Global Market Review - October 13th 2010

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Global Market Review - October 7th 2010

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Asian Market Review - October 5th 2010

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Asian Market Review - Monday, October 4th 2010

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Asian Market Review - September 30th 2010

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Asian Market Review - September 28th 2010

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Asian Market Review - September 14th 2010

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Asian Markets Review – September 2nd 2010

US Data Fueled Asian Rallies

Improving global sentiment triggered by the latest ISM data for the US manufacturing sector boosted Asian shares on Thursday. Nikkei 225 Average was up 135.82 points to end 1.52% higher at 9,062.84, Hang Seng index jumped higher to 20,868.92 or 1.19%, while Shanghai Composite ended at 2,655.78 or up 1.25%.

Top gainers from Japan were Kyocera Corp. with 3.30% gains at ¥7,510, Nissan Motor Co. at ¥664 with 2.95% gains, and Nikon Corp. at ¥1,434 (+2.58%). Toyota and Nintendo were losing out with 0.25% and 0.26% declines.

Sony’s Qriocity was unveiled and aimed at facing competition with Apple in video and music streaming services. The services will be available this fall in France, Germany, Italy, Spain, and England. Qriocity will be accessible via Sony’s Bravia TV, Playstation 3, Blu-ray DVD player, and also Vaio PCs. Analysts were not excited with the product, citing that Sony still has a lot of catching up with Apple’s recently unveiled similar services yesterday by Steve Jobs. Sony ended at ¥2,427, up 2.19%.

US vehicle sales data revealed that Toyota sales were down 34% year-on-year in August, while Honda’s sales fell 33%, and Nissan’s declined 27%. Asian branded autos fell 29% overall in August, worse than US branded ones which slumped 14%. The August sales figures were the lowest in the last 28 years due to worries over a double dip recession in the US. Toyota ended the day at ¥2,850, Honda Motor at ¥2,859 (+1.85%).

In Hong Kong, Ping An Insurance resumed trading after being suspended since June 30th as it acquired Shenzhen Development Bank. Ping An jumped 2.7% to HK$66.10, boosting the Hang Seng index performance.

Esprit Holdings reported a net profit of HK$4.23 billion for the fiscal year ending June 2010. The figure was less than the expected HK$4.44 billion and was 11% lower than the same period last year. Esprit fell 2.82% by the end of the day at HK$43.00.

China Mobile underperformed on Thursday as the uncertainties surrounding Vodafone’s planned sale of China Mobile’s 3.2% stakes lingered. China Mobile advanced only 0.76% towards HK$79.80.

CITIC Pacific, China Shenhua, and China Overseas Land & Investment posted significant gains today: 4.41%, 3.31%, and 3.09%, respectively. Stuck at the red zone along with Esprit Holdings, China Resources fell 0.4% as well as Cheung Kong Infrastructure which declined 0.25%.

European and North American Markets Review – September 1st 2010

Bulls Ruled Europe and North America

Better-than-expected economic data from China and US triggered hefty gains in Europe and North America on Wednesday. DAX index jumped 158.68 points to end at 6,083.90 or up 2.68%, while FTSE 100 rallied towards 5,366.41 or gained 2.70%. North American markets also rallied, with the Dow ended at 10,269.47 after leaping 254.75 points throughout the day, Nasdaq Composite gained 2.97% to settle at 2,176.84, while S&P 500 landed at 1,080.29 after a 2.95% rise.

Data, Data, Data …

After China PMI triggered a mood swing towards positive in Asia, the effect still lingered throughout midday Europe (for China data, read previous post). Then, US data were out, and despite the ADP report went in below the expectations, ISM data posted a better-than-expected reading and thus further powered the rally among European and North American shares.

ADP report showed that 10,000 jobs were cut in August, against a gain of 37,000 jobs in the previous month. The market had expected an addition of 20,000 jobs into the private sector in August. The missed result was unable to stop the rally that already brought over 100 points of gains on Dow Jones index.

The boost came from the Institute for Supply Management (ISM) index for the manufacturing sector that beat the expectation of a fall towards 53.00. Instead of falling, the index rose from 55.5 in July to 56.3 in August, indicating that manufacturing activity remained robust throughout August.

