US Shares Flat as Market Awaited for More Data
European bourses ended up on Tuesday, helped by US data which came in above the expectation. German DAX was lifted 12.81 points to 5,925.22 (+0.2%), and FTSE 100 index was up 23.66 points to 5,225.22 or up 0.5%. European data released on the same day also showed improvements.
In August, GfK consumer confidence survey index was edging higher from -22 to -18, beating the consensus of a drop to -24. German data continued to be encouraging. The jobless number was down 17,000 in August, although the unemployment rate remained at 7.6%. Euro-Zone’s unemployment rate stayed high however, at 10% in August. Another economic data from Europe showed CPI slowed from increasing by 1.7% in July to 1.6% in August.
This Wednesday, along with US ISM for manufacturing sector, PMI for manufacturing sector will be released in Germany and UK. German PMI is expected to be unchanged at 58.2, the same as in July, while UK PMI is seen to slip to 57.0 from 57.3.
On the corporate front, Bayer AG successfully proved that its Xarelto was as effective as the old warfarin drug. The medication could land Bayer in a lucrative market worth $10 billion to $20 billion of annual profit. Bayer gained 2.43% by the end of the day and closed at €48.18.
Allianz SE aimed at China and India as potentially strategic markets with high potential of both life and non-life insurance business growth in Asia Pacific. Throughout the first half of 2010 Allianz achieved 31% increase in written premiums worth €5.6 billion with life insurance as the lead contributor. For Asia Pacific, life insurance worth $4.1 billion with Taiwan as the biggest contributor, while for non-life, India and Malaysia led the market. Allianz was at €80.94 at the end of the day.
Siemens Enterprise Communications, jointly owned by Siemens AG and The Gores Group acquired a contract to build communication infrastructures for 165,000 ports from the German Federal Employment Agency. The contract was worth over 100 million euros and will span for eight years. It will be a full service contract which includes provision of software and hardware as well as end-user devices. Siemens was up 0.59% to €71.78 on Tuesday.
HSBC plann
ed to exit its entire consumer lending business in the US by the end of 2014. The most recent move from the British bank was to sell its auto loans business to Santander Consumer USA with the price tag of $3.56 billion. The value of the loans obtained by Santander was $4.3 billion. HSBC was settled at 643.70 pence or up 1.05%.
Joining Bayer and HSBC as the top gainers, Vodafone advanced 2.31% to 157.15 pence. At the bottom, Barclays Plc, BT Group, and the bourse operator Deutsche Boerse ended down 1.1%, 0.75% and 0.65%, respectively.
The North American market was boosted earlier by data from the Conference Board but unable to withhold the gains as the Dow pulled back to near flat along with S&P 500 and Nasdaq Composite indexes. Dow Jones index inched up 4.99 points to 10,014.70, S&P 500 index went 0.04% higher to 1,049.33, but Nasdaq slipped 5.94 points to 2,114.03.
Consumer confidence improved in August, according to the data from the C
onference Board. The index went up to 53.5 from the upwardly revised July’s 51.0. Initially, July’s index was at 50.4. The current situation index fell to 24.9 from 26.4, while the expectations index went up to 72.5 from 67.5. Another data due on Tuesday was the house prices from Case-Shiller. In June, prices went up 1% compared to May; while year-on-year the prices were 4.2% higher. Despite the data was positive, it should be noted that the data lagged two months as it reported June, not the most recent August market conditions. The Dow’s late slip back to the flat area was mostly due to the FOMC minutes which was lacking new leads to lift the mood, turning the market back to the cautionary mode as it waits for more data to come.
Motorola which would be split in early next year would have the mobile phone division some cash amounting to $3.5 billion, which would be used for operational needs and business expansions as well as potential acquisitions. Motorola stayed flat by the end of Tuesday at $7.52.
Microsoft was reportedly developing a search application for the Google Android platform. The application which going to be available for free for Verizon Wireless users will be the mobile version of Microsoft’s Bing. Microsoft ended at $23.47 or down 0.74%.
Google and Associated Press reached an agreement in the distribution of AP’s news materials. Google will have the right to host AP’s materials for two years ahead. Google was down 0.59% at $450.02 by the end of the session.
