systems to make sure trading continues through a disruption, including a natural disaster or software glitch. The rule would also cover exchange competitors called alternative trading systems such as dark pools.

No Competition

SEC warned in its March proposal that SIPs could be vulnerable to glitches as there is virtually no competition amongst market data feeds offered to the public, which could lead to little incentive in ensuring high quality product with minimal disruptions. David Easthope, Research Director for securities and investment group at Celent, San Francisco said if you are thinking about investing in your budget for technology, you are going to invest in things, which bring in revenue not necessarily things, which are infrastructure or shared services across the industry.

Software failures have mounted as stock trading becomes more dispersed across multiple alternative trading venues and 13 United States equity exchanges. Larry Tabb, Chief Executive Officer at Westborough, Massachusetts based financial market consultant, Tabb Group LLC said the demand for faster dissemination of market data has forced exchanges to accelerate the movement of information through high speed proprietary data feeds and SIPs.

Faster Systems

Tabb said the way you wind up getting software to speed up is you take out all the protection. Exchanges are resisting Regulation SCI as they worry it will be used to fine them for software glitches which are impossible to eliminate. The rule would replace a voluntary program created after 1987’s share market crash and would expand SEC’s oversight to more systems, including those which support surveillance and regulatory compliance. James J. Angel, Finance Professor at Georgetown University’s McDonough School of Business in Washington said Reg SCI fundamentally gives provides SEC the ability to ding any exchange for any problem.

White’s Response

On 22^nd August, Mary White said that she would work to advance the proposal that passed SEC unanimously on 7^th March. She also said she would convene a meeting of exchange executives and other market participants for accelerating ongoing efforts to further reinforce our markets. Michael Piwowar, SEC Commissioner who joined the agency in August yesterday advised caution on advancing the regulation. Regulation SCI may or may not have contemplated what ultimately caused these disruptions. Thus, we should reconsider the assumptions underlying the Regulation SCI proposal before moving forward with further rulemaking.

Limiting Reports

Exchanges also want SEC to limit the rule to systems which support clearance, trading, order routing, market data and settlement in real time. They also say the commission should adopt materiality threshold to limit the number of system intrusions or compliance failures that must be reported to the regulator. The problem is finding a device to prevent this and recognize the truth of what the industry based message is, that you can’t have this kind of technology-based elaborate system and expect no failures.

CNX Nifty Futures Are Little Changed After Yesterday’s Rally

Indian Sensex stock index futures were little changed after equities rebounded on Thursday. For August delivery, SGX CNX Nifty Index Futures fell 0.1% to 5410.5 in Singapore. The underlying Nifty Index on NSE (National Stock Exchange) jumped 2% to 5408.45 on Thursday. Standard & Poor’s 500 BSE Sensex surged 2.3% to 18,312.94, climbing after its steepest 4-day retreat since 2009. Bank of New York Mellon India ADR Index of American traded shares rose 1.5%. RBI (Reserve Bank of India) said the country’s monetary and economic policies must preserve financial stability as the prospect of reduced Fed stimulus contributes to a slide in the rupee. Weakness in rupee could stoke already high consumer price inflation.

Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio Limited said that economic weakness and issues in rupee against dollar continue to be the main concerns right now. Duvvuri Subbarao, Governor at Reserve Bank and Palaniappan Chidambaram, Finance Minister held coordinated briefings in New Delhi on Thursday to try to soothe investors’ nerves. Excessive pessimism is unwarranted, economic expansion will pick up as year progresses and rupee’s drop has overshot appropriate levels.

Record Low

The officials said, India has no intention of imposing capital controls. Last week, Reserve Bank cut the amount Indian firms can invest abroad without approval and said residents can remit $75,000 per financial year down from $200,000. Rupee touched an unprecedented low on Thursday as concern the Federal Reserve will taper stimulus prompted investors to pull billions of dollars from emerging markets. The 2^nd largest aluminum manufacturing company of India, Hindalco Industries Limited might move. The company is seeking enhanced terms on as much as $2.7 billion of debt as projects funded by rupee loans start. The 3^rd biggest economy of Asia might expand 5.5% in the year to March 2014, as per Central Bank estimates. The ten-year average is around 8%. Auto sales have dropped for 9 straight months through July, whereas industrial production fell 2.2% in June.