Final piece of the economic data on Wednesday was construction spending that declined 1% to $805.2 billion. June’s figure was revised down to -0.8% against prior estimate of +0.1%.

Earlier, European data showed unimpressive results. German PMI for manufacturing sector was stagnant at 58.2 in August, the same as July’s level. UK’s PMI for manufacturing unexpectedly fell from 56.9 to 54.3, below the expected rise to 57.0. Meanwhile, retail sales fell 0.3% (m/m) in Germany while on the year-on-year basis sales grew 0.8% after a 4.7% jump in prior month.

More data to come on Thursday, as US jobless claims and pending home sales will grab the market’s attention aside from other data coming from Europe. Claims were expected to rise again to 478,000 after it dropped towards 473,000. Pending home sales were expected to fall 1.5% in July, at a better pace than June’s -2.6%.

Daimler AG gained significantly to €40.46 or 5.46% higher than Tuesday’s close after UBS raised its rating from SELL to NEUTRAL.

BMW beat Toyota’s Lexus at the American market for luxury cars in August as the sales climbed to 19,540. 1 Series and 7 Series had their sales up by 53% and 42%, respectively. Lexus however, declined 15% to 19,465. Daimler’s Mercedes sales were up 10% to 18,826 units, as the E-Class contributed a month-on-month increase of 26% in August while since the start of the year its sales were up 71%. BMW gained 2.99% at €42.91 while Volkswagen advanced 2.24% to €73.36.

Among the three, Lexus was on top with 145,490 units (+11%), Mercedes in the second place with 139,867 units (+18%), and BMW next at 139,236 units (+7.8%). Further down, Ford Motor Co. had 6,428 units of Lincoln models sold (+9.4%), Volkswagen’s Audi with 9,182 units (+14%) along with its Porsche’s sales of 2,032 units (+33%). Honda’s Acura and Nissan’s Infiniti sales were a 11,534 units (+20%) and 9,428 units (+22%), respectively.

BP will resume the work of plugging of its well in the Gulf of Mexico on Thursday which had been held by rough seas since August 30th. BP’s shares hovered at 388.75 pence at the end of the session.

Shares with significant gains in Europe were Daimler at the top (+5.46%), Barclays Plc. (+4.33%) and Deutsche Boerse (+3.69%).

Eyes on Apple

Apple demonstrated its new iPods, iTunes and Apple TV. It also introduced iTunes software with more social-networking features that enable users to see their friends’ downloading activities. Apple TV’s set-top box was revamped, video rentals fees were lowered, and Netflix’s content was made available for streaming. Apple unveiled iOS 4.1 at the event, which would be available next week for iPhone and iPod touch via free download. The OS will include GameCenter for multiplayer gaming. Subsequent version, iOS 4.2 will be launched later in November and it would be for iPad, with features like wireless printing, streaming videos and photos. The new iPod Nano will be 46% smaller, 42% lighter, with 24 hour audio playback battery life. The new iTunes 10 will include Ping, as music social network. Apple’s CEO Steve Jobs also said that Disney’s ABC and News Corp’s Fox are available on Apple TV. The new Apple TV will cost $99, has no storage management, and can stream content from computer. It will be available in four weeks time. Apple was placed with an OUTPERFORM rating at MP Securities with price target at $290. Apple gained nearly 3% and ended the day at $250.33.

Amazon.com led the North American gainers on Wednesday as it leaped to $132.49 - over 6% gains – as the company was reportedly approaching media companies to start an online video-subscription service to compete with Netflix. One of them was Time Warner Inc.

From Citigroup, the bank will lower the balance requirements of its basic account to reach more customers. The Citigold customers can now be free from monthly fees if the balance requirements are met, which was set at $50,000. Citigroup was up 3.73% at $3.85.

Other ratings revisions were Wal-Mart which was downgraded to SELL from BUY at Crowell Weeden, while Siemens AG downgraded to HOLD from BUY by Deutsche Bank. Wal-Mart ended up 2.11% at $51.20 and Siemens ended at €73.89 or up 2.94%.

Other top gainers were Bank of America with 6.08% jump to $13.21 and Halliburton Co. at $29.73 or up 5.39%.

