Asian Market Update: Nikkei, Hang Seng hit fresh 2012 highs, USD/JPY rises to highest level since Sept 2010


Economic Data

- (KR) SOUTH KOREA NOV DISCOUNT STORE SALES Y/Y: -1.7% V -6.6% PRIOR; DEPARTMENT STORE SALES Y/Y: +9.1% V -0.4% PRIOR

- (KR) SOUTH KOREA JAN BUSINESS SURVEY - MANUFACTURING: 70 V 67 PRIOR; NON-MANUFACTURING: 68 V 65 PRIOR

- (CN) CHINA NOV INDUSTRIAL PROFITS YTD Y/Y: 3.0% V 0.5% PRIOR

- (TH) THAILAND NOV MANUFACTURING PRODUCTION INDEX Y/Y: 83.3% V 68.0%E

- (PH) PHILIPPINES NOV BUDGET BALANCE (PHP): -11.6B V -9.7B PRIOR

- (JP) JAPAN NOV VEHICLE PRODUCTION Y/Y: -8.4% V -12.4% PRIOR

- (JP) JAPAN NOV ANNUALIZED HOUSING STARTS: 907K V 911KE; Y/Y: 10.3% V 10.7%E; Construction Orders y/y: -2.1% v -13.8% prior


Markets Snapshot (as of 05:30 GMT)

- Nikkei225 +1.1%

- S&P/ASX +0.3%

- Kospi +0.2%

- Shanghai Composite -0.2%

- Hang Seng +0.4%

- Mar S&P500 -0.5% at 1,420

- Feb gold -0.2% at $1,658/oz

- Feb Crude Oil down marginally at $90.94/brl


Notes/Observations

- Asian equity markets traded marginally higher as US fiscal concerns continued to weigh on sentiment with only a few days left until the end of the year. The US government will technically hit the debt limit on the 31st of Dec, but will take extraordinary measures to postpone any default. The US Treasury Secretary Geithner confirmed he will conduct additional measures to avoid reaching the debt ceiling limit to allow officials additional time to reach a fiscal deal.

- Shares in South Korea declined on thin trading with shares trading ex dividend. The South Korean Finance Ministry cut its 2013 economic growth forecasts to 3.0% from the prior estimate of 4.0% citing the fiscal uncertainties in the US and in Europe. The new guidance brings it closer in line with the Bank of Korea's 2013 GDP forecast of 3.2%, which was cut from 3.8% due to similar concerns.

- The Japanese stock market continued its strong run as the yen extended its slide against the USD on persistent easing prospects. Exporters and financials, benefitting from the softer yen, pushed the Nikkei to fresh yearly highs in early trading. The new Japanese Finance Minister Aso said that Prime Minister Abe informed him the new stimulus package does not have to adhere to the ¥44T bond issuance limit. In addition, the next budget should be large enough to show the government will beat deflation. The new budget is expected to be released next month.


Currencies/Fixed Income/Commodities

- (JP) Japan Finance Ministry: Japan Nov crude imports from Iran -19% y/y - financial press

- (CN) China NDRC to proactively secure natural gas imports - financial press

- (JP) Japan Ministry of Economy, Trade and Industry (METI): Forecasts next quarter crude steel production +0.2% at 26.7M metric tons - financial press


Speakers/Political/In the Papers

- (JP) Japan Fin Min Aso: The next budget should be large enough to show the Govt will beat deflation, aims to be complete by the middle of January; Would be impossible for Japan to descend into a Greece-style fiscal crisis; Govt could shelve plan to increase sales tax depending on economic conditions; wants to decide by next Oct whether or not to raise sales tax; Law states that won't increase sales tax while economy is in poor condition.

- (JP) Japan coast guard reported sighting of two China vessels around Senkaku Islands marking it the 15th intrusion into the waters by China ships since the islands were nationalized in Sept - Yomiuri News

- (KR) South Korea Finance Ministry cuts 2012 GDP to 2.1% from 3.3%, cuts 2013 GDP to 3.0% from 4.0% prior

- (KR) South Korea Employers Federation (KEF) survey finds businesses to cut investments, workforce in 2013 - Yonhap News

- (KR) South Korea's new government is expected to seek moderate policy shifts - Yonhap News

- (KR) Bank of Korea monetary policy direction for 2013: To respond actively on possible market instability; will focus on economic growth for the time being.

- (US) Moody's: Highly likely that US will eventually act to raise the debt limit; direction of US bond ratings most likely to be determined by the outcome of budget negotiations

- (US) Republican aide: Republican House caucus expected to hold conf call tomorrow to discuss fiscal cliff - financial press

- (CN) China may set FY13 fiscal deficit at CNY1.2T vs CNY800B in 2012 - Chinese press

- (CN) China may report Dec CPI at 2.2% - Chinese press

- (CN) China railroad investment may require approx CNY650B in 2013 - Chinese press

- (CN) China Ministry of Finance (MoF) researcher: China is studying limits placed on local government debt - Chinese press

- (TW) Taiwan think tank Yuanta-Polaris Research Institute lowered 2013 GDP forecast to 3.48% from 3.85% prior in Sept due to the continued global economic uncertainty - Taiwan press


Equities

- BCD Semiconductor Manufacturing: To be acquired by Diodes at $8.00/share in cash; valued at $151M

- Toyota: Agreed to pay over $1.1B to settle recall claims related to incidents of sudden acceleration - financial press

- OLAM.SG: Completes acquisition of NZ Farming Systems Uruguay; To meet shareholders regarding rights offer on 15th Jan - financial press

- Tokyo Electric Power 9501.JP: (JP) Japan plans to approve resuming operations at nuclear plants that regulators have deemed safe to operate - Japan press