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Asian shares edge up after PBOC fixes yuan rate

Asian shares eked out marginal gains early Friday, as investors digested the People’s Bank of China’s (PBOC) decision to set the midpoint rate for the yuan at 6.3975, slightly lower than the previous day’s close of 6.3990.

The move broke the central bank’s devaluation pattern since Tuesday, and in line with the PBOC’s announcement on Thursday that there was no basis for continued currency depreciation.

A nearly flat finish on Wall Street overnight and a renewed decline in oil prices also kept a lid on risk appetite. Major US indices pared gains and finished mostly lower on Thursday, as a fall in energy counters offset a rebound in July retail sales and easing concerns over the continued depreciation of the Chinese yuan.

Mainland indices up

China’s Shanghai Composite index opened up 0.4 percent, while the blue chip CSI300 index and Shenzhen Composite edged up 0.1 and 0.5 percent, respectively.

Hong Kong’s Hang Seng index tracked the tepid open in its mainland peers, up 0.2 percent.

Nikkei slips 0.1 percent

Japan’s Nikkei 225 turned positive following the PBOC’s yuan fixing, but soon returned to below the flatline.

Companies with a significant dependence on China for business surrendered Thursday’s gains. Komatsu and Hitachi Construction Machinery receded 0.9 and 1.2 percent, respectively, while steelmakers such as JFE Holdings and Nisshin Steel lost more than 2 percent each.

Attention also fell on the companies affected by the explosions in Tianjin, China. Toyota Motor and Mazda Motor receded slightly, while Isetan Mitsukoshi Holdings dropped 0.8 percent. Fuji Heavy Industries, which suffered damage to more than 100 new vehicles in Tianjin, according to the Nikkei business daily, remained in positive turf, up 0.7 percent.

ASX flat

Australia’s S&P ASX 200 index hovered near the flatline.

In the resources sector, key energy and gold producers slumped on the back of weaker commodity prices overnight. Santos and Woodside Petroleum fell more than 1 percent each, while Newcrest Mining tanked 2.2 percent.

Financial heavyweights were mixed, thereby providing little direction for the bourse. National Australia Bank and Westpac edged up 0.2 and 0.4 percent, respectively, while Australia and New Zealand Banking ticked down 0.4 percent.

Kospi adds 0.4 percent

South Korea’s Kospi index extended gains a day after halting a five-day losing streak, but advances were capped amid downbeat blue chips.

Market bellwether Samsung Electronics plunged 1.2 percent, while autos also kicked off the day on the back foot. Hyundai Motor eased 1 percent, and its smaller affiliate, Kia Motors, sagged 0.3 percent.

Stocks with exposure to China continued on an uptrend; AmorePacific and LG Household & Healthcare, whose major target consumers include Chinese buyers, advanced 0.5 and 2.6 percent, respectively. Exporters to the mainland, including food and beverage manufacturers like CJ Cheiljedang, climbed 1.7 percent.

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