Asian Markets Review – September 1st 2010

PMI Data Lifted Mood in Japan and Hong Kong

Nikkei 225 Average shot up 102.96 points or 1.17% to end at 8,927.02 after the market’s mood in Asia brightened early by economic data coming from China and Australia.

PMI data reported by China Federation of Logistics and Purchasing (CFLP) for the manufacturing sector in China was up from 51.2 in July to 51.7 in August. Similarly, another PMI data compiled by HSBC-Markit Economics also showed improvement as the index rose to 51.9 from 49.4, clawing back from the contraction zone (<50) to the expansion zone. The data was able to lift the mood, calming the market’s concerns over the potential slowdown in China due to the government’s measure to stem growth.

Australian GDP due on Wednesday also provided support as economic growth improved to 1.2% in 2Q from 1Q which was at 0.7%. The GDP figure was better than the market consensus of 0.9%.

From Japan, the auto industry enjoyed a 47% rise in August year-on-year. The sales reached 290,789 units and were the highest jump since 1972. Government’s subsidy helped spurred the sales, but it would expire soon late this month. Toyota was at the lead with sales of 130,092 units, excluding its Lexus model, jumping 43%. Honda was at the second place with 61% jump in sales to 50,195 units. Another auto giant Nissan Motor reached 44,857 units sold or leaped 45%. Auto sales in China were also robust as auto dealers offered lower prices to boost sales and to reduce inventories.

The sales figures were released after the market closed and are likely to influence the shares prices of Toyota, Nissan, and Honda on Thursday. Toyota ended the day at ¥2,857 (-0.10%), Honda at ¥2,807 (+1.01%) and Nissan at ¥645 (+0.47%). Meanwhile, Tokyo Electron was down 0.25% and Advantest slipped 0.44%. Mitsubishi Estate, Sumitomo Metal Industries, and Daikin Industries were gaining 3.33%, 2.03%, and 1.92%, respectively.

In Hong Kong, Hang Seng index settled at 20,623.80, rising 0.43%. Shanghai Composite slipped to 2,622.88 or down 0.60%. Shanghai’s losses were triggered by a report from Xinhua regarding China Banking Regulatory Commission’s (CBRC) statement that the Commission would continue to stem speculative investment in the property sector, supporting the construction of affordable housing and to control risk.

BOC-Hong Kong jumped 3.67% to end at HK$21.20 after the yuan deposit level exceeded the 100 billion yuan mark for the first time. Other stocks with significant gains were China Resources (+3.4%) and China Telecom (+3.19%).

Property stocks scattered at the red zone, except Hang Lung Properties and Sino Land which gained 0.72% and 0.74%, respectively. China Overseas Land and Investment slumped 2.41% to HK$16.20, Henderson Land fell 2.10% to HK$46.60, while Sun Hung Kai Properties settled 0.18% lower at HK$108.80. New World Development was at HK$12.40 or down 0.64%.

Li Ka-Shing’s purchase of Hutchison Whampoa’s shares amounting to 1.163 million shares last week managed to boost Hutchison by 2.4% to HK$58.90. Li’s stakes at the company are now 52.31%, up from 52.28%.

Foxconn resumed its Tuesday’s slide as the shares fell to HK$4.93 or tumbling 4.6%. The fall was due to the poor results which were reported on late Monday.

Asian Markets Review – August 31st 2010

Heavy Selling Hit Nikkei, Foxconn Tumbled Over 6%

Following overnight losses of US shares, the Japanese shares also saw red as Nikkei 225 Average plunged 325.2 points or 3.55% to end at 8,824.06. The heavy selling was also triggered by the yen’s gains against the greenback and the euro. USDJPY fell to ¥84.05 while EURJPY hit ¥106.16 on Tuesday.

Japan’s economic data released today showed industrial production increased in July by 0.3% after declining 1.1% in June. Retail sales also advanced 0.7% in July, faster than the June’s gains of 0.4%. The PMI data for manufacturing however, slipped from 52.8 in July to 50.1 in August. In the property sector, housing starts were up from 0.75 million to 0.77 million in July or up 4.3% year-on-year.

