Asian Market Update

(CN) CHINA DEC TRADE BALANCE: $16.5B V $8.8BE

(AU) AUSTRALIA NOV BUILDING APPROVALS M/M: 8.4% V 6.0%E (3-month high); Y/Y: -18.9% V -19.8%E

(UK) UK DEC RICS HOUSE PRICE BALANCE: -16% V -19%E (17-month high)

(UK) UK DEC BRC SALES LFL Y/Y: 2.2% V 0.4%E (8-month high)

(NZ) NEW ZEALAND DEC QV HOUSE PRICES Y/Y: 2.4% V 1.7% PRIOR (15-month high)

(NZ) NEW ZEALAND NOV BUILDING PERMITS M/M: -6.4% V +3.3%E

(PH) PHILIPPINES NOV TOTAL EXPORTS: -19.4% V -10.0%E; TOTAL MONTHLY EXPORTS: $3.3B V $4.1B PRIOR

(MA) MALAYSIA NOV INDUSTRIAL PRODUCTION Y/Y: 1.8% V 3.5%E; MANUFACTURING SALES VALUE Y/Y: 6.3% V 11.8% PRIOR

(JP) Japan investors sell ¥155B in foreign bonds last week v ¥146B bought in prior week

Markets Snapshot (as of 05:00GMT)

Nikkei225 +0.4%

S&P/ASX +1.2%

Kospi +1.7%

Taiwan Taiex +1.2%

Singapore Straits Times +0.8%

Shanghai Composite +1.6%

Hang Seng +0.6%

S&P Futures +0.5% at 1,281

Feb Gold +0.6% at $1,617/oz

March Crude +0.5% at $101.78

Overview/Top Headlines

Markets were buoyant today, with Alcoa kicking off the US earnings which helped to boost Australian miners. The Kospi rose supported by electronic and tech names. EUR/USD leveled off around $1.2780, coming off its 16-month low. China Securities Regulatory Commission (CSRC) said it would "actively" push pension and housing funds to invest in capital markets; To encourage long-term investors such as insurers and corporate pension plans to buy more shares.

China's softer import data in the December trade balance (also a multi-month low) at 11.8% v 18.0%e v 22.1% prior supported the popular belief that the RRR would be cut before the Lunar New Year holiday. With Europe still a big question mark and the crisis reducing external demand, China will need to find ways to boost its trade, since its largest destination, Europe, is such an uncertainty. This fed the Shanghai Composite's rise to 2,284 since it is now even more likely that the PBoC will have to take action. December headline trade balance was nearly double analyst estimates at $16.5B v $8.8Be. Exports were in line at 13.4%. 2011 Trade Balance $155.1B v $183B y/y, this was in line with Chinese government official comments in the past.

Australia November building approvals hit a 3-month high at 8.4% ahead of the 6%e, y/y also was better than expected -18.9%. AUD/USD extended its gains to session highs above $1.0270 it then went on to test $1.0320 on China's trade balance data. NZD/USD followed suit testing 2-month highs above $0.7940

PBoC Gov Zhou quoted in the Chinese press said that more downside pressure on the economy will require China's policymakers to use a wider range of tools to maintain a prudent monetary policy this year. The government needs to prepare not only quantitative measures, pricing tools, but also other "innovative prudent tools," in a bid to meet the current challenges.

Speakers/Geopolitical/In the press

(CN) HSBC's Qu expects 3 Reserve Ratio Requirement (RRR) rate cuts over 6-months

(PH) Philippines Central Bank Gov Tetangco: Reiterates the central bank has room for policy easing

(KR) According to Bank of Korea (BOK) review, benchmark rates will have to raise to 6% from current 3.25% in order to lower CPI to 3% - Korean press

(CN) CSRC chairman Guo Shuqing: China may introduce sovereign bond as well as commodity futures - financial press

Equities

TSM: Reports Dec Rev NT$30.6B v NT$35.2B m/m v NT$33.8B y/y

JSTL.IN: Will buy Q4 coking coal at $230/ton v $290/ton in Q3; Do not expect steel prices to fall in the short term

Nikon, 7731.JP: Resuming some of the suspended production in Thailand - financial press

Kia Motors, 000270.KR: Exec: Expects US sales to grow in 2012 despite the absence of new model launches; Aims to surpass 500K vehicles in sales

Longfor Properties, 960.HK: Reports Dec contracted sales CNY2.65B, -52.6% y/y; 2011 contracted sales CNY38.3B v CNY40B target, +14.8% y/y

PBG.AU: Entered preliminary talks with KKR after unsolicited approach

US Equities

LIZ: Affirms FY11 pro-forma adj EBITDA at the low end of $80-90M; Cuts 2012 adj EBITDA $125-140M from $130-150M prior; CFO resigns; -12.9% after hours

JNPR: Lowers Q4 guidance to $0.26-0.28 v $0.34e, R$1.11-1.12B v $1.2Be (guided $0.32-0.36; R $1.16-1.22B prior); -2.1% after hours

WDFC: Reports Q1 $0.42 v $0.54e, R $84.9M v $86Me; -8.1% after hours

OCZ: Reports Q3 $0.06 v $0.06e, R$103.1M v $100Me; -3.6% after hours

AA: Reports Q4 -$0.03 v -$0.03e, R $5.99B v $5.7Be; +0.8% after hours