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Japan's Growth Slows in Q2, Exports Slacken

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 at the start of the trading week.

More signs of a slow down in Japan, as growth data comes in below forecast for the second quarter on declining export growth and flat consumption.

Gross domestic product rose an annualized 0.4 percent in the three months ended June 30, economists were expecting a 2.3 percent gain.

The slowdown is a big negative for Japan who's also battling with deflation.

Despite signs of slowdown in the nation's growth, Japan's economy ministry say it's too early to introduce new stimulus measures

Markets are now concern that a further slow down is in sight, weighed down by a stronger yen which hit 15 year highs recently.

(SOT) Jesper Koll, MD & Head of Japanese Equity Research, JPMorgan Securities Japan:

"You're going to have a little bit of downward pressure on exports just because of the cyclical slowdown in the global economy and the Yen's strength. But more importantly, and this is where the housing data was disappointing, you know, the idea was that housing is actually gaining some traction, as a result of housing coming through, you're going to get some durable goods consumption pick up in the following quarters, which is just natural you buy a house and you put in the refrigerator, and you know now that outlook is likely to have to be postponed."

The weak economic data from Japan dampened the sentiment for the benchmark Nikkei 225.

It closed down by 0.6 percent led down by, the exporters.

Meantime, South Korea's KOSPI finished lower by almost 0.2 percent led lower by declines in technology and banking sectors.

In Australia, although the S&P ASX 200 ended half a percent lower, there were some bright spots on the Australian markets.

Grains firm AWB soared after Canadian fertilizer maker Agrium made a $1.1 billion dollar bid for the company, trumping an existing offer from GrainCorp.

BlueScope Steel gained after returning to profit whilst Leighton Holdings jumped, thanks to a 39 percent rise in the full-year profit and positive guidance.

(SOT) Wal King, CEO, Leighton Holdings:

We are in the construction business, obviously it's a risk business, and the business has a large momentum going forward in terms of the work in hand and the future, "I'm certainly not of the view that the housing industry is way over valued, there's lots of articles on that. we only have about 350 million dollars, about 8 billions of assets invested in property, and our perception is that commercial property is going to recover sometime later this year.”

In Greater China, mainland stocks rose, sending the benchmark index to its biggest two-day gain this month.

Our next guest however, thinks there's still more downside for Chinese property counters.

(SOT) Joseph Zeng, Managing Director & Head of Hong Kong Office, Greenwoods Asset Management:

“To be honest we don't think the market, the property market has bottomed yet, so the property price should have some more room to go down. but that being said, we see value in some property-related sectors like property service sectors, we can share the stocks on a stock which is quite strong in the property service sector later on."

Food and Beverage stocks have come under pressure with the recent surge in soft commodity prices.

But as SBS CNBC'S Rhie Young Lim reports, South Korean players could be especially vulnerable.

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Korean Food and Beverage names are taking a bigger bite into the global pie, especially in Asia. Orion known for its signature "choco pies," is now Vietnam's second biggest snack-maker and expects to overtake the local competitor by next year. China of course has been its sweet spot sales skyrocketing by 140 fold since its debut in that market 13 years ago. Meanwhile, Hite-Jinro's Korean vodka has been a top seller in Japan.

But local F&B makers are now facing mounting concerns of 'agflation’ as wheat and other grain prices surge. It's an especially a big problem for Korean F&B companies who import a majority of their grain needs.

(SOT) Kim Byung-Ryul, Professor, Korea Rural Economic Institute:

"Apart from rice, we import almost all of our agricultural products. Our self sufficiency rate for wheat and corn is less than 1% meaning we import almost 99% of them. We buy 140,000 tons of agricultural products every year since our overall dependency rate is only 26%."

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And as for the earnings prospects, climbing prices of these agricultural products will only start weighing in during the fourth quarter. According to experts, it usually takes 4 to 6 months for the spot price of a grain to be incorporated into the actual food product. But others feel rising raw materials costs won't have too big an impact.

(SOT) Ji Gi-Chang, Analyst, NH Investment & Securities:

"We still have an overweight position on some of the F&B players like Orion and Hite. We do have to keep our eyes on barley price that has recently edged up, but Hite remains stable until April next year because it purchases grain on yearly basis. Orion will continue to benefit from its overseas business."

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There's also the won factor. The local currency has been edging up, expected to help the importers.

(SOT) Kim Byung-Ryul, Professor, Korea Rural Economic Institute:

"The won has been rising against other currencies. But really, it's a matter of price for the importers and if raw materials spike up at rate of some 50 and 60 percent each month, the won won't be able to offset that."

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Experts agree agriculture prices will always be a factor and if that's the way the cookie crumbles, F&B players will have to soon find a way to hedge against the risks or raise prices. SBS-CNBC. Rhie-Young Lim.

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Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

Have a good week ahead!

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