Asian Investors Digest Fed's Statement
This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.
Welcome to our viewers across China tonight.
I'm Saijal Patel from CNBC and you're watching "Asia Market Daily".
"Additional accommodation" was exactly what the markets expected from the US federal reserve meeting last night... And that's kept most of Asian markets on the upside in trade today.
The central bank left the cash rate on hold, despite members signaling they're worried about a sluggish recovery. While investors take that to mean that the Fed will start pumping more liquidity into the system, Stephen Wood of Russell Investments says he doesn't expect the Fed to move just yet.
(SOT) Stephen Wood, chief market strategist, North America, Russell Investments:
"You've got unemployment stabilizing, housing could stabiles in early 2011, it's not quite there yet. Consumers are saving. They're not consuming but they're deleveraging, and corporate profits are having cash on their balance sheets and profitability. So really it's a mixed environment right now, and I think the Fed is going to provide funding and liquidity into markets and they are pursing full employment. But right now I think they've done a good job. My guess is the Fed's on hold, probably until the fourth quarter 2011."
Checking on the equities market.. Korea, China and Taiwan are closed for holidays today.
In Japan, the Nikkei closed down 4-tenths of a percent, with exporters feeling the impact from a stronger yen. Investors, of course, opting for the safe haven currency, given the talk of further easing in the US. But any excessive strength was capped by expectations that the Japanese government would intervene, should the yen show any drastic movements.
Some analysts say while bonds may be the asset class of choice in times of crisis, equities may be an overlooked option.
(SOT) Graham Bibby, CEO & CIO, Richmond Asset Management, Hong Kong:
"I've always got this contrarian view of what investors do. You know after these crises you see investors running shy of the risk end of the market, so cash funds, money funds are at or near record highs. Cash funds hold huge amounts of cash. Even the S&P 500 companies I think they've quadrupled their own cash holdings so there's a lot of cash out there and a lot of people ran to bonds. And when everybody runs for a certain investment vehicle that's normally the time to start selling. So I think equities are
going to continue surprise on the upside"
Other safe haven investments - such as gold - are also benefiting in trade today.
In Australia, banks and miners taking the index higher by 2-tenths of a percent.
And on the corporate front, the battle continues for Potash, the world's largest fertilizer maker. China's Sinochem has reportedly enlisted the help of Deutsche Bank and
Citigroup - to explore options for a counterbid against Australian mining giant BHP Billiton's takeover bid for the Canadian chemical giant. Speculation is mounting that Sinochem might try to quash BHP's bid with a better offer, or by picking up a blocking stake in Potash.
Potash sells some 7-percent of its output to China and concerns are that any buyout from BHP may push up the price of fertilizer.
And China's currency is still making headlines - as Chinese Premier Wen Jiabao prepares to meet with US President Barack Obama in New York tomorrow. Debate is continuing to rage about whether China is doing enough to allow its currency to appreciate, despite the yuan's earlier 9 straight days of rally.
China's foreign ministry has struck back at negative comments from the US president - saying international pressure for the Yuan to rise further is "unwise and shortsighted".
However, some economists say the rise in the yuan has already had profound effects.
(SOT) Andy Xie, independent economist:
"The currency move has led to huge property bubble because of all this speculation, all this hot money. But in terms of the effect on the real economy we have to think of how much the dollar has come down. The dollar index has dropped by about a one third from its peak. So in that way the Renminbi hasn't moved much."
But not everyone agrees. Shaun Rein of China Market Research Group says the housing is not at risk despite the surge in prices this year.
(SOT) Shaun Rein, managing director of China Market Research Group (CMR):
"The reality is though that prices are high but it isn't a problem where the market is going to collapse. Why not? because overleverage is not at play. Right now you have Chinese consumers have to put down 30 percent to buy their first home. 50 percent to buy your second home. And what you have in Beijing is a full 60 percent of second home purchases are paid upfront in cash. You don't have overleverage like you had in the United States where one guy is buying eight homes with 0 percent down."
In Hong Kong, property counters also finding some upside today on increasing optimism that the real estate market will remain robust.
That's all the latest business news headlines for today
I'm Saijal Patel from CNBC.. hope you have a great night.
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