Asian Markets, Fundamentals

Asian Stocks Tumble to Mark Biggest Losing Streak Since July; BoJ Maintains Cautious Outlook

Asia Session Key Developments

• Bank of Japan Holds Key Rate at 0.10%
• Hong Kong’s Consumer Prices Advance at the Fastest Pace in 9 Months
• Deputy Prime Minister Naoto Kan Sees Risk for Deflation
  

The Asian equities market tumbled lower on Friday for the fourth consecutive day to post the longest losing streak since July, with S&P/ASX 200 shedding 1.33% to lead the decline. The global economic docket showed consumer prices in Hong Kong advanced at the fastest pace in 9 months, with the index climbing at an annual pace of 2.2% in October, while Japanese convenience store sales tumbled 5.5% from a year earlier. Meanwhile, the Bank of Japan held the benchmark interest rate at 0.10% and said that the “economy is picking up mainly due to various policy measures taken at home and abroad,” but noted that the recovery remained weak as households continue to face a weakening labor market paired with lower wage growth. At the same time, a report by the Cabinet Office showed GDP grew at an annualized pace of 4.8% during the last quarter, while prices excluding imports marked the biggest decline in 51 years, with Deputy Prime Minister Naoto Kan said that the economy “is in a mild deflationary phase.”

Nikkei 225                          9,497.68

The Japanese equity markets traded lower for a fourth successive day, with the Nikkei 225 shedding 51.79 points (0.54%) to end the trade at 9,497.68. Consumer Services slumped 1.79% to lead the decline, followed by a 1.26% loss in oil & gas, while financial climbed 1.07% to taper the decline. Shares of T&D Holdings soared 5.73% to mark its largest gain in 6 weeks subsequent to announcing that its first-half profit quadrupled from a year ago, while Japanese Airlines slumped 3.06% as the Jiji Press reported the firm will apply for a government loan over the following week. At the same time, Mitsubishi Rayon Corporation advanced 4.84% after Mitsubishi Chemical Holdings, which gained 9.18% on the day, offered to buy Mitsubishi Rayon for 380 yen a share, while Showa Denko K.K. added 3.40% as the firm will begin to supply liquid electrolyte materials used in car lithium-ion batteries.

Hang Seng                        22,643.16

Hong Kong shares closed lower on Friday, leading the benchmark equity index to shed 187.32 points (0.83%) and end the trade at 22,455.84 as 8 of the 9 components declined on the day. Shares of China Petroleum & Chemical tumbled 2.34% as China Finance Information reported that China will not raise natural gas prices this year, while Cathay Pacific Airways, Asia’s third-most valuable airline fell 1.89% as COO John Slosar said a gauge of average airfares have fallen roughly 20% as competitors continued to slash prices to revive demands. Meanwhile, Industrial & Commercial Bank of China slid 1.46% as the Shanghai Securities News said the central bank may look to increase reserve requirements for banks as financial conditions improve, with PetroChina shedding 1.19% on the back of lower commodity prices.

S&P/ASX 200 Index           4,685.80

Stocks in Australia pared the two day advance, leading the S&P/ASX 200 to tumble 63.40 points (1.33%) and close at 4, 685.80, with all 10 components pushing lower on the day. Shares of BHP Billiton, the world’s largest mining company fell 2.01% as copper prices declined the most in two weeks in New York amid a rise in the U.S. Dollar, while Insurance Australia Group dived 6.89% after having its stock rating downgraded to “underperform” from “neutral” by Macquarie Research. Meanwhile, Virgin Blue Holdings slumped 2.78% as the Australian Financial Review said the firm is actively looking to replace CEO Brett Godfrey, with Woodside Petroleum loosing 2.81% as crude oil has traded lower for the first time in four days.

Notable Asian Session Event Risk / Economic Releases