Asian Market Update: Markets lifted by another PBoC liquidity injection; Japan, China remain unyielding on the disputed islands

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Asian Market Update: Markets lifted by another PBoC liquidity injection; Japan, China remain unyielding on the disputed islands

27.09.2012 08:42 Thursday
***Economic Data***
- (CN) CHINA AUG INDUSTRIAL PROFITS YTD Y/Y: -3.1% V -2.7% PRIOR
- (AU) AUSTRALIA Q2 JOB VACANCIES Q/Q: +4.2% V -5.3% PRIOR
- (NZ) NEW ZEALAND SEPT NBNZ ACTIVITY OUTLOOK: 29.3 V 26.4 PRIOR; NBNZ BUSINESS CONFIDENCE: 17.0 V 19.5 PRIOR
- (KR) SOUTH KOREA OCT BUSINESS SURVEY - MANUFACTURING: 72 V 75 PRIOR; NON MANUFACTURING: 67 V 69 PRIOR
- (JP) Japan investors Sold ¥66.8B in Foreign Bonds last week vs bought ¥64.4B prior week; Foreign Investors Sold ¥59.0B in Japan stocks last week vs bought ¥60.4B in prior week
- (VN) VIETNAM Q3 GDP Q/Q: 5.4% V 5.7% PRIOR; YTD: 4.7% V 4.8%E

***Markets Snapshot (as of 03:30GMT)***
- Nikkei225 flat
- S&P/ASX +0.1%
- Kospi +0.2%
- Shanghai Composite +0.3%
- Hang Seng +0.5%
- Dec S&P500 +0.4% at 1,432
- Dec gold flat at $1,757/oz
- Nov Crude oil +0.1% at $90.05/brl

***Notes/Observations***
- Asian equity markets are shrugging another session of losses in US indices and the seeming lack of progress in the China-Japan standoff. Instead, modestly bullish sentiment in the early hours was supported further after PBoC announced another round of daily liquidity via its reverse repo operations. And while today's injection was shy of the record amount added earlier in the week, the weekly operation hit a record high CNY365B. AUD/USD was the first to react, rising about 40 pips to retest the $1.04 handle. CAD also firmed up by about 30 pips against greenback, while EUR/USD added about 20 pips to its gains to $1.2890. USD/JPY pair was little changed, keeping a 10-pip range around ¥77.70.

- On the geopolitical front, China and Japan diplomatic officials were unable to make any meaningful progress on the sidelines of the UN, as PM Noda reiterated support in the acquisition of Senkaku islands. Analysts worry that the situation may be exacerbated further if the ruling DPJ loses its parliament elections to the LDP, ceding power to the former PM Abe who was elected as the leader of the opposition overnight. Japanese press speculated that he has exhibited nationalistic tendencies in the past and pledged to defend the Senkaku Islands and Japan's territorial waters following yesterday's party vote. Japan market watchers are further concerned that he would undo the progress made on the fiscal front with the opposition to the consumption tax increase, sending JGB yields higher on worries over further credit rating agency oversight.

***Fixed Income/Commodities***
- (CN) After today's operations, PBoC liquidity injections for the week are now CNY365B (record high)
- (CN) China Iron & Steel Association (CISA) Deputy Chief Wang: China iron ore production to decline on prices
- SLV: iShares Silver Trust ETF daily holdings rise to 10,046 tons from 10,015 tons (highest since 10,047 in Sept of 2011)
- GLD: SPDR Gold Trust ETF daily holdings fall by 10.5 tons to 1,320.8 tons (first decline since Sept 12th)
- JGB: (JP) Japan MoF sells ¥2.54T vs. ¥2.7T indicated in 0.1% 2-yr bonds, Avg Yield 0.100% v 0.098% prior; bid to cover: 11.39x v 12.62x prior

***Speakers/Political/In the Papers***

- (JP) Japan PM Noda: Does not want to dampen relations with China; Japan will not compromise its claim on the islands
- (JP) Japan Foreign Min Gemba: Proposes senior official dialogue with four Pacific nations - Kyodo press
- (JP) Japan's new LDP leader Abe hints at monetary easing, conditions tax hike to deal with deflation - Nikkei press
- (JP) Long-term JGB yields may rise following LDP elections of former PM Abe to party leadership post - Nikkei News
- (JP) Advanced Research Japan: Japanese automakers' sales in China expected to fall 20-30% - Shanghai Daily

- (CN) China Ministry of Commerce (MOFCOM) official Wang Chao: Reiterates conditions in trade sector remain 'grim' - financial press
- (CN) China to investigate land hoarding, speculation - Chinese press

- (ID) OECD raises Indonesia 2013 GDP forecast to 6.2% from 6.0% prior
- (TH) Thai PM Shinawatra: Open markets are key to growth in Asia; Sees 2012 GDP at 5.5-6.0% - financial press

- (EU) ECB's Liikanen: Economy is showing worrying signs, measures are needed to end uncertainty; defends ECB council decisions despite own stance
- (ES) Spain Govt said to be planning to place a hold on civil servant wages for 2013 and restriction in hiring as part of budget program to be announced tomorrow - financial press
- (EU) Italy and Spain are said to oppose an EU-wide tax on financial transactions (Tobin tax) - financial press
- (IR) Iran President Ahmadinejad: Enrichment cannot be stopped; nuclear enrichment to 20% for medicinal purposes only - UN comments

***Asia Equities***
- Daiei Inc 8263.JP: Revises FY12 Net lower to loss ¥5B from profit ¥1B prior - Kyodo press
- Sharp 6753.JP: Provides restructuring update: To cut 2k additional jobs, sell Malaysia unit - Yomiuri press
- Hitachi 6501.JP: Receives US approval to build, operate uranium enrichment plant with GE - Yomiuri press
- Toshiba 6502.JP: Awarded ¥100B order for gas power equipment from Chubu electric - Japan press
- Samsung Electronics 005930.KR: Alleging jury misconduct during its case with Apple in which it was ordered to pay $1.05B for patent infringement - Korean press

***US Equities***

- CPHD: Reports prelim Q3 Rev $79-81M v $84Me; Affirms FY12 Rev $333-347M v $334Me
- FUL: Reports Q3 $0.53 v $0.53e, R$500.5M v $518Me
- CMTL: Reports Q4 $0.45 v $0.38e, R$112.8M v $109Me
- PRGS: Reports Q3 $0.31 v $0.23e, R$107.2M v $112Me
- NWE: Cuts FY12 EPS guidance to $2.30-2.40 vs $2.45e; Receives non-binding Initial Decision from regulators related to Dave Gates Station

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