Asian Markets Higher on China Stimulus Hopes

09 Aug 2012

-- Asian markets edge forward after economic data. -- Nikkei up 1.1%, Hang Seng Index up 1%, S&P ASX 200 down 0.1%. -- Rio Tinto climbs on above-view earnings. (Rephrases first paragraph, updates prices, adds quote, information.) Asian markets climbed on Thursday as more signs of a slowdown in China raised hopes Beijing may step up efforts to stimulate the economy while other regional central banks left interest rates untouched. Hong Kong's Hang Seng Index was up 1% to 20269.47, hitting a fresh three-month high after China reported lower inflation and weaker industrial production. The Shanghai Composite was also 0.6% higher at 2174.10. "The likelihood of a [reserve requirement ratio] cut this month is rising," said Jacky Zhang, an analyst at Capital Securities. Japanese companies with a strong exposure to China ended the day higher: Factory automation company Fanuc climbed 1.8% and construction machinery manufacturer Komatsu was 0.8% higher. In Australia, the S&P ASX 200 finished 0.1% lower at 4308.30, as China's weaker-than-expected industrial production tugged the market mildly negative. The unemployment rate in Australia came out at 5.2% compared to an expected 5.3%, pushing the Australian dollar higher, to $1.0585. Earnings were also in focus in Australia as the local reporting season got underway, with Rio Tinto announcing strong first-half earnings thanks to a lower-than-expected tax rate, lifting the mining heavyweight up by 3.6%. BHP Billiton also climbed 1.6%. Australian telecoms company Telstra Corp. dropped 2.3% after releasing earnings that matched but didn't beat expectations, extending a slide in the stock that started after it reached a four-and-a-half year high earlier this month, as analysts said there was nothing in the company's outlook to suggest it would beat expectations in the year ahead. Central banks were in the spotlight, as the Bank of Korea held off from changing interest rates after a surprise cut last month. The South Korean won strengthened against the dollar after the news, to KRW1,125 per dollar compared to KRW1,128 late Wednesday. The Bank of Japan left its monetary policy unchanged on Thursday, as expected, as the central bank maintained its assessment that the Japanese economy has started picking up moderately as domestic demand remains supported by reconstruction demand. The Nikkei was up 1.1% to 8978.60, while the dollar strengthened slightly against the yen on Thursday, at Y78.53 to the greenback compared to Y78.43 late on Wednesday. "In Asia, there is still some leeway to cut some rates, because rates can still go lower. But [the central banks] are not in much of a hurry," said Claudio Cocchis, head of treasury Asia and G10 currency specialist at Societe Generale in Hong Kong. South Korea's Kospi climbed 2% to 1940.59, after foreign purchases of local stocks reached their highest level for more than a year. Steel, chemical and construction stocks all rose on hopes of greater stimulus out of China. In company news, Nikon Corp skidded 8.1% in Japan, eradicating Wednesday's 2.6% gain, after the electronics company cut its profit guidance for the year, reflecting a change in its foreign-exchange assumptions. In Hong Kong, West China Cement fell 1.5% following a research report by short-seller Glaucus Research suggesting that the company is a "blatant fraud." West China Cement said the allegations "are groundless or misstatements." In deal news, Sharp gained 1.6% in Tokyo and Hon Hai Precision Industry gained 4.2% after a Dow Jones Newswires report said Taiwan's government returned Hon Hai's application for a regulatory review of its planned purchase of a 10% stake in Sharp, saying the expected investment return "isn't reasonable enough".