By Laura He and Michael Kitchen, MarketWatch
HONG KONG (MarketWatch)--Asia stocks settled mostly lower on
Tuesday, but Japanese shares added to their recent run of strong
gains.
Japan's Nikkei Average rose for a fourth straight day, ending up
0.2%. The broader Topix index finished slightly higher, up less
than 1 point at 1,511.01. The yen (USDJPY) softened versus the
dollar, trading at Yen101.858 from Yen101.908 on Monday.
Other major markets slipped, with the Shanghai Composite Index
down 0.3%, Hong Kong's Hang Seng Index off 0.1%, and Australia's
S&P/ASX 200 down 1 point at 5,511.70. However, the Aussie
(AUDUSD) strengthened to 92.65 U.S. cents from 92.52 U.S. cents in
the previous day.
In Japan, exporters were stronger on the weaker yen, with
optical equipment maker Olympus Corp. rising 2.2%, semiconductor
manufacturer Renesas Electronics Corp. gaining 1%, and industrial
robot maker Fanuc Corp. higher by 0.9%. In the financial sector,
banking group Sumitomo Mitsui Financial Group advanced 1.3%,
brokerage firm Daiwa Securities Group added 1%, and investment bank
Nomura Holdings moved up 0.9%.
In Hong Kong, local retailers took a hit after reports said the
Hong Kong government may allow fewer mainland Chinese to visit the
city. Cosmetics chain Sa Sa International Holdings tumbled 3.8%,
and smaller rival Bonjour Holdings declined 2.3%. Jewelry brands
also suffered, as Chow Tai Fook Jewellery Group lost 3.2% and Luk
Fook Holdings (International) dropped 0.6%.
China's cost of clearing the air
In China, just under half the days that made up 2013 registered
unhealthy levels of air pollution on a nationwide basis, and 31
days were considered hazardous--this, according to China's own
Environmental Protection Ministry.
Sick of choking from the smoke, the Chinese government is
determined to improve air quality, with measures in its previously
announced action plan including reducing the use of coal, getting
the most-polluting vehicles off the road, and closing down those
factories that contribute the heaviest to the problem.
Given this, Société Générale put a note out Monday looking at
the economic cost of the cleanup.
Long story short, they see a hit of a little over a third of a
percentage point to GDP growth cumulatively between now and 2017,
noting that "coal, iron and steel, cement and glass production
account for around 16% of overall industrial output and 6% of
GDP."
However, the costs won't be evenly distributed, the SocGen
analysts say.
Geographically, the heavy-industrial northeast of the country
will see the most slowing from the pollution action plan. For
instance, Hebei province has seen its industrial output slow since
September of last year, when the State Council (China's cabinet)
first introduced the plan.
Chronologically, the drag to economic growth may be
front-loaded, with SocGen projecting 10 basis points of the
35-basis-point (0.35 percentage-point) penalty to GDP will show up
this year, possibly increasing to 13 basis points if the plan's
targets are exceeded.
"We have observed that local governments are accelerating the
process of facility closures. Hebei province, for example, had
already torn down 120 furnaces and converters by March ... Hence,
we believe that the pace of closures will be quicker than the
mandatory targets require," the SocGen analysts wrote.
More MarketWatch news:
Asia Stocks blog: Quiet day, but Japan adds to gains
Stephen: Hong Kong's trial of the century puts the whole system
in the dock
Why U.S. stocks are being held back from a big breakout
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