Asian Market Update: New Zealand retail sales gain at 10-month high pace, boosting NZD; USD/JPY tops 86.00 on speculation PM Kan and BOJ to meet next week

As of 1:30amET:

- Nikkei225 +0.5%

- S&P/ASX +1.1%

- Kospi +1.3%

- Taiex +0.8%

- Shanghai Composite +0.5%

- Sept S&P Futures % at

- Sept Gold +0.2% $/oz

- Sept Crude oil +1.2% $76.63/brl

- Sept Wheat +0.8% at $7.18


Economic Data

- (SI) SINGAPORE JUN RETAIL SALES M/M: -0.7% V +0.5%E; Y/Y:-4.9% V -3.4%E; EX AUTO: 5.0% V 7.8% PRIOR

- (NZ) NEW ZEALAND JUL NON RESIDENT BOND HOLDINGS: 62.8% V 64.1% PRIOR

- (NZ) NEW ZEALAND JUN RETAIL SALES M/M: 0.9% V 0.5%E; EX-AUTO M/M: 1.5% V 0.5%E; EX INFLATION Q/Q: 1.3% V 0.3%E

- (NZ) NEW ZEALAND JUL REINZ HOUSING PRICE INDEX M/M: -1.2% V 0.6% PRIOR; Y/Y: -27.0% V -24.3% PRIOR

- (CL) CHILE CENTRAL BANK RAISES NOMINAL OVERNIGHT RATE TARGET BY 50BPS TO 2.00%; AS EXPECTED

- (CO) COLOMBIA JUNE TRADE BALANCE: $133M V $400ME


Overview/Top headlines

- Asian equity markets are in the green across the board as short covering going into the weekend tracks some late-session strength reverberating in US. Investors are focused on prospects of a more upbeat German Q2 GDP data tipped to top expectations at 2.0%. New Zealand retail sales further boosted sentiment, rising unexpectedly while supporting Kiwi gains across the board. Risk appetite also creeped into commodity prices, with copper and crude trading well off the week's lows. Sept copper topped $3.31, crude oil was above $76.70, and spot gold hit 4-week high above $1,217. Commodity currencies were also stronger: USD/CAD fell back below 1.04 and AUD/USD shrugged 4 days of losses to trade above 0.90.

- On the monetary front, Bank of Japan July meeting minutes saw members agree Japan's economy is recovering at a moderate pace, with uptrend in exports expected to continue. BOJ did acknowledge the threat of the rising Yen as far back as that meeting in mid-July. With USD/JPY rates moving to the "pivotal" 85.00 handle this week, speculation BOJ Gov Shirakawa would meet with PM Kan that follows overnight report the central bank is "checking rates" helped the currency pair regain 86.00.


Macro/FX

China

- (CH) PBoC Adviser Xia Bin said China should raise deposit rates to deal with negative real rates - People's Daily Interview

- (CH) PBOC Advisor Zhou Qiren: China's trade surplus fuels increases in money supply, resulting in price volatility in goods such as property - Chinese press

- (CH) Former PBoC Advisor Fan Gang: China's money supply has expanded too quickly; Govt should boost investment in monopoly industries as well as overseas - Shanghai Securities News

- (CH) China may invest about CNY80B to stimulate domestic consumption - Chinese perss

- (CH) China Admiral says that the U.S. will pay a "costly price" for participating in naval drills with a nuclear powered aircraft carrier with South Korea - China Daily

Australia/New Zealand

- (NZ) Dominion Post citing economists suggest interest rates will be unchanged until 2011 following weak manufacturing data

Japan

- (JP) Bank of Japan July Meeting Minutes: Some said need to watch impact from Yen rise and rise due to investors risk aversion; Members concurred that Japan's economy was likely to recover at a moderate pace; The uptrend in exports was expected to continue, reflecting continued improvement in overseas economic conditions; Need to monitor impact of rising Yen.

- USD/JPY: (JP) Japan PM Kan, BOJ may meet next week to consider response measures to Yen rise - Asahi press

Other

- (ID) Indonesia Fin Min Martowardojo: Forecasts 2011 GDP in 6.1-6.4% range v 6.3% prior, inflation 4.9-5.3%

- (TT) Reportedly Taiwan Fin Min cancels 182-day NT$20B treasury sale


Equities

Australia/New Zealand

- QAN.AU: CEO: Bookings this year have been strong; Sees return of business traffic despite patchy overall demand

- TLS.AU: Early weakness attributed to company decision to sell China unit SouFun to buyout firms General Atlantic and Apax Partners for $810M

Japan

- Japan's Top 3 automakers - Toyota, Honda, and Nissan - have been offering high incentives to keep up sales of SUVs and luxury vehicles in US dealerships - Japanese press

- Asahi Breweries Ltd: Aims to reach profitability for operations in China by FY11 - Nikkei News

- PC: Panasonic and Sony are seeing a 30% drop in price on 3D TVs since their release earlier in 2010 - Nikkei

- Toshiba Corporation: Home electronics business looking to reduce procurement costs by ¥1T over 3 years through seeking new suppliers in emerging economies - Nikkei

China

- Geely Automobile Holdings LT: Has backed out of deal to gain controlling stake in Manganese Bronze; To stick with their 20% stake - Telegraph

- China Life, China Cinda Asset Mgt and Fosun are withdrawing from the AIA IPO bidding with concerns that it is overpriced - Chinese press

- Li & Fung Ltd.: Going to acquire Integrated Distribution Services Group for about HK$7B - HK Standard

Korea

- Korean Air Lines Co Ltd: Reports Q2 Net loss KRW233B v KRW25Be; Op profit KRW352B v KRW273Be, Rev KRW2.8T v KRW2.7Te

- MM.IN: Offered about KRW535B ($450M) to purchase Korea's Ssangyong Motor after being selected as preferred bidder - Korean press

Other

- GOOG: Oracle files complaint against Google for Patent and Copyright Infringement regarding use of Java in Android OS

- RIMM: In response to statement by India govt, RIMM says it will not make any special deals on a country by country basis; insists any access it provides to carriers is "lawful" under a consistent global standard


Commodities

- SPDR Gold Trust ETF holdings rise by 0.9 metric tons to 1,286.70 metric tons as of Aug 12th (second consecutive increase)

- (JP) Tokyo Grain Exchange plans to apply in Spring 2011 to trade rice futures - Nikkei

- ACH: May raise prices on alumina 3.8% to CNY2.75K/ton from CNY2.65K/ton - China Securities Journal