Asian Markets, Fundamentals

Asian Stock Markets Mixed on Speculation China Will Tighten Policy

Asia Session Key Developments

• Gold Climbs to Six-Week High
• Copper Prices Rally for a Fourth Straight Day
• Hong Kong Retail Sales Rise Less-Than-Expected

Stocks in Asia/Pacific were mixed on Thursday for the third consecutive day amid concern policy makers in China will tighten policy over the coming months, which could further weigh on bank lending going forward. Nevertheless, the economic docket for Hong Kong showed retail spending increased at an annual pace of 3.2% in January, which fell short of expectations for a 6.7% rise, while the value of sales increased 6.6% amid forecasts for a 10.1% expansion. Moreover, capital spending in Japan slumped 17.3% during the fourth quarter, which missed projections for an 18.4% decline, while Australia’s trade deficit narrowed to 1176M in January from a revised 2174M shortfall in the previous month.

Nikkei 225                          10,145.72

Stocks in Japan pared yesterday’s advance, leading the Nikkei 225 to shed 107.42 points (1.05%) on Thursday, and close at 10,145.72 as all ten components traded lower on the day. Shares of Mitsubishi Chemicals added 3.10% subsequent to Credit Suisse Group AG raising the company’s stock rating from “neutral” to “outer perform”, while TDK slumped 2.91% as Barclay Capital lowered its outlook for the firm to “underweight” from “overweight.” In addition, Mitsubishi Motors tumbled 10.61% as the company, along with PSA Peugeot Citroen stated that they would not form a capital alliance, while Sumitomo Metal Mining added 0.76% on the back of higher commodity prices.

Hang Seng                        20,575.78

The Hong Kong equity market extended yesterday’s decline, leading the benchmark equity index to dive 301.01 points (1.44%) and close at 20,575.78 on Thursday. Seven out of the nine components tipped lower on the day, with technology leading the way, falling 3.39% and was followed by a 2.09% decrease in telecommunications. Shares of China Mobile shed 2.41% following Daiwa Securities Capital Markets downgrading the company from “outer perform” to “underperform,” along with concerns that the company will deviate from its main business as it looks to invest in Shanghai Pudong Development Bank, while Aluminum Corporation of China tumbled 2.28% on the back of lower metal prices. Moreover, Henderson Land Development shed 0.47% as home completions last year were the lowest since at least 1999, while the Bank of China, the nation’s second-largest lender by market value retreated 3.47% as the bank plans to sell 24.93 billion yuan ($3.7 billion) of subordinated bonds next week to replenish its capital.

S&P/ASX 200 Index           4,750.50

Shares in Australia rallied for the fifth session on Thursday, leading the S&P/ASX 200 to advance 14.80 points (0.31%) and close at 4,750.50. Four out of the ten components pushed higher on the day, with basic materials climbing 1.03%, while utilities tumbled 1.81% to taper the advance. Shares of BHP Billiton, the world’s largest mining company added 1.46% as copper prices rose for the fourth straight day, while Newcrest Mining, Australia’s largest gold producer gained 1.67% as gold prices climb to a six week high. At the same time, Henderson Group rose 0.96% as Goldman Sachs JBWere raised its rating on the firm to “buy” from “hold,” while Ramsay Health Care fell 1.77% as Morgan Stanley cut the company’s stock rating from “overweight” to “equal weight.”

Notable Asian Session Event Risk / Economic Releases