Filed under: Equities, Economy, Asia, Japan, India, South Korea

The train bombings in Mumbai on Tuesday seemed not to have had much effect on Indian equities markets, at least in the short term, after the nation’s finance minister said that the bombings would not harm the economy there. The BSE Sensex index was up 3 percent Wednesday to 10,930.09.

Elsewhere in Asia, however, some equities markets declined, primarily due to worries about the news in corporate earnings reports. While the Hang Seng index in Hong Kong added 0.2 percent to 16,522.21 as resources stocks climbed as commodity prices rose, the weighted index in Taipei fell 0.1 percent to 6,634.09 and the Kopsi index in Seoul declined by 0.3 percent to 1,296.69.

In Tokyo, the equities markets were substantially lower, mostly on anticipation of an expected move later in the week by the Bank of Japan to raise interest rates above zero for the first time in six years. The Nikkei 225 dropped 1.5 percent to 15,249.32. Meanwhile, the Topix index fell 1.4 percent to 1,563.69.

Consumer finance companies saw huge losses as concerns continued about the lowered ceiling on allowable interest rates for their loans. Aiful dropped 7.2 percent to ¥4,870, while Takefuji declined by 7.6 percent to ¥5,840.

The real estate sector also saw significant declines, with the sector as a whole down by 2.7 percent. Mitsui Fudosan dropped 1.9 percent to ¥2,390, while Sumitomo Realty and Development fell 2.3 percent to ¥2,735 and Mitsubishi Estate declined by 3 percent to ¥2,295.

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Filed under: Equities, Economy, Asia, Japan, India, South Korea

Most Asian equities markets saw gains on Monday, with Tokyo again being the exception as the Topix index was slightly higher but the Nikkei was down by 55.08 points on the day.

In South Korea, the Kospi Index added 0.5 percent to 1,329.22 as foreign buyers purchased more than they sold for the first time in 14 trading days. The Hang Seng in Hong Kong added 0.4 percent to 15,963.77 despite caution in anticipation of the beginning of trade by the Bank of China, scheduled for Thursday. The BSE Sensex index in Mumbai added 0.4 percent to 10,853.14 on advances in the transportation sector. In Karachi, Pakistan, however, the KSE-100 lost 3.9 percent to 10,247.59 as foreign fund managers sold heavily.

In Tokyo, while the Topix added 0.2 percent, a mere 2.39 points, to 1,616.17 on steel and banking advances, the Nikkei 225 dropped 0.3 percent to 15,915.68.

The banking sector added 1.2 percent as a whole, with Mitsubishi UFJ and Resona each up by 2.7 percent, to ¥1,540,000 and ¥348,000 respectively. Despite forecasts for this year that were disappointing for some banks, most annual reports for the year just ended were good.

Steel companies were up on reports that European steel maker Arcelor will purchase Russian company Severstal. Nippon Steel gained 0.7 percent to ¥471, Tokyo Steel Manufacturing was up 1 percent to ¥2,460, and JFE added 1.7 percent to ¥4,860.

Toyota was up 0.5 percent to ¥6,140 after Daiwa Institute of Research raised its target share price on the carmaker.

Declines came in the retail sector after new data showed that year-on-year sales were down in April. Seven & I dropped 1 percent to ¥4,070, while Isetan was down 1.4 percent to 2,085 and Matsuzakaya declined 2 percent to ¥872.

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Filed under: Equities, Economy, Asia, Japan, India, South Korea

Asian equities markets were down again on Thursday as investors continued to look for less risky places to put their money. The exception was the BSE 30 Index in India, which added 0.88 percent to 10,666.32 after a rally late in the day.

In Thailand the SET Index fell 1.8 percent to 701.03, it’s lowest close in five months. In South Korea, the Korea Composite Stock Price Index dropped 2.82 percent to 1,295.76, the third biggest one-day decline so far this year and the index’s lowest close in six months. The Hang Seng, in Hong Kong, declined by 0.79 percent to 15,696.89, while the Straits Times Index in Singapore lost 1.3 percent to 2,404.45.

Elsewhere in the Pacific, the S&P/ASX 200 in Sydney lost 1.21 percent to 4,976.80.

The Tokyo equities markets were also down on the day, with the Nikkei 225 losing 1.3 percent to 15,693.75 and the Topix index dropping 1.3 percent as well, to close at 1,584.71. Declines came for both domestic and export-focused stocks.

The electronics sector was down 1.4 percent as a whole. Toshiba lost 4.5 percent to ¥713, while Sony declined by 1.4 percent to ¥5,090. Automobile manufacturer Toyota, also focused on exports, lost 1.8 percent to ¥6,010.

Among more domestically focused sectors, securities were down 3.6 percent as a whole. Nomura dropped 3.7 percent to ¥2,200, while Daiwa Securities and Nikko Cordial each lost 4 percent to ¥1,377 and ¥1,566 respectively.

