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  • Asia ex-Japan Daily Research Summary

    Published on October 3, 2011

    by NR INDRAN / INT

    1.     NOMURA: Global Weekly Economic Monitor – 30 September 2011

    Paul Sheard, Lewis Alexander, Peter Westaway, Takahide Kiuchi, Rob Subbaraman

    We now expect the ECB to cut rates and the Bank of England to do more quantitative easing. But both will probably want to lay a little more groundwork.

    2.     Asia specialty retail – ANCHOR REPORT: Shopping for catalysts

    Tanuj Shori; Tushar Mohata; Vishnuvardana Reddy; Vivien Hu

    More nuanced than just an Asian consumption story: Samsonite and L’Occitane top BUYs; NEUTRAL on Prada, Li & Fung and Esprit

    We are believers in the long-term growth story for brand retailers with strong presence in Asia, particularly China. However, in the current climate of economic uncertainty, our investment preference lies with stocks that, in our view, are most resilient to external shock on account of clear intrinsic catalysts. Our top pick Samsonite is a turnaround story and a play on Asia-originating travel. L’Occitane is expanding fast in emerging markets where the cosmetics story is still young. We are cautious on Prada because its otherwise compelling expansion plan might face challenges if the new spending classes turn cautious, and valuations are already generous. We like Li & Fung’s management, franchise and business model, but ~80% exposure to the US/EU may remain an overhang. On Esprit, we don’t see any catalysts in the near term and ~80% Europe exposure doesn’t help.

    Also Inside Today…

    Regional Market Strategy / Regional Sector Strategy / Regional Economic Analysis

    Asia Transport (September 2011)

    Jim Wong; Andrew Lee; Shirley Lam; Cecilia Chan; Amar Kedia; David Fraser; Jacinda Loh; Justin Lee

    As we expected toll revenue for most expressways rebounded in Aug 2011 following decreasing competition and resumption of organic growth. Although the possible toll rate review may still be an overhang on the share price in the short term, we note that most expressway managements are now more confident that a toll rate cut for expressways is less likely.

    Asia Property – Asia R.E. View

    Paul Louie

    The Asia R.E. View aka Asia R(eal) E(state) View provides a look back at our regional property publications of the past week. We have 10 updates for this past week. Although the overall market mood still appears fairly bearish, our recent reports have started to take a slightly more constructive tone. Whether these are early signs of a sales recovery in China or the Year of the Dragon impact on HK birth rates, given current depressed valuations, even less bad news is good news for stocks.

    Asia Chart Alert: China: Credit crunch is worsening

    Zhiwei Zhang; Chi Sun

    A large gap is opening up between the bill discount rate and the interbank rate.

    Anecdotal evidence from media reports suggests that with rising costs of labour, commodities and capital, financing pressures for small and medium sized enterprises are building, but it is not clear how serious this problem has become relative to the past. Many investors have inquired about this issue.

    Asia Chart Alert: Taiwan: Labour market tightness has eased

    Tomo Kinoshita

    The job-offers-to-seekers ratio dropped sharply in July and August

    The job-offers-to-seekers ratio in Taiwan further declined in August to 1.07 from 1.20 in July. In June, when the ratio was 1.71, Taiwan’s labour market was at its tightest level since early 2006. However, the August print shows that this tightness has eased dramatically.

    Asia Economic Alert: South Korea: Back-to-back decline in factory output

    Young Sun Kwon

    Industrial output fell by a larger-than-expected 1.9% (sa) m-o-m in August (Consensus: -0.3%) after a 0.3% fall in July. Service output grew further, up 0.5% (sa) m-o-m in August after a 0.4% increase in July. We maintain our below-consensus 3.5% GDP growth forecast for 2011 and our call for no further interest rate hikes until February 2012.

    Asia Pacific Strategy – Conviction List Weekly

    Stewart Callaghan; Amy Lee; Mixo Das


    In the past week, we closed our Long positions on Korea Zinc and Swire Pacific and opened new Long positions on Mando Corp and Samsonite.


    Shipping – Korea company visits


    Taiwan round-up – Weekly focus: Strong defense to liquidity crunch

    Hong Kong / China

    China Power & Utilities – Wind farm capacity to rise 56% YoY in 2011


    Singapore Banks – Sector Stats: August 2011

    Singapore property – Weekly: Looking beyond current consolidation


    RHB Capital [RHBC MK] – Reduce : M&A Part 2: Seeking a merger with OSK ( MYR7.16 / PT: MYR6.45 )

    Gamuda (GAM MK, Reduce) – Wait for it ( MYR2.87 / PT: MYR2.67 )


    First Look – Downer (DOW AU, Neutral) – One crisis averted, Reliance is solvent ( AUD2.94 / PT: AUD3.80 )

    First Look – Cochlear (COH AU, Neutral) – Competitor stops developing Middle Ear Implant ( AUD48.20 / PT: AUD53.86 )

    Australia Financials – Bank Stats – Mind the (funding) gap


    JSW Steel [JSTL IN] – Buy : key takeaways from 2nd phase of E-Auction ( INR586.8 / PT: INR1,038 )

    Coal India [COAL IN] – Buy : Cabinet clears Mining Bill 2011 – Much ado about nothing? ( INR333.2 / PT: INR433 )You can contact author @ [email protected]


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