Positive China Data Gives a Boost to the Markets; S&P Strikes Again Cutting EFSF's Rating

(CN) CHINA Q4 REAL GDP Q/Q: 2.0% V 2.3% PRIOR; Y/Y: 8.9% V 8.7%E (lowest since Q2 of 2009); 2011 GDP Y/Y: 9.2% V 10.4% IN 2010

(CN) CHINA DEC INDUSTRIAL PRODUCTION Y/Y: 12.8% V 12.3%E (first rise in 3 month); M/M: +1.1%; YTD Y/Y: 13.9% V 13.8%E

(CN) CHINA DEC RETAIL SALES Y/Y: 18.1% V 17.2%E (1-year high); M/M: +1.4%; YTD Y/Y: 17.1% V 17.0%E

(NZ) NEW ZEALAND Q4 NZIER BUSINESS OPINION SURVEY: 0 V 25 PRIOR

(CN) CHINA DEC FIXED ASSETS INVESTMENT URBAN Y/Y: 23.8% V 24.1%E (lowest since Feb 2008)

(JP) JAPAN CABINET OFFICE JAN MONTHLY ECONOMIC REPORT: KEEPS ECONOMIC ASSESSMENT UNCHANGED

(NZ) NEW ZEALAND DEC NON-RESIDENT BOND HOLDINGS: 59.1% V 60.2% PRIOR

(SG) SINGAPORE DEC ELECTRONIC EXPORTS Y/Y: -4.6% V 0.4%E; NON-OIL DOMESTIC EXPORTS M/M: 16.4% V 1.6%E; Y/Y: 9.0% V -1.2%E

(JP) JAPAN NOV TERTIARY INDUSTRY INDEX M/M: -0.8% V -0.4%E (8-month low)

(NZ) NEW ZEALAND DEC NZ CARD SPENDING TOTAL M/M: -0.2% V -0.2%E; RETAIL M/M: -0.3% V 0.2%E PRIOR

(JP) JAPAN DEC FINAL MACHINE TOOL ORDERS Y/Y: 17.4% V 17.4% PRELIM

Markets Snapshot (as of 05:30GMT)

Nikkei225 +0.9%

S&P/ASX +1.7%

Kospi +1.5%

Taiwan Taiex +1.7%

Singapore Straits Times Index +1.2%

Shanghai Composite +2.5%

Hang Seng +2.3%

S&P Futures +0.6% at 1,297

Feb Gold +1.7% at $1,659/oz

March Crude +1.7% at $100.33

Overview/Top Headlines

Asian equity markets traded cautiously to the upside ahead of key China Q4 GDP and Industrial production, the data was a bit stronger than expected pushing markets into high territory which eased some market fears that the EU debt crisis is brining global economic activity to a near halt. S&P cut EFSF AAA rating to AA+, however the markets were undeterred. The Greenback weakened against the majors and emerging market currencies. Euro gained 0.5% to $1.2730, yen gained 0.2% against the dollar to ¥76.67, EUR/JPY gained 0.4% to ¥97.60. USD/KRW lost 0.5% to KRW1,145. A$ hit a 2-month high above $1.0390 on strong Chinese data. Silver and copper both gained nearly 3% testing, $30.40 and $3.75 respectively.

China National Bureau of Statistics Chief Ma said in terms of the domestic and international situation, 2012 will be a year of complexity and challenges so China should be fully prepared. Due to macroeconomic controls China Q4 GDP fell to 8.9% with 2011 GDP at 9.2%, the same as 2009, which was the slowest expansion since 2002. Mas said that local govt debt levels and property market will not be a problem in 2012 and that a mild moderation in GDP is desirable. Ma went on to say that external demand is not the biggest risk to China, balancing inflation, growth and reform is the biggest challenge. Exporters were stronger in Korea and Taiwan, Samsung Electronics, +1%, Acer +2% and Hon Hai +3.5% as fears subsided about a hard landing in China.

S&P said that the EFSF's obligations are no longer fully supported either by guarantees from EFSF members rated 'AAA' by Standard & Poor's, or by 'AAA' rated securities. We consider that credit enhancements sufficient to offset what we view as the reduced creditworthiness of guarantors are currently not in place.

Speakers/Geopolitical/In the press

(KR) Bank of Korea (BoK) Gov Kim: Must proceed cautiously on policy; discrepancy with neutral rate cannot last long, interest rates are still accommodative

EUR/JPY: (JP) Japan Fin Min Azumi: Reiterates that Japan is closely watching forex rates; Need to closely look at moves before deciding where to intervene in EUR/JPY

(US) Fed's Plosser: Would like to see interest rate tightening before mid-2013 target set by the FOMC

(JP) According to Japan MoF, increasing consumption tax to 10% from current 5% would reduce homebuyers' purchasing capacity by another ¥600B - Nikkei News

USD/CNY: (HK) HKMA raising limit for CNY open positions to 20% from 10% - financial press

Equities

Tokyo Electric Power, 9501.JP: Confirms will increase corporate electricity rates by 18.1%

WES.AU: Reports Q2 Curragh coal output 2.21M tons, -1.2% q/q

RIO: Reports Q4 global iron ore output 65M tons v 64M tons q/q; 2011 iron ore production 245M tons v 240M ton target; Shipments 239M tons

LG Display, 034220.KR: To take a loan for KRW1.0T instead of offering shares - Korean press

FMG.AU: Reports Q2 Iron Ore Production 16.0M tons v 11.0M tons y/y; Shipped 14.4M tons v 9.9M tons y/y

PDN.AU: Reports Q2 uranium production 1.82M pounds, +47% q/q ; Rev $69.9M

RRD: Guides FY11 Rev $10.6B v $10.6Be; Op margin 6.6-6.7%