Despite credit downgrades for Toyota, dilution in banks, & less than expected manufacturers confidence; Japan and other markets trimmed losses and went green to the tune of 1%. Some reasons for this were good trade data out of Korea, a doubling of retail sales expectations out of Australia, China’s manufacturing data, & ANZ’s potential bid for RBS units across the whole of Asia.
By Patrick Rial and Shani Raja
July 1 (Bloomberg) — Asian stocks fell on speculation more companies will raise equity capital, diluting the value of investments by existing shareholders.
Orix Corp., Japan’s largest non-bank financial company, slumped 5.9 percent after the Nikkei newspaper said it may raise 100 billion yen ($1.03 billion) through a stock sale. All Nippon Airways Co., Japan’s biggest domestic carrier, lost 5.9 percent after the newspaper said it will issue 150 billion yen in new stock. Posco, South Korea’s largest steelmaker, rose 1.3 percent after agreeing to invest in an Australian iron ore miner.
Japan’s Tankan index of business confidence came in below economist forecasts, yet still showed the first improvement in sentiment in more than two years.
The MSCI Asia Pacific Index lost 0.2 percent to 103.03 as of 9:33 a.m. in Tokyo. The measure rallied 15 percent in the first half of 2009, the best start to a year since 1999 and outpacing gains by gauges in Europe and the United States.
“The disappointing numbers were a sobering reminder that we’re still in for a tough second half of the year,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “This downturn in confidence pushes the recovery story back, and has certainly led to a more defensive stance for traders.”
Japan’s Nikkei 225 Stock Average lost 0.1 percent to 9,944.69. The Tankan index of confidence among large manufacturers rose to minus 48 in June from minus 58 in March, the Bank of Japan said today. Economists surveyed by Bloomberg News had predicted minus 43….
Japan’s Mizuho Expected To Annouce A 600 Billion Yen Raise
TOKYO, July 1 (Reuters) – Japan’s Mizuho Financial Group (8411.T) is set to announce plans later on Wednesday to raise about 600 billion yen ($5.2 billion) via a new share issue, several sources said.
The bank said in May it planned to raise up to 600 billion yen through new share issue to shore up its balance sheet hit by a recession and losses on its equity holdings. ($1=116.32 Yen) (Reporting by Taro Fuse)
Down Under The Curve Moves Higher
By Katrina Nicholas
July 1 (Bloomberg) — International borrowers from Europe, Asia and the U.S. are being forced to pay more in interest to sell local-currency bonds in Australia after domestic banks lured investors to top-rated, federal government-backed debt.
European Investment Bank and International Finance Corp., supranationals which raised $17 billion from so-called kangaroo bonds in the four years ended August 2008, are now paying as much as 120 basis points in extra interest to borrow in Australia for projects around the world. That amounts to $12 million a year in interest on every $1 billion of debt.
“The old days are over,” said Patrick Bryant, senior manager of securities origination at Commonwealth Bank of Australia in Sydney. Many of the kangaroo bonds sold by supranationals were priced below mid-swap rates, and “that simply wasn’t attractive” to investors now being offered state- backed bonds at 120 basis points above the benchmark, he said….
China’s PMI Expands Again From the Stimulus Injection
By Bloomberg News
July 1 (Bloomberg) — China’s manufacturing expanded for a fourth month as government stimulus spending and record bank lending sparked a recovery in the world’s third-biggest economy.
The Purchasing Managers’ Index rose to a seasonally adjusted 53.2 in June from 53.1 in May, the Federation of Logistics and Purchasing said today in Beijing in an e-mailed statement. A reading above 50 indicates an expansion.
China’s economy may keep improving in the third and fourth quarters, enabling the nation to meet its 8 percent economic growth target for this year, central bank Governor Zhou Xiaochuan said this week. Prices of copper, used for autos and construction, are headed for their biggest six-month gain in 22 years as Chinese buyers boost imports to records to replenish stockpiles.
“China’s recovery is gathering further momentum,” said Lu Ting, an economist with Bank of America Merrill Lynch in Hong Kong. “It has been recovering faster than the market had expected.”
Higher coking coal prices are adding to evidence that demand for steel is recovering. Fushan International Energy Group Ltd., a producer of steelmaking coal, said last month that it raised prices for the first time since January.
Higher GDP Forecasts…..
Fitch Takes a Notch Off of Toyota
By Tim Smith
July 1 (Bloomberg) — Toyota Motor Corp. had its ratings downgraded to A+ from AA by Fitch Ratings on long-term industry concerns. The company retains a negative outlook.
Japan’s Bonds Fall On A Bounce In Manufacturing Confidence
By Yasuhiko Seki
July 1 (Bloomberg) — Japanese bonds fell, ending a two-day gain, after a central bank survey showed sentiment among the nation’s largest manufacturers rose from a record low, signaling companies believe the worst of the recession is over.
Benchmark yields climbed from the lowest level in three months after the Bank of Japan’s Tankan index of sentiment for large manufacturers climbed to minus 48 in June, from minus 58 in March. Treasuries declined yesterday after an industry report showed a measure of business activity shrank less than forecast.
“The Tankan survey clearly confirmed that the business confidence is now enjoying a rapid-paced recovery from a record low and this improvement will be sustained,” said Tatsushi Shikano, senior economist in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan’s biggest lender. “As the direction of the economic cycle changes, the 10-year yield may rise toward 1.50 percent to 1.60 percent this quarter.”
The yield of the benchmark 10-year bond rose 1.5 basis points to 1.365 percent as of 9:42 a.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. It fell to 1.345 percent yesterday, the lowest since April 2. The price of the 1.5 percent bond due in June 2019 fell 0.134 yen to 101.183 yen.
Ten-year bond futures for September delivery dropped 0.09 to 138.01 at the Tokyo Stock Exchange.
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