Corporate news came from the automobile industry as Guangzhou Automobile Group Co. a partner of Toyota Motor Corp. and Honda Motor Co. in China had its net profit increased more than three times of last year’s 1H. China has been a primary market for Japanese auto producers like Toyota, Honda, and Nissan. Toyota ended the day at ¥2,860 (-2.39%), Nissan at ¥642 (-1.83%) and Honda at ¥2,779 (-2.66%).

Elsewhere, from the media roundtable in Abu Dhabi, Renault-Nissan CEO Carlos Ghosn hinted on Nissan’s plan to increase production in South Korea. The move was intended to reduce the exposure to yen’s recent strength against the greenback and euro which could damage the company’s competitiveness.

Among worst performers, Tokyo Electron shed 5.74% at ¥3,940, Advantest fell 5.34% to ¥1,594 and Sumitomo Metal Industries which ended at ¥197, down 4.83%.

In Hong Kong, Foxconn International plunged 6.65% to end at HK$5.19 after the market responded to its first-half results. In 1H 2010 the company suffered from net losses of US$142.6 million compared to last year’s losses of US$18.7 million. The company’s revenue was at US$3.23 billion, up 2.2% from last year’s $3.16 billion. Lower product prices, adjustments in company’s product mix and also the increase in depreciation expenses related to the production facility relocations were the factors behind the worsening financial performance in 1H 2010. Despite worsening performance, UBS revised FIH’s target to HK$5.0 from HK$3.4.

On the government front, the Hong Kong government sold a luxury residential site in Kowloon Peninsula for HK$1.285 billion, higher than the forecast value range of HK$868 million to HK$1.09 billion. The high sale price of the site indicated strong appetite from developers despite limited supply and also amid the government’s attempts to stem the ballooning property prices in Hong Kong as well as in China.

Elsewhere, Hong Kong retail sales were reported to have increased 16% year-on-year on volume basis in July, against the market consensus of a rise by 10.7%.

China PMI data will set the tone on Wednesday as the August index is expected at 51.5, up from 51.2 in July. A downside deviation will certainly damage the investors’ sentiment and will pull down global stocks as global recovery concerns will return, especially following the poor string of US data.

Among gainers, China Resources increased 2.86% to HK$32.40, COSCO Pacific advanced 1.58% to HK$10.26 and Cheung Kong Infrastructure was at HK$30.00 by the end of the day, or up 1.45%. Joining Foxconn at the bottom, Esprit Holdings tumbled 2.35% to HK$43.60 and Bank of East Asia shed 2.01% to end at HK$29.20.

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.

Global Markets Review – August 27th 2010

Stocks Rallied On Revised GDP

All major indexes ended positive on Friday, excluding Hong Kong’s Hang Seng Index which ended at 0.07% lower at 20,597.30. Nikkei gained 84.58 points to end at 8,991.06, while Shanghai Composite Index added 7.26 points to end at 2,610.74. In Europe, DAX and FTSE 100 indexes turned higher as each gained 0.65% and 0.89%, respectively. American shares also rallied with the DJIA index jumped 164.84 points or 1.65% to end at 10,150.70, recovering from the sub-10,000 area. S&P 500 Index advanced 1.66% along with Nasdaq which ended 1.65% higher.

Yen Remained A Major Issue

Japanese shares rebounded on tough talk by the Prime Minister Naoto Kan who vowed to take decisive action whenever necessary if the yen continues to strengthen. USDJPY and EURJPY rallied on the comment and later in late New York trading session the pairs went even higher as Ben Bernanke indicated that the Federal Reserve will do whatever necessary to maintain economic recovery. USDJPY traded at 85.26 yen while EURJPY traded at 108.57 yen in late New York hours.

As the yen weakened, Japanese exporters gained. Nissan Motor ended 3.17% higher, Nikon Corp. gained 2.86%, while Daikin Industries ended at 2,955 with a 2.82% gains.

Nippon Steel was reported to rapidly building production bases and sales network overseas to fill overseas demand, dodging a takeover from European firm ArcelorMittal and to avoid rules on greenhouse gas emissions in Japan. Brazil, India, Thailand and African countries are the targets of expansion for Nippon Steel.

Toyota announced that it would recall another 1.3 million cars on Thursday, adding to a long line of recalls it had conducted this year. It was said that there were three accidents involving defects to engine control modules or ECMs. Toyota gained 0.44% however, at the end of the day.