3M acquired
Cogent in a deal worth $943 million. The maker of the fingerprint identification systems for government and civilians was bought at $10.50 a share, or 18% above Cogent’s closing price on Friday. 3M fell however, to $78.55 or 1.38%.
JP Morgan Chase & Co. would shut down its proprietary trading desk for commodities to abide the Volcker Rule. Consequently, all of its proprietary trading desk will be closed completely. Volcker Rule, which was a result of the recent banking reform in the US, was expected to reduce JP Morgan’s annual profit by $1.4 billion. JP Morgan was at $36.36 in late New York, up 1.42%.
On downgrades and upgrades, Intel Corp. was downgraded at Charter Equity from BUY to MARKET PERFORM on the back of the recent earnings revision for 3Q 2010. Gleacher & Co. maintained Intel at BUY, while FBR Capital also kept Intel at MARKET PERFORM. Intel was down 1.64% to $17.67.
Gainers on Tuesday include AT&T (+1.5%), JP Morgan & Chase (+1.42%), and Merck & Co. (+1.24%). Languishing at the bottom were AMD (-2.94%), Dell (-2.08%) and Starbucks (-1.92%).
Wednesday’s focus will be on the ADP employment data, a guide to Friday’s non-farm payrolls figure. Another key data for the day will be ISM for manufacturing sector. ADP employment figure is expected to show an increase of private sector’s hiring by 20,000 compared to July’s 42,000. ISM for manufacturing sector however, is seen to edge down to 53.0 from 55.5.
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 n
ews 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.
DAX and Dow Started the Week on a Weak NoteGerman DAX and the three North American indexes tumbled on Monday as economic data were unable to defend gains from last Friday’s rally. The DAX index settled the day at 5,912.41 or falling 0.65%,
the Dow Jones index tumbled 140.92 points or 1.39% to end at 10,009.73, within striking distance to the psychological support at 10k, while Nasdaq Composite and S&P 500 indexes fell to 2,119.97 and 1,048.92, respectively.
Personal spending and personal income data released on Monday showed spending increased by 0.4% in July, while personal income rose as well by 0.2%. While the personal income was below the expected 0.3% increase, the personal spending was slightly above the expected increase of 0.3%. The mixed results turned the market’s attention to the next data, especially the non-farm payrolls which will be announced on Friday. Tuesday will see Chicago PMI data falling from 62.3 to 57.5, while consumer confidence data is expected to rise from 50.4 to 51.0.
European auto shares fell after Renault-Nissan’s CEO Carlos Ghosn said that auto sales in the US are to be below the expected level, while global sales are also not as smooth as previously expected. In addition, German’s Der Spiegel reported that the sales of Daimler’s Smart are to be below 100,000 units against last year’s sales of 114,000 units. Weak demand from US and also lack of model variations were cited as the culprits. Daimler fell 0.73% to 38.12 euros, BMW and Volkswagen fell 1.33% and 0.45%, respectively.
More on M&A activities, Intel announced that it bought Infineon’s wireless unit for $1.4 billion in an effort to strengthen its position in the mobile phone business. Intel could potentially equip each of its PC with 3G feature which would put the company in a direct competition with Qualcomm who dominates the 3G business currently. Recently, Intel also bought McAfee for $7.68 billion. Intel’s rating however, got mostly downgraded. Credit Suisse downgraded Intel’s estimates, RBC Capital downgraded Intel’s target to $26 from $30, Deutsche Bank also did the same, revising its target to $25 from $27 but maintaining the BUY rating, while Lazard Capital put Intel to HOLD from BUY. Wedbush also lowered Intel’s target to $25 from $29. Intel fell 2.23% to end at $17.96.
IBM also bought its next company: Storwize after recently it bought Sterling Commerce. Its real-time data compression technology would be expandable to help IBM clients to improve data storage efficiency by up to 80%. IBM fell 1.07% to $123.40, however.
The pharmaceuticals industry will see Pfizer and Bayer AG to compete for the second spot after Boeringer Ingelheim’s Pradaxa in a blood-thinner market with the potential of $10 billion to $20 billion annually. Both companies will present their data at the meeting of European Society of Cardiology to be held on Tuesday. Afterwards, on September 20th the American regulatory body will also review the drug. Pfizer worked together with Bristol-Myers developing apixaban, while Bayer teamed up with Johnson & Johnson working on Xarelto.
