Positive leads may push Asian stocks higher today

<p>Asian markets are expected to round the week out with modest gains after positive overnight leads.  It will be a tussle between industrials and financials […]</p>

Asian markets are expected to round the week out with modest gains after positive overnight leads. 

It will be a tussle between industrials and financials posting gains and resource stocks struggling to shake off large declines in commodity prices this week. In economic news this morning, New Zealand’s sovereign credit rating was cut one step to AA by Fitch Ratings, which cited the southern Pacific nation’s high level of external debt and its persistent current account deficit. 

The news isn’t good for New Zealand but we think growth prospects will improve over the next few years as infrastructure rebuilding ramps up. Most growth estimates are quiet generous so the ability of the New Zealand government to address its balance sheet from this growth pipeline will be scrutinised. 

There is also some offsetting, good news for regional stocks, particularly in emerging growth pockets. Japan’s public pension fund, the world’s largest, will start investing in emerging market stocks by the end of the year as it diversifies assets to maintain stable returns. The Government Pension Investment Fund, which oversees 114 trillion Yen is in the final stage of deciding the managers who will handle the investments

In Australia, the Materials sector may remain soft due to weak commodity prices. The top 5 mining stocks make up 20% of the ASX200 index and any weakness in their price will have an impact on the overall index.


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