Asian Markets, Fundamentals

Stocks in Asia/Pacific Tumble as the Yen Trades at a 14-Year High Against the U.S. Dollar

Asia Session Key Developments

• Japan Finance Minister Fujii Closely Watching FX Market
• BOJ Minutes: Loan Program Could Be Extended

The Asian equities market plummeted on Thursday ahead of the Thanksgiving holiday in the U.S. as the dollar tumbled to a 14-year low against the yen amid speculation that interest rates in the world’s largest economy will remain low for some time. Meanwhile, during the BOJ minutes, Finance Minister Hirohisa Fujii reiterated his support for a strong U.S. dollar and said the government is monitoring the foreign exchange market “very closely” as the marked appreciation in the Japanese yen hampers the prospects for a sustainable recovery. At the same time, Mr. Fujii stated that the central bank may take action on abnormal currency moves, and pledged to “take appropriate actions” to stem the downside risks for growth and inflation. Meanwhile, the economic docket in Australia, showed business investment unexpectedly fell 3.9% in the third-quarter after rising 2.1% during the previous three-month period, and firms may continue to keep a lid on spending throughout the remainder of the year as global trade conditions remain subdued.

Nikkei 225                          9,383.24

The Japanese equity markets pushed lower on Thursday as the dollar fell to a 14-year low against the Japanese yen, leading the Nikkei 225 to decline 58.40 points (0.62%) and close at 9,383.24. Technology slid 1.61% to lead the advance, followed by a 1.20% fall in consumer goods, while consumer services climbed 1.14% to taper the decline. Shares of Asahi Glass plunged 7.86% as the firm filed to auction JPY 45B in three-year and JPY 45B in five-year convertible bonds with Japan’s Finance Ministry, while Mitsui Chemicals advanced 4.46% as UBS maintained the firms’ rating at “neutral.” Moreover, Showa Denko K.K. added 1.95% as Goldman Sachs increased its rating on the company to “neutral” from “sell,” while Isuzu Motors slipped 4.70% following the marked appreciation in the Japanese exchange rate.

Hang Seng                        22,210.41

Hong Kong shares closed to the downside on Thursday, leading the benchmark equity index to push 401.39 points (1.78%) lower and end the trade at 22,210.41 as all 9 components traded lower on the day. Shares of Li & Fung slumped 2.46% as Hong Kong exports declined for a 12^th straight month in October, dragging on the city’s recovery from a year long recession, while China Petroleum & Chemical, the nation’s largest oil refiner tumbled 2.07% as the company, along with U.S. buyout firm TPG, have weighed a bid a for LyonellBasell Industries AF which could challenge Reliance Industries offer of approximately $12 billion.  At the same time, Aluminum Corporation of China shed 0.11% on the back of lower metal prices, while China Construction Bank Corp slid 3.64% on speculation the firm may sell shares to shore up its capital holdings.

S&P/ASX 200 Index           4,708.60

Stocks in Australia traded lower on Thursday, leading the S&P/ASX 200 to shed 13.60 points (0.29%) and close at 4,708.60, with 7 of the 10 components contracting on the day. Shares of Beach Petroleum jumped 4.62% as the firm held an improved outlook for crude outputs at its Egypt and Tanzania oil site, while Newcrest Mining, Australia’s biggest gold producer, rallied 2.76% on the back of gold trading at record highs. Meanwhile, BHP Billiton, the world’s largest mining company, added 1.48% amid copper prices rising to a 14-month high due to the fall in the U.S. dollar, while Amcor soared 3.91% as the company cited a potential divestment of flexible packaging plant.

Notable Asian Session Event Risk / Economic Releases