Asian Market Update: China markets rise on hopes over Spain's budget plan and more action from PBoC; Japanese industrial production disappoints, METI cuts assessment

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Asian Market Update: China markets rise on hopes over Spain's budget plan and more action from PBoC; Japanese industrial production disappoints, METI cuts assessment

28.09.2012 08:21 Friday
***Economic Data***
- (JP) JAPAN SEPT MARKIT/JMMA MANUFACTURING PMI: 48.0 V 47.7 PRIOR (first rise in 4 months)
- (JP) JAPAN AUG PRELIMINARY INDUSTRIAL PRODUCTION M/M: -1.3% V -0.5%E (biggest decline in 3 months); Y/Y: -4.3% V -3.4%E
- (JP) JAPAN AUG JOBLESS RATE: 4.2% V 4.3%E (11-month low); JOB-TO-APPLICANT RATIO: 0.83% V 0.83%E
- (JP) JAPAN AUG OVERALL HOUSEHOLD SPENDING Y/Y: 1.8% V 1.1%E (3-month high)
- (JP) JAPAN SEPT TOKYO CPI Y/Y: -0.7% V -0.6%E; TOKYO CPI EX-FRESH FOOD: -0.4% V -0.3%E (14th consecutive negative print)
- (JP) JAPAN AUG NATIONAL CPI Y/Y: -0.4% V -0.5%E; NATIONAL CORE CPI: -0.3% V -0.3%E (4th consecutive negative print)
- (JP) JAPAN AUG RETAIL TRADE SA M/M: +1.5% V -0.3%E; Y/Y: +1.8% V -0.3%E (3-month high); LARGE RETAILERS' SALES: -0.9% V -1.7%E
- (UK) UK SEPT GFK CONSUMER CONFIDENCE INDEX: -28 V -28E
- (KR) SOUTH KOREA AUG CURRENT ACCOUNT: $2.36B V $6.14B PRIOR; GOODS BALANCE: $2.37 V $5.34B PRIOR
- (KR) SOUTH KOREA AUG LEADING INDEX CHANGE M/M: -0.2% V +0.2% PRIOR
- (KR) SOUTH KOREA AUG INDUSTRIAL PRODUCTION M/M: -0.7% V -0.4%E; Y/Y: 0.3% V 0.4%E
- (AU) AUSTRALIA AUG PRIVATE SECTOR CREDIT M/M: 0.2% V 0.3%E; Y/Y: 4.1% V 4.3%E
- (NZ) NEW ZEALAND AUG BUILDING PERMITS M/M: 1.9% V 3.0%E (3rd consecutive increase)
- (SG) SINGAPORE AUG M1 Y/Y: 4.7% V 7.0% PRIOR; M2 MONEY SUPPLY Y/Y: 7.2% V 5.9% PRIOR
- (SG) SINGAPORE AUG CREDIT CARD BAD DEBTS (S$): 19.6M V 20.8M PRIOR; CREDIT CARD BILLINGS (S$): 3.15B V 3.14B PRIOR; BANK LOANS & ADVANCES Y/Y: 19.2% V 20.0% PRIOR

***Markets Snapshot (as of 03:30GMT)***
- Nikkei225 -0.3%
- S&P/ASX +0.1%
- Kospi +0.3%
- Shanghai Composite +1.0%
- Hang Seng +0.6%
- Dec S&P500 flat at 1,441
- Dec gold +0.1 at $1,782/oz
- Nov Crude oil +0.5% at $92.32/brl

***Notes/Observations***
- Asian equity markets are trading mixed in the final session of the week, with the moderately bullish tone in China taking cue from the gains on Wall St. Shanghai Composite opened in the red following outsized gains overnight but quickly climbed into positive territory, as investors continue to price in further easing by the PBoC after this week's record high reverse repo liquidity injection. Note that China is entering a week-long holiday break and has been known to pull the trigger on policy shift on days when the markets are closed. Notable press reports out of the local press speculated that September lending activity may continue to recover, and that Premier Wen would only succumb to pressure for accommodation if Q3 GDP slows further.