The real estate sector dropped 1.5 percent as a whole. Mitsui Fudosan lost 1.9 percent to ¥2,340 and Mitsubishi Estate ended the day down 3.9 percent to ¥2,230.

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Filed under: Equities, Economy, Asia, Australia, Japan, India, South Korea

Equities markets in Asia saw substantial declines on Monday as investors interested in avoiding risks exited emerging markets. Declines were widespread throughout the region.

In Mumbai, the market fell 10 percent during the day, causing trade to be suspended for an hour. Once trade resumed, the market recovered some but still closed 4.2 percent lower at 10,481.77. In other major Asian markets, Indonesia’s Composite Index lost 6 percent to 1,309.05 and the Straits Times in Singapore and the Hang Seng in Hong Kong each dropped 3.1 percent to 2,416.69 and 15,805.52 respectively.

The Kospi index in Seoul declined by 2.5 percent to 1,338.59. The biggest exception to the declines there was retailer Shinsegae, which added 6.6 percent on the day to won460,000 after it said it would buy Wal-Mart’s South Korean stores.

Meanwhile, in Australia, the S&P/ASX in Sydney dropped 1.4 percent to 5,030.8. Miners were a factor there, with BHP Billiton dropping 3 percent to A$27.89 and Rio Tinto falling 3.9 percent to A$75.22. Oil stocks were also lower in Sydney, with ARC Energy down 6.4 percent to A$1.54 and Hardman Resources declined by 6.7 percent to A$1.76.

In Tokyo, the Nikkei 225 closed at its lowest level in two months, dropping 1.8 percent to 15,857.87. The Topix index lost 1.4 percent to 1,615.86. Miners were down there, as well, with Nippon Mining losing 8 percent to ¥948 and Sumitomo Metal Mining down by 3.9 percent to ¥1,471.

Among Japanese semiconductor companies, Elpida Memory lost 5.2 percent to ¥4,890 on a restatement of last year’s earnings that showed an even wider net loss than had been previously reported. In the electronics sector, Sony added 0.8 percent to ¥5,120 on the announcement that mobile carrier KDDI has plans to launch a line of Walkman-type mobiles manufactured by Sony Ericsson. The news sent shares in KDDI up 1.4 percent to ¥737,000.

Seafood processing groups saw the biggest gains for the day in Tokyo, with Nippon Suisan adding 10.2 percent to ¥584 and Maruha gaining 3.3 percent to ¥282. The sector has been benefiting from foreign demand for their products.

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Filed under: Forex, USD, US, Japan, Yen, South Korea

The South Korean won and the Japanese yen both lost value in relation to the US dollar on Tuesday as rising oil prices led to concerns that the nations’ balances of payments could be threatened since neither one has significant oil reserves.

Japan’s trade surplus has fallen to a 4-year low mostly due to oil imports, while the governor of South Korea’s central bank said on Tuesday that the hike in oil prices could take 0.7 percentage points off the growth of Korea’s gross domestic product this year.

The won lost 1.1 percent in relation to the US dollar to Won1,024, a two month low. The yen fell 0.8 percent to an eight-month low of ¥110.07 against the US dollar before recovering slightly to ¥109.91 by the close of trade.

Meanwhile, the US dollar advanced in relation to the euro and sterling ahead of an expected rise in interest rates during the meeting of the US Federal Reserve, which began today.

The dollar was up 0.7 percent to $1.2073 in relation to the euro. It also gained 0.7 percent against sterling, to $1.8160.

The New Zealand and Australian dollars both lost ground to the US dollar. The Australian dollar declined by 0.7 percent to $0.7643 against the US dollar, while the New Zealand dollar fell by 0.9 percent to $0.701 in relation to the US dollar as New Zealand reported a trade deficit of NZ$25 million in May. This pushed the annual deficit to its highest level since the mid-1970s.

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Filed under: Companies, Countries & Regions, South Korea

South Korea is looking at the possibility of suspending Deutsche Bank from engaging in derivatives trading for three months on accusations that the bank had not adequately advised state-run companies of the risks involved in investing in derivatives.

The allegations emerged from a tax investigation into foreign private equity funds operating in the Asian nation.

The investigation, by the Financial Supervisory Service, had included not only Deutsche Bank, Germany’s biggest bank, but BNP Paribas, Barclays Capital, and JP Morgan, has been criticized as the beginning of a crackdown on foreign capital.

The FSS began its investigation in February, looking into whether the banks had signed derivatives contracts with state-run companies that contained terms unfavorable to those Korean companies, and whether they had been warned of the risks inherent in the deals.

One contract in question was a currency option with Korea Highway Corp. The deal was worth Won115.5 billion ($114 million). While FSS officials would not enumerate the losses likely on the contract, an official with Korean Highway Corp said that there had been no irregularities with the contract, that there had been a warning on risks, and that the company is making a profit on the deal.