Corporate Earnings

Weak currency and economic slowdown is hurting company earnings. Anand Kumar and Jyotivardhan Jaipuria, Analysts at Bank of America Corporation said combined profits for 30 firms in Sensex increased 1.4% in 3 months ended June, unlike an estimate of 5.8% before reporting season. Around 47% of Sensex firms, which posted earnings for June quarter missed analyst estimates; that compares with 43% in 3 months ended December and 27% for March quarter. Sensex lost 5.7% in 2013 and trades at 13 times projected annual earnings unlike 9.8 times of MSCI Emerging Markets Index. Global investors sold a net $118 million of Indian shares on 21^st August; that pared this year’s inflow to $12.1 billion.

Emerging Stocks Decline to 6-Week Low on Fed as Rupee Slumps

Emerging market shares dropped to 6-week low after Fed minutes showed wide support for stimulus cuts, fueling concerns capital outflows will accelerate. Indian rupee weakened to record low. SM (SM Investments Corporation) tumbled 8.4% in Manila, dragging Philippine Stock Exchange Index to the steepest intraday plunge since 2008. Philippine peso weakened 1.1% against dollar, whereas govt. bonds yields rose to one-month high. Malaysian stock index headed for longest losing streak since 2010 after government cuts its economic growth forecast. MSCI Emerging Markets Index fell 1.1% to 913.80 in Hong Kong heading for 6^th day of declines. The faltering growth outlook of Asia and prospect of reduced United States stimulus fueled a selloff of developing-country shares that have lost around $1 trillion in 2013.

Fed officials were comfortable with Ben Bernanke, Chairman’s plans to begin reducing bond purchasing in 2013 should the economy improve. Laurentia Amica Darmawan, Fund Manager at First State Investments said it is a signal to investors to reduce their emerging markets exposure. The tapering could see the American dollar reinforcing so what’s the point of investing in emerging market assets?

Industry Groups

All ten industry groups in developing nation index of MSCI slid, led by consumer staple and industrial companies’ shares. The broad measure has dropped 13% in 2013, unlike 11% increase in MSCI World Index of developed country shares. The developing country index trades at 9.7 times projected 12-month earnings, lower than 13 times of MSCI World. Philippine Stock Exchange Index lost as much as 6.9% as local markets resumed trading after 3-day closure. The stock exchange was closed and trading of debt and currencies was halted this week due to public holiday yesterday and floods in Manila. SM Investments, owner of the largest shopping mall operator in Philippines headed for lowest close since 25^th June.

Growth Forecast

FTSE Bursa Malaysia KLCI Index declined 1.7%, poised for the lowest close since 3^rd May. That’s the gauge 7^th day of declines. Central Bank of Malaysia cut its 2013 forecast for growth yesterday after 2^nd quarter expansion missed economists estimates. Rupee slumped to an all-time low and Indian shares swung between profits and losses. International funds have cut holdings of Indian debt by $10.1 billion since Ben first flagged the paring of stimulus on 22^nd May.

Hariyanto Wijaya, Analyst at PT Mandiri Sekuritas said that Indonesian coal producing companies – PT Tambang Batubara Bukit Asam surged 6.4% and PT Indo Tambangraya Megah jumped 5.3% in Jakarta as demand from China is expected to enhance. SHCOMP (Shanghai Composite Index) added 0.1% as a report signaled Chinese manufacturing expanded in August and added to signs the 2^nd largest economy of the world is reinforcing after a 2-quarter slowdown. The preliminary reading of 50.1 for Purchasing Managers’ Index released by Markit Economics and HSBC Holdings Plc compares with 48.2 median estimates in Bloomberg News survey of 16 economists.

JCI (Jakarta Composite Index) tumbled 2.3%, dropping about 20% from its 20^th May peak. SET Index of Thailand slumped 1.9% to the lowest level since 30^th November. Taiex index of Taiwan fell 0.4% as markets resumed trading today after tropical storm. Trading volumes on KLCI were 114% above its 30-day average and 75% higher for Indonesian index.

