Reports » Asia

Asian stock market, economy and companies update (June 15, 2010)

Contributed by Trade The News

By Trade The News

- Asian equity markets are marginally higher as investors shrug the 4-notch sovereign downgrade of Greece by Moody's and availability of credit concerns in Spain that helped reverse early risk appetite in the US session. Entering the final hour of trading in Tokyo, Nikkei225, S&P/ASX, and the Kospi are up in a 0.1-0.3% range, with similar upside range seen in US equity futures. Taiwan's Taiex is the broad outperformer, rising over 1% as investors continue to reward progress on cross-straits trade talks with China announced yesterday.

SPEAKERS/PRESS
- JAPAN: Bank of Japan policy meeting provided more details on the 0.1% 1-yr fixed loan scheme to private banks outlined in the prior statement last month, offering a total of ?3T in a series of maximum 3 ?1T borrowing instances. Low-rate loans are said to be available to "growth industries", but include a broad range of enterprises such as R&D, business reorganization, environment/energy, medicine, infrastructure, creation of housing stock, tourism, and agriculture. Outside the "Fund Provisioning" initiative, BOJ statement saw economy showing further signs of moderate recovery, CAPEX improving, and exports/production increasing. BOJ also noted pace of CPI declines is falling and should continue to decelerate, severity of employment - while still evident - is easing, but also warned to monitor for impact of EU crisis on global economy. Following the BOJ announcement, Vice Fin Min Ikeda voiced support for the new central bank steps to tackle deflation.

- AUSTRALIA: RBA Meeting Minutes from early June decision to hold target rate unchanged offered some insight into the factors policymakers will consider in order to renew tightening measures. Specifically, RBA acknowledged the impact of EU crisis appears to be worse than initially thought and may weigh on global growth. RBA also deferred to the next quarterly inflation outlook in late July for assessment of conditions and the impact of implemented tightening measures. On the upside, policymakers saw medium-term outlook remaining positive, decline in AUD as orderly, and growth in Asia remaining strong. RBA reiterated concerns over weak retail trade conditions and slumping housing demand, but also noted robust terms of trade and employment. Elsewhere, The Australian cited PM Rudd continue to defend the mining tax and the "high degree of resolve within the government" to proceed with reform.

- CHINA: China Banking Regulator (CBRC) annual report was seen as a warning shot on excessive lending and questionable quality of loans amid continued global uncertainty that could cause shocks to the economy. CBRC said the risk of default under tighter credit risk conditions would rise, also pointing to some banks circumventing capital requirements by transferring loans off balance sheets. Excessive lending was said to be particularly dangerous considering high unemployment in China and questionable demand from overseas.

- KOREA: Local press said the govt may raise its 2010 GDP forecast to "high 5% range" from estimates of "about 5%" forecasted in late April. Separately, Korea customs office put exports to US rising 41.6% y/y (biggest gain since 2004), while exports to China and EU rose 45% and 16% respectively.

EQUITIES
- In individual names, FujiFilm guided FY11 op profit at ?230B - above consensus estimates. In Taiwan, TSM Chairman said company is not affected by rising Chinese labor costs, and UMC forecasted Q2 Revs above prior guidance. In Sydney, Wesfarmers warned the mining tax potentially threatens earnings and dividend, agreeing with major mining names that it does present a sovereign risk to Australia.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, European majors traded in narrow ranges, consolidating late-session retreat in risk appetite, with EUR/USD afloat above 1.22 after testing 1.23 in US hours and GBP/USD supported by 1.4730. In commodity majors, AUD/USD underperformed, falling below 0.8550 after RBA minutes confirmed an unequivocal hold at the early-July meeting. NZD/USD fell below 0.6930, while USD/CAD rose as high as 1.0340. Japanese Yen was also firmer particularly late in the day, extending retreat from 92.00 to 91.40 in USD/JPY. Spot gold remained supported at 1,220 after falling in US hours on initial risk-related flows. Likewise, front-month crude was higher early-on, rising above $75/brl before retreating below that level on late session selling.

ECONOMIC DATA
- (NZ) NEW ZEALAND MAY REINZ HOUSE SALES M/M: -1.4% V -0.4% PRIOR (4-month low); Y/Y: -17.2% V -16.2% PRIOR (15-month low)
- (UK) UK MAY RICS House Price Balance: 22% v 15%e (4-month high)
- (PH) Philippines APR Unemployment Rate: 8.0% v 7.3% prior (2-yr high)
- (NZ) New Zealand MAY Non Resident Bond Holdings: 64.1% v 63.2% prior
- (JP) BOJ LEAVES RATES UNCHANGED AT 0.10% AS EXPECTED; Decision Unanimous; To offer ?3T to support bank lending; Maintains economic assessment
- (SI) SINGAPORE APR RETAIL SALES M/M: -2.2% V 0.9%E; Y/Y: -2.6% V 0.8%E
- (JP) Japan MAY Tokyo Condominium Sales y/y: 7.1% v 22.6% prior