Asian Stock Markets

Asian markets continue their decline. In yesterday's Europe session Italian yields continued to rise in their latest bond auction sparking continued concern that the EU will be able to deal with the growing debt crisis. Japan quarterly business confidence survey, Tankan saw a larger drop than expected. The auto industry expressed concerns over the strong yen, playing a huge role in confidence levels. Crude fell $5.00 from yesterday's session after the OPEC meeting, Asian currencies fell against the USD. AUD/USD contuned its descent below parity testing the $0.9860 level, NZD followed suit with lows around $0.7460. The Shanghai Composite fell below 2,200 for the first time since Mar 2009 and extended its losses challenging the 2,180 level.

China HSBC Flash PMI Manufacturing gave a little bounce to the markets at 49.0 up from the final NOV reading of 48.0. China Min of Agriculture Han Changfu said that the bumper harvest helped to cool inflation and China can boost its output through greater efficiency. China Banking Regulatory Commission (CBRC) may introduce capital adequacy requirement in H2 of 2012; Lenders will have to raise CNY400B from capital markets.

RBA released its Quarterly Bulletin saying the latest data available to the Bank on shipments of Australian coal and iron ore to China (these are up to September) suggest that shipments have held up, though the weakening in iron ore prices over the past couple of weeks may be pointing to some softening ahead. Adjustment in consumer behavior has created a difficult trading environment for some businesses, coming as it has after a prolonged boom.

Speakers/Geopolitical/In the press

(CH) PBoC Gov Zhou: Increasing domestic consumption is key task; developing real economy is foundation of work in 2012

(JP) Japan Auto Association Head: Yen strength is beyond what auto makers can deal with; Govt needs to take steps

(EU) ECB's Noyer: Downgrade of France's AAA rating would not be justified, rating agencies seem to be making politically motivated decisions, rather than economic based; Not worried about French banking sector

(KS) State owned Korea Development Bank (KDB): Sees 2011 GDP 3.8% and 2012 GDP at 3.5%; Sees 2011 CPI at 4.3% and 2012 CPI at 3.4%

Korean press

(AU) HSBC Exec: Australian miners are looking to invoice in yuan and companies are increasing hedging efforts with A$

Equities

TWE.AU: CEO: Targeting demand for premium wines in BRIC countries, premium wine will be in short supply for some time

SNP: Sinopec and ENN Energy may have to increase their $2.2B bid for China Gas Holdings SCMP

Acer, 2353.TT: CEO: PC market recovery is likely to take place in H2 of 2012

NVLS: Halted; Lam enters merger agreement to acquire Novellus Systems in $3.3B All-Stock Transaction; Lam to buy back $1.6B in common stock (approx 34% of market cap); +20.1% after hours

PAY: Reports Q4 $0.53 v $0.51e, R$416M v $408Me; 0.6% after hours .