Fed's Downbeat Outlook Weighs on Asian Markets

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.

Stocks in the region were mixed with many markets spending the day in negative territory giving up their recent gains after U.S. Federal Reserve said growth slowed in some areas in the world's largest economy.

The Fed's beige book report showed regional economic activity was rising but at a more subdued rate.

Overnight data also showed durable goods orders fell 1 percent in June.

That's the second straight monthly drop and the largest decline since last August.

(SOT) Vasu Menon, VP, Welath Management Singapore, OCBC Bank:

“I think as we go into the second half, growth will slowdown, I think that's expected, well, the markets are adjusting to it slowly, as the markets adjust to it, and once they've adjusted to it, forms a platform for the market to perhaps hit higher. Because if you look at valuations in the market right now, this is not a market you want to sell into, because you know, valuations are low, even single digits in some cases. This is not like the technology boom of 1999-2000, when stocks were trading at 100 times p/e ratio. By and large, even the developed markets, even Europe is trading at about 11 times p/e ratio, so in that sense, I think there is an argument for a leap of faith there."

We take a closer look at how Asian markets traded today.

Markets were mostly in negative territory giving up its recent gains.

Here's a look at how major markets stacked up at the end of trading day.

In Japan the benchmark Nikkei 225 closed lower 0.6 percent after hitting a 2-week high yesterday.

Panasonic shares tumbled on news that it's making an offer for the shares it does not already own in Sanyo and Panasonic Electric Works.

The company says it will pay 138 yen for Sanyo Electric share and 1,110 yen for Panasonic Electric shares.

It intends to raise 500 billion yen in new share offerings to finance the acquisitions.

Analysts say the deal is aimed at strengthening the Panasonic's grip on the two subsidiaries. They hold a big role in Panasonic's strategy of shifting its focus to energy and environment-related business.

(SOT) Kota Ezawa, Fundamental Analyst, Japanese Equity Research, Citi Investment Research & Analysis:

“So far I have a buy rating on the company, based on mid to long-term high potential of the growth scenario related to the eco-related products, such as home appliances or energy-related products. The company may announce TOB or equity finance later today, along with newspaper reports this morning. It could be a negative impact for very short-term share price trend, I suspect, but still it'd be a kind of fundamental recovery scenario on a mid to long-term basis."

Meantime, South Korea's KOSPI finished 0.15 percent lower.

Samsung Electronics, which gets a fifth of its revenue in America, was one of the biggest losers snapping its 7-day gains.

Further south In Australia, stocks managed to claw back gains after spending most of the day in negative territory dragged down by the financial sector.

The S&P ASX 200 closed slightly up at 0.13 percent.

Meanwhile, on the corporate front, Rio Tinto is again in the limelight.

The market's waiting for Chinese aluminum giant, Chinalco to announce a deal with Rio Tinto, with speculation it could be transferring its interest in the Simandou venture to its listed Chalco unit.

The 2 companies had earlier signed a memorandum of understanding in March with Chinalco promising $1.4 billion in return for 45% of the project.

Our next guest Andre Julian thinks it's a win-win situation for both.

(SOT) Andre Julian, Chief Financial Officer, OpVest:

"The common interest right now is money and untapped resources in New Guinea, and I think you have a $4.4 billion deal from what I understand on the table, and I think it all comes down to the almighty dollar. It’s a perfect opportunity right now, aluminum prices have been depressed, steel prices have been going up, and oil prices have been going up, and obviously Rio Tinto has some issues in Australia with mining tax that they have to resolve. But you know, at the end, what it comes down to is that the company wants to take a bigger share of the market, and join forces in a place where there're really some untapped resources that they have opportunity to build."

Hyundai Motor, South Korea's top carmaker has posted a record profit beating market estimates.

Second quarter net profit saw a 71-percent rise hitting $1.17 billion.

Healthy demand in the United States and China helped boost numbers. Better utilization rates also helped offset slower domestic demand and the impact of the stronger won.

Despite the good showing, the automaker is not about to pop the champagne, instead has decided to gear up for a new challenge, reducing the number of its platforms.

SBS CNBC's Hyunmo Ahn reports.

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The two most popular mid-class sedans in South Korea currently are Hyundai Motor's YF Sonata and Kia Motor's K5. Unknown to some though are how similar these two rivals actually are.

These two cash cows of Hyundai and Kia look very different on the outside, but underneath and under the hood they share a lot in common. That's because they are both built off the same platform.

A car platform usually refers to the basic underpinnings that comprise a vehicle, everything from front and rear axles to the fuel tank. And for automakers, platforms normally take up around 60~70% of total development costs. From around the 1980s. global carmakers have been moving to slash these costs through sharing and integrating platforms.

Now Hyundai wants to join those ranks with a plan that was first unveiled at an investor road show in London in June.

(SOT/Voice of Translator) Hang-koo Lee, Director, Korea Institute for Industrial Economics & Trade:

“At present, Hyundai produces 32 models based on 18 different platforms. But by 2013, it plans to roll out around 40 different models on just 6 platforms; each for small, medium, large, SUV, coupe and commercial vehicles. This will significantly reduce costs, shorten the development period, and improve productivity, ultimately boosting its profitability.”

The cost benefits are obvious but platform consolidation can also mean less variety and it remains to be seen If Hyundai can translate this new direction into sales.

(SOT/ Voice of Translator)Young-ho Park, Senior Analyst, Daewoo Securities:

‘The next step for Hyundai is to develop a wider range of differentiated models that fit local markets because sometimes, platform integration can lead to cookie cutter models.”

While Hyundai has been making inroads overseas, it's starting to lose its grip at home hurt by foreign competitors. An expected Free Trade Agreement with the U-S is only expected to accelerate this market share loss. And consumers are hoping platform integration will be reflected in price tags while at the same time not compromising on design.

Hyunmo Ahn, SBS CNBC, Seoul

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And finally, a rare luxury residential site in Hong Kong's upmarket peak district has been sold at a government auction for $1.3 billion, higher than expected although some analysts were anticipating an even steeper price.

Hong Kong's privately owned Nan Fung group won the auction, which took the title of the territory's third most expensive land sale.

One company that isn't looking to buy sites in Hong Kong is Hang Lung Properties.

(SOT) Ronnie Chan, Chairman, Hang Lung Properties:

We look at eastern seaboard, middle part western part, we are very specific in what we want, pricing is not the most important to us, because after all, land prices are only 15-20% of our total project costs, which is a lot lower than for most people, so really it's not that. It is really we want places that we think are really world-class locations, big enough with terms, with development terms that we can accept.”

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC. Thank you for watching.

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