Asian Stocks Slip Ahead of G-20
This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.
Hello and a very warm welcome to our China viewers on CCTV Business Channel.
I am Saijal Patel and you are watching "Asia Market Daily" — co-produced by CCTV and CNBC, first in business worldwide.
On to what's moving in markets today.
Asian stocks were mostly lower on expectations of tighter financial regulation ahead of the Group of 20 meeting in Toronto, Canada over the weekend.
Uncertainty about the global economic recovery also weighed on investor sentiment.
In Japan, the Nikkei 225 fell as blue-chip exporters dragged the index lower.
Meanwhile, the latest consumer-inflation numbers from Japan showed that deflation is still hurting the world's second-biggest economy.
Consumer prices logged their 15th month of annual declines in May.
The data suggests that the Bank of Japan may have to maintain its easy monetary policy.
In South Korea, exporters also dragged the market down.
Stocks such as LG Electronics and Hynix Semiconductor fell on concern about the state of the world economy.
In Hong Kong, financial stocks were in focus.
Looking at Agricultural Bank of China, its A-shares were reportedly 16 times oversubscribed in the pre-marketing for its IPO.
AgBank is the last of China's big four state banks to go public.
It is selling a 15 percent stake in a dual listing in Hong Kong and Shanghai.
The Hong Kong leg of its IPO was also reportedly oversubscribed by institutional investors.
AgBank had originally hoped to raise up to $30 billion but scaled back expectations because of a drop in the Chinese stock market in recent months.
It plans to make its debut in Shanghai on July 15th and Hong Kong a day later.
Francis Lun, General Manager of Fulbright Securities in Hong Kong is optimistic about the listing.
(SOT) Francis Lun, Fulbright Securities, General Manager:
"A lot of IPOs are coming to the market, people are still buying, paying for these shares. And that's why China's launch of the Agricultural Bank's launching its IPO right now and the Chinese government is going to make sure that it will be a success, right, it's already oversubscribed, so it will be a success."
Over in Australia, stocks touched a two-week low as investors awaited developments on a controversial mining tax. Mining stocks had jumped a day earlier on hopes that the country's new prime minister Julia Gillard would offer a softer approach on the 40 percent super profits tax, but there was little new information on Friday.
Joining us from Sydney is CNBC's Matthew Taylor with more:
Thanks Saijal.... The shine has come off Julia Gillard inspired bounce we saw for the Australian market and resource stocks yesterday as uncertainty continues to linger about the resource super profits tax.
In her second press conference as Prime Minister, Julia Gillard said resolving the resource super profits tax issue would be her number one priority - but there is little detail on just what concessions if any the new Prime Minister will make.
(SOT) Julia Gillard, Australia Prime Minister:
"We will genuinely negotiate with the mining industry, so that those genuine negotiations can start. I have met this morning with deputy prime minister and treasurer Wayne Swan, and with the relevant minister Martin Ferguson to work on the government's negotiating strategy"
The Treasurer and new Deputy Prime Minister Wayne Swan says the government is committed to negotiations, but at least one former Treasurer thinks it might be too late.
Peter Costello, who was Australia's longest serving Treasurer - serving under John Howard, says the new Prime Minister must act decisively and quickly.
(SOT) Peter Costello, Australia Former Treasurer:
"The interesting thing will be what does Gillard do about these things. She hasn't announced what she believes should happen in relation to the emissions trading scheme. That's still in the 'too-hard basket'. And although she said she's prepared to negotiate in relation to this resources tax, I think she missed the opportunity yesterday, she should have come out, she should have said the tax won't be going through, won't be going through in that form. A number of the big miners welcome Prime Minister Gillard's commitment to resolving the issue but are still calling for the headline tax rate of 40 percent to be reduced."
Back to you Saijal.
Meanwhile, the Australian dollar was lower as investors reduced risky positions amid uncertainty about Australia's mining tax.
One currency expert advised that when playing the Australian dollar, one should take into account developments in China.
Here's what Rob Rennie, Currency Strategist from Westpac Bank Australia in Sydney has to say.
(SOT) Rob Rennie, Currency Strategist, Westpac Bank:
"For the Chinese economy, we have the Chinese economy slowing potentially quite considerably into the end of this year and beginning of next year, we might be seeing growth down into the eights, and I think that is an important factor to keep an eye on. And that certainly adds to my view that if you do see opportunities to sell strength in the Australian dollar, you should be taking those opportunities, because obviously the Aussie is very highly linked in to developments in China."
And now, for a look at the big stories from the Indian market, including what investors should be watching out for in the week ahead in terms of earnings and macro events...
Let's go to Reema Tendulkar in Mumbai. Reema?
For the domestic markets, there are three important triggers. We will be starting off earnings in the next two to three weeks. We kick it off with In Forces. Second is going to be how Monsoon pans out, because that's very important for us, and the third is going to be the credit policy that will be taking place on the 27th of July.
There are expectations given that inflation is in double digits. Remember last month we crossed the 10-percent mark, perhaps there will be some tinkering of rates, maybe a 25%, 25-basis point hike is not completely ruled out. If that takes place, watch out for what happens to all these interest-sensitive counters. So that's gonna be very important. so that's the broad outlook for what we expect in the next month going forward.
Going forward it will be all the three triggers which I named - it will be earnings, monsoon and how that shapes up, and also, it will be the credit policy, and the big big eye will continue to remain on the equity market. The people we spoke to, they believe that the range, this broad range that we've had of about 4,800 on the down side, to 5,300, 5,400 perhaps will continue. And at these higher levels of above 5,300, there is some sort of cautiousness. Technically, if you look at it, it's the 5,400-mark which is a very important resistance level. So currently, we stand at just around the 5,300 mark. Watch out for the 5,400-mark. And there are some hopeful people who believe that the downside this time around would be kept at around the 5,000-level. So let's see what happens from here. it's the start of the new series for us.
Back to you.
And as we mentioned earlier, the Group of 20 meeting will take place in Toronto, Canada over the weekend.
G-20 leaders are set for a showdown as the U-S calls for growth while Europe preaches fiscal prudence.
In the past, the G-20 has been proud about a unified response that helped prevent a global recession in 2008 from becoming a depression.
Now the group must get consensus on a number of controversial topics, including a global bank tax.
Australia, Brazil, Japan, and South Korea are opposed to the tax proposal.
Canada, the host country of the G-20 meeting, has said that countries calling for a global bank tax are not focusing on the most important issues in global financial reform.
Ahead of this weekend's gathering, Germany, France and Britain have gone ahead without the other G-20 members and announced plans to introduce a bank levy to help meet the costs of the financial crisis.
Well, that wraps up today's business highlights.
You have been watching "Asia Market Daily" — co-produced by CCTV and CNBC, first in business worldwide.
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