Hang Seng Down as Investors Stayed Cautious

Hong Kong’s Hang Seng index became the only index falling on Friday as investors stayed on the sideline ahead of GDP revision release and the speech from Ben Bernanke during the New York hours. The constituents were actually had mixed performances with BOC HK gained 2.99%, Esprit Holdings up 1.81%, and Yue Yuen Industrial went up 1.58%. Among losers were Hang Lung Properties with 2.57% decline, China Resources dipped 2.38%, while China Life resumed its fall to 1.79%.

China Shenhua reported its 2Q net profit which hit a record 10.03 billion yuan, up from 8.98 billion in previous year. Consensus forecast 10.2 billion yuan net profit before the release. Coal production was up 3.2% during the first half from prior year to 109.2 million tonnes, while sales were up 11.6% to 137.4 million tonnes. The coal company warned however, that demand in second half could slow as the government’s economic policy could put a brake on electricity consumption.

On ratings updates, Cosco Pacific’s target raised to HK$13.20 against prior HK$12.10 by Nomura, while its rating was raised to BUY from NEUTRAL. China Resources’ target was raised to HK$32 from HK$29 by JP Morgan, while Henderson Land was downgraded to NEUTRAL from OUTPERFORM by Macquarie while its target cut to HK$50.70.

Europe Up on US GDP

European stocks were boosted by US data as Vodafone gained 2.78%, BT Group rose 2.76%, and Prudential settled 2.26% higher. DAX top gainers include Deutsche Telekom which rose 2.31% Volkswagen and Siemens with 1.64% and 1.25% gains, respectively. At the bottom were Commerzbank (-2.0%), BP (-1.54%), Rolls-Royce (-0.63%) and ThyssenKrupp (-0.18%).

Commerzbank slumped 2% as it was reportedly planning to sell new shares as soon as autumn this year. Around 5 billion euros are said to be sold, according to a Handelsblatt’s report. Another losing side was BP who fell 1.54% to 379.65 pence. The oil giant’s executives told investigators dealing with rig explosion at the Gulf of Mexico that they did not know who was in charge of the rig just before the explosion occurred.

Marks & Spencer announced its move to enter the Egyptian market as a part of its efforts to enhance global sales. Two stores were planned over the next two years in Cairo as the company saw opportunities in the clothing sector and shopping center businesses. At the end of the trading day, Marks and Spencer settled at 346.50 pence, gaining 1.73%.

Vodafone was reportedly going to sell its assets in Poland, China and France. The move was not intended to improve cashflow, but rather as a move to discipline its international expansion. As a result, the Vodafone Essar, an Indian mobile phone firm said that it would delay its IPO plan until next year. Vodafone ended at 153.60 pence or up 2.78%.

The Fed Is Not Out of Options

US shares shot up as the GDP revision was higher than expected at 1.6% in 2Q. Consensus estimate was at 1.4% after previously the GDP was reported growing at 2.4%. Meanwhile, the decline in consumer sentiment from 69.6 in July to 68.9 in August was not able to deter stocks from rising. The figure was slightly lower than the consensus of 69.0.

Ben Bernanke’s speech in Jackson Hole, Wyoming sent a message to the markets that the Federal Reserve would be able to prevent another recession from happening. Growth was seen to be picking up in 2011 as households rebuild savings, banks expand lending and employment outlook improves. If necessary, the Fed would provide further monetary accommodation, but two criteria must be met: an increasing risk of deflation and, excluding whether deflation to happen or not, the Fed will safeguard the continuation of economic recovery. The Fed chairman indicated that three options are available: more purchases of securities, a change in the Fed’s policy statement and the reduction of interest rate that the Fed has been paying on banks’ excess reserves. Bernanke’s speech cheered the market as the Fed was initially thought of running out of options to prevent the second coming of the recession.

The bidding war over 3Par continued as Hewlett-Packard offered a counteroffer of $30 a share (or $2 billion) to acquire to compete with Dell’s offer of $27 a share. HP ended at $38, declining 0.58%, while Dell edged up 1.17% to $11.89.

Elsewhere, Bank of America was said to have to deal with a lawsuit regarding concealment of bonuses and losses at Merrill Lynch & Co. after it bought the brokerage firm. The news did not seem to hinder Bank of America’s advance to $12.64 as it settled 1.36% higher on Friday.

