Asian Markets, Fundamentals

Asia/Pacific Stocks Rally for Third Day, Japan’s Eco Watchers Confidence Survey Disappoints

Asia Session Key Developments

• Australian Business Confidence Rebounds in October
• Japan’s Trade Surplus Widens Less-Than-Expected
• Eco Watcher’s Survey Unexpectedly Weakens

The Asian stock market pushed higher on Tuesday for the third consecutive session amid the surge in China car sales, leading the Hang Seng to advance to a fresh two-week high. Meanwhile, the economic docket showed Japan’s trade surplus widened to JPY 599.2B in September amid expectations for a rise to JPY 630.0B, while the current account surplus expanded to JPY1567.9B from JPY1171.2B in August to top forecasts for a rise to JPY 1510.0B. At the same time, bank lending in the region increased at an annual rate of1.5% for the second consecutive month in September to mark the lowest level of growth since May 2008, while the Eco Watchers confidence survey unexpectedly slipped to a five-month low of 40.9 in October from 43.1 in the previous month, with the gauge for future expectations falling to 42.8 from 44.5 in September. Meanwhile, the NAB business confidence survey for Australia bounced back in October, with the index rising to 16 from 14 in September, while the measure of current conditions increased to 12 from 3, and firms may continue to raise their outlook for future growth as the economy skirts the global recession.

Nikkei 225                          9,980.73

The Japanese equity markets traded higher for a third consecutive day, with the Nikkei 225 adding 61.74 points (0.63%) to end the day at 9,870.73. Consumer Services pushed 2.72% higher to lead the advance, followed by a 1.50% increase in financials, while oil & gas slid 0.79% to taper the advance. Shares of Sumitomo Mitsui Financial Group advanced 3.59% as the firms signed an agreement with Inter-American Development Bank to trade carbon emission credits, while Softbank added 2.10% as the firm plans to sell mobile phones with Google’s Android operating system by the spring of 2010. At the same time, Nippon Telegraph & Telephone slumped 2.45% after the firm lowered its full-year revenue forecast by1.3%, while Isuzu Motors tumbled 4.15% as the firm posted a first-half net loss of JPY 27.8B.

Hang Seng                        22,268.16

Hong Kong shares advanced to a fresh two-week high, leading the benchmark equity index to rise 60.61 points (0.27%) and end the trade at 22,268.16 as 8 of the 9 components pushed higher on the day. Shares of Industrial & Commercial Bank of China advanced 1.20% as Credit Suisse raised its rating on the stock to “outperform” from “neutral,” with China Unicom, the country’s number-two wireless company, gaining 2.21% as Morgan Stanley upgraded the company’s stock to “overweight.” Moreover, Cnooc added 0.32% as China raised the cost of fuel, while Wharf holdings gained 3.67% after Wheelock & Co announced the firm will sell its 87.5% stake in the Beijing Capital Times Square building project.

S&P/ASX 200 Index           4,733.60

Stocks in Australia traded higher on Tuesday to post its strongest three-day rally in four months, leading the S&P/ASX 200 to climb 58.70 points (1.26%) to 4.733.60, with all 10 components trading higher for a second successive day. Shares of BHP Billiton Ltd, the world’s largest mining company climbed 2.34% on the back of higher metal prices, with Rio Tinto advancing 2.59%. Meanwhile, AXA Asia Pacific Holdings pushed 1.23% higher after rising 32.56% yesterday subsequent to Credit Suisse raising the company’s stock rating from “underperform” to “neutral,” while Wilson HTM Investment Group raised the company’s rating to “buy” from “hold.” Moreover, Wesfarmers gained 2.77% after the company’s fertilizer and chemicals unit approved a study to boost its output at its Kwinana ammonium nitrate plant in Western Australia.

Notable Asian Session Event Risk / Economic Releases