Asia Climbs on Wall Street's Rally, RBA Holds Rates

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.

No surprises from Australia.

As widely expected, the Reserve Bank of Australia has decided to keep its key cash rate steady at its monetary policy meeting today.

CNBC's Oriel Morrison is all over the story. Oriel?

Yes, Reserve Bank of Australia left interest rates on hold at 4.5 percent today, it was a move that was widely expected by economist given inflation in Australia has moderated in the wake of 6 previous rate hikes, and of course one that came to some relief to PM Julia Gillard who is struggling in the polls ahead of a August 21 election in Australia.

The central bank lifted rates by 150 basis points between October and May and activity as you would expect has moderated in response to those hikes. The central bank statement has a slightly dovish tone, also noted that lending rates are around average levels of the past decade, growth close to trend and uncertainty remains in the global economy, still Chris Loong from State street told us that rate rises should still be on the Horizon.

(SOT) Chris Loong, Head of Currency and Asset Allocation, State Street Global Advisors:

“I think its a bit of a reminder that even though the pace may be cooling domestically with inflation at least in the last reading there's still quiet a lot of activity out there and with the global economy coming through and continuing to recover, that its not a done deal that they won't tighten again later this year.”

And of cause analyst say that inflation will be a key trigger for any future rate rises as will that stronger than expected growth from China and on the global front the RBA says growth in China is moderating to a more sustainable rate. The European outlook is uncertain and US growth may be lack luster in the second half. Back over to you Saijal.

Thanks, CNBC's Oriel Morrison.

Well at the end of Sydney's trade, the S&P ASX 200 closed up 0.7 percent.

Turning now to the other markets, Asian stocks are mostly higher with financials and commodity plays on the rise.

Part of this is because of a sharp rise on Wall Street overnight, when investors rode a wave of strong manufacturing-sector data.

Stephen Wood of Russell Investments gives his take on the U.S. rally.

(SOT) Stephen Wood, Chief Market Strategist, North America, Russell Investments:

“You are getting a grinding economic recovery, its global but its certainly not brisk, and the market I think for the first two quarters plus or minus, was trading pretty significantly, as sentiment and forecast, and I think over the last six weeks or so the market has be trading more on the basis of fundamentals.”

Let's break down the action here in Asia.

Japan's benchmark Nikkei 225 gained 1.3-percent this Tuesday.

Trading house Mitsui and Company is in focus, after the company said it is carefully studying a 480-million-dollar bill from BP.

But it has yet to decide on whether it will shoulder any clean-up costs.

Mitsui owns a 10-percent stake in BP's ruptured oil-well in the Gulf of Mexico.

Asahi Breweries also rose after the beer maker said it's considering selling shares in its South Korean unit, Haitai Beverage. Asahi also plans to expand its cooperation with the Lotte Group.

Meantime, South Korea's KOSPI tacked-on gains of half-a-percent.

Those blockbuster numbers from HSBC helped Hong Kong stocks touch a three-month high.

China shares, meantime, closed down 1.7-percent, off a two-and-a-half-month high.

Part of the reason was on increasing supply concerns, after GF Securities announced plans for a share-placement.

In other news, China Everbright Bank has reportedly priced its Shanghai IPO at between 3 and 3.20-yuan apiece.

This would allow the lender to raise as much as 2.9-billion dollars before an over-allotment of shares. Sources say the price-range represents 1.5 to 1.6-times Everbright's forecast 2010 book-value.

The Chinese lender will take subscriptions from investors from August 9th, and aims to list on the Shanghai Stock Exchange on August 18th.

Everbright follows in the footsteps of other lenders such as Agricultural Bank of China, in seeking to replenish capital.

Meanwhile, China Construction Bank is reportedly planning to sell 11-billion dollars worth of shares in both Shanghai and Hong Kong.

The share sale could happen at the start of the fourth quarter.

According to Reuters sources, the lender has already received regulatory approval for the share offering.

And, it's a done deal.

China's Geely has finally completed its purchase of Ford's Swedish unit, Volvo.

Zhejian Geely, parent of Hongkong-listed Geely Automobile Holdings, said it paid about 1.3-billion dollars in cash and issued a 200-million dollar note to Ford.

Volvo's new Chairman, Li Shufu, says he wants the group to compete with BMW and Mercedes-Benz in the high-end market, especially in China.

Geely's Vice President Freeman Shen agreed.

(SOT) Freeman Shen, Vice President, Geely:

“When you talk about the Chinese market growing it's not only in the mass car market but also all the segments’ including premium car market segment. So we believe our knowledge and resources in China will support Volvo’s growth in that particular market segment.”

Meantime, growth data is looking positive on both sides of the Atlantic.

That's helping alleviate fears of a double-dip. But we need more evidence to support any trend.

The U.S. ISM manufacturing index came in at 55.5 in July, versus 56.2 in June. But it beat consensus-forecasts of 54.2.

It also remained well above the boom-bust level of 50.

In fact the manufacturing sector grew for the 12th straight month in July although the growth-rate was the slowest in 2010. Meanwhile, Eurozone factory PMI pushed further above the 50-mark, which separates growth from contraction.

The index rose to 56.7 in July from 55.6 in June, led by growth in Germany and Italy.

But growth within the Eurozone is uneven.

French manufacturing growth slowed to its weakest in 10 months. HSBC's PMI data showed the first contraction in manufacturing activity in 16 months. The headline index fell below the 50 mark to 49.4 in July That's from 50.4 in June.

This suggests the government's measures to rein-in property speculation and slow bank lending are starting to gain traction. By contrast, you'll remember that China's official government data, released yesterday, showed PMI was in expansionary territory of over 50.

But that marks a slowdown from June's reading of 51.2 in July, versus 52.1 in June.

It's worth noting though that the two indexes do frequently diverge.

China strategist Michael Kurtz of Macquarie Securities sums-up what he thinks is the reason for the decline.

(SOT) Michael Kurtz, China Strategist, Macquarie Securities:

“I really think a lot of this is just brought about by inventory draw down China we're not so much seeing the end of the China growth story, as we're just seeing an according effect as some of the inventory that was build up in late 2009, and early 2010, were worked off and the underlying growth story looked reasonably intact lets keep in mind that for example property sales picked up in July steel prices are starting to come back as well, which is certainly by no means a sign that rails are starting to come off.”

And that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

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