Intel cut its sales forecast on Friday as it saw weakened consumer PC market. Sales expectations were revised from between $11.2 billion and $12 billion to $11.00 billion plus or minus $200 million. Intel gained 1.05% to end at $18.37 instead of falling as slowdown in the PC markets had been expected long ago by investors.

Citigroup planned to open a China desk based in Singapore in order to encourage Chinese firms to set up business in Singapore. Products will cover cash management, trade services and finance, securities and fund services for Chinese clients. Citigroup ended the New York session at $3.76 or up 2.73%.

Sharing the same fate with Toyota, Ford also said that it would recall more than 575,000 units of Windstars from Canada and US due to problems with the rear axle corrosion. Ford was up 3.49% on late Friday, however.

IBM acquired Sterling Commerce as a move to improve its ability to help clients accelerate their interactions with customers, partners and suppliers through dynamic business networks. In turn, the effort would be able to enhance efficiency and profitability. The join-up of the two companies would help integrating key business processes across channels and among trading partners, which covers marketing and selling and up to order management and fulfillment.

Leaders in the North American market were Halliburton with 4.02% jump, AMD with 3.58% rally, and Ford that raced to end at $11.56 at the end of Friday’s session. At the bottom, Goldman Sachs slumped 1.45% below Thursday’s close, while HP suffered from its bidding war with Dell as it shed 0.58% to end at $38.

Week Ahead

Looking ahead, key US data to be announced next week would be personal income and consumer spending on Monday, each with the same expected growth of 0.3% in July, up from unchanged position in June. Chicago PMI will due on Tuesday, with August figure expected at 57 against 62.3 on July. Conference Board’s consumer confidence data is seen down from 50.4 to 50.0 in August. ADP employment will be the first major data to observe this week as it acts as a lead to the Friday’s Nonfarm Payrolls. ADP is expected to report on Wednesday. ISM will be announced on the same day, with expected August figure at 53.5, down from 55.5 in July. Construction spending is seen to have declined in July by 0.6%, compared to the 0.1% increase in June. Jobless claims will be delivered on Thursday and expect a further drop in claims from 473,000 last week to 470,000. Productivity is seen to have worsened to -2.0% in 2Q after in the prior quarter it fell 1%. Factory orders are seen to have improved in July, gaining 0.4% after a 1.2% fall in June. Another housing data will be out next week as pending home sales for the period of July is expected to have declined 1.3% after it fell 2.6% in June. Nonfarm payrolls on Friday will be the key data for next week. The markets expected a decline of 105,000 after July’s fall of 131,000. Private payrolls are seen to have shrunk to just 30,000 from 71,000, while unemployment rate is seen to have inched up to 9.6% from 9.5%. Average hourly earnings are seen at 0.1% growth in August, slowing from 0.2% in July. ISM for the service sector will end the next week’s calendar with an expected fall to 53.2 in August from 54.3 in July.

Asian Markets Review – August 26th 2010

Nikkei Bounced on Yen's Retreat, China Life Weighed on Hang Seng

Nikkei 225 average recovered from lows on Thursday, ending the day at 8,906.48 or up 0.69% as yen weakened against the US dollar and also from the late rally on Wall Street which brought the US equity indexes back from underwater. In Shanghai, the Shanghai Stock Exchange also gained 6.90 points or 0.27% to end at 2,603.48. Hong Kong’s Hang Seng index however, fell 22.92 points to 20,612.06 or 0.11% below Wednesday’s close.

Among gainers in Japan, Kyocera advanced 1.97% to 7,240 yen, Nikon to end at 1,398 yen or up 1.90%, while Honda Motor gained 1.77% to 2,766 yen. Sony and Tokyo Electron were in the red as they ended 0.42% and 0.25% lower, respectively.

Corporate news came from Canon who indicated that it might have to raise output overseas and review product prices should the yen strength continues. Yen’s recent strength has worried Japanese exporters as strong yen is seen to erode export sales. Another came from Toyota who planned to release its Etios hatchback in India starting from early 2011. First year sales of Etios are aiming for 70,000 units. Lexus is also another brand considered to be released in India.

