BY ALEX FRANGOS

As the Euro Zone Flirts With Disaster, Asian Economies Stand at Varying Degrees of Preparedness

HONG KONG—Greek elections may have assuaged fears of a European financial contagion spreading to Asia, at least for the moment. But as troubles brew in Spain, where borrowing costs shot up again Tuesday, and as Greece faces more painful cuts to meet bailout targets by September, many wonder who in Asia is most exposed should Europe’s economy and financial system finally crack.

Lessons from the 2008 financial crisis show that while all of Asia tends to get hit when the world economy shudders, the severity differs depending on which countries have the biggest trade and financial linkages to the rest …

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By Dominic Lau TOKYO, June 21 (Reuters) – Japan’s Nikkei average broke above 8,800 for the first time in five weeks on Thursday, as sentiment was buoyed by a softer yen after the U.S. Federal Reserve held back from more aggressive stimulus steps to prop up the economy.

The benchmark Nikkei hit its highest closing level since May
17 and has recovered 7 percent from a six-month low on June 4.

Shrugging off a survey showing China’s vast manufacturing sector slowing for the eighth straight month, the Nikkei rose 0.8 percent to 8,824.07, driven by exporters, such as Honda Motor Co Ltd, up 3.5 percent, and Canon Inc, adding 1.4 percent. The Fed disappointed some investors by delivering only a limited expansion of monetary stimulus on Wednesday. It extended its “Operation Twist” beyond its original June expiration to the end of the year to boost the flagging U.S. recovery. It also cut its GDP growth estimates for the year.

“The fact they eased at all is a plus for the U.S. economy, while holding off on QE3 is good for the Japanese market as it didn’t strengthen the yen,” said Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities.

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By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — Evergrande Real Estate Group Ltd. was drawn into the controversy over questionable accounting practices at listed Chinese companies Thursday, as its board denied allegations of financial impropriety leveled by the Los Angeles–based stock-commentary website Citron Research.

Evergrande
Signing ceremony for the development projects of Chongjiang Jiangjin Evergrande Splendor International Skiing Health Resort and Chongqing Yucai Middle School n January 2012.

The Hong Kong–listed shares of Evergrande HK:3333 -11.38%  EGRNF -6.14% ended down 11.4% at 3.97 Hong Kong dollars (51 U.S. cents), shedding 51 Hong Kong cents from its previous session’s close, and paring an earlier, steeper drop of as much as 88 Hong Kong cents.

Citron said in summary research posted on its website that it had concluded that Guangzhou-based Evergrande is “essentially an insolvent company that has consistently presented fraudulent information to the investing public.”

By Bloomberg News – Jun 21, 2012

A worker sews shirts at a factory in Shenzhen, Guangdong province, China.

China’s manufacturing may shrink for an eighth month in June, matching the streak during the global financial crisis in a signal the government’s stimulus has yet to reverse the economy’s slowdown.

The preliminary reading was 48.1 for a purchasing managers’ index today from HSBC Holdings Plc and Markit Economics. Above-50 readings indicate expansion. The lowest crisis level was 40.9 in November 2008, when industrial production increased 5.4 percent from a year earlier, compared with a gain of 9.6 percent last month.

Today’s report contrasts with comments by officials expressing confidence growth will rebound, with President Hu Jintaosaying in remarks published June 17 that China has taken “targeted measures” to boost domestic demand. Asian stocks fell and the yuan weakened for a second day against the dollar.

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By P.F. Pune, May 31st 2012

INDIA’S economy has had some bad economic ideas inflicted on it over the past century, from imperial neglect to the cult of the village and big-ticket socialism. Maybe the concept of BRICs—a handful of emerging economies including India that were destined for fast growth—should be added to the list. It led to a bubble of complacency that is now being popped rather brutally. Growth in India was 5.3% in the three months to March—worse than the 6% expected, below the prior quarter and way below the close-to-double digit rates that were meant to be preordained and propel India to economic super-power status.

India, unlike the other BRIC countries, is still desperately poor.

Other BRICs have slowed too, including China and Brazil. But India’s GDP figures, the worst for at least nine years, will have a deep impact on the sub-continent. The country was meant to grow in its sleep—regardless of what happens in the rest of the world. A quick bounce back looks unlikely. The central bank has cut interest rates a little this year, but will struggle to loosen policy further given high inflation. The ruling coalition keeps on promising a bout of reforms to boost confidence, but it is so divided, its behaviour so erratic and its record of delivery so poor that few believe this will actually happen. Expectations for growth over the next couple of years will probably slip further, to 6%.

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By Virginia Harrison and Nick Godt, MarketWatch

Asian market indexes have shows increases in stock prices

MUMBAI (MarketWatch) — Asia markets rose Wednesday as hopes for a fresh round of stimulus to revitalize the U.S. economy buoyed sentiment, though trading volumes were light, suggesting caution in the markets.

Japan’s Nikkei Stock Average JP:100000018 +1.11%  outperformed with a gain of 1.1%, while Hong Kong’s Hang Seng Index HK:HSI +0.53% rose 0.5%. South Korea’s KospiKR:SEU +0.65%  gained 0.7% and Australia’s S&P/ASX 200 index AU:XJO +0.22%  added 0.2%.

The Shanghai Composite CN:000001 -0.34%  bucked the trend, however, slipping 0.4%.

Upbeat U.S. housing data and the prospect of more monetary easing by the Federal Reserve helped to drive Wall Street stocks to five-week highs Tuesday. Read more on the U.S. session.

The U.S. central bank’s Federal Open Market Committee was slated to wrap up a two-day policy meeting later Wednesday, with many analysts expecting the Fed would step in to support the economic recovery through an extension of its “Operation Twist” program. Read a preview of the Fed meeting.

“Markets are edging up on hopes of quantitative-easing-type programs being implemented by the Fed in the next 24 hours,” said Tom Kaan, director equity sales at Louis Capital in Hong Kong.

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