Asian Market Update: Yen hits new 15-yr highs vs greenback amid dulling sensitivity to Japan currency comments

As of 12:30amET:

- Nikkei225 -2.2%

- S&P/ASX -0.7%

- Kospi -0.9%

- Taiex -0.6%

- Shanghai Composite -0.5%

- Sept S&P Futures -0.2% at 1,089

- Oct Gold flat $1,258/oz

- Oct Crude oil -0.5% $73.73/brl

- Dec Wheat -0.2% at $7.34


Economic Data

- (AU) AUSTRALIA JUL HOME LOANS M/M: +1.7% V +1.0%E

- (JP) JAPAN JUL MACHINE ORDERS M/M: 8.8% V 2.0%E (7-month high); Y/Y: 15.9% V 8.1%E

- (JP) JAPAN JUL CURRENT ACCOUNT TOTAL: ¥1.7T V ¥1.5TE; ADJUSTED: ¥1.5T V ¥1.4TE (4-month high); TRADE BALANCE: ¥916B V ¥865BE

- (JP) JAPAN AUG BANKRUPTCIES Y/Y: -14.3% V -23.1% PRIOR

- (JP) JAPAN AUG JAPAN MONEY STOCK M2 Y/Y: 2.8% V 2.6%E ; M3 Y/Y: 2.1% V 1.9%E

- (JP) JAPAN AUG BANK LENDING BANKS ADJUST Y/Y: -1.7% V -1.7% PRIOR; BANK LENDING EX-TRUSTS Y/Y: -2.0% V -1.9% PRIOR; BANK LENDING INCL TRUSTS Y/Y: -1.9% V -1.8% PRIOR

- (KS) SOUTH KOREA JUL SOUTH KOREA MONEY SUPPLY M2: 9.3% V 9.7% PRIOR; L: 9.4% V 9.5% PRIOR; BANK LENDING TO HOUSEHOLDS: KRW420.3T V KRW419.3T PRIOR

- (UK) UK BRC JUL SHOP PRICE INDEX Y/Y: 1.7% V 1.5% PRIOR (3-month high)


Overview/Top headlines

- Asian equity markets are in the red for across the board for the second consecutive session, with broadbased losses in EU bourses and renewed weakness in US completing the cycle overnight. Once again, Japanese equities are leading the slump, falling over 2% as Japanese Yen makes new inroads to a fresh 15-year highs against the greenback below ¥83.50. Despite improved economic data - namely stronger trade surplus and higher machine orders - markets continue to test the resolve of Japanese officials, becoming increasingly less sensitive to "verbal intervention" in the absence of real action. BOJ Governor Shirakawa appeared in Parliament, defending central bank activity by stating ample liquidity has been provided. Finance Minister Noda stepped up his intervention threat by stating MoF is talking to other nations, while calling the Yen moves deep-rooted, but fell short of convincing traders a unilateral action would be considered.

- Tech heavy markets in Asia likewise saw little reprieve, as UBS slashed its outlook for stalwarts INTC, HPQ, Hynix, and much of the EU semiconductor sector. Automakers in Japan were also weak, as currency factors added to speculation domestic output may be cut as eco-friendly vehicle incentive program abruptly expires.


Macro/FX

China

- (CH) China Commerce Min Chen: Expect a "small" trade surplus this year; trade surplus has been larger than expected because of declining commodity prices - Xinhua

- (CH) China may cut reserve requirement ratio in H2 - Chinese press

- (CH) China Securities Regulatory Commission (CSRC) Chairman Shang: To promote corporate bond market and improve fund raising avenues for companies; Increasing supervision of cross border flows

- (CH) United Nations Conference on Trade and Development (UNCTAD): China will remain increasingly more attractive destination for foreign investment - China Daily

Australia/New Zealand

- (AU) Australia largest banks are forecasted to independently raise key mortgage rates by up to 20 bps out of cycle with the RBA - WSJ

- (AU) Australia Treasurer Swan: Government will be stable and the AU economy is strengthening; to proceed with mining tax, seeking to enact it as soon as possible - Comments on the radio

- (AU) The Australian citing concerns among some of Australian smaller iron ore and coal miners regarding the future of tax reform; Says A$200B in projects on the line and about to enter final investment decision phase

