Asian Markets, Fundamentals

Stocks in Asia/Pacific Mixed, Japan’s Cabinet Office Leaves Economic Assessment Unchanged

Asia Session Key Developments

• Japan’s Consumer Confidence Extends January Advance
• New Zealand’s Performance of Services Climbs to 53.7
• Chinese Stocks Decline to Five-Week Low

Stocks in Asia/Pacific kicked off the week on a mixed note amid prospects that China will tighten policy over the coming months to curb inflation. Meanwhile, Japan’s cabinet office monthly economic report illustrated that although the economy has been picking up, it is only weakly self-sustaining and remains in a difficult situation as the private sector remains weak. Nevertheless, the economic docket for Japan showed that consumer confidence rose for the second consecutive month in February, with the gauge for employment rising to 34.2 from 33.1 in January. Moreover, New Zealand’s performance of services index increased to 53.7 from 53.1 during the same period, and conditions are likely to improve going forward as the Reserve Bank of New Zealand maintains a loose policy stance in an effort to encourage a sustainable recovery.

Nikkei 225                          10,751.98

Stocks in Japan advanced for the third consecutive day, leading the Nikkei 225 to push 0.72 points (0.01%) higher on Monday and close at 10,751.98. Half of the components rallied on the day, with financials leading the way, climbing 1.03%, while consumer services tumbled 0.64%.  Shares of Fuji Electric Holdings soared 8.86% as firm is likely to benefit from the Chinese government spending 4 trillion Yuan on smart power grinds, while Canon added 2.97% amid speculation that the company will report higher earnings. In addition, Mitsui Fudosan rose 1.37% following the Nikkei newspaper reporting that the company is likely to have a 20 billion yen profit from its stake in Oriental Land, while Nissan Motor tipped 0.39% higher as the automaker plans to invest 11.76 million Yuan in order to set up a design studio in Beijing.

Hang Seng                        21,079.10

The Hong Kong equity market pushed lower for a second successive session, with the benchmark equity index sinking 130.64 points (0.62%) to close at 21,079.10. Five out of the nine components fell on the day, with basic materials tumbling 3.59%, while technology added 3.51% to taper the decline. Shares of Aluminum Corporation of China lost 2.47% on the back of lower metal prices, while PetroChina shed 2.27% following the Australian Financial Review reporting that the company, along with Royal Dutch Shell may see their $3.03 billion bid for Arrow Energy rejected. At the same time, Industrial & Commercial bank of China lost 1.20% amid the company selling HK$275 million of floating rate notes which mature in March 2011, while Bank of China slipped 1.76% as it expects fewer loans this year compared to 2009.

S&P/ASX 200 Index           4,784.10

Shares in Australia pared Friday’s advance, leading the S&P/ASX 200 to shed 34.00 points (0.71%) and close at 4,784.10 as all ten components tumbled on the day. Shares of Fortescue Metals sank 3.04% on the back of lower metal prices, while BHP Billiton lost 0.65% as BHP Billiton Mitsubishi Alliance said the Hay Point port in Queensland remains closed due to weather conditions deteriorating over the weekend. Moreover, Henderson Group added 1.77% as the company considers cutting 25% of funds during its restructuring process, while Avoca Resources retreated 4.06% as gold marked its biggest loss in seven weeks on speculation that China will raise interest rates over the coming months to control inflation.

Notable Asian Session Event Risk / Economic Releases