Asian Markets, Fundamentals

Stocks in Asia/Pacific Advance for Fourth Day on Optimism for Global Growth

Asia Session Key Developments

• Economic Activity in China Tops Forecasts
• Australian Consumer Confidence Declines for First Time Since May
• Japan’s Machine Orders Exceeds Expectations

The Asian stock market pushed higher on Wednesday for the fourth consecutive session as retail spending in China jumped at an annual rate of16.2% in October to top expectations for a 15.7% rise, while industrial outputs jumped 16.1% from the previous year to mark the biggest increase since March 2008. Moreover, the trade surplus for the world’s third-largest economy widened to $23.99B from $12.93B in September, led by a 6.4% drop in imports, while new Yuan loans advanced 253.0B during the same period after rising 516.7B in the previous month. Despite the improved outlook for growth, price pressures weakened more than expected, with consumer price falling at an annualized pace of 0.5% in October, while producer prices slumped 5.8%. Meanwhile, the Westpac Consumer Confidence for Australia fell 2.5% for November, marking its first fall since May as the central bank raised borrowing costs for the second month in November, while Japanese machine orders jumped 10.5% in September amid forecasts for a 4.1% rise. As the outlook for global growth improves, the rise in market sentiment may continue to drive the equities market higher as traders raise their appetite for higher risk/reward investments.

Nikkei 225                          9,871.68

The Japanese equity markets traded higher for the fourth consecutive day, with the Nikkei 225 adding 0.95 points (.01%) to end the day at 9,871.68. Telecommunications pushed 0.67% higher to lead the advance, followed by a 0.62% gain in utilities, with oil & gas traded lower for a second successive day, sliding 2.01% overnight. Shares of Pioneer Corporation soared 8.80% after the company, along with Sharp Corporation, stated that they started operations at their optical disk joint venture earlier in the day, while Dowa Holdings tumbled 5.98% as the firm said first-half net income slumped 65%, led by 40% drop in sales. Moreover, Japan Airlines advance 4.76% as Transport Minister Seiji Maehara said the Development Bank of Japan will provide a bridge-load to the ailing firm, while Nippon Telegraph & Telephone rallied 4.46% as Goldman Sachs added the stock to its ‘Conviction List.’

Hang Seng                        22,627.21

Hong Kong shares advanced to a fresh two-week high, leading the benchmark equity index to soar 359.05 points (1.61%) and end the trade at 22,627.21 as 7 of the 9 components pushed higher on the day. Shares of Bank of East Asia, the third-biggest Honk Kong-based lender by market value, jumped 15.20% higher amid speculation Guoco Group may offer to buy the bank, while HSBC rallied 5.98% as the firm announced its third-quarter profits were “significantly” higher from the previous year. In addition, Cathay Pacific Airways gained 1.71% after South China Morning Post stated holiday demand boosted cargo volumes, while China Petroleum & Chemical Corporation and Hong Kong & China Gas climbed 2.23% and 1.09% successively on the back of higher commodity prices.

S&P/ASX 200 Index           4,757.00

Stocks in Australia traded higher on Wednesday to post its strongest three-day rally in four months, leading the S&P/ASX 200 to advance 23.40 points (0.49%) and close at 4.757.00, with all 10 components trading higher for the third successive day. Shares of Nexus Energy advanced 2.94% after Managing Director Ian Tchacos said the firm may sell up to a 50% stake in its Longtom gas project, while Wesfarmers Added 2.04% as CEO Richard Goyder held an improved outlook for its Coles supermarket chain. At the same time, Pacific Brands rose 3.85% after the company was rated “overweight” by Morgan Stanley, with Downer EDI advancing 1.79% as UBS raised its rating on the firm to “buy” from “neutral.

Notable Asian Session Event Risk / Economic Releases