- Nikkei225 is the laggard among the regional indices, tracking stronger yen and disappointing industrial production data. Output fell 1.3% m/m and 4.3% y/y - off by nearly a full point on both measures - prompting Japan's Economy Ministry to cut its assessment on the sector for the first time since June. Retail trade and employment data were slightly better than expected, while the volatile household spending figure saw its highest y/y increase in 3 months. Tensions around the disputed islands have taken a back seat for the time being, even though neither side has shown any willingness to de-escalate the conflict.

***Fixed Income/Commodities***
- (CN) China Sept New Yuan loans seen rising to about CNY750B vs CNY704B in Aug; CNY750B would mark a 3-month high - Chinese press
- (AU) Australia MoF (AOFM) sells A$500M 5.5% in Jan 2018 Notes; avg yield: 2.636% bid-to-cover: 3.26x
- (US) Weekly Fed Balance Sheet Assets Week ending Sept 26th: $2.787T v $2.804T prior; M1: -$43.8B v -$14.5B prior; M2: +$13.8B v +$34.6B prior

***Speakers/Political/In the Papers***
- (JP) Japan Ministry of Economy, Trade and Industry (METI): Cuts assessment of industrial production to "weakening as a trend" vs prior "flat as a trend" (first cut since June)
- (JP) Japan Fin Min Azumi: LDP (opposition) aware of the need for fiscal reform; may require further measures to delay spending from Oct
- (JP) Japan opposition LDP party approval rating has risen to 37% from 25% in Aug; LDP leader Abe now preferred PM over PM Noda by 41% to 28% margin with 30% undecided - Nikkei News

- (CN) Fitch: Cuts 2012 GDP target for China to 7.8% from 8.0%; Sees only modest policy loosening unless labor market deteriorates sharply.
- (CN) China Premier Wen: Prefers stability not easier policy; Cautious on policy as economy improves; Room for monetary policy easing is limited - financial press

- (IN) Fitch: Cuts 2012 GDP target for India to 6.0% from 6.5%
- (KR) South Korea Hyundai Research Institute (HRI) think tank: Consumer prices in South Korea may rise after Chuseok holidays - Korean press

- (FR) France PM Ayrault: Will NOT raise VAT in 2013 budget; France is weakened by debt and unemployment - French TV
- (EU) IMF Official: Europe risks a bigger crisis if it falls into political complacency, EU authorities need to prevent the creation of zombie banks
- (EU) Italy PM Monti: No further conditions on ECB bond buying should be implemented, the IMF should not be involved
- (ES) Egan Jones cuts Spain sovereign rating to CC from CC+

***Asia Equities***
- Kirin 2503.JP: Not the source of press speculation on sale of stake in F&N; It was reported earlier that Kirin had stated earlier that it was planning to sell stake in Singapore's Fraser and Neave for ¥120B.
- Toshiba 6502.JP: Exec: TV sales may be 10-20% below the initial estimate of 16M units for FY12/13 - Nikkei News
- Astellas Pharma Inc 4503.JP: May report H1 op profit of ¥75B, -10% y/y; Rev seen at ¥475B, -2% y/y - Nikkei News
- Kao Corp 4452.JP: May report H1 op profit around ¥52B v ¥57.5B y/y - Nikkei News
- TM: To temporarily halt exports to China; Cites drop in China car sales; Other Japan car manufacturers, incl Nissan, have started or are considering reducing production at factories in China following island dispute - Japanese press
- WOW.AU: Chairman James Strong to retire from the Board on Nov 22, 2012
- High Tech Computer Corp 2498.TW: May engage in patent lawsuits with Nokia related to Windows 8 phone models - DigiTimes (update)

***US Equities***
- NKE: Reports Q1 $1.23 v $1.12e, R$6.67B v $6.44Be; -3.7% afterhours
- MU: Reports Q4 -$0.24 v -$0.22e, R$1.96B v $2.10Be; +0.3% afterhours
- ACN: Reports Q4 $0.88 v $0.88e, R$6.84B v $6.74Be; +3.8% afterhours
- RIMM: Reports Q2 -$0.27 v -$0.46e, R$2.87B v $2.48Be; expects Q3 operating loss (v -$0.42e); +20.5% afterhours
- KH: Medtronic Signs Agreement to Acquire China Kanghui Holdings for $755M (net of cash) or $30.75/ADS (approx 22% premium to prior close)

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