Asian Markets, Fundamentals

Stocks in Asia/Pacific Mixed, PBoC Advisor Fan Gang Holds Cautious Outlook for China

Asia Session Key Developments

• Japan Machine Tool Orders Falls for 17^th Straight Month
• Australia’s Wage Cost Grow At Slower Pace in Third Quarter
• Westpac Leading Index Improves in September

The Asian Market was mixed on Wednesday, with the Hang Seng trading lower for the second day as central bank advisor Fan Gang held a cautious outlook for China. Mr. Gang continued to see excessive speculation in China’s property market and said that double-digit growth would raise the risks for an asset-bubble within the region, and forecasts the economy to expand 8% to 9% in 2010 as he anticipants the government to maintain a moderately loose policy throughout the following. Meanwhile, Australia’s Westpac leading index increased 0.9% in September to mark the fourth rise in the last five-months, while wage cost in the region grew at a slower pace in the third quarter as the index expanded 0.7% after rising 0.8% during the previous three-month period.

Nikkei 225                          9,676.80

The Japanese equity market traded lower for a second consecutive day, with the Nikkei 225 shedding 53.13 points (0.55%) to end the trade at 9,676.80. Financials plummeted 2.77% to lead the decline followed by a 2.33% loss in oil & gas, while telecommunications rose 0.65% to taper the decline. Shares of Tokyu Land Corporation took a free fall of 10.70% on speculation the firm will look to replenish its capital holdings as Tokyo Tatemono Corporation announced it will sell new shares to fund property purchases and pay off loans, while Japan Airlines pushed 3.92% lower to its the lowest level since October 2002 as Transport Minister Seiji Maehara said there remains a risk for the firm to for bankruptcy. In addition, Softbank Corp shed 0.24% as the firm increased its stake in RockYou Inc. by $50M, while Mitsubishi UFJ Financial Group slipped 0.62% as the firm plans to sell securities to raise as much as JPY 1T.

Hang Seng                        22,840.33

Hong Kong shares closed lower on Wednesday for a second successive day after central bank adviser Fan Gang stated that the nation is among the emerging nation facing risks of market bubble, leading the benchmark equity index to fall 73.82 points (0.32%) and end the trade at 22,840.33 as 7 of the 9 components declined on the day. Shares of Hang Lung Properties dived 2.98% following the comments from Mr. Gang, while China Unicom Hong Kong, China’s official carrier for Apple’s iPhone climbed 1.90% as the CEO announced 3G revenue per user is trending up to more than 100 yuan ($14.65) per month. At the same time, China Petroleum & Chemical rose 1.47% on the back of higher commodity prices, while heavyweight China Mobile, the world’s biggest phone company by market value added 2.49% as Chairman Wang Jianzhou expects to have 3 million subscribers for its third-generation service by the end of the year from 1.66 million at the end of September.

S&P/ASX 200 Index           4,739.00

Stocks in Australia climbed higher on Wednesday, leading the S&P/ASX 200 to gain 9.60 points (0.20%) and close at 4,739.00, with 5 of the 10 components trading higher on the day. Shares of AWB shed 0.40% as the firm reported its first annual loss in nine-years, while Insurance Australia Group advanced 2.30% as the Australian Financial Review reported that QBE Insurance Group may offer a takeover bid for the firm. Moreover, Linc Energy surged 12.87% as the firm announced better-than-expected results for  its drilling site at Galilee, while Rio Tinto slipped 1.09% after JPMorgan Chase said the firm may look to get out of its joint venture with BHP Billiton as commodity prices push higher.

Notable Asian Session Event Risk / Economic Releases