Emerging Stocks Fall as India’s Sensex Leads World Losses

Emerging stocks fell, trimming a weekly advance, as Indian stocks plunged the most amongst global indexes and trading error roiled Chinese markets. Brazil’s real posted the largest decline in nearly 15 months. MSCI Emerging Markets Index slid 0.3% to 958.11. India’s Standard & Poor’s 500 BSE Sensex Index dropped the most amongst 94 world gauges as rupee slid to a record. Shanghai Composite Index posted the largest swings since 2009. The real capped the worst performance amongst all currencies tracked by Bloomberg as Guido Mantega; Finance Minister said slump was good for local industry. Egypt’s bonds capped the steepest 3-day drop in 14 months after deadly government crackdown.

A trading error by Everbright Securities Company drove Chinese shares to largest swings since international financial crisis, threatening to erode confidence in the 2^nd worst performing share market after Greece during the past 4 years. Indian shares plunged amid concern that govt. efforts to stem rupee’s slide to record low will curb economic growth. Mark Luschini, Chief Investment Strategist at Janney Montgomery Scott said that these events like you are seeing aren’t doing anything to instill any kind of confidence towards why they feel the need to go into emerging market equities. The slide in MSCI Emerging Markets Index was led by utility and financial companies and trimmed a weekly gain to 0.7%.

The broad measure dropped 9.2% in 2013 compared with 13% surge in MSCI World Index. The gauge of developing countries is trading at 10.1 times estimated earnings, below the valuation of developed markets of 13.7.

Emerging ETF

The iShares MSCI Emerging Markets Index ETF (exchange traded fund) slid 0.9% at $39.30, whereas the Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on fund and expectations of price swings, rose 2.3% to 23.62. India’s Standard & Poor’s 500 BSE Sensex Index dropped 4% in Mumbai as SBIN (State Bank of India) tumbled to the lowest level in 4 years. ICICI Bank Limited slumped 5.2%. The rupee touched an unprecedented 62.0050 per dollar on Saturday before closing 0.3% weaker from 14^th August in Mumbai. Shanghai gauge jumped from a loss as much as 1% to gain of 5.6% in 2 minutes during morning session.

The index fell 0.6% at the close. Around 15.3 billion shares of Shanghai Composite firms changed hands, versus the 30-day average of 10 billion.

Brazil’s Real

Brazil’s real dropped 2.2%, the most in 15 months/. The Ibovespa posted a 2^nd weekly gain as Fibria Celulose SA, a pulp producer led commodity producers higher amid bets that the pickup in international growth will boost exports of Brazil. Egypt’s 5.75% dollar denominated notes maturing 2020 fell 4.3% in the past 3 days. The Micex Index (INDEXCF) lost 0.8% in Moscow as state-run power company OAO RusHydro fell 1.8% after sliding 3.6% on Friday. Benchmark gauges in Hungary, Turkey and Czech Republic added at least 0.4%, while stocks in Poland retreated. The premium investors demand to own emerging-market debt over U.S. Treasuries slid 0.05 percentage point to 319 basis points.

Rupee hits a record low of 62 per dollar; Sensex tanks over 700 Points

BSE benchmark Sensex tumbled by over 700 points in afternoon trade today on renewed selling pressure, triggered by fall in international markets and expectations, which Federal Reserve might begin reducing its stimulus in September amid growing signs of recovery in American Job market. Rupee depreciation against US dollar also dampened market sentiment and hit record low of 62 per dollar on Friday on heavy US currency demand. Formerly, it had hit all-time low of 61.80 on 6^th August. The 30-share index that has gained nearly 703 points in the previous 4 sessions fell by 744.58 points to 18,623 with all sectoral indices led by banking, realty, consumer durables and metals coming under pressure.

In similar fashion, the wide based NSE (National Stock Exchange) index, Nifty fell by 216 points to 5526. Sectorally, the banking sector fell the most by declining 4.94%, followed by realty (4.38%), metals (4.49%), power index (3.69%) and oil & gas (4.19%). Major losers on Bombay Stock Exchange include BHEL (7.46%), Maruti Suzuki (4.82%), HDFC (4.58%), HDFC Bank (4.13%) and Sterlite Industries (3.94%). According to analysts, all round selling amid a weak trend on Asian bourses in line with overnight losses on American markets, led to the decline on Dalal Street. Reserve Bank of India’s decision for reducing the limit for ODI (Overseas Direct Investment) under automatic route for all fresh ODI transactions from 400% of the net worth of Indian Party to 100% of its net worth also supported market participants to trimmer their positions.

