Asian Markets, Fundamentals

Stocks in Asia/Pacific Falter on Growth Concerns, Hang Seng Bucks Trend

Asia Session Key Developments

• Australian Consumer Confidence Improves in March
• Japan Machinery Orders Slump After Biggest Jump Since 2000

Stocks in Asia/Pacific weakened on Wednesday as policy makers held a cautious outlook for the region, while the Hang Seng bucked the trend as firms within the region posted better-than-expected earnings results for 2009. Bank of Japan’s board member Suda publicized that upside and downside risks for growth are almost balanced, sticking with the central bank’s view that the economy will continue to gradually expand. Meanwhile, the economic docket in Japan showed machinery orders pushed 3.7% lower in January after posting its biggest jump since 2000 the month prior, while the regions domestic goods price index advanced for the fourth consecutive month in February, with the gauge increasing 0.1% following the 0.3% rise in the previous month. Moreover, Australia’s Westpac consumer confidence index gained 0.2% in March, signaling that households are weathering RBA’s decision to raise borrowing costs for the fourth time in five meetings last week, while home loans unexpectedly slumped 7.9% in January after contracting a revised 5.1% in the month prior. At the same time, exports from China jumped at an annualized pace of 45.7% February to top expectations for a 38.3% rise, which outpaced the 44.7% expansion in imports.

Nikkei 225                          10,563.92

Stocks in Japan extended yesterday’s decline, leading the Nikkei 225 to shed 3.73 points (0.04%) on Wednesday and close at 10,563.92. Six out of the ten components retreated on the day, with telecommunications leading the way, falling 1.52%, while technology advanced 0.63%. Shares of Tokyo Gas tumbled 0.25% on the back of lower energy prices, while Casio Computer rallied 3.44% amid Nikkei English News stating that the company could see an operating profit of 20 billion yen for the year ending March 2011. In addition, CSK Holdings added 2.01% as the firm looks to sell its Cosmo Securities Co. brokerage unit to Iwai Securities for approximately 16 billion yen, while Nippon Light Metal soared 10.09% as UBS AG raised its outlook for the aluminum producer from “neutral” to “buy.”

Hang Seng                        21,208.29

The Hong Kong equity market advanced on Wednesday for the fourth consecutive session, leading the benchmark equity index to rise 0.74 points (0.00%) and close at 21,208.29. Seven out of the nine components rallied on the day, with technology climbing 2.13%, while consumer goods slipped 1.88%.  Shares of Cathay Pacific Airways soared 4.68% as the airline returned to profit in 2009, while Citic Pacific surged 7.47%as net income for the previous year topped market expectations. Moreover, China Petroleum & Chemical lost 1.45% on the back of lower energy prices, while HSBC Holdings slipped1.09% as the U.K. intends to force banks to increase disclosure on compensation.

S&P/ASX 200 Index           4,820.00

Shares in Australia pared yesterday’s advance, leading the S&P/ASX 200 to retreat 0.10 points (0.00%) and close at 4,820.00. Six out of the ten components tumbled on the day, with consumer goods leading the way, falling 0.43%, while telecommunications surged 2.55% to taper the decline. Shares of Alesco took a free fall of 31.58% as the company lowered its earnings forecast and UBS downgrading its stock rating from “neutral” to “sell,” while CuDeco leapt 12.98 % as Xiangguang Copper looks to take a 15% stake in the firm. At the same time, Telstra Corp advanced 2.75% after the Australian Financial Review said Communications Minister Stephen Conroy lacks political support to split up the firm, while Atlas Iron soared 4.52% as the Australian iron ore producer will purchase Aurox Resources for A$149 million in shares.

Notable Asian Session Event Risk / Economic Releases