Thursday December 29, 2011 - 06:17:46 GMT
Trade the News Staff - www.tradethenews.com/freetrial.asp?gv

TradeTheNews.com Asian Market Update: Markets cautious ahead of Italian auction; Talk continues that China will cut RRR after the New Year

- (KR) SOUTH KOREA NOV INDUSTRIAL PRODUCTION M/M: -0.4% V 0.4%E; Y/Y: 5.6% V 5.9%E; INDUSTRIAL PRODUCTION MANUFACTURING Y/Y: 5.9% V 6.3% PRIOR
- (KR) SOUTH KOREA NOV CURRENT ACCOUNT: $5.05B V $4.2B PRIOR; GOODS BALANCE: $4.5B V $3.6B PRIOR
- (KR) SOUTH KOREA NOV SERVICE INDUSTRY OUTPUT Y/Y: 2.6% V 3.4% PRIOR
- (KR) SOUTH KOREA NOV LEADING INDEX Y/Y: 1.1% V 1.0% PRIOR
- (RU) RUSSIA DEC MANUFACTURING PMI: 51.7 V 52.6 PRIOR
- (VN) VIETNAM DEC INDUSTRIAL PRODUCTION Y/Y: 7.5% V 8.1% PRIOR
- (VN) VIETNAM Q4 GDP Y/Y: 6.1% V 6.1% PRIOR; YTD Y/Y: 5.9% V 5.8% PRIOR

***Markets Snapshot (as of 04:30GMT)***
- Nikkei225 -0.5%
- S&P/ASX -0.6%
- Kospi -0.1%
- Taiwan Taiex +0.1%
- Singapore Straits Times +0.1%
- Shanghai Composite +0.3%
- Hang Seng -0.9%
- S&P Futures +0.4% at 1,249
- Feb Gold -0.3% at $1,558/oz
- March Crude +0.1% at $99.50

***Overview/Top Headlines***
- Asian markets were weaker today with risk aversion high. Taking cues from Wall St. and jitters ahead of Italy's debt auction (05:00ET Italy Debt Agency (Tesoro) will sell 2014, 2021 and 2022 Bonds). EUR/USD extended its losses testing below $1.2900, a 1-year low and almost a 10-year low against the yen below ¥100.35. Commodities dipped lower with silver dipping below $26.70, copper stayed in a small range while wheat fell 1.2% to $6.43. Shanghai Composite skipped up into positive territory on a Chinese white paper from the China State Council said that the PBoC is likely to cut the RRR after the new year. It was unclear if they meant Jan 1st or the Chinese New Year later in January. This is not new speculation but the timing fits in with other views from different analysts. The last cut came on Nov 30th, which was a 50bps rate cut to 21.00%.

- Bank of China Analyst thinks that China Local Govt debt may be much higher than the official estimate of CNY10.7T, which is going to pose a huge threat to China's financial system in 2012. The official data did not take debts extended to county governments, especially those in coastal cities, into calculation. The China Banking Regulatory Commission said it was aware of the rising numbers of "unauthorized" financing platforms created by local governments.

- Bank of Korea (BoK) released a statement saying that in 2012 will maintain policy priority on stabilizing inflation and sound growth. Inflation will slow down moderately. The economy will slowdown in in early 2012 and recover in H2. Growth is uncertain due to EU crisis and threats from North Korea, will consider North Korea and EU when deciding on policy.

***Speakers/Geopolitical/In the press***
- (JP) Japan said to be considering a ASEAN+3 foreign-reserve lending program - Japanese Media
- (CN) China will remove auto sector, polysilicon and coal to liquid from encouraged foreign investment list in 2012
- (HK) IPOs in Hong Kong in 2012 expected to decline y 15% y/y better than the 40% drop from 2010 to 2011 - SCMP
- (CN) PBoC 2012 bill maturation is at its lowest level since 2005 - Chinese press
- (JP) Japan Ministry of Finance has suspended Citi and UBS from government bond auctions for 2 weeks - Nikkei

***Equities***
- New World Development, 17.HK: Exec Henry Cheng Kar-shun reiterates that he expects property prices to decline by 10% - HK press
- Alibaba.com, 1688.HK: Has hired a lobbying company in the US; Seen as a step towards deal with Yahoo - financial press
- Geely, 175.HK: May not meet FY11 sales target of 480K units - HK press
- Elpida Memory, 6665.JP: May ask for an extension in paying back public funds - Japanese press

***FX/Fixed Income/Commodities***
- (US) API PETROLEUM INVENTORIES CRUDE: +9.57M V -3ME; GASOLINE: +1.86M V -1ME; DISTILLATE: +550K V -1.5ME; UTILIZATION: 83.3% V 83.1% W/W
- 2319.HK: Mengniu, Yili and Sanyuan will all raise milk prices in Jan - Chinese press
- (CH) PBoC did not conduct its 3-month bill auction on today's session

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