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Filed under: Companies, China, South Korea

South Korea’s Hyundai Motor signed a preliminary agreement on Tuesday with China’s Guangzhou Motor Group to form a joint venture to make commercial vehicles.

Hyundai’s new partner already makes vehicles in China with Honda and Toyota.

The project is worth $1.24 billion and is intended to meet what Hyundai said is an “explosive” demand for commercial vehicles in China, especially in taking account of expected increased demand for the Beijing Olympic games in 2008.

It forecast that by 2010, demand for trucks and buses will reach 3.5 million units per year.

The project, scheduled to begin production in 2007, is expected to have a capacity to produce 200,000 units each year by 2011. Each party to the venture will make an initial investment of $430 million.

Hyundai is already a top seller in China, but it hopes with this project to increase its total vehicle production in china to 1 million units per year.

That would take its Chinese production to one-fifth of its total output.

In the first quarter of 2005, Beijing Hyundai Motor, Hyundai’s passenger car joint venture, was the top seller of passenger vehicles in China, with 56,100 units sold in the quarter.

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Filed under: Companies, US, South Korea

South Korean automobile manufacturer Hyundai, the top car seller in China and India, has opened its first US facility, a $1.1 billion plant in Montgomery, Alabama.

The company claims that it is the most advanced in the world. Hyundai is the third foreign carmaker - after Honda and Mercedes - to move into Alabama, where until 1997 no vehicles at all were made.

Once the new plant becomes fully operational, Alabama will have the capacity to produce 800,000 cars per year.

The southern United States has begun to rival Michigan as an automobile manufacturing center because the wages there are much lower and union organization is much less widespread, making it a hospitable place for foreign carmakers to locate plants.

Hyundai, with its subsidiary Kia, is one of the fastest growing carmakers in the US. Last year, Hyundai sold 419,000 cars in the US last year, 4.1 percent of the market.

The company is also seeing success in Europe, where it is currently building a $1 billion plant in Slovakia.

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Filed under: Equities, Asia, Australia, Japan, South Korea

Asian equities markets were up across the board on Thursday on Wall Street gains, weak oil prices, and news that US inflation is in check.

Tokyo markets had their best day since the beginning of the year as the Nikkei 225 rose 2.2 percent to 11,077.16 and the Topix index was up 2 percent to 1,131.42. Export-oriented stocks did especially well.

Hong Kong’s Hang Seng index rose 0.5 percent, to 13,698.93 as the mood was subdued by rises in domestic interest rates.

HSBC, Hong Kong’s largest bank, raised its prime interest rate 50 basis points and other banks soon followed suit. The S&P/ASX 200 index in Sydney hit a five-week high, going up 1.4 percent to 4,044.5.

Gains by importers took the composite index in Seoul up 2.3 percent to 952.09. In Taipei, technology stocks helped volume improve and took the weighted index up 1.4 percent to 5,970.71.

Technology stocks also were a factor in Singapore, where the Straits Times index had its first positive result in five days as it rose 0.6 percent to 2,167.27.

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Filed under: Equities, Asia, South Korea

The South Korean government has been advised by a think-tank sponsored by the Bank of Korea to sell its stake in South Korean banks only to other banks and not to private equity funds.

Amid public animosity in South Korea toward US funds, a report from the Institute for Monetary and Economic Research said that while these private foreign investors have contributed to financial stability in South Korea, they had done very little for the nation’s banking sector.

Cost efficiency, determined by a bank’s expenses over its assets, seems to be the main issue.

The report found that foreign-run banks improved cost-efficiency from 10.7 percent in 2000 to 9.8 percent in 2004, but that Korean-controlled banks improved efficiency even more, from 12.6 percent in 2000 to 8.3 percent in 2004.

While the report is seen as a slap against foreign private investment funds because the cost-efficiency data is couched in terms of foreign-run versus Korean-run institutions, the report advises against selling to either foreign or domestic private funds.

Much of the resentment toward foreign funds comes from the fact that when they turn around and sell their interests in Korean banks, they often conduct their business through tax havens and end up making huge profits without paying any tax in south Korea.

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Filed under: Companies, Asia, South Korea

Cameras and listening devices have been found secreted in the walls of the office of the Korea Exchange Bank’s chief executive. KEB is Korea’s fifth-largest lender and is controlled by U.S. private equity fund Lone Star.

The cameras and microphones were found last month as the office was being redecorated for the new president and chief executive of the bank. A computer to transmit results of the spying was also found.

A senior executive, who told management that the devices had been installed for the new executive’s security, was suspended and it is said that he will be leaving the company soon.

It was suggested that the devices might have been installed to gather information about the sale of the bank which is expected to begin later in the year, after the period in which Lone Star cannot sell the bank expires.

Additionally, Lone Star is one of two foreign companies currently being investigated by the South KoreanTax office for possible tax avoidance after the 1997 Asian financial crisis.

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