Asian Markets, Fundamentals

Stocks in Asia/Pacific Battered on Falling Commodity Prices, Tightening Credit Standards

Asia Session Key Developments

• Australia’s Leading Indicator Improves, New Home Sales Falter
• Japan Industrial Outputs Rise for Seventh Month in September

Stocks in Asia/Pacific traded lower on Thursday subsequent to the massive sell-offs on Wall Street, with the ASX tumbling 2.36% on the day to mark the biggest decline in four months. Meanwhile, the Conference Board Leading for Australia improved at a faster pace in August, with the index climbing 1.8% after rising 1.0% in the previous month but at the same time, the HIA new home sales data posted the largest decline since May as the index tumbled 4.5% after jumping 11.4% in August. Moreover, industrial outputs in Japan improved for the seventh month in September, with productivity increasing 1.4% from the previous month, while the annual rate of production fell at a slower pace from August, and the data reinforces an enhanced outlook for the economy as policy makers see the nation emerging from the worst recession since the post-war period.

Nikkei 225                          9,891.10

The Japanese equities market traded lower for a third successive day and is at its lowest level in two-weeks, leading the Nikkei 225 to shed 183.95 points (1.83%) and end the day at 9,891.10, led by a 2.86% drop in oil & gas. Shares of Advantest Corp, the world’s biggest maker of memory-chip testers, fell another 6.56% on top of yesterday’s 5.15% decline after the company posted a second-quarter losses rose more than expected, Nippon Mining Holdings, Japan’s largest copper producer, slid 3.68% on the back of lower commodities and releasing a preliminary earnings statement in which the company said first-half net income will miss projections by 18%. Moreover, Bridgestone Corp fell 4.59% subsequent to Goodyear Tire & Rubber Co forecasting an operating loss in North America, while Japan Airlines advanced 2.68% as the Nikkei English Newspaper said the government may enact new legislation in an effort to speed up the restructuring of the firm.

Hang Seng                        21,761.58

Hong Kong shares weakened for a third day, with the Hang Seng plummeting 496.59 points (2.28%) to close at 21,264.99 as all 9 components traded lower for a second successive day. Shares of Bank of Communications, China’s fourth-largest lender by market value, plunged 5.39% after third-quarter profit missed analysts estimates, while PetroChina tumbled 4.02% as oil fell for a second day subsequent to rising U.S. crude and gasoline inventories in the U.S. At the same time, Wharf Holdings push backed 3.60% after trading to the upside on speculation the China Banking Regulatory Commission will continue to tighten credit standards to temper the rise in home values, with shares of Sino Land Co declining 2.57%.

S&P/ASX 200 Index           4,685.10

Stocks in Australia traded lower for the fourth consecutive day on Thursday and marked the biggest one-day decline in 4 months, causing the S&P/ASX 200 to plunge 110.48 points (2.36%) to end at 4,574.70, with basic materials shedding 3.59% to lead the decline. Shares of Sundance Resources and Woodside Petroleum tumbled 9.38% and 3.51% respectively on the back of lower commodities, with Rio Tinto shedding 4.87%, while Australia & New Zealand Banking Group slipped 2.14% following an 11% drop in full-year net income. Moreover, ANZ’s Chief Executive Officer Michael Smith held a cautious outlook for the economy and said that the Reserve Bank of Australia should have waited to tighten policy, while Goodman Group traded 6.67% lower after being up during early morning trading even after Goldman Sachs raised the company’s rating on the stock to “buy” from “hold” earlier this week.

Notable Asian Session Event Risk / Economic Releases