Asian Stocks Performance Lately...
Asian stock markets were mixed last week, despite an improving credit outlook. Japan was one of the worst performers, weighed down by political uncertainty.
Just weeks after the Liberal Democratic Party's drubbing in upper house elections, Japan's Shinzo Abe resigned as prime minister. Yasao Fukuda has emerged as the front runner in the leadership elections, after gaining support from all the party's major factions. Australian prime minister John Howard vowed to step down before the end of his next term, if re-elected, and hand power to treasurer Peter Costello.
China's central bank raised the benchmark lending and deposit rates by 0.27%, after inflation accelerated to a ten-year high in August, driven by rising food prices. China Southern Fund Management received regulatory approval to double the size of its first global equity fund to RMB30bn.
South Korea's government expects the domestic economy to grow 5% in 2008, aided by brisk exports and a recovery in domestic demand.
India's industrial production growth slowed to 7.1% in July from the previous year, suggesting that tighter monetary policy and the strong rupee were starting to bite.
Thai consumer confidence fell for the tenth straight month in August to a fresh five-year low, while advertising expenditure and automobile sales remained weak.
Australia: Leighton Holdings announced A$471m-worth of new contract wins. National Australia Bank acquired a 20% stake in China's Union & Investment, a property trusts manager.
China/Hong Kong: Corporate results were in line with expectations: Hongkong & Shanghai Hotels' first-half earnings were strong, on higher room rates and revalued real estate; and Sun Hung Kai Properties posted higher full-year profits on improved apartment sales, and paid a final dividend of HK$1.60. Elsewhere, Warren Buffett's Berkshire Hathaway reduced its stake in Petrochina, from 10.16% to 9.72%.
India: Sun Pharma became the third local drug maker to gain 180-day exclusive marketing rights to launch a generic drug in the US market, following US regulatory approval. Separately, the company is defending a patent infringement suit brought by Sepracor and the University of Massachusetts. Nicolas Piramal will invest some Rs2.5bn-3bn over the next two years in its recently spun-off R&D unit. ONGC is among 35 qualified bidders for Libya's fourth round of auctions for gas fields. BPCL and Videocon Industries jointly acquired a stake in EnCana's Brazilian assets for US$425m. Tata Power plans to take a 15% stake in a proposed spot power exchange. Following new bike releases by domestic rivals Bajaj and TVS Motor, Honda Motor announced plans to launch an array of products through its two subsidiaries HMSI and Hero Honda to maintain its market leadership. ICICI Bank is to launch a US$2bn infrastructure fund, with the aid of Credit Suisse.
Indonesia: Singapore's Temasek Holdings has reportedly hired advisers to draft recommendations for a merger between its two Indonesian bank holdings, Bank Internasional and Bank Danamon, following changes to bank ownership rules. The government plans to merge the Jakarta Stock Exchange and Surabaya Stock Exchange. Elsewhere, Holcim Indonesia reported strong cement sales in August, as it increased its market share.
Korea: Shinsegae reported higher sales and operating profits in August.
Malaysia: The government refused to extend the year-end deadline for Telenor to trim its stake in Digi, from 61% to 49%. It also proposed to cut Bursa Malaysia's clearing fees, to encourage market activity, especially in the retail segment. Astro reported a loss of RM54m for the second quarter, due to a RM92.4m write-off related to its Indonesian venture. In contrast, United Malacca's first-quarter earnings surpassed expectations, buoyed by high palm oil prices. Meanwhile, Bumiputra-Commerce has been shortlisted to bid against China's ICBC for a 20% stake in Thailand's smallest bank, ACL Bank.
Singapore: Keppel Corp's unit Keppel Land is paying S$387.6m for a 51% stake in a luxury apartment development in Saudi Arabia. Taiwan: Taiwan Mobile reported higher revenues in August, boosted by its TFN acquisition; however, net profits were more than halved due to a NT$454m asset write-down. TSMC raised its third quarter guidance, following improved sales in August. Fubon Financial reported unaudited profits of NT13.5bn for the year to August.
Asian Fixed Income
Weaker-than-expected US nonfarm payrolls data lowered US interest rate expectations, with yields dipping 10 basis points over the week. Improved sentiment and support from the US rate market buoyed Asian bond markets. Asian currencies strengthened against the US dollar, but lagged emerging market currencies, which had underperformed during the sell off. Asian dollar credits stabilised and market liquidity improved. Investment grade credits and high-yield sovereigns generally fared better than high-yield corporates. The primary market remained quiet.
Aberdeen Asset Management Asia Limited
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