Asian Markets Update: January 18, 2012

(CN) CHINA DEC ACTUAL FOREIGN DIRECT INVESTMENT (FDI) Y/Y: -12.7% V -9.8% PRIOR; 2011 FDI: +9.7% to $116B (record high)

(CN) CHINA DEC NEW HOME PRICES DECREASE M/M IN 52 OF 70 CITIES V 49 CITIES PRIOR; Y/Y PRICES DECREASED IN 8 CITIES OUT OF 70 V 66 PRIOR

(AU) AUSTRALIA DEC NEW MOTOR VEHICLE SALES M/M: -2.9% V -0.6% PRIOR (7-month low and 2nd consecutive decline); Y/Y: -3.0% V +2.6% PRIOR (5-month low)

(AU) AUSTRALIA JAN WESTPAC CONSUMER CONFIDENCE M/M: +2.4% V -8.3% PRIOR; INDEX: 97.1 V 94.7 PRIOR

(KR) SOUTH KOREA DEC DEPARTMENT STORE SALES Y/Y: +11.0% V -0.5% PRIOR; DISCOUNT STORE SALES Y/Y: +3.7% V -0.5% PRIOR

(JP) JAPAN NOV FINAL INDUSTRIAL PRODUCTION M/M: -2.7% V -2.6% PRELIM; Y/Y: -4.2% V -4.0% PRELIM (6-month low); CAPACITY UTILIZATION M/M: -2.9% V 4.1% PRELIM

Markets Snapshot (as of 05:30GMT)

Nikkei225 +1.2%

S&P/ASX +0.1%

Kospi -0.3%

Taiwan Taiex +0.2%

Singapore Straits Times Index +0.1%

Shanghai Composite -0.3%

Hang Seng +0.2%

S&P Futures +0.3% at 1,292

Feb Gold unchanged at $1,655/oz

March Crude +0.6% at $101.27

Overview/Top Headlines

Asian equity markets traded mixed after yesterday's rally and ahead of Portugal debt sale later in the EU session. Concerns over Greece debt negotiations returns to the forefront with talks resuming Wednesday. PM Papademos said he will consider legislation that would force creditors to take losses on their holdings if no agreement can be reached. Today was the last day of trade in China before a 7-day break for the Lunar New Year, this will keep most traders on the sidelines with the anticipated thinning liquidity as other countries in the region join for shorter breaks to celebrate. There is still heavy chatter that there could be up to a 50bps rate cut to the RRR heading into the holiday as this is typically a cash crunch time for banks with demand soaring for the holiday.

China Business News reported today that the PBoC has set a lower RRR for banks in Guizhou. All this caution held the euro steady around $1.2765, yen gained against the USD to ¥76.80, EUR/JPY stayed in a smaller range testing ¥97.85. Copper rose to $3.75, +0.5% and silver followed to $30.40. Spreads in Asia were pretty subdued with 10-yr JGBs mostly unchanged.

World Bank Updates 2012 GDP Forecasts cutting 2012 global GDP forecast to 2.5% from 3.6%, 2013 cut to 3.1% from 3.6%. Key comments included the EU crisis, weaker developing country growth could become reinforcing and cause an even sharper downturn. There is a risk of freezing up capital markets and a Lehman like crisis are contained at the moment but not impossible.

Speakers/Geopolitical/In the press

(CN) China Academy of Social Sciences (CASS): Sees 2012 GDP falling to 8.5% from 9.2% in 2011; Sees 2012 CPI at 3.6-4.0% - Chinese press

(CN) China Commerce Ministry Spokesperson Shen: China faced with severe foreign trade environment in Q1; Imports growth may continue to decelerate in Jan

(PH) Philippines Central Bank Gov Tetangco: Will adjust policy rate in Q1, will encourage investment; Can be accommodative on policy right now due to inflation

(AU) Westpac chief economist: Sees "ample scope for the RBA to go further given the benign outlook for inflation"; Expects next RBA meeting to produce another rate cut - Sydney Morning Herald

EUR/JPY: (JP) Japan Fin Min Azumi: It is difficult for Japan to intervene in the forex markets like Switzerland did, hard to draw a line in fx rates

Equities

Nanya Technology, 2408.TW: Reports Q4 Net loss NT$10.99B v loss NT$10Be

TSM: Reports Q4 Net profit NT$31.6B v NT$31.2Be

TM: Will add Sat shift at truck plant in San Antonio, TX in the US for the next 3-months to be able to boost dealer inventory which was depleted after the earthquake - financial press

LYC.AU: Raises mineral resource estimate at Mt Weld to 23.9M tons, +37% from prior estimate Sept 2010 - The Australian

BHP: Reports Q2 Iron Ore Production 41.1M tons v 39.6M q/q, +22% y/y; FY12 iron ore output will marginally exceed guidance

US Equities

RIMM: Samsung Electronics spokesperson: Not interested in buying RIMM and had never considered it - financial press; -5.6% afterhours

YHOO: Founder and former CEO Jerry Yang resigns effective immediately; +2.7% afterhours

CE: Lowers FY11 EPS to $4.45 v $4.71e (prior guidance $4.60-4.70); Sees FY12 EPS above average consensus estimates of $4.70; flat afterhours