In Asian region, Nikkei Index of Japan fell 0.8%, whereas broadest index of Asia-Pacific shares of MSCI outside Japan slipped 0.2%. Compared to Wall Street, the falls were moderate where S&P 500 Index shed 1.4%, its largest fall since mid-June to 5-week lows. Asian stocks stumbled today after some worries and weak earnings that Fed would soon pare its bond purchases slammed Wall Street. Key benchmark indices in Hong Kong, China, Singapore, Indonesia, Japan and South Korea were down by 0.51% to 1.35%.

Asian Stocks Swing From Gain to Loss as Hong Kong Closed

Asia’s benchmark stocks index swung between profits and losses amid low trading volumes as Hong Kong canceled trading because of a typhoon and earnings at Leighton Holdings Limited missed estimates. The biggest builder of Australia, Leighton sank 5.6%, whereas Hokuetsu Kishu Paper Co. dropped 4.9% after Japan’s No. 3 paper maker by market value cut its profit forecast. The largest producer of India, Tata Steel Limited gained 4.4% after posting its best quarterly earnings in 2 years, whereas CPU (Computershare Limited) sank 5.9% in Sydney, the most in 2 years, after share registry firm reported profit fell.

MSCI Asia Pacific Index slid 0.1% to 134.90 in Hong Kong, reversing an increase of as much as 0.4%. Eight of ten industry groups fell on the gauge, which rose for past 4 days, its longest stretch of gains in a month. Seiichiro Iwamoto, who helps oversee around $33 billion at Mizuho Asset Management Company, Tokyo said investors are on holiday so the market is much quieter than usual. The Topix index of Japan sank 0.3%. Daily trading volume on Topix fell to the lowest in 2013 on 12^th August and remained near that level yesterday, with fewer than 2 billion shares changing hands during the summer vacation.

Best Performer

Topix Index surged 35% in 2013 through yesterday retaining its position as the best performing developed stock market of the world, amid Shinzo Abe, optimism Prime Minister will push through reforms, whereas Bank of Japan offers record stimulus for spurring a recovery in the 2^nd biggest economy of Asia. Trading in Hong Kong was canceled after the city issued a No. 8 storm signal, the 3^rd highest. Over 200 flights were delayed or canceled at HK airport as Typhoon Utor brought maximum wind speeds of 74 miles (119 kilometers) an hour. Gavin Parry, Managing Director at Hong Kong based brokerage Parry International Trading Limited said it is like a ghost town, everything is closed.

Retail Sales

United States retail sales advanced for the 4^th month in July, data showed on Tuesday after other reports showing German investor confidence and Japanese machinery orders topped estimates and euro-area factory output expanded in June. Around 50% of firms on MSCI Asia Pacific gauge, which have posted profits this earnings season beat analysts’ estimates. Hon Hai Precision Industry Company, ST (Singapore Telecommunications Limited) and CBA (Commonwealth Bank of Australia) all retreated today after posting earnings. The gauge traded at 14 times for Stoxx Europe 600 Index and 13.1 times estimated earnings on Tuesday, compared with 15.4 for S&P 500 Index.

NZX 50 Index of New Zealand advanced 0.1% as statistics office said retail sales accelerated last quarter, whereas S&P/ASX 200 Index of Australia sank 0.3%. Taiex Index of Taiwan sank 0.7% and Straits Times Index of Singapore lost 0.2%. Kospi index of South Korea rose 0.2% after country’s jobless rate remained unchanged in July for the 3^rd month. S&P BSE Sensex Index of India was little changed. Futures on S&P 500 Index slipped 0.2% today, while Standard & Poor’s 500 rose 0.3% yesterday as data on U.S. retail sales strengthened signals the biggest economy of the world is expanding moderately.

Undervalued And Overvalued Stocks

Undervalued Stock

As for the criteria/methodology for undervalued stock, the general rule is to discern intrinsic value of an organization and compare it to its enterprise value. An undervalued stock is defined as stock, which is selling at a price drastically below what is assumed to be its intrinsic value. For instance, if the stock is selling for $50; however can be determined to be worth $100 based on predictable future cash flows, then it is an undervalued stock. A number of famous books discuss undervalued stocks; these include The Warren Buffet by Robert Hagstrom and The Dean of Wall Street. Warren Buffet also called The Oracle of Omaha stated that value of business is the sum of cash flows over the life of business discounted at an appropriate interest value.