Dollar went up against yen as jitters reigned over the markets on the potential action from the government regarding yen’s strength. The greenback gained against yen to 84.68 while the euro also rose against yen to 107.79.

In Hong Kong, China Life reported first-half results which showed increase of net profits by 7.4% from last year. Meanwhile, Ping An Insurance delivered a 28.5% jump in net profit during the first-half 2010, leading to an increase of its price target to HK$88 from HK$80 by Credit Suisse. China Life fell 6.3% upon the report and ended at HK$30.65, a major drag to Hang Seng index. Poor results from China Life sent its target cut to HK$39 from HK$45 by Morgan Stanley, while Credit Suisse downgraded its rating to NEUTRAL from OUTPERFORM with target set at HK$37 from HK$42. Regarding AIA’s IPO, China Life Chairman said that the company was still undecided on whether to invest or not in the IPO, but plans to focus on bonds for investments as well as deposits in 2H. The chairman also added that China Life has no near-term financing needs.

PetroChina announced a 29% increase in net profit during 1H to 65.3 billion yuan, lower than the consensus of 68.7 billion yuan. Lower results were due to the government’s controls on tariffs of gasoline and diesel even as the crude oil prices were higher. PetroChina was up 0.36% at HK$8.48.

China Resources also delivered its first-half report which showed its net profit more than tripled from a year earlier. A major factor behind the rise was a gain from the sale of its brand-fashion distribution unit. Net profit amounted to HK$4.24 billion, up from HK$1.16 billion, while revenue was up 19.8% to HK$41.98 billion from HK$35.05 billion. First-half dividend stayed unchanged at HK$0.14. The shares were unchanged by the end of the day at HK$31.55.

The third biggest lender in China, Bank of China said that its first-half net profit was up 27% as demand for loans and asset quality improved. The H-shares were settled at HK$3.96, unchanged from the previous day. Elsewhere, the BOC-Hong Kong also reported its results for the same period. Earnings per share were at HK$0.68 per share, 7.5% higher than HK$0.6329 per share a year ago. Net profit was up 7.5% to HK$7,190 million. Interim dividend was up 40.4% to HK$0.40 per share. At the closing time, BOC-HK was at HK$20.05 or down 1.23%.

In the telecommunication sector, China Telecom was upgraded to OVERWEIGHT from NEUTRAL by HSBC while its target was raised to HK$4.40 from HK$3.60. Another change in upgrades and downgrades was from Cosco Pacific which had its target raised to HK$13.80 from HK$12.50 by Credit Suisse.

Next Tuesday, ICBC plans to sell convertible bonds worth 25 billion yuan which are to be converted to its Shanghai-listed shares. In addition, 45 billion yuan is also to be raised through a rights offer in Shanghai and Hong Kong. Earlier, ICBC said that 2Q net profit was up 38% as margins widened and demand for loans and fee-based services were up. ICBC stayed unchanged compared to prior day at HK$5.59.

Asian Market Review – August 24th 2010

Nikkei Tripped Below 9K, Hang Seng Fell

Hong Kong and Japanese shares sunk in the red as investors steered clear away from the market ahead of the housing data due on Tuesday, coupled with renewed yen’s strength. Hang Seng Index slumped 230.30 points to end at 20,658.71 while Nikkei 225 index fell 1.33% to 8,995.14, piercing the psychological 9,000 level. Shanghai composite however, edged up 10.94 points to 2,650.31.

At the bottom, Nikon Corp lost 4.02%, Tokyo Electron fell again by 3.76%, and Sony Corp. tumbled 3.72%.

Sony Corp. reportedly has planned to join Sumitomo Mitsui Finance and Leasing in a general leasing venture. Sony will have 34% stake, while Mitsui holds the rest of the stake.

Meanwhile, Toyota predicted that sales will grow in China by over 10% next year. This year’s target of 800,000 units is also expected to be achieved. Toyota fell 0.83% as it settled the day at ¥2,980.

China Resources, Hang Lung Properties, and Wharf Holdings gained 1.29%, 0.88%, and 0.85%, respectively, thus averted them from the red zone where most HK shares were at on Tuesday. In contrast, CITIC Pacific, China Mobile, and Cheung Kong Holdings were at the bottom with 2.4%, 2.14%, and 2.07% losses, respectively.

