Friday's Asia ADR Recap
Stocks in Indian advanced Friday after the government's industrial production numbers came in higher than expected, offsetting higher inflation data.
India's index of industrial production (IIP) rose 8.6% in February, vs. a revised 5.8% for the previous month, while the annual rate of inflation based on the wholesale price index (WPI) came in at 7.41% for the week ending March 29, vs. 7% registered for the previous week. The Inflation reading marked a three-year high and dealers in the region said the Reserve Bank may be forced to raise interest rates or tighten capital supplies to fight of rising inflation.
"We expect a 50-basis-point hike in the cash reserve ratio before or at the April 29 policy meeting. The central bank will prefer tightening money over raising policy rates and rupee appreciation," said Rajeev Malik, senior economist at JPMorgan Chase in Singapore. The Bombay Stock Exchange Sensitive Index rose 112.54 points, or 0.7%, to 15,807.64.
Earnings season will kick off next week in India with major information technology player Infosys Technologies (INFY) set to report on Tuesday and third-ranked IT company Wipro Limited (WIT) due to report on Friday. Traders said the Indian equity markets will be looking for direction and cues from these key technology earnings reports. American depositary shares of INFY slid 1% to $35.81, and WIT lost 3.5% to $11.03.In the Indian auto sector, Toyota Motor (TM) announced it plans step up competition against Tata Motors (TTM) in the low-priced car market with a new car priced in the range of $6,900 to $7,850. Recently, Tata Motors introduced the world's cheapest car, the Nano, which it plans to sell for $2,500. Shares of TTM fell 2.8% to $15.17. The Indian banking sector came under selling pressure Friday as traders fear the central bank will cut off liquidity in an effort to slow growth and fight rising inflation. Shares of Icici Bank (IBN) fell 2.9% to $38.95, and HDFC Bank (HDB) slipped 3.5% to $96.24. Among the few Indian ADRs to trade higher Friday were, Rediff.com (REDF), which closed higher by 5.7% to $9.04 and Sify Technologies (SIFY), which rose 4% to $4.87. Both stocks finished up on above-average daily volume. Be sure to check out the Far East Portfolio at Stockpickr.com every night to find out which stocks in India and China are making big moves and announcing major news. For more on Asia, check out Daniel Harrison's coverage at TheStreet.com.
China RecapStocks in China and Hong Kong closed out the week on a positive note Friday as investors in the Far East hope for some positive developments out of this weekend's meeting of the G7 central bank governors and finance ministers in Washington. Analysts said China-based stocks also received a boost from a technical breakout for the yuan. "After the yuan broke through a new psychological barrier yesterday against the US dollar, investors' focus is on yuan-backed companies or those which operate on the mainland and generate yuan earnings," said Alex Wong, director at Ample Capital. The Shanghai Composite Index rose 21.15 points, or 0.6%, to 3,492.89, and Hong Kong's Hang Seng Index advanced by 480.69 points, or 2%, to 24,667.79. Chinese alternative energy company Trina Solar (TSL) received some positive comments from SG Cowen. Cowen raised its 2008 EPS estimate to $4.05, vs. its previous estimate of $3.64 and raised its revenue estimates to $750 million, vs. a prior target of $710 million, citing a new GCL deal that will raise Trina's silicon to 95% of targeted production. Cowen thinks the stock can rise 50% in the next 12 months and rates the shares outperform. American depositary shares of Trina ripped 9% higher to $38 on twice the average daily trading volume.
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