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Friday, September 03, 2010

Asian Market Update – 3/12/10

Friday, March 12th, 2010

Asian Market Update: Plans by China to crack down on property market speculation weighs on Shanghai and Hong Kong shares, while USD/JPY was supported by comments out of Japanese officials

ECONOMIC DATA
- (NZ) NEW ZEALAND JAN RETAIL SALES M/M: 0.8% V 0.5%E; EX- AUTO: 0.3% V 0.7%E; Prior retail sales revised LOWER to -0.4% from 0.0%, prior ex-auto revised LOWER to -2% from -1.8%
(JP) Japan JAN Final Industrial Production M/M: 2.7% v 2.5% prior; Y/Y: 18.5% v 18.2% prior; Capacity Utilization M/M: 3.9% v 1.4% prior

SPEAKERS/PRESS
-China: Following the higher than expected rise in China’s Feb housing prices, a state media report disclosed that the Chinese government would launch a 5-month campaign (from March to July) to crackdown on illegal speculation in the land market. The government plan will target developers who use land for either unapproved purposes or speculation. PBoC Assistant Gov Qingping reiterated that the central bank faced greater difficulty in 2010 in keeping “appropriately loose” monetary policy. Qingping added that China’s loan growth situation needed to change, as excessive lending is bad for economic development. Additionally, the PBoC’s Deputy Gov Su Ning said the issue of the yuan should not be “politicized”, after on yesterday’s session, the US President Obama said he believed China allowing the yuan to increase would aid US exports. PBoC’s Su Ning also addressed the inflation situation, noting that inflation expectations are gradually rising.

-Japan: Amid press speculation that the BoJ could consider additional easing measures in either March or April in order to lower short-term rates, BoJ Gov Shirakawa said the central bank would discuss what it could do based on the its rules at next week’s policy meeting. Currently, the BoJ is prohibited by law from buying new government bonds. Shirakawa added that he believed an easy monetary policy would eventually affect the yen rate, but said there was no clear relationship between short-term price moves and forex. Japan’s Prime Minister Hatoyama was quoted as saying forex should be decided by markets, although markets do not always set forex rates properly. Also, Japan’s Finance Minister Kan noted that excessive yen strength at times is undesirable, and the government has intervention as a tool to deal with excessive currency movements. Also, Kan said he hoped the BoJ would take its own measures to fight deflation.

-Vietnam: Fitch disclosed that it placed Vietnam’s long-term foreign and local currency issuer default ratings (BB-) on watch negative, citing the decline in domestic confidence in the local dong currency, and a lack of transparency regarding Vietnam’s international reserves.

EQUITIES
- The Nikkei 225 ended higher by more than 0.75% and at the best level since late Jan, as exporters benefited from the weaker yen. Australia’s S&P ASX 200 closed marginally higher led by gains in gold miners. The Shanghai Composite is currently trading lower by more than 0.50%, as the index is being weighed down by property developers. Taiwan’s Taiex closed the session flat, hurt by losses in the technology sector. In South Korea, the Kospi gained by 0.40%, led by LG Display. Hong Kong’s Hang Seng is lower on declines in the banking sector.

CURRENCIES/FIXED INCOME/COMMODITIES
- The Japanese yen is broadly weaker, following comments regarding the currency from various officials in Japan. Additionally, the US dollar is marginally weaker against the European major and commodity currencies, as EUR/USD is near 1.3700 as of the time of writing.

- In commodities, both crude oil and gold have benefitted from the weakness in the dollar. Oil prices are trading above $82/bbl, while Spot Gold is trading above $1,110/oz.

Written by Trade the News

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