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Asian Markets Lower on Worries over U.S. Economy

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

A good Monday 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.

The weekend's come and gone but Wall Street's Friday woes still leaving its mark on Asia stocks today.

Weak consumer sentiment data and earnings from the likes of General Electric, Citigroup and bank of America led investors to a sell-off.

The S&P 500 failing to hold onto its 8 percent gains over the past 2 weeks.

JP Morgan Asset Management says, caution still remains the name of the game.

(SOT) Geoff Lewis, Head of Investment Services, J.P. Morgan Asset Management:

“Tactically we're somewhat underweight equities in global balance portfolios but we don't see a lot of long term value in government bonds either so I think a lot of eyes are on this earning season, but to us, probably the bigger question mark now is for earnings of 2011 where global consensus is looking for 19-20% year-on-year increase, and the momentum figure seems to be turning down some region, so I think probably this quarter's earnings will be okay. It’s more a question now if growth does slow, if there are strong headwinds going into 2011, are those forecasts for 2011 now too optimistic?”

Here's the picture in Asia.

Japan's closed for Marine Day holiday.

Australia ended down 1.5 percent, despite the nation's largest buyout deal in 3 years being inked.

Healthscope shares jumped 11 percent after US private equity firms TPG and Carlyle pipped the competition with a $1.7 billion dollar offer.

Healthscope owns 15 percent of the private hospital market.

Bargain hunting kicking in South Korea after early losses. The KOSPI ended the day, down 0.4 percent.

Hong Kong shares also falling today, in line with the rest of Asia.

China markets however bucking the trend to eke out some gains.

Investors have since moved on from last week's mega listing of the agricultural bank of china.

Jim Antos of Mizuho Securities Asia explains why banking shares failed to benefit from one of the largest IPOs of all time.

(SOT) Jim Antos, Bank Analyst, Mizuho Securities, Asia:

“This does not imply anything for other bank shares going forward. This is not dawn of a new day of great confidence in the banking sector. That's actually the problem. We’re heading for a possible double dip recession in Europe and the US, that's never going to be good for bank shares.”

Over in Hong Kong, CNBC's Emily Chan caught up with Ag Bank's executive VP, Pan Gongsheng, while he was visiting, to talk about the bank's prospects.

(Package begins)

Chan: Raised 22 billion dollars. What plans do you have for these funds, and how much of it is going to be for covering

Gongsheng: It is fair to say that Agricultural Bank for China IPO has been very successful and we're going to use $22 dollars. Besides fees, other funds will be used to replenish our capital base. This capital base is going to be utilized to support our future business growth and expansion. With approval from the government we're also going to expand our business line to make our service more diversified and more comprehensive.

Chan: What kind of commitment do you have from your cornerstone investors? What’s going to happen when lock up period expires?

Gongsheng: In our arrangement we have more than 10 cornerstone investors who purchased ABC's shares and they are prestigious and renowned sovereign wealth funds and also financial institutions. They value very much ABC’s growth potential and investment value and they are going to be long-term shareholders. ABC has great potential and enjoys very good investment value.

Chan: In the near term, do you have any more plans to additional fund-raising?

Gongsheng: In the coming 3 years, we do not have additional plans to raise capital from the capital markets because for ABC, we have multiple sources to replenish our capital base, because we have very high profitability

Chan: What risk management controls do you have in place to have a strong grip on NPL's?

Gongsheng: For the past few years, we have greatly enhanced our risk control abilities and risk resistance capabilities, if you take a dynamic view, we have further readjusted our credit needs and credit structure, we have readjusted our loans to extend to different industries, different regions and different product lines.

(Package ends)

Banks aside, let's take a special look at the insurance sector.

Investors have been wondering what to make of insurance plays, after the insurance regulator said it plans to remove limits on interest rates for certain life products.

That's all part of a plan to help the sector develop.

Remember last year, China launched $125 billion program to raise medical insurance coverage.

With an aging population and one of the highest household savings rates in the world... the demand for life products is expected to grow rapidly in China.

Right now, the sector is growing at 15 percent per annum.

Here's how the penetration rate for China insurers compares globally.

Taiwan has the biggest market at 13 percent while China only has a 2 percent market share.

But with rapid growth, analysts say China could overtake the US by as early as 2020.

Let's check in on PE ratios

Analysts say China insurers are trading at slightly higher levels compared to their European peers.

Prudential for example, trades at 6 times P/E, versus China Life's 17 time and Ping An's 21 times.

China life, of course, is the number one player in China with around 60 percent market share.

Even with regulatory uncertainty, analysts say insurers could pan out to be a good long-term play.

(SOT) Kenneth Yue, Senior Analyst, Insurance Research, CCB International Securities:

“I think there are 2 things we need to look at. One thing is for premium growth. I don't think there will be any significant impact on the Chinese insurance. For investment, obviously, because of this low interest rate environment, there will be continuous pressure, especially in the second half of the year for the Chinese insurers, but in the long-term, I mean, we know that the valuation of Chinese insurance are coming from the future value of their profit max. So the deregulation, if it's just going to be approved, the deregulation, the impact on the nonparticipating products will be minimal.”

Before we go, here's a look at what markets are on the lookout for in the week ahead

Tonight, more US housing data. Expectations are for a further slowdown, as public tax credits for buyers have now ended.

This Wednesday, US Fed Chairman gives his semiannual testimony to the Congress.

And on Friday - what everyone has been waiting for - stress test results from the European banks.

I'm Saijal Patel from CNBC and here's our market wrap for today.

See you tomorrow.

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