Asian Market Update: Anti-austerity clashes in Spain and lack of progress in Sino-Japanese tensions weigh on sentiment

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Asian Market Update: Anti-austerity clashes in Spain and lack of progress in Sino-Japanese tensions weigh on sentiment

26.09.2012 08:20 Wednesday
***Economic Data***
- (NZ) NEW ZEALAND AUG TRADE BALANCE (NZ$): -789M V -630ME (largest deficit in 11 months; first deficit in 7 months); EXPORTS: 3.32B V 3.55BE; IMPORTS: 4.10B V 4.10BE; TRADE BALANCE 12 MTH YTD: -866M V -760ME
- (AU) AUSTRALIA AUG DEWR INTERNET SKILLED VACANCY: -2.9% V -2.8% PRIOR (5th month of decline)
- (AR) ARGENTINA AUG TRADE BALANCE: $1.62B V $1.08BE
- (VN) Vietnam YTD Foreign Direct Investment (FDI) inflow -1.2% y/y to $8.1B - Vietnam government
- (VN) Vietnam General Stats Office reports retail sales value YTD +17% y/y to VND1.71T

***Markets Snapshot (as of 03:30GMT)***
- Nikkei225 -1.7%
- S&P/ASX -0.3%
- Kospi -0.6%
- Shanghai Composite -0.6%
- Hang Seng -0.8%
- Dec S&P500 +0.1% at 1,438
- Dec gold flat at $1,766/oz
- Nov Crude oil -0.2% at $91.18/brl

***Notes/Observations***
- Asian equity markets are taking a lead from the final hour sell-off on Wall st, falling moderately across the board. Images of increasingly violent marches on the streets of Madrid reminiscent of those early days of discontent in Athens sent risky assets lower, prompting further financial press speculation on whether PM Rajoy would turn to international lenders and under what conditions. About 60 people were said to be injured in the scuffles between "indignados" marching on Spanish Congress and riot police, with rubber bullets said to have been fired into the crowds. Late in the Asian session, euro currency moved to 2-week lows below $1.2870, as stops triggered below $1.2890 exacerbated an otherwise quiet FX market session. Commodity majors AUD and NZD were off by over 0.2% against the greenback, with the former falling to session lows as well below $1.0370

- Regional Japanese automakers continued to curb their production in China in the wake of recent tensions, as management perceived little progress in the talks among respective diplomats on the sidelines of the UN summit. Foreign ministers finally held formal talks but stuck to their guns, with China diplomats vocally opposing the purchase of disputed islands by Japanese govt. In turn, Japan's foreign min remarked that bilateral ties with China are not good. Tokyo stand-off with China will likely spill out into the political arena later today when Japan's opposition LDP party holds leadership elections with the victor said to be highly likely to unseat PM Noda in the coming months. Shinzo Abe, who served as Japan's PM some 5 years ago, is increasingly viewed as the likely candidate to retake the reins. USD/JPY was little changed, holding US session lows around ¥77.70.

***Fixed Income/Commodities***
- (US) API PETROLEUM INVENTORIES CRUDE: +335K V +1.5ME (2nd consecutive build); GASOLINE: +112K V +500KE; DISTILLATE: -483K V +1ME; UTILIZATION: 86.9% V 87.8% W/W
- GLD: SPDR Gold Trust ETF daily holdings rise by 4.5 tons to 1,331.3 tons (record high)
- (AU) Australia MoF (AOFM) sells A$500M in Apr 2020 Notes; avg yield: 2.832% bid-to-cover: 2.81x
- (CN) China MoF sells 20-yr Bond at yield of 4.1% v 4.03% April 19th

***Speakers/Political/In the Papers***
- (JP) Former Japan PM Hatoyama denied invitation by China to visit Beijing on 40-year anniversary of normalization of bilateral ties - Nikkei News
- (JP) Japan polls report Japan, China bilateral ties are not good; According to a survey conducted by Asahi press, approx 90% of Japanese and 83% of Chinese say relations between the two countries are no good.
- (JP) Japan's opposition LDP (opposition) party to hold elections later today; Likely frontrunner expected to become the next Japan PM due to falling popularity of DPJ party; Former PM Abe seen as the favorite to win the LDP party leadership race - Japanese press
- (JP) BoJ board member Kiuchi: Expects Japan economy to recover Q1 2013 at the earliest; May lower inflation target - Asahi press

