Asian Market Update: Japan Q3 Tankan improves while outlook disappoints, foreshadowing more BOJ QE next week; China HSBC PMI at 5-month high

As of 1:30amET:
– Nikkei225 +0.9%
– S&P/ASX -0.3%
– Kospi +0.7%
– Taiex +0.6%
– Shanghai Composite +0.5%
– Dec S&P Futures +0.1% at 1,142
– Dec Gold +0.3% $1,312/oz
– Nov Crude oil +0.5% $76.57/brl
– Dec Wheat +0.3% at $6.87

***Economic Data***
– (CH) CHINA SEP HSBC MANUFACTURING PMI: 52.9 V 51.9 PRIOR (5-month high)
– (JP) JAPAN Q3 TANKAN LARGE MANUFACTURERS INDEX: 8 V 7E (highest since Q1 2008); MANUF OUTLOOK: -1 V 3E; Large manufactures see USD/JPY at ¥89.66 in FY10
– (NZ) NEW ZEALAND AUG TRADE BALANCE (NZ$): -437M V -417ME (second consecutive month of trade deficit and 10-month low)
– (NZ) NEW ZEALAND AUG MONEY SUPPLY M3 Y/Y: -3.3% V -2.8% PRIOR
– (AU) AUSTRALIA JUL CONFERENCE BOARD LEADING INDEX: 0.8% V 0.6% PRIOR
– (KS) SOUTH KOREA AUG CURRENT ACCOUNT: $2.1B V $5.8B PRIOR; GOODS BALANCE:$3.7B V $7.2B PRIOR

***Overview/Top headlines***
– Asian equity markets are in the green across the board, tracking late session-rally in US indices in a mirror image of prior session’s trading. Invests took disappointing US consumer confidence data in stride, maintaining expectations of Bernanke “put” in the form of further QE in the face of further frustration in fundamentals. 5-yr auction also went off well, while benchmark yield closed below 2.50% for the first time since late August and a new 19-month low.
– Economic data in Asia remained region-dependent. New Zealand trade activity was disappointing with a second consecutive monthly deficit. Both exports and imports were below consensus – exports to a larger extent – as terms of trade put in a 10-month low. Bank of Japan’s quarterly Tankan data saw relative improvement, but outlook components foreshadowed expectations of renewed weakness. Moreover, Japan manufacturers average USD/JPY forecast was well above current levels at ¥89.66 – putting more pressure on BOJ to reopen intervention spigots. Late in the Asia session, USD/JPY pair traded below US-session low at ¥83.70 – post intervention low. In China, HSBC manufacturing data provided the silver lining at a 5-month high of 52.9 – a second consecutive monthly increase from after a “contractionary” 49.4 low in July.

***Macro/FX***
China
– (CH) PBoC sets yuan mid point at 6.6936 v 6.6906 prior close (new yuan high since July 2005 revaluation)
– (CH) According to data from China Securities Journal, 76% of China’s listed companies releasing their Q3 forecasts have positive outlook – China Daily
– (HK) Hong Kong property market is overvalued and will fall about 5% by the end of the year according to an analyst from the Royal Bank of Scotland – HK press

Australia/New Zealand
– (AU) RBA Broadbent: Expects higher Australia growth in 2011; Markets will be more volatile than the underlying fundamentals
– (AU) Australia PM Gillard: Australian economy is stronger than advanced economies – speaking to parliament

Japan
– (JP) Japan govt is considering placement of “Ground Self-Defense Force” on westernmost Yonaguni island governed by Okinawa Prefecture in response to recent China tension – Nikkei News
– (JP) Japan Govt spokesperson Sengoku: China needs to mend relations with Japan; Japan Govt still has no official information about resumption of rare earth exports from China – Japanese press

Korea
– (KS) Moody’s: Korean credit card sector performing well but may see some challenges
– (KS) North Korean and South Korea military officials to hold talks on October 10th – Chinese press
– USD/KRW: South Korea FX authorities reportedly buying dollars in order to curb won’s gains
– (KS) South Korea Central Bank official: FY10 Current account to top prior forecast of $21B

Other
– (ID) Indonesia Central Bank: Confident of policy rate at 6.5%
– (TT) Taiwan financial regulators are expected to request local banks to retain a 0.5% provision on loans; Amounting to NT$26B – Taiwan press

***Equities***
Australia/New Zealand
– LYC.AU: Signs a supply pact with a Japan rare earth customer priced at China FOB market price
– TLS.AU: Sees FY11 sales “flattish”; EBITDA high single digit % fall; Free cash flow of A$4.5B-5B – Investor day presentation
– LEI.AU: Awarded contract for A$758M for Leighton Offshore Private from Iraq – The Australian

Japan
– Elpida Memory Inc: Reducing production costs by 30% by mass producing DRAMs with a low 30 nanometer line width in Dec – Nikkei
– Marubeni and Toyo Engineering have reached basic agreement with local petro company to build a refinery in Mongolia; Deal worth approx ¥50B – Nikkei
– Japan Airlines Corp.: Held talks with 5 labor unions over worker layoffs after only 50% of targeted employees accepted early retirement – Nikkei
– Asahi Breweries Ltd: To close Nishinomiya plant in Hyogo Prefecture at the end of August 2011 – first shutdown of a unit in 9 years – Nikkei News

China
– Gome Electrical Appliances Holdings: Shareholders vote to keep current chairman; Leaves jailed founder Huang the largest shareholder – WSJ
– BYD Company Limited: Warren Buffett said to have disclosed a stake increase with management – Chinese Press

Korea
– KB Financial Group (Kookmin Bank): CEO: Domestic financial market competition is overheated looking to overseas expansion; Seeking strategic alliances with global financial players
– Hyundai Heavy Industries: Power generator sales may rise to KRW3T quadruple what they are currently; Sales fueled by power demand
– Samsung Heavy Industries: Awarded a $1B ship order from Taiwan Evergreen Group to build 10 container vessels

Other
– AU Optronics Corp.: Expected to receive orders for new iPhone 5 – Taiwan press
– DELL: China South Asian President: Andriod tablet will launch in the next few weeks; Sees China as Dell’s largest PC market by 2012
– UOB.SI: DBS Group and United Overseas Bank have noted a significant reduction in applications for mortgages since the end of Aug – Singapore press

***Commodities***
– API PETROLEUM INVENTORIES: CRUDE: -2.41M V -250KE; GASOLINE: +3M V +1ME; DISTILLATE: -2.8M V +250KE; UTILIZATION: 83.6% V 87.2%E
– XAU/USD: Reportedly, investor John Paulson was quoted as saying that he believes gold prices can rise to $2,400-4,000/oz by 2012 – Business Insider (Update)
– XAU/USD: According to a poll of of bankers, producers and analysts gathering for London Bullion Market Association conference, gold will rise as high as $1,450/oz by 2011 – FT
– VALE: Exec: Sees steel demand growth reviving by end of 2010/early 2011; China’s iron ore demand is unaffected by power closures
– GAZP.RU: Exec: Building a natural gas pipeline to China through the Altai border; Construction to start in 2011
– (AU) Australia Newcastle weekly coal shipments up 14.1% w/w
– (CH) China Ministry of Agriculture (MoA): Expecting a good harvest this year; Average yields are estimated +10M Mu y/y

Similar Posts:

Share
September 27th, 2010 in Forex News

Leave a comment

Your comment