For instance, if the risky stock has 5 PE ratio and the organization becomes bankrupt, this wouldn’t be an undervalued stock. Some qualities of firms with undervalued stocks are as follows:

The company doesn’t specialize in high technology, which can become obsolete overnight.

The earning history of company is stable.

The low PE ratio of company isn’t because of profits realized from capital gains.

The company is not in the middle of some financial scandal.

The PE ratio of company is below its average PE ratio for last decade.

The low PE ratio of company is not because of major decline in profitability.

The trailing 3-years earnings of company have risen over the past decade.

The company is selling at a price below its tangible asset value.

The company didn’t have a loss during the last recession.

The credit rating of company is A, AA or AAA, or even better, there is no rating as there is no debt at all.

Overvalued Stock

A stock with current price which is not justified by its P/E (price/earnings) ratio or earnings outlook and is expected to drop in price is known as overvalued stock. Overvaluation might result from emotional buying spurt, which inflates the market price of the stock or from deterioration in the financial strength of the company. Potential investors don’t want to overpay for a stock. A few factors they might look at are the PEG (price to earnings growth) ratio and the P/E (price to earnings) ratio in comparison to company’s peers for determining if the stock is overvalued. There are other factors also, which investors look at.

Overvalued stock describes a share for which the market price is considered too high for its fundamentals. Some metrics used for evaluating whether a security is overvalued include: growth potential, P/E ratio, balance sheet health and more. A stock that’s considered to be overvalued is likely to experience a price decline and return to a level which better reflects its fundamentals and financial status. Investors try to avoid one-month annualized overvalued stocks as they are not considered to be a good buy.

Asian Stocks Fall on Japan as Yen Climbs for 4th Day

Asian stocks fell with regional benchmark index heading for its largest drop since 20^th June as Japanese shares led declines across the area after Yen gained for a 4^th day and metals prices slid. The largest mining company of the world, BHP Billiton Limited dropped 2% in Sydney after copper futures declined; alternatively MSCI Asia Pacific Index decreased 2% to 133.08 in Tokyo with over 5 shares falling for each that rose. Pioneer Corporation sank 8.7% in Japan after the maker of car stereo systems lowered its full-year profit forecast. Nikkei 225 Stock Average of Japan tumbled the most in almost 2 months at the close in Tokyo as Yen touched a 6-week high against the dollar.

United States trade deficit narrowed more than forecast in June, driving the S&P Index lower as traders weighed whether the stronger data would encourage Federal Reserve to begin reducing its monthly bond purchases. Yoji Takeda, Head of Asian Equities at RBC Investment Asia Limited, Hong Kong said markets are entering a period of uncertainty. There is a policy vacuum in Japan and the govt. is not going to come up with new policies till parliament resumes sessions in September. Bank of Japan will be maintaining its asset buying program at 2-day meeting, which started on Wednesday.

Regional Indexes

Topix Index of Japan dropped 3.2%, while Taiex Index of Taiwan and Kospi Index of South Korea both slipped 1.5%. NZX 50 Index of New Zealand lost 0.6%, while S&P/ASX 200 Index of Australia fell 1.9%, its largest decline since 3^rd July. Hang Seng index of Hong Kong decreased 1.5%, whereas Shanghai Composite Index of China slipped 0.7%. Straits Times Index of Singapore gained 0.2%. MSCI Asia Pacific Index advanced 1.3% in July, its first such gain since April. Shares on gauge traded at 13.2 times estimated earnings on Tuesday unlike 13.8 times for Stoxx Europe 600 Index and 15.4 times for Standard & Poor’s 500.

U.S. GDP

Charles Evans, President at Fed Bank of Chicago said he would clearly not rule out a decision to start dialing back bond purchases in September. Economists at Barclays PLC and Goldman Sachs Group Inc. raised their estimates for 2^nd quarter. German factory orders increased by the most in 8 months and United Kingdom industrial production beat forecasts in June.

