Asian Markets, Fundamentals

Asian Stocks Extend Decline on Growth Fears; Japan’s 3Q GDP Expands 1.3%

Asia Session Key Developments

• China Pledges to Increase Regulator Supervision
• Fujii Says it’s Important to Keep Fiscal Discipline
• Australia’s Consumer Confidence Tumble on Rising Borrowing Costs
  

The Asian equities markets plunged on Wednesday as Fitch Ratings cut Greece’s credit rating, while China Banking Regulatory Chairman Liu Mingkang said the government will “strictly control lending” and “increase regulator supervision” in an effort to avert an asset bubble. At the same time, Japan’s Finance Minister Fujii said Japan can contain bond sales below 44 trillion yen, while also noting it is important to keep fiscal discipline. Nevertheless, the final GDP reading for Japan reinforced a weakened outlook for future growth as the growth rate was revised down to 1.3% from an initial forecast for a 4.8% expansion in the growth rate, and policy makers may continue to provide support to the real economy as global trade conditions remain subdued. Meanwhile, Australia’s Westpac consumer confidence index tumbled 3.8% in December after falling 2.5% in the previous month, while home loans slid 1.4% after rising a revised 3.3% in September. Moreover, Australia’s trade deficit widened to A$2.379M in October from A$1845, led by a decline in iron ore and coal exports.

Nikkei 225                          10,004.72

The Japanese equity markets traded lower for a second consecutive day, leading the Nikkei 225 to tumble 135.75 points (1.34%) and close at 10,004.72. Nine of the ten components traded lower on the day, with oil & gas plunging 2.41% to lead the decline, while utilities surged 0.11% to taper the decline. Shares of Aeon, Japan’s largest supermarket retailer climbed 3.02% as the company said it will sell its stake in U.S. clothing chain Talbots, while Suzuki Motor advanced 3.49% as Volkswagen AG looks to take a 20% stake in the firm, according to Reuters. At the same time, Nissan Motor Co slumped 3.40% as the automaker announced plans to invest EUR 160M to build a plant in northern Portugal, which will produce batteries for electric cars, while Pioneer Corp rallied 3.24% after launching a joint-venture with Shanghai Automotive Industry Corp to produce car navigation systems in China.

Hang Seng                        21,741.76

Hong Kong shares closed to the downside on Wednesday for a third straight day to mark a one-week low, leading the benchmark equity index to shed 318.76 points (1.44%) and end the trade at 21,741.76 as 8 of the 9 components traded lower on the day. Shares of China Overseas Land tumbled 3.1% as the Xinhua News Agency said China’s government will temper “speculative” home purchases, while Sun Hung Kai Properties tipped 0.26% lower following the report, which cited National Development and Reform Commissioner Chairman Zhang Ping. In addition, Industrial Commercial Bank of China shed 1.5% as China Banking Regulatory Chairman Liu Mingkang said it will “strictly control lending to industries that are energy-intensive, polluting and have overcapacity, and raise the quality of lending,” while PetroChina lost 1.65% as oil prices weakened for the fifth day.

S&P/ASX 200 Index           4,637.90

Stocks in Australia traded lower on the back of falling commodity prices, with the S&P/ASX 200 shedding 32.70 points (0.70%) on Wednesday to close at 4,637.90.  Nine of the ten components traded lower on the day, with oil & gas tumbling 1.75% to lead the decline, while telecommunications added 0.77%. Shares of Newcrest Mining, the country’s largest gold producer slid 1.62% as gold posted its largest three-day fall since October 2008, while Alesco slumped 8.74% subsequent to the company forecasting a 29% fall in first-half earnings. At the same time, Karoon Gas added 3.45% as the company said its venture partner ConocoPhillips will purchase an extra 9% stake in two exploration permits, while Caltex Australia, the nation’s biggest oil refiner shed 4.11% as the company held a weak growth outlook for the first half of 2010.

Notable Asian Session Event Risk / Economic Releases