Meanwhile, at Susquehanna, Texas Instruments was downgraded to NEUTRAL from POSITIVE. The shares ended at $23.25 or 3.73% below Friday’s close, joining AMD and Home Depot as worst performers of the day with AMD falling nearly 5% and Home Depot slipping 2.61%. At the top, the competing tech giants Hewlett-Packard and Dell led at 1.47% and 1.12% gains, respectively. Apple also went up slightly by 0.36%.
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 e
nd 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.
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 Ste
el 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 stay
ed 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 glo
bal 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.
Europe Up, Spain Report Tripped The Street
German DAX and FTSE 100 ended higher at 5,912.58 and 5,155.84, respectively, after the US jobless claims fell to 473,000 in the week ending August 21st. Positive data
from German and UK also provided some supports to the European bourses. GfK consumer confidence index was to inch higher in September to 4.1 against the prior figure of 3.9. The result was above the consensus of 4.0. From UK, CBI reported sales index climbed to 35, defying forecast of a fall to 18. In July, the sales index was reported at 33.
US shares were not so lucky as late news from Spain knocked the Street back to the red zone. Dow Jones index settled 74.25 points lower at 9,985.81, S&P 500 index fell 0.77% to 1,047.22, while Nasdaq Composite ended at 2,118.69 with 1.07% losses. It was reported by El Economista that a 5.1 billion euros worth of value-added tax collected could be voided by a Spanish court. The news renewed concerns over the impact on the Spain’s economy, especially when the European debt crisis remained a major concern today. The Spanish government denied the report, however.
Corporate news came from BP which got maintained at OUTPERFORM by Credit Suisse. Low valuation of BP shares was the reason behind the recommendation. BP shares was up 2.8% at 385.6 pence at the close.
Volkswag
en also gained on Thursday after its importer in Turkey, Dogus Otomotiv Servis & Ticaret AS expected an increase in sales by 48% to more than 75,000 units this year. Low interest rates were cited as boosting sales. VW’s shares ended 2.1% higher at 79.21 euros.
Boeing was upgraded by Goldman Sachs. The EPS was upgraded to $1.15 per share from $1.12 per share. Profit margin from the company was expected to improve along with the declining research costs and improving volume. Boeing edged up 0.9% to $61.32.
Following up the rivalry between Dell and Hewlett-Packard for acquiring 3Par, HP has offered a new proposal to 3Par with the price bid up to $27 per share, from prior bid of $24 per share. Dell recently upped the bid to $24.30. According to analysts, the deal is more important for Dell than for HP as Dell could boost its product range while HP may gain less although it could pressure the Dell’s potential to improve in the high-end data center area. Also on Thursday, HP said it acquired Stratavia, a Denver-based database and application automation.
Today’s events include the speech from Federal Reserve Chairman Ben Bernanke at Jackson Hole, Wyoming. The markets will be eager to hear Bernanke’s new updates on the economy, if any. Finally, the economic data due today will be the GDP revision which has been expected to be at 1.4% in Q2. Prior estimate was at 2.4%.
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 Kon
g, 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.
ed to exit its entire consumer lending business in the US by the end of 2014. The most recent move from the British bank was to sell its auto loans business to Santander Consumer USA with the price tag of $3.56 billion. The value of the loans obtained by Santander was $4.3 billion. HSBC was settled at 643.70 pence or up 1.05%.
onference Board. The index went up to 53.5 from the upwardly revised July’s 51.0. Initially, July’s index was at 50.4. The current situation index fell to 24.9 from 26.4, while the expectations index went up to 72.5 from 67.5. Another data due on Tuesday was the house prices from Case-Shiller. In June, prices went up 1% compared to May; while year-on-year the prices were 4.2% higher. Despite the data was positive, it should be noted that the data lagged two months as it reported June, not the most recent August market conditions. The Dow’s late slip back to the flat area was mostly due to the FOMC minutes which was lacking new leads to lift the mood, turning the market back to the cautionary mode as it waits for more data to come.
Cogent in a deal worth $943 million. The maker of the fingerprint identification systems for government and civilians was bought at $10.50 a share, or 18% above Cogent’s closing price on Friday. 3M fell however, to $78.55 or 1.38%.
