Asian Market Update: Thailand Q3 GDP Hits 1-yr high as Thai officials raise 2009 forecast; Dovish comments by Fed's Bullard help sink USD; Gold makes new record high at $1,165


ECONOMIC DATA

- (NZ) New Zealand Oct Visitor Arrivals: -0.7% v 3.8% prior

- (HU) Hungary Nov Economic Sentiment: -27.5 v -26.8 prior; Business Confidence: -18.9 v -18.4 prior; Consumer Confidence: -51.9 v -50.8 prior

- (AU) Australia Oct New Motor Vehicle Sales m/m: 3.7% (4-month high) v 3.1% prior; Y/Y: 3.3% v -1.8% prior (first increase since Jun 2008)

- (NZ) New Zealand Nov ANZ-Roy Morgan Consumer Confidence: 121.5 v 125.9 prior

- (TH) Thailand Q3 GDP Q/Q: 1.3% v 2.3%e; Y/Y: -2.8% v -3.2%e (one-year high)

- (SI) Singapore Oct CPI M/M: 0.6% v 0.6%e; Y/Y: -0.8% v -0.5%e


SPEAKERS/PRESS

- Asian equities are predominantly in the green, unwinding some of the cautious sentiment permeating across the markets in the prior week. Sydney's S&P/ASX led the majors to a +0.7% close, Hang Seng is up just over 0.5%, while Shanghai Composite and the Taiex are both up marginally. Korea's Kospi is the only major regional decliner, falling 0.5% on heavy tone in consumer discretionary in correction of last week's outperformance, and Nikkei225 is closed for the holiday. Ahead of the start of the holiday-shortened trading week in the US, front-month S&Ps also point to a higher open with a 0.4% gain.

- Thailand Q3 GDP marked the primary economic event of the session, falling short of estimates on Q/Q basis at 1.3% v 2.3%, but beating on Y/Y to a 1-year high at -2.8% v -3.2%e. Decline in trade activity, private consumption, and investment continued to slow across the board, prompting Thai officials to boost their 2009 GDP forecast to a maximum contraction of -3.0% from prior range of -3.5% to -3.0%. In 2010, Thai govt saw GDP rising 3-4% and rate of inflation returning to positive at 2.5-3.5% vs 2009 forecast for -0.9% decline. Separately, Thai central bank noted it may intervene to prevent excessive Baht movements, but declined to guide the appropriate level for the currency.

- Elsewhere in the region, Japan's Deputy PM Kan continued to voice his displeasure with the BOJ decision to wind down corporate asset buying in December, noting that Friday's declaration of deflation in the govt report was a direct message to the central bank. Recall that in the same session, BOJ unexpectedly raised its assessment for the economy for the second consecutive month. Malaysia Central Bank Governor Zeti said the domestic economy will emerge out of recession by Q4. In China, a research fellow at State Council's Development Research Center forecasted Q4 GDP over 10% and over all 2009 GDP around 8.5% on low Y/Y comparison basis and positive signs in the economy. Over in Taiwan, the local press cited Premier Wu support of the plan to rescue local chip makers as part of the plan to use public funds in bailouts. Later in the day, Fitch affirmed Taiwan local-currency IDR rating at AA, but maintained negative outlook, citing uncertainty over the effectiveness of anticipated fiscal consolidation program and rising govt debt denominated entirely in TWD.

- In US Fed speakers, 2010 FOMC voter James Bullard said he would support asset buying beyond Q1 of 2010 and would only vote in favor of raising fed funds rate when recovery is unambiguous, noting it would be difficult to raise interest rates if unemployment rises but also viewing inflationary outlook as a more dominant determinant. Regarding current conditions, Bullard said inflation remains low with no signs of new asset market bubbles, but also warning that the Fed kept rates "too low for too long" earlier this decade, with inflation risk emerging in the medium term. Chicago Fed President and FOMC voter Charles Evans also offered dovish remarks, noting that unemployment in US is likely to peak around 10.5%.


EQUITIES

- In individual equities, James Hardie was one of the bigger gainers in Sydney, reporting Q2 sales of R$304M v $268Me and guiding Operating earnings at the top end of market forecasts. Asian auto sector also saw reports of increasing capacity across the region. Hino Motors said it would invest ¥3B in an Indonesia truck factory, Hyundai Motor announced it would manufacture Tucson compact SUVs in China, and Geely Auto said 2010 sales may rise 25-30% y/y even without government stimulus. In notable tech names, Samsung Electronics rallied after Credit Suisse raised its price target to KRW940K from KRW860K, with Q4 Net profit expected to reach KRW3.4T v KRW2.9Te. In financials, FT reported Banco Bilbau may raise its stake in Citic Bank to 15% from 10% through exercise of an option, and NAB CEO in Sydney noted he was cautiously optimistic on the outlook for lending, but called for market to look through the December holiday season for full impact of rising interest rates.


CURRENCIES/FIXED INCOME/COMMODITIES

- In currencies, US dollar was heavily offered across the board on dovish Fed rhetoric and risk appetite in Asian equity markets. EUR/USD was up over 80 pips from opening levels above 1.4940, GBP/USD rose 60 pips to 1.6550 session high, and USD/CHF fell below 1.0120. Commodity FX was also firmer, with gold extending to new record highs and oil recovering some of last week's decline. AUD/USD tested the upside of 0.92, and USD/CAD fell about 70 pips to 1.0630. Japanese Yen was also stronger against the dollar but much softer against European majors, with USD/JPY falling about 10 pips to 88.80 and EUR/JPY gaining about 70 pips above 132.80.

- Crude oil is higher by over 0.70% and trading above $78/bbl. Factors supportive oil prices include the weaker US dollar and the war games being conducted by Iran's Revolutionary Guards. In terms of US energy demand ahead of the Thanksgiving holiday, the most recent Lundberg survey showed that avg. retail gasoline prices declined by 1.5% to $2.65/gallon in the last two weeks vs. +7% prior. According to Lundberg, the decline in gasoline prices was driven by lower demand and high unemployment levels. Spot Gold has moved to a fresh record high above $1,165/oz on the weaker dollar and events in Iran. Shanghai Copper prices have moved to the highest level since late Sept 2008, supported by the weaker dollar. Additionally, on Friday's session the Shanghai Futures Exchange reported that copper stockpiles rose by more than 2% to 107.4K tons for the week ended 11/20.