×

Australia Holds Rates at 4.5%, Upbeat on Asia

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hello to our viewers all over China.

You're watching “Asia Market Daily”, co-produced by CCTV Business Channel and CNBC, first in business worldwide.

I am Saijal Patel and here are the top stories across Asia today.

Asian markets had their biggest gain in two weeks today, as investors bet equities had become cheaper relative to earnings prospects.

During the trading day, stocks in Asia recouped early losses, bouncing back from month lows,

In Japan the benchmark Nikkei 225 gained almost eight-tenths of a percent as a rally in China shares eased concerns that a stronger yen will erode manufacturers' profits.

Exporters rose — with Fanuc and TDK gaining in today's trade.

ABC Mart bucked the trend with a decline after reporting a fall in some retail sales.

Meantime, South Korea's KOSPI finished higher by more than half a percent.

South Korea's LG Electronics shares jumped after it unveiled a new Android-based smartphone model.

In Australia, the S&P ASX 200 gained 1.16 percent today.

Macarthur Coal shares up after lifting its annual profit guidance by 10 percent.

Meanwhile, the watered down mining tax fails to placate Rio Tinto. The miner says the tax is still among the world's highest and that it will re-examine expansion plans in the Pilberra region.

Despite the positive showing on financial markets, Emil Wolter, Head of Regional Strategy, Asian Equities at RBS cautions that the macro economic climate is still a worry.

(SOT) Emil Wolter, Head of Regional Strategy, Asian Equities, RBS:

“Generally speaking, I would say that the longer view and the bigger picture is that the world is now slowing down. All year, we've been faced with tighter liquidity conditions and rising cost of capital, and now it's become increasingly clear that May was the inflexion point for economic activity, and so generally speaking, we've been advising clients to reduce their risk profile, to get out of cyclical names in general, and to emphasize more defensive elements to their portfolio.”

Hong Kong stocks also gained today.

Chaowei Power and Sinoref make their trading debut tomorrow.

Vicks Poon, Head of Investment Advisory Fubon Bank on what to expect.

(SOT) Vicks Poon, Head of Investment Advisory, Fubon Bank:

“Those smaller IPOs, those that are listed this week, and the previous this time has been you know, largely diminished, so i think the overall performance of these newly-listed stocks should not be too surprisingly positive. so i think it will be likely sluggish to slightly lower.”

The Agriculture Bank of China, the nation's largest lender by customers, is also in the midst of a 20.1 billion initial public offering with a dual listing in Shanghai and Hong Kong.

There are reports of strong institutional response for the AgBank shares and it's expected to set record as the world's largest initial public offering ever.

Aaron Boesky, CEO of Marco Polo Investments on the IPO's larger impact.

(SOT) Aaron Boesky, Founder and CEO, Marco Polo Investments:

“In the case of these banks raising capital, this capital goes into the banks, it stock up to a 12% reserve ratio essentially, and then re-lent out at about a 9 times gearing, so for 20 billion dollars going into the bank, we're going to see 150 billion dollars shoot back into the economy, of which a decent chunk will flow into stocks, and real estate, and general business activity, so I think it's a boon for the economy. It takes a month to wash in, but it should do well.”

The Reserve Bank of Australia's left its benchmark interest rate unchanged for a second month in a row.

CNBC's Matthew Taylor with the details from Sydney Australia. Matthew?

Thanks Saijal. Well the Reserve Bank did as the market was expecting and kept interest rates unchanged for the second straight month at 4.5 percent but it does look like we could see more rate hikes this year.

While the Reserve Bank pointed to concerns in the international arena, it remains fixated on cooling growth and inflation domestically which could pose a problem in the near term.

While the central bank said policy setting was appropriate — strong terms of trade and a pick up in commodity prices coupled with persistently high inflation — could force the Reserve Bank's hand.

(SOT) Jonathon Cavenagh, Currency Strategist, Westpac:

“If we see core inflation a little bit below point 8 percent, then they can probably stay on hold for a little bit longer but anything north of point 9 percent then the RBA will be quite concerned about the inflation outlook, considering their fairly upbeat growth forecasts, so from that perspective I think you will see them tighten policy above what they call a normal stance.”

In some good news for the Australia economy, the RBA noted the recent spike in house prices was moderating.

But it is also keeping a close eye on international developments saying that there are indications growth in China is slowing, and growth in the US jobs market is sluggish.

It's also watching the prospects for growth in Europe, which it says remain uncertain.

So Saijal, we will be waiting on key inflation numbers due out later this month, which will provide a further insight into just how the central bank will manage policy going forward. Back to you.

The European Union will be stress testing their banks to boost confidence in the sector, which has been battered by doubts over its health.

EU economy commissioner, Olli Rehn says stress testing of banks will include the criteria of sovereign debt shock and countries could turn to the 500 billion euro safety net as a backup.

According to Reuters, the European Central Bank President Jean-Claude Trichet is planning to meet with Europe's top banks to discuss the test results in a couple of weeks.

Sean Callow, Senior Currency Strategist with Westpac Bank on the impact of on financial markets.

(SOT) Sean Callow, Senior Currency Strategist, Westpac Bank:

“No, nothing is going to solve the sovereign debt issue short-term, but for the markets at least, there're those concerns being pushed till a bit further down the track, so while we still think there's a pretty decent probability further out the sovereign debt, particularly Greece may end up restructuring, it's not really the prime focus at the moment, so for the time being, it's a reasonably encouraging response the ECB tender last week, and the Spanish bonds auction overall have cooled things off a bit.”

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

All Rights Reserved. A Division of NBC Universal.