Asian Markets Review – August 30th 2010

Nikkei Pared Gains As BOJ Move Lacked Surprises

Japanese shares climbed to 9,149.26 by the end of the trading day Monday as market was initially jumped by 3.2%, boosted by the hope that the Bank of Japan meeting would end with a surprise or at least decisive move to stem the yen’s recent rise. Likewise, USDJPY which hovered at 85.88 yen earlier gave up its gains and fell to 84.96 yen. Ben Bernanke’s Friday’s speech was also a factor contributing to support the Asian stock markets.

The BOJ meeting ended with the bank to expand its 20 trillion yen quantitative-easing program from 3-months time frame to 6-months time frame. Available funds were also increased by 10 trillion yen. The results fell short of the market’s expectations of a stronger measure to stem the yen’s rise. Currency intervention however, was most recently conducted in 2004 at the time the USDJPY was at 109.

There were only a few corporate news from Japan, being one came from Toyota who said that the company would start a trial production of its Etios in September for the Indian market three months earlier than initially planned. There will be a second round which is to start in October. Toyota however, ended at 2,930 yen or down 0.37% by the end of the day.

Other news came from Nissan, with its Senior VP said that global auto sales are to reach 70 million units this year, and with China continues to be the key market for autos. Nissan’s Infiniti sales in China reached 5,113 units in the 1H 2010, over twice of last year’s sales level. The model is seen to hit sales of 10,000 units by the end of this year. Nissan ended at 0.46% higher by the end of Monday.

Among top gainers in Japan were TDK Corp with 3.74% jump, Kyocera with 190 yen gains to 7,440 yen, and Canon at 3,585, 2.43% higher than Friday’s close.

Hong Kong Jumped, But Sentiment Cautious

Sharing the same fate with Nikkei, Hang Seng index rose 139.87 points to end at 20,737.22 or up 0.68%. Meanwhile in Shanghai, the Shanghai Composite also jumped, ending the day at 2,652.66 or up 1.61%. The good start for this week was triggered by Bernanke’s pledge that the Federal Reserve would safeguard the prospect of economic recovery, lifting some worries that have lingered around the markets for some time due to the worsening economic data. The positive sentiment will be facing numerous challenges this week as data will be pouring in with the most significant one coming in Friday.

PetroChina hinted that the company would seek to develop overseas business to boost long-term growth. This would be achieved by forging cooperation with British Petroleum (BP) while also working together with ConocoPhillips on shale gas related project, particularly in Sichuan Province.

ICBC reported that loans to small businesses were up 25% throughout the first half as the figure hits 390.9 billion yuan. Non-performing loans ratio of loans to small enterprises fell 0.33 to 1.09 from the start of this year. Balance of loans to small and medium-sized enterprises was at 2.2 trillion yuan by the end of June, at 50% of the total ICBC’s corporate loans. ICBC went up 1.77% to close at HK$5.75.

China Mobile became one of the worst performers on Monday after Vodafone was reportedly planning to sell its 3.2% stakes worth around HK$52.39 billion. Recent moves from Vodafone suggests that the divestment could be one of its moves in Asia to consolidate its business, in line with recent news of planned sales of assets in Poland, China, and France. China Mobile’s shares ended down 1.1% to HK$80.70.

Other losing shares were Foxconn with 1.42% losses and Hutchison Whampoa who shed 0.93% to end at HK$58.30. At the top, China Resources advanced 2.61% to HK$31.50, while China Shenhua and ICBC gained 1.77% each, to end at HK$28.70 and HK$5.75, respectively.