- (KR) South Korea Fin Min Bahk: Warns of the negative effects of protectionism; can harm trade, exports; In final stage of FTA talks with Canada
- (KR) Korea Institute of Industrial Economics and Trade (KIET): Korean steelmakers to suffer sluggish demand and oversupply of steel products for the next 8 years - Korean press
- (KR) Bank of Korea (BOK) Gov Kim: Eurozone economy is not likely to improve until next year - Korean press

- (CN) China State Council Development Research Center Researcher Zhang Liqun: Sees China GDP to rebound in Q4 - China Daily
- (CN) State Administration of Foreign Exchange (SAFE): China individuals/institutions more willing to keep foreign currency in Aug - China Daily
- (CN) PBoC to continue to implement lower RRR for financial firms in western China to support their lending ability - China Securities Journal
- (CN) China Ministry of Industry and Information Technology (MIIT): China Aug mobile phone user numbers reached 1.072B subscribers; +1.0% m/m and +14.1% y/y - DigiTimes

- (AU) S&P cuts South Australia rating to AA from AA+; Outlook Stable

- (ES) Police in Madrid said to be firing rubber bullets in effort to disperse protesters - press
- (EU) ECB's Weidmann: OMT bond buying program could be more negative than positive over the long-term - financial press
- (EU) EU's Rehn: Returning to growth to be a slow process; Does not expect more restructuring in Greece; Hard to determine what the next steps in Greece will be e a slow process; sees signs that imbalances are narrowing
- (ES) Spain PM Rajoy: Will seek bailout if rates too high for the economy; Studying the possibilities for a bailout request.

***Asia Equities***
- (NZ) Fonterra FCG.NZ: Reports FY12 Profit NZ$609M v NZ$754M y/y, Rev NZ$19.8B v NZ$19.9B y/y
- Hon Hai 2317.TW: Seeing pronounced labor shortage amid production of iPhone 5; Under increasing pressure to meet demand for 14-16M units in Oct v 8-10M units expected to total in Sept - DigiTimes
- Samsung 005930.KR: Sales of Galaxy S3 smartphones has topped 3M three months after debut - Korean press

*Japan:
- Nissan NSANY: To halt production at China JV from Sept 27-Oct 8, three days earlier than the expected - Japanese press
- Toyota TM Executive in Beijing denied earlier reports by Asahi press that it plans to completely halt China production in Oct; Only planning to reduce production amid anti-Japan sentiment - financial press
- Sharp 6753.JP: On track secure enough cash to meet immediate funding needs through FY12 but little progress seen in talks with Hon Hai - Nikkei press
- Toho 9602.JP: Raised FY12/13 net profit guidance to ¥12.8B, Rev ¥192.5B (previously guided ¥8.5B, Rev ¥182B)
- (JP) Japan top carriers, All Nippon Airways (ANA) and Japan Airlines (JAL), report major cancellations for Japan-China flights for Sept-Nov period; cuts 52k+ reservations - Kyodo press
- Fuji Heavy 7270.JP: Reports Aug China Sales 4.03K, +6.9% y/y; YTD 34.9K, -7.4% y/y
- Mitsubishi UFJ 8593.JP: To acquire Jackson Square Aviation in the US for ¥100B - Nikkei News

***US Equities***
- JBL: Reports Q4 $0.54 adj v $0.58e, R$4.34Bv $4.22Be; Authorizes $100M in repurchases; -4.2% afterhours
- SNX: Reports Q3 $0.93 v $0.93e, R$2.58B v $2.59Be; -3.7% afterhours
- KFT: To replace Alpha Natural in S&P500; Effective after close Oct 1st; +1.1% afterhours
- YHOO: Appoints Ken Goldman as CFO; effective Oct 22nd

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