Quite a few interesting stories in Asia today. Before we get to Japan and the rising market there I really liked this tweet from @GerryS about Indonesia:
'For the FIRST time in Indo History, outgoing and incoming President walks together into Parliament for the Inauguration! THIS IS HISTORY!'
Given Indonesia's growing importance in Asia this is a noteworthy observation.
Now, back to Japan. A near 4% bounce in the Nikkei today although, as shown below, the retracing of recent losses is still relatively minimal.
Now part of this results from a new fall in the yen back to the 107s against the US dollar...
...but the real story was this one from Bloomberg:
The Government Pension Investment Fund will also boost its holdings of foreign bonds and stocks to about a combined 30 percent from 23 percent, while reducing domestic notes to the 40 percent level from 60 percent, the Nikkei reported on Oct. 18.
Investors are awaiting any word from the GPIF on its new allocations after a government-picked panel advised it to reduce bonds to boost returns. Takatoshi Ito, a member of the panel, said his personal recommendation is to increase the target for Japanese and foreign stocks to about 25 percent each and cut notes to around 35 percent.
Elsewhere, Moody's updated their iron ore views...and unsurprisingly they were negative/cautious...my personal view remains that stocks like BHP Billiton are opportunistic at prevailing (and I did buy just under two weeks ago).
The growing oversupply in the iron ore market is damaging for the sector and poses risks to the downside. We estimate over 300 million metric tons (MT) of new and expanded production will come on-stream over the next several years. In light of expectations for muted growth in global steel production for at least into 2016, the lack of equilibrium will continue to weigh negatively on prices and operating performance of iron ore producers.
As a result, we have revised our price sensitivity for iron ore for the period through 2016 to a range of $75MT – $85MT (62% Fe). Downward rating actions for iron ore producers could result as Moody’s reassesses the impact of a protracted pricing weakness.
Finally, amazing images from China of the air pollution which impacted the Beijing marathon:
The growing oversupply in the iron ore market is damaging for the sector and poses risks to the downside. We estimate over 300 million metric tons (MT) of new and expanded production will come on-stream over the next several years. In light of expectations for muted growth in global steel production for at least into 2016, the lack of equilibrium will continue to weigh negatively on prices and operating performance of iron ore producers.
As a result, we have revised our price sensitivity for iron ore for the period through 2016 to a range of $75MT – $85MT (62% Fe). Downward rating actions for iron ore producers could result as Moody’s reassesses the impact of a protracted pricing weakness.
Finally, amazing images from China of the air pollution which impacted the Beijing marathon:
A good graphic on the Chinese property market and 'ripple effects' too.
Chinese stocks remain opportunistic to me.
Final image is of life expectancy...surprising to see HK/China at the top given the air pollution noted above. First time I have not seen Japan at the top of such a regional table too.
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