Asian Markets, Fundamentals

Asia/Pacific Stocks Rally as Group of 20 Nations (G-20) Pledge to Maintain Stimulus

Asia Session Key Developments

• Australian Home-Loans Rises the Most in 6 Months
• Gold Prices Surges to $1,100
• Japanese Reserve-Holdings Jump to Record High

The Asian stock market rallied on Monday as the G-20 agreed to maintain the expansion in fiscal and monetary policy in an effort to encourage a sustainable recovery, leading investors to raise their appetite for risk. However, the rally in the Japanese market was tapered by the appreciation in the Yen as market participants held a cautious outlook for future earnings, while a government report showed foreign reserves rose to $1.05T in October to mark the highest reading on record. Meanwhile, home-loan approvals in Australia jumped 5.1% in September amid expectations for a 3.0% rise to mark the biggest rise since March, with the value of loans increasing another 6.7% after advancing 4.0% in the previous month, and the Reserve Bank of Australia may continue to hike borrowing costs over the remainder of the year in an effort to balance the risks for growth and inflation.

Nikkei 225                          9,808.99

The Japanese equity markets traded higher on Monday after the G-20 agreed to maintain stimulus efforts on Friday, with the Nikkei 225 adding 19.64 points (0.20%) to end the day at 9,808.99. Industrials pushed 0.69% higher to lead the advance, followed by a 0.53% gain in consumer services, while utilities shed 2.49% to taper the rally. Shares of Mitsui Sumitomo Insurance surged 8.59% as first-half net income unexpectedly rose to JPY 57 billion due to lower-than-expected payouts, while Citizen Holdings soared 7.79% after the company raised its full-year operating profit outlook 83%on the back of lower fixed costs. At the same time, Tokio Marine Holdings advanced 4.26% as first-half net income rose 78% above expectations, while Mitsubishi Rayon slipped 4.26% as the company lowered its net-income projection and expects a loss of JPY 8.5B from an initial forecast for JPY 1.0B.

Hang Seng                        22,207.55

Hong Kong shares advanced to a two-week high on expectations fund inflows will persist following the weakness in the greenback, with benchmark equity index climbing 377.83 points (1.73%) to end the trade at 22,207.55 as 7 of the 9 components pushed higher on the day. Shares of Foxconn International, the world’s largest contract maker of mobile phones slid 3.80% as Goldman Sachs cut its rating on the stock from “neutral” to “sell,” while Industrial & Commercial Bank of China rallied 3.10% as Moody’s Investors Service raised the rating on the firm to “positive” from “stable.” At the same time, China Resources Enterprise and Petro China gained 2.46% and 2.03% respectively on the back of higher commodity prices, while China Shenhua Energy advanced 3.91% as coal prices within the region increased for the eighth consecutive week.

S&P/ASX 200 Index           4,674.90

Stocks in Australia traded higher on Monday on the back of higher commodity prices, leading the S&P/ASX 200 to climb 80.90 points (1.76%), with all 10 of its components trading higher. Shares of AXA Pacific Holdings soared 32.56% as the company rejected a $10.3 billion break-up plan that would leave its assets with rival AMP, which stirred speculation for a higher takeover bid. Meanwhile, Orica, the world’s largest industrial explosive marker soared 5.64% subsequent to the company announcing that profit would push higher for a ninth year due to continued demand from mining companies, while Newcrest Mining, Australia’s largest gold producer, jumped 3.58% as gold futures surged to record highs of $1,100 amid speculation record-low borrowing costs in the U.S. will drive down the greenback.  Furthermore, National Australia Bank advanced 2.96% as home-loan approvals increased 5.1% in September after unexpectedly rising 4.0% in the previous month, with Australia & New Zealand Banking Group adding 1.16%.

Notable Asian Session Event Risk / Economic Releases