Following up the takeover news of South African lender Nedbank by HSBC, the shares of HSBC fell 1.49% to end at HK$76.00. Despite the fall, the deal may benefit HSBC as the trade relationship between China and Africa is seen to grow as China imports of commodities from Africa to support its economic expansion.

Cheung Kong Infrastructure Holdings and HK Electric shared 40% each of a consortium offering £5.78 billion for three electricity distribution networks in UK operated by the French Electricite de France. CKIH fell 0.66% to HK$29.90, and HK Electric dropped 1.04% to HK$47.40.Li Ka-Shing will hold the rest of the stakes (20%) in the consortium.

HK & China Gas Co. reported a decline in net profit to HK$2.97 billion from HK$3.00 billion in prior year. Revenue increased however, to HK$10.41 billion or 66% from HK$6.26 billion. The shares fell 1.79% to HK$18.68.

Ping An also reported its earnings for H1 on Tuesday. The insurer’s net profit jumped 28.5% from 7.477 billion yuan to 9.611 billion yuan. The consensus was for a net profit of 7.9 billion yuan. EPS was 1.30 yuan vs. 1.02 yuan a year ago, while total income amounted to 96,980 million yuan against 75,171 million yuan in H1 2009.

Another company reporting on Tuesday in Hong Kong was the port operator Cosco Pacific. Net profit was said to have increased 82% to US$189.9 million from US$104.5 million in prior year. Revenue was 40% higher at US$222.7 million from US$159.0 million. Dividend was set to HK$0.137 vs.HK$0.144 last year. Cosco ended at HK$10.32 or 0.39% higher.

Japan Review – Nikkei Up as Mitsubishi Extended Gains

Following up prior day’s advance, Mitsubishi resumed its rally to reach 1,311 yen or up 2.66% on Friday. Nikon Corp led with 3.9% gains to close at 1,571. Nikon recently reported a $131 million annual profit which was attributed to partly to the new models of d-SLR and compact cameras that rose 33% (yoy) to 4.5 million units. Net profit was at 8.15 billion yen compared to the loss of 4 billion yen during the same quarter a year ago.

Meanwhile, Honda’s new hybrid is to be priced at 1.6 million yen to become the cheapest gasoline-electric car in Japan. Honda’s shares went up 2.07% to 2,912 yen. Elsewhere, Toyota launched its new production facility in Tacoma, San Antonio to build its best-selling pickup model. Toyota slightly up to 3,115 or gained 0.32%.

Nikkei average fell 0.1% to close the week at 9,642.12, setting the weekly gains of 1.1%.

Japan Review - Yen’s Strength Knocked Nikkei

Nikkei 225 Stock Index fell by 204.67 points or 2.11% to 9,489.34 as stronger yen hit Japanese stocks. Japanese yen rose to as high as 85.32 yen on Wednesday. A stronger yen will put a dent on Japanese companies due to the reliance of the country’s economy on exports. Tokyo Electron fell 4.95% to 4,510 yen, Canon Inc. slipped to 3,650 or down 4.33%, while Nissan Motor sunk 4.28% to 648 yen. Other auto stocks also shared the same fate as Toyota fell to 3,090 (-1.59%) and Honda settled at 2,780 yen or down by 2.22%.


Toyota’s raised profit forecast for full year ending March 2011 to a net income of 340 billion yen, higher than the earlier forecast of 310 billion yen. Its first fiscal quarter which ended June 2010 showed a profit of 190.47 billion yen compared to last year’s losses. Sales growth in Asia is seen as offsetting stronger yen and waves of recalls which have hit auto companies recently. Toyota sold 285,000 units in Asia excluding Japan. A 47% increase from a year earlier. In North America Toyota sold 526,000 units, a strong 36% annual increase. Its global sales for the year ending March 2011 were raised to 7.38 million units against a previous forecast of 7.29 million. The yen rate used in the forecast is 90 yen against US dollar, around 5% weaker than current USD/JPY rate. European market is seen not as rosy as Asian and North American ones as the company revised down its forecast for Europe to 770,000 units from 860,000 units while EURJPY rate is seen at 112 yen, down from 125 yen seen earlier. The forecast upgrade was announced after the Japan’s market closed.