Asian Markets, Fundamentals

Stocks in Asia/Pacific Falter, Hang Seng Plummets as Hong Kong Monetary Authority Tightens Lending Requirements

Asia Session Key Developments

• Japan’s Finance Minister Hirohisa Fujii Attempts to Temper the Yen’s Advance
• HKMA Tightens Lending Standards to Temper Rise in Home Prices

Stocks in Asia/Pacific traded lower on Tuesday following the slump on Wall Street, led by a 1.86% drop on the Hang Seng index. Stocks in Hong Kong were weighed as the Hong Kong Monetary Authority tightened lending requirements for the first time since 1991, while a government report showed the trade deficit unexpectedly widened to 29.1B in September from 21.8B as exports slumped at an annual pace of 8.6% during the month. At the same time, Japan’s Finance Minister Hirohisa Fujii said he never voiced support for a stronger yen in a speech at FCCJ in Tokyo, and went onto say that the marked appreciation in the exchange rate has been carried over from the weakness in the U.S. dollar.

Nikkei 225                          10,212.46

The Japanese equities market traded lower on Tuesday, with the Nikkei 225 shedding 150.16 points (1.45%) to end the day at 10,212.46, led by a 2.59% decline in basic materials. Shares of Kawasaki Kisen Kaisha plummeted 6.37% after the firm reported a net loss for the first-half, with Pacific Metals tumbling 6.07% on the back of weaker commodities prices, while Fujifilm Holdings climbed 6.15% as Nomura Holdings raised the office equipment maker from “neutral” to “buy” amid speculation that the company will post higher-than-expected second quarter profits. At the same time, Chuo Mitsui Trust Holdings soared 7.94% after the company announced that it will merge with Sumitomo Trust & Banking Co. in the spring of 2011, while Astellas Pharma, Japan’s second-biggest drug maker slid 6.42% as Barclays Capital lowered the company’s rating from “equal-weight” to “underweight.”

Hang Seng                        22,169.59

Hong Kong shares weakened on Tuesday after being closed in observance of the Cheung Yeung Festival, leading the Hang Seng to slide 420.14 points (1.86%) to close at 22,169.59. 8 of the 9 components pushed lower on the day, with consumer services tumbling 2.33% to lead the decline, while consumer goods added 0.15% to taper the downturn.  Shares of Henderson Land and New World Development plunged 4.34% and 3.31% successively on the Hong Kong Monetary Authority increased down-payment requirements for luxury homes for the first time since 1991 in an effort to temper the rise in home prices, while Cnooc slipped 3.41% as crude oil prices weakened. At the same time, Aluminum Corp of China slid 2.59% on the back of lower commodity prices, while China Life Insurance Co added 0.53% as third-quarter profits tripled.

S&P/ASX 200 Index           4,753.50

Stocks in Australia traded lower for a second successive day on Tuesday on the back of weaker commodity prices, causing the S&P/ASX to fall 76.80 points (1.59%) to end at 4,753.50, with technology shedding 5.26% in the past two days after slipping 2.63% overnight. Shares of Worleyparsons, Australia’s biggest engineering company, plummeted 8.00% after announcing that the company expects full-year profit to push lower following the appreciation in the Australian dollar, while PanAust, the owner of the second-largest copper mine in Laos, fell 5.00% as Credit Suisse Group cut the company’s rating from “neutral” to “underperform.” Moreover, Newcrest Mining declined 3.11% following the drop in gold prices, while Woodside Petroleum slipped 2.46% on the back of lower oil prices.

Notable Asian Session Event Risk / Economic Releases