Asian Markets, Fundamentals

Asian Stocks Advance as Policy Makers See Improved Growth Prospects, Japan’s 3Q GDP Tops Forecast

Asia Session Key Developments

• Japan’s GDP Expands at the Fastest Pace in More Than Two Years
• BoJ Says Low Rates in U.S. Could Threaten the Global Recovery
• Gold Hits New Record High of $1,131.32

The Asian stock market pushed higher on Monday as policy makers pledged to maintain stimulus measure to support the recovery, China’s Ministry of Commerce held an improved outlook for future growth and expects household spending to become an “important engine” for growth going forward. Meanwhile, economic activity in Japan expanded 1.2% in the third quarter amid expectations for a 0.7% rise, with the annualized rate of growth increasing 4.8% from the previous year to mark the biggest increase since 2007, led by a 1.6% rise in capital spending. At the same time, Bank of Japan Governor Masaaki Shirakawa said that record-low interest rates in the U.S. could lead emerging economies to “overheat and experience financial turmoil” as the Fed pledges to maintain borrowing costs at 0.25% for an extended period of time, while the chairman of the China Banking Regulatory Commission said Liu Mingkang said the depreciation in the dollar could stoke “new, real and insurmountable risks to the recovery of the global economy” as it continues to inflate asset prices.

Nikkei 225                          9,791.18

The Japanese equity market traded higher on Monday, with the Nikkei 225 climbing 20.87 points (0.21%) to end the day at 9,791.18. Consumer Services pushed 3.31% higher to lead the advance, followed by a 1.24% gain in utilities, while oil & gas tumbled 1.98% to taper the rally. Shares of Mitsui Chemicals plunged 13.21% to mark its largest drop since October 2008 as the company stated that it will raise as much as 64.3 billion yen in a sale of new shares, while Marui Group rallied 6.92% as Nomura Holdings raised its rating on the firm to “neutral” from “reduce.” Meanwhile, Toshiba Corporation retreated 5.15% as the company plans to scale back production of flat-panel televisions amid falling prices, while Sumitomo Mitsui Financial Group tumbled 5.9% as second quarter profits failed to meet market expectations.

Hang Seng                        22,553.63

Hong Kong shares closed at a 15-month high, leading the benchmark equity index to climb 390.35 points (1.73%) and end the trade at 22,943.98 as 8 of its 9 components advanced on the day. Shares of Industrial & Commercial Bank of China, the nation’s biggest lender climbed 2.35% as Goldman Sachs raised its share-price forecast for the stock by 16%, while China Construction Bank gained 3.65% as Goldman increases the share-price estimate for the firm by 15%. Moreover, Petrochina added 1.31% amid rising commodity prices, while HSBC advanced 2.64% as the bank agreed to sell its headquarters in London to South Korea’s National Pension Service for $1.29B.

S&P/ASX 200 Index           4,755.20

Stocks in Australia advanced on Monday on the back of rising commodity prices, leading the S&P/ASX 200 to climb 48.80 points (1.04%) and close at 4,755.20, with 8 of the 10 components trading higher. Shares of BHP Billiton, the world’s largest mining company gained 2.79% as the Australian Financial Review said Canada’s First Quantum Minerals may bid for the firm’s Ravensthrope nickel operation in West Australia, while Newcrest Mining rallied 2.40% as gold prices advanced 1.1% amid speculation that the greenback would extend its decline. At the same time, AWB rose 3.25% as the company stated it has added 90 additional grain wagons to more than double its rail wagon fleet, while AXA Asia Pacific Holdings soared 3.99% as the Age newspaper reported the firm’s Asia unit may receive a higher takeover bid from AMP later this week after rejecting the initial offer.

Notable Asian Session Event Risk / Economic Releases