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Asian Market Review - September 29th 2010

|Includes: Helmerich & Payne Inc. (HP)
Japanese Tankan survey released on Wednesday indicated that sentiment for large manufacturers improved from 1 in June to 8 in September. For non-manufacturers, sentiment went higher from -5 to 2. Both readings beat the forecast of 6 and -2, respectively. Outlook for December for large manufacturers was dim, as the reading showed -1, and for large non-manufacturers, a reading -2 was expected. Capex for large industry slowed to 2.4% lower than the spending in prior quarter of 2.7% and also below the upbeat expectation of 4.0%. The results sent investors speculating for more intervention from the government to weaken yen further and for some more quantitative easing from the Bank of Japan to boost the economy, averting it from falling back into recession. Tankan results sent Nikkei 225 Average to end at 9,559.38, up 63.62 points or 0.67% on Wednesday.
 
Japan’s Ministry of Economy, Trade and Industry expected steel output to fall 1.5% in 4Q. A decline in car sales in Japan and also falling exports are the factors behind the assessment. Year-on-year, steel output is expected to gain 1.4%. METI said that the projected output for 4Q is about 90% of the peak output of 30 million tonnes, so it is not a too-pessimistic assessment after all. Demand for cars is projected to fall 0.7% in Japan as the government subsidy in auto purchase has expired. Moreover, yen strength and oversupply in China are behind the decline in exports.
 
HSBC’s Purchasing Manager Index for China’s manufacturers improved in September to 52.9 from 51.9, lifting the concerns over the hard-landing scenario in China. New exports were reportedly increased, as well as employment and unfortunately, input-price too. Higher input prices triggered manufacturers to raise output prices. Despite the positive reading, Shanghai Stock Exchange slipped 0.67 points or 0.03% to settle at 2,610.68 by the end of the day. Hang Seng Index however, was buoyed by the data as well as the rise in the US stocks overnight and jumped 268.72 points or 1.22% to 22,378.67.
 
Nintendo announced a cut in its annual profit outlook. Net income is expected to be at ¥90 billion in the fiscal year ending March 2011. Prior expectation was ¥200 billion, while last year the profit was reported at ¥228.6 billion. According the company, yen strength has contributed to the downward revision. Nintendo shed 2.93% on Wednesday to end at ¥23,190.
 
HSBC Holdings Plc. has no intention to move its headquarters to Hong Kong from London, according to its chairman, Stephen Green. HSBC’s Stuart Gulliver said that the bank would relocate its HQ if the UK government approved the proposal to split big UK banks. Gulliver is the next HSBC CEO, replacing Michael Geoghegan while Green will step down as Chairman, replaced by Douglas Flint, and step up as UK Trade Minister. HSBC shares in Hong Kong ended at HK$80.45 or up 0.12%
 
Sinopec recalled its exploration crew from Sakhalin Island as results of the exploration have not been ideal, according to 21st Century Business Herald. The exploration project involved Sinopec and OAO Rosneft and started in 2007. Sinopec agreed in 2007 to fund the exploration cost amounting to around $300 million. Sinopec gained 2.69% to end at HK$6.87.
 
Foxconn International Holdings is set to buy Dell’s business unit in Poland after European Union regulators approved the deal. FIH ended at HK$5.69 or up 1.25%.
 
Yue Yuen was raised by Goldman Sachs from HK$28 to HK$32.50. Yue Yuen ended up 1.21% to HK$29.20.
 
Hewlett-Packard’s revenue is expected to be around $131.5 billion to $133.5 billion in the fiscal period of 2011, above the consensus of $131.4 billion. Adjusted earnings also expected to be aound $5.05 per share to $5.15 per share, beating the $4.99 per share expected by analysts. On the GAAP basis, earnings were expected to be around $4.35 per share to $4.45 per share. The acting CEO, Cathie Lesjak said that on the CEO search issue, the company has looked at both good internal and external candidates. HP was closed at $41.62 on Tuesday, up 0.87%, but in extended hours it  stood at $42.04, up another 1.01%.
 


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