Asian Stocks Gain; S.Korea Surprises with Rate Hike

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.

Happy Friday!

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 as we wrap up the trading week.

Stocks in the region still on a winning streak picking up from Dow gains overnight.

The trading momentum was boosted further by Korea's surprise interest rate decision and positive corporate developments in the region.

Asian markets ended the week up, with the Nikkei chalking up its best week in four months. Market analysts say optimism is creeping back as equity markets bounce back from oversold territory.

Richard Clarida, Global Strategic Advisor at Pimco shares the positive outlook and tells us his investment strategy.

(SOT) Richard Clarida, Global Strategic Advisor, Pimco:

"Time for what we think of as deep value investing doing bottoms-up analysis on companies. It's probably not a good idea to be hanging, time to be hugging indexes, but we think deep value investing with the global focuses is a good opportunity now... Broadly we are looking globally in a range of industries, financials, pharmaceuticals, companies with a compelling track record."

We have more of Asian markets closing numbers in a while.

But first, the surprise move by Bank of Korea.

The BoK raised interest rates for the first time since the outbreak of the financial crisis, catching markets off-guard.

The central bank raised the 7-day re-purchase rate by 25 basis points to 2.25 percent, as concerns about domestic inflation risks outweigh doubts about the global economic recovery.

The central bank is expecting consumer inflation to top 3 percent next year.

South Korea's currency gained against the greenback, touching this month's high after the surprise rate decision, it has retreated since.

Our next guest , Dariusz Kowalczyk from Credit Agricole, is expecting more weakness for the Korean won.

(SOT) Dariusz Kowalczyk, Senior Economist & Strategist, Credit Agricole:

"Despite the fact that Korea begun its rate tightening cycle, we believe that the third quarter will be negative for the currency, because interest rate differentials will not be a key driver in the FX market in the months to come. On the other hand, investors will trade on risk aversion, and we think that risk aversion will increase in the third quarter as data from around the world will show a lot of momentum in global recovery."

South Korea joins other leading Group of 20 economies -- Australia, Canada, Brazil and India -- in raising borrowing costs to gradually return policies to pre-crisis settings.

Within the region, Malaysia and Taiwan had also lifted borrowing costs recently, all pointing to a growing confidence that economic rebounds across Asia will remain resilient to Europe's debt crisis.

PK Basu of Daiwa Capital Markets on Asia's economic health.

(SOT) PK Basu, Managing Director & Chief Economist, Daiwa Capital Markets:

''In general, I think we have a situation where Asia is growing at normal pace now, most of Asia this year will grow faster, I think, than at any time in 20 years. So we have spectacular export growth, strong GDP recoveries, with domestic demand growing across the board in almost every economy, particularly Korea, Singapore, Taiwan, as well as for China, India, and Indonesia. So we've got a strong recovery. Under those circumstances, you would expect interest rates to be at more normalized levels."

And now for more of the closing numbers of Asian markets.

As we said earlier Asian stocks ending the trading week higher.

In Japan, the benchmark Nikkei 225 closed up half a percentage point .

Canon gained after a report that the company may post almost three-fold jump in its first-half operating profit.

Bucking the trend in Japan today, Fast Retailing - Asia's biggest clothing retailer, sank after cutting its full-year net income target.

Another laggard, Inpex - Japan's top oil and gas explorer, tumbled 12.8 percent, hitting an all time low after the company announced its plan to raise capital via a global share offering.

Meantime, South Korea's KOSPI extended gains, finishing higher at more than 1.4 percent.

In Australia, the S&P/ASX 200 was up more than seven-tenths of a percent.

Santos, Australia's third largest oil and gas producer, saw it shares climb to its highest in 19 months after reports that Royal Dutch Shell may buy a stake in its gas project in Queensland.

In Hong Kong, Li & Fung the biggest supplier to retailers including Wal-Mart Stores also rose to its highest level the in five months after announcing acquisitions and agreements that may generate $1 billion in sales next year.

India's stocks have also been gaining strength with the benchmark index set for its highest level in three weeks.

CNBC-TV 18 reporter, Reema Tendulkar on what to expect from the Indian markets next week.

Thanks so much.

Next week is definitely going to be a very important week because we have to navigate through some very important macroeconomic numbers which would be coming out, and also a lot of influential heavyweights will be announcing their quarter one results.

Just to map out what we are expecting next week.

Starting with Monday, we will be having the IIP numbers, which will be out live for the month of May. Analysts are currently pegging it at 16.1 percent, worse than the 17.6 percent that it did in April.

But April was a spectacular month, so on a month-to-month basis, perhaps there may be a bit of a decline, but at 16 percent I think we will be happy. The broad range that all the people we spoke to, the economists are expecting anywhere between 15 to about 17 percent.

Tuesday, it's going to be very important, because officially the earnings season gets kicked off with the bellwether in the IT space coming out in forces with their numbers. Just broadly, the expectations from the IT space is going to be that on a sequential basis, there will be an improvement of about 4 to 5 percent coming in terms of their turnover. But the bottomline may not see a commensurate improvement, because of all the currency volatility and the risk over there. And also because the wage hikes which have been undertaken.

But Tuesday, watch out for IT, and brush out for four seasons, that would set the tone for the entire industry going forward.

Wednesday, again, another important economic number. We'll be having the inflation number, which will be coming out for the month of June. We have been coming out with the 10 plus percentage inflation number for the past few months, and the expectation this time around also is that it's going to cross the 10 percent mark.

And also we had the rate, we had a few price hikes, which was undertaken by the government, and that is expected to add nearly about a percent, that's the inflation impact of the rate hike. So in the month of June, we are expecting a 10.74 percent versus an actual figure of 10.16 percent, this is on a month-on-month comparison.

Thursday, it's probably going to be dedicated to the entire financial space, because we have two in the financial space coming out with their numbers. One is Axis Bank, and the other one is LIC Housing Finance. But TCS will also be coming out with their numbers, the second from the entire IT space.

On Friday, no Nifty heavyweight will be announcing their numbers, but watch out for Chambal Fertilizer, because that's the one which will be coming out with the numbers in the mid-cap space. This is a fertilizer company, so keep your eye out on that. So lots to watch out for, it's definitely going to be a very interesting trading week for our markets in India.

With that, it's back to you.

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

On Monday, we have a special update on the Japan upper house elections taking place Sunday.

Have a good evening and a great weekend ahead!

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