Asian Markets, Fundamentals

Stocks in Asia/Pacific Retreat on Global Growth Concerns, RBA Limits Scope for Another Rate Hike

Asia Session Key Developments

• Japan 3Q Home Loans Expand at Faster Pace
• Reserve Bank of Australia Holds Neutral Outlook for Policy
• Hong Kong Unemployment Rate Weakens for Second Month

The Asian stock market pushed lower on Tuesday as Fed Chairman Ben Bernanke held a cautious outlook for global growth, while Japan’s Finance Minister Hirohisa Fujii said that the world’s second largest economy remains in a severe state as job losses intensify. Meanwhile, housing loans in Japan increased at an annual rate of 0.8% in the third quarter after rising 0.4% during the previous three-month period, while service-based activity unexpectedly weakened in September, with the Tertiary index slipping 0.5% after rising 0.3% in August. At the same time, the Reserve Bank of Australia meeting minutes said the outlook for future policy remains an “open question” and said that board members “were conscious of balancing risks” as  the $1T skirts the global recession. Moreover, the central bank said that “business and consumer confidence could prove fragile” as the government stimulus begins to taper off, and went onto say that the appreciation in the Australian dollar is likely to “constrain output and dampen inflationary pressure” as global trade conditions remain far from favorable.

Nikkei 225                          9,729.93

The Japanese equity market traded lower on Tuesday, with the Nikkei 225 shedding 61.25 points (0.63%) to end the day at 9,729.93. Telecommunications plunged 2.88% to lead the decline, followed by a 1.39% loss in basic materials, while utilities advanced 1.15% to taper the fall. Shares of Canon climbed 2.97% as the company agreed to buy Oce NV for 730 million euros in cash to expand its printer operations and help the company expand market share, while Konica Minolta tumbled 5.32% as Mizuho Securities lowered its rating on the stock to ‘neutral’ from ‘outperform.’ At the same time, Fuji Heavy Industries advanced 2.02% as auto sales increased 10% during January to October from the previous year, while NEC shed 3.69% as the firm plans to sell new shares at a 3-5% discount from the current market price.

Hang Seng                        22,914.15

Hong Kong shares closed lower on Tuesday even as the unemployment rate fell for a second consecutive month in October, leading the benchmark equity index to fall 29.83 points (0.13%) and end the trade at 22,914.15 as 6 of its 9 components declined on the day. Shares of HSBC Holdings, Europe’s largest bank by market value, climbed 0.93% as the bank plans to hire 200 people in Hong Kong for its credit-care, mortgages, insurance and phone-banking operation, while Hong Kong Electric Holdings shed 0.71% as the firm, along with its affiliate Cheung Kong Infrastructure, plans to raise its stake in U.K’s Northern Gas. Meanwhile, Citic Pacific Limited pushed 0.45% higher as HSBC announced a new target price of HK$22.50/share, while Sino Land shed 2.90% as the U.S. Federal Reserve held a cautious outlook for the global recovery.

S&P/ASX 200 Index           4,729.40

Stocks in Australia tumbled on Tuesday on the back of lower commodity prices, leading the S&P/ASX 200 to fall 25.80 points (0.54%) and close at 4,729.40, with 6 of the 10 components trading lower. Shares of Paladin Energy climbed 2.79% as Cameco Corporation, which plans to double its annual uranium consumption, will consider acquiring mining assets and creating joint ventures with customers in Asia, while AXA Asia Pacific Holdings plummeted 2.50% as AMP CEO Craig Dunn saw little prospects for a higher bid to take over the firm.  Meanwhile, Platinum Asset Management dived 2.62% as global equities tumbled overnight, while BHP Billiton and Rio Tinto advanced 1.00% and 0.71% respectively as copper prices jumped to a 13-month high during the New York trade.

Notable Asian Session Event Risk / Economic Releases