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Asian stock market, economy and companies update (May 11, 2010)

Contributed by Trade The News

By Trade The News

- Asian equity markets are turning cautious once again, with mixed monthly economic data out of China raising fears of tighter policy/currency actions weighing on sentiment already prone to profit-taking following strong stock gains across the globe. Entering the final hour of Tokyo trading, Nikkei225 is at session lows, down 0.9%. Elsewhere, S&P/ASX is off 0.8%, while the Kospi and the Taiex are down around 0.5%. After 4.4% cash-market rally in S&P500, front-month contract is off 0.5%, just above 1,150.

SPEAKERS/PRESS
- CHINA: In addition to above estimates inflation / worse than expected industrial production April data mix, local press cited PBoC Adviser Xia Bin forecasting higher Yuan, adding to mid-session risk-averse flows. Separately, former PBoC adviser Yu Yonging called for the central bank to tighten policy despite expectations of slowing economic growth and falling exports, citing expectations of rising inflation. On a related note, China National Bureau of Stats commentary following the monthly metrics saw CPI growth as still mild, with 3% y/y target remain "achievable". NBS also pointed to large inflationary pressure in near term due to higher food, residence, and commodity price, but also saw those pressures receding as low base-yr comparisons pass. In China property sector development, local press said the nation's biggest banks' stress tests reveal the financinal institutions can withstand 30-40% drop in prices. Another press reported saw Beijing property prices falling 31.4% to CNY16.9K/sqm for the weak ending May 9th from week ending Apr 11th, while China National Bureau of Stats saw prices in 70 major cities still rising nearly 13% in April. Jan-Apr price pressures were also seen as rising, as NBS posted +36% y/y gain in Property Development and a 33% gain in sales volume.

- JAPAN: A report from local press suggested the focus of the bond markets on fiscal deficits may turn to Japan, as outstanding govt bonds and debt rise to record ?883T as of March-end, with possibility of ?973T by the end of next year. Report goes on to note that because a large component of debt holders includes domestic institutional investors, yields may not rise as long as demand from institutional investors such as life insurance companies and banks remains high. Separately, Japan's Finance Minister Kan said the cabinet would like to avoid next year's debt issuance above ?44.3T and may consider a spending cap in some areas during next year's budget. Strategy Minister Sengoku also said the administration should move with a greater sense of crisis.

- AUSTRALIA: Ahead of the fiscal year govt budget report to be announced at 05:30ET, Treasurer Swan said it is important to return to budget surplus as soon as possible, despite the anticipated govt injection of A$7B in funds into healthcare sector. Note that last year, Swan forecasted budget returning to surplus by 2015-16. Opposition forces countered ahead of the budget release, warning the ruling party against "banking" on revenue of recently announced mining tax.

EQUITIES
- In individual names, Toyota reported an impressive set of Q4 and FY results afterhours: Q4 Net ?112B v ?48Be, Op Profit ?95B v loss ?6Be, Rev ?5.3T v ?4.9Te; Reports FY09/10 Net ?209B v ?122Be, Op Profit ?148B v ?44Be, Rev ?19T v ?19Te. Just a reminder, Japanese press speculated company FY Op Profit may rise to ?100B. Speaking after the report, President of the company said the volume impact of recalls in FY09/10 is smaller than expected in Feb, reducing sales by 50K units vs 100K expected. In other notable Tokyo names reporting earnings, Hitachi posted Y09/10 Net loss ?107B v loss ?114Be, Op Profit ?202B v ?200Be, Rev ?9.0T v ?9.0Te with FY10/11 guidance of Net ?130B v ?112Be, Op Profit ?340B v ?305Be, Rev ?9.2T v ?9.4Te. Also in auto space, Isuzu reported FY09/10 in line, but guided slightly above estimates with Op Profit ?45B v ?36Be, Rev ?1.34T v ?1.2Te. During market hours, Japanese press reports weighed on the banking sector, with Sumitomo Mitsui Financial Group said to consider listing shares in New York and Mizuho Financial mulling offering ?1T in new shares.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, ECB quantitative easing steps continued to weigh on single currency, with EUR/USD extending retreat below Friday closing level of 1.2750. Sterling was also weaker against USD amid risk aversion benefiting safehaven dollar assets as well as political uncertainty clouding UK arena. In commodity FX, AUD/USD was back below 0.90 handle, down about 100 pips from early US session highs, while USD/CAD rose about 60 pips to 1.0290. Japanese Yen also benefited from greater market cautious, as USD/JPY fell about 100 pips during Asian hours to 92.30.

- Crude oil and copper prices are lower on the weakness in equities, disappointing Chinese industrial production data and doubts regarding the EU's rescue package. Crude oil is down over 0.50% and trading below $77/bbl, while copper has lost over 1.2%. Spot Gold prices are higher and trading above $1,200/oz driven by fund buying and safe haven demand for XAU/EUR. In gold market news, the SPDR Gold Trust ETF disclosed on yesterday's session that its daily holdings rose by 3.7 metric tons to a new record high of 1,192 metric tons. In other commodity related news, China's April, power output rose by 21% y/y, steel production rose by 27% y/y, copper production increased by 15% y/y and crude oil output rose by 4.2% y/y.

ECONOMIC DATA
- (NZ) NEW ZEALAND APR NZ CARD SPENDING M/M: -1.7% V 2.1% PRIOR (biggest decline since Nov 2008)
- (UK) UK APR RICS HOUSE PRICE BALANCE: 17% V 10%E
- (UK) UK BRC APR RETAIL SALES MONITOR SSS: -2.3% V 4.4% PRIOR (biggest decline since Dec 2008); TOTAL SALES: -0.2% V 6.6% PRIOR
- (CH) CHINA APR CPI: 2.8% V 2.7%E; PPI Y/Y: 6.8% V 6.5%E; PURCHASING PRICE INDEX Y/Y: 12.0% v 12.1%E
- (CH) CHINA APR RETAIL SALES Y/Y: 18.5% V 18.2%E
- (CH) CHINA APR INDUSTRIAL PRODUCTION Y/Y: 17.8% V 18.5%E
- (CH) CHINA APR FIXED ASSETS INV URBAN Y/Y: 26.1% V 26.0%E (14-month low)
- (CH) CHINA APR NEW YUAN LOANS: CNY774B v CNY585BE (3-month high)
- (CH) CHINA APRIL M2 MONEY SUPPLY Y/Y: 21.5% V 22.0E; M1: 31.3% v 28.7%E; M0: 15.8% v 15.8% prior
- (KS) South Korea MAR Money Supply M2: 9.3% v 9.4% prior; L: 10.7% v 10.2% prior; Bank Lending to HH: KRW411T v KRW409T prior
- (MA) Malaysia MAR Industrial Production y/y: 14.1% v 13.4%e; Manufacturing Sales Value y/y: 27.7% v 16.8% prior