- (NZ) New Zealand Fin Min: Collapse of South Canterbury Finance will cost New Zealand at least NZ$300M

Japan

- Japan Fin Min Noda: Decisive steps to include forex intervention; To closely cooperate with other nations on currency; Concerned uptrend in Yen has become deep-rooted

- (JP) Japan Min of Finance official Ogushi: Any forex intervention should be planned to be effective; MoF to make necessary preparations and enter the market if determined to be necessary

- (JP) BOJ Gov Shirakawa: Providing sufficient liquidity; Recent quantitative easing has helped to stabilize the financial system but not stimulated it

- (JP) BoJ Nishimura: Foreign exchange and stocks are unstable recently; Need to pay attention to downside risks in economy and prices

- (JP) In July, China bought a net of ¥583B in Japanese financial assets - Nikkei

- (JP) Japan Gov't is debating whether or not to allow the eco-car subsidy program to end - Japanese press

Other

- (SI) Singapore Gov't offered a land piece at auction for development in eastern Singapore drew only 5 bids, half the typical number; Indicating developers are becoming cautious following latest measures to cool the property market - Straits Times

- (PH) Philippine Eco Planning Sec Paderanga: Reaffirms GDP target of 5%-6% for 2010

- (ID) Indonesia Gov't: Holding maximum rupiah guarantee deposit rate at 7% and dollar guarantees deposit rate at 2.75%


Equities

Australia/New Zealand

- FGL.AU: Proposal for wine unit from a private equity group for A$2.3B-2.7B in cash was rejected; Proposal significantly undervalues the wine business

- LEI.AU: Believed that the board has nominated COO David Stewart as the next CEO to replace Wal King; Official retirement details are expected any day now - The Australian

- TLS.AU: With Labor forming the Gov't will be able to move forward with work on the A$43B national broadband network of which Telstra stands to profit A$11B; Deal will allow Telstra to focus just on retail - The Australian

Japan

- TM: May cut domestic output by 20% in October; Honda may also cut output by 15% as eco-friendly subsidies expire - Nikkei

- DCM: May be selected for mobile TV by Japan regulators, appears to be favored over KDDI Corp - Nikkei News

- SNE: Looking to take 30% of the Japan 3D television market in 2011; Forecasting 1M 3D TV sales in the same period - Marketing president Nobuki Kurita

China

- CHL: Vodafone confirms sale of 3.2% stake in China Mobile for £4.3B

- SHI: Controls the Shandong oil rig in the East China Sea that is leaning at a 45 degree angle; Min of transportation has sent rescue teams to assist the 34 people trapped

Korea

- Samsung Electronics: Product executive Hankil Yoon: Samsung expects to ship 10M Galaxy tablet PCs next year and secure one-third of the market - WSJ

Other

- POT: Reportedly CNOOC and ChemChina are in talks about Potash bid with ZhongChuan - Chinese press; Up 3% after hours on chatter bid price may be around $185/shr

- BP: Will take some of the blame for the Gulf spill and assign the rest to other companies involved in decisions leading to the explosion; - Note: Transocean owned the rig that exploded; Halliburton did all the cementing work and Mitsui owned a minority share in the project. - WSJ; BP - Flat after hours; RIG - up 0.1% after hours


Commodities

- Kobe Steel Ltd: Reached an agreement with Rio Tinto on a 13% price reduction in Oct. to Dec. iron ore prices v July to Sept. price

- (CH) China Iron & Steel Association (CISA) is in talks with Vale, Rio Tinto and BHP about moving to a monthly pricing mechanism - China Daily

- (AU) Australia CBH Group lowers its wheat crop estimate to a 4 year low due to poor rainfall in Western Australia - Australian Financial Review

- (CH) China to add 30.5M tons of oil refining capacity, with 23M in 2011 and 15M in 2012; Growing refining capacity pressures regional markets - Standard Charter

- ACH: China aluminum production may decline because of cuts on energy use - Chinese press

- (AU) Australian Bureau of Agricultural and Resource Economics (ABARE): Q2 exports of energy and minerals rose 41% q/q to A$44B