Earnings Season

IHI Corporation, a manufacturing company of ships and jet engines dropped 5.8% to 409 Yen after its earnings outlook missed estimates. On the other hand, Pioneer dropped 8.7% to 178 Yen in Japan after cutting its full year net income forecast by 92% as sales of optimal disc drives and car audio systems declined and profit margins dropped.

Exporters Decline

Raw material producing companies dropped as copper futures fell. BHP slipped 2% to A$34.90 in Australia. The 2nd biggest mining company of the world, Rio Tinto Group decreased 2.1% to A$58.60. The biggest automobile manufacturing company of South Korea, Hyundai Motor Company decreased 3.2% to 225,000 won. Kia Motors Corporation fell 3.7% to 60,500 won after union negotiators walked out of wage talks and said they would ask workers to vote on a strike. The biggest automaker of Asia, Toyota Motor Corporation dropped 2.4% to 6230 Yen. The No. 1 camera manufacturing company, Canon Inc. slipped 2.5% to 3130 Yen. Sony Corporation that designs and manufactures PlayStation game consoles and Bravia televisions fell 4.3% to 1952 Yen.

Asia Stocks Fall as Topix Drops, U.S. Jobs Miss Estimates

Asian stocks fell with benchmark regional index on course for its first loss in 3 days as yen’s gain weighed on Japanese exporters and American jobs data missed estimates. Mazda Motor Corporation, a Japanese automobile manufacturing company, which gets 30% of its sales in North America dropped 4.1% in Japan. Fontera Shareholders Fund tumbled 3.7% in Wellington after Russia and China halted imports of milk powder from the biggest dairy exporter, Fontera Cooperative Group Limited. A manufacturer of storage batteries, Tianneng Power International Limited tumbled as much as 19% before it was suspended from trading in Hong Kong.

MSCI Asia Pacific Index fell 0.2% to 135.33 as of 3:29 PM Tokyo time with over 5 shares dropping for every 4 that rose. The gauge rose 0.1% last week capping a 6^th straight week of gains, the longest winning streak since the period ended 4^th January. Mr. Chris Weston, Chief Market Strategist at IG Markets Limited in Melbourne stated that Japan is still quite choppy for me to be honest. MSCI Asia Pacific Index advanced 1.3% in July after China pledged to do more for supporting the transition from reliance on exports to domestic demand in the 2^nd biggest economy of the world.

Regional Measures

Topix Index of Japan lost 1% after Yen gained 0.6% on 2^nd August. A stronger yen cuts the value of overseas earnings at Japanese firms. NZX 50 Index of New Zealand added 0.1%, Kospi Index of South Korea lost 0.4%, Taiex Index of Taiwan rose 0.5%, Straits Times Index of Singapore slid 0.7% and S&P/ASX 200 of Australia fell 0.1%. Hang Seng Index of Hong Kong, the benchmark gauge of the city rose 0.2%. Hang Seng China Enterprises Index of mainland firms listed in Hong Kong gained 0.2%.

China Services

HSBC Holdings PLC and Markit Economics China services gauge was unchanged at 51.3 from June in July. The People’s Bank of China will appropriately fine-tune policies and strike the balance between risk and reform prevention, structural adjustment and stable growth. Futures on Standard & Poor’s 500 Index slipped 0.1% today after measure advanced 1.1% last week, its largest gain in 3 weeks, as central banks vowed to maintain stimulus and data showed economic growth beat projections in the 2^nd quarter.

Exporters Fall

Japanese exporters to United States declined with Mazda losing 4.1% 423 yen. Komatsu Limited, a construction machinery maker manufacturing company which gets around 30% of its sales in America slid 0.5% to 2214 yen. Toyota Motor Corporation, the largest automobile manufacturing company of Asia dropped 1.1% to 6360 yen even after saying on 2^nd August that net income almost doubled to $5.7 billion (562.2 billion yen) last quarter as U.S. sales rose and the weaker yen boosted overseas profit. Fonterra dropped 3.7% to NZ $6.86 after New Zealand Company warned of contaminated ingredient, prompting Russia and China to suspend imports of milk powder. Biostime International Holdings Limited, a supplier of baby products surged 9.6% to HK$43.30 in Hong Kong. China Modern Dairy Holdings Limited, the biggest raw milk producing company of the country jumped 8.1% to HK $2.55.