Asian markets update

Asian markets rose last week, with sentiment lifted by JPMorgan Chase's improved offer for Bear Stearns and the Federal Reserve's further moves to boost liquidity. Chinese equities, in particular, fell to their lowest in almost nine months before rebounding.

Taiwan's central bank raised interest rates again to counter inflation. Consumer prices in Singapore remained near a 25-year high in February as food, transport and housing costs continued to rise. Price pressures also led South Korea to end import tariffs on a range of goods.

Thailand upgraded its 2008 economic growth forecast on anticipated increases in consumption and investment.

Japan's inflation in February rose at the fastest pace in 10 years, while the jobless rate unexpectedly moved up for the first time in five months. Export growth in February was higher than expected as demand from emerging markets offset a drop in US shipments.

Australia: In half-year results, Brickworks posted higher earnings due to contribution from its land and development unit; Nufarm's operating profits benefited from a stronger showing by its crop protection businesses; and David Jones' net gain increased on robust sales of clothing and cosmetics. In other news, Spotless Group launched a hostile takeover bid for Programmed Maintenance Services at a 35% premium.

China/Hong Kong: Dah Sing Banking posted a drop in 2007 net profits due to a HK$1bn write-down for CDOs, which led to lower earnings for parent Dah Sing Financial. Hong Kong & Shanghai Hotels announced solid results over the same period, driven by a robust Asian market. Huaneng Power International's net gain was marginally higher despite higher coal costs. Separately, the company signed a letter of intent to buy Singapore's Tuas Power, which its parent recently acquired for S$4.23bn.

India: BPCL and GAIL will set up a venture to sell compressed natural gas and piped gas in Kerala and Karnataka. Nicholas Piramal launched a pilot project to distribute drugs in Rajasthan as part of its plans to reach rural markets. ITC stopped production of non-filtered cigarettes, following a proposed hike in excise rates in the 2008-2009 Budget.

Indonesia: Unilever's full-year profit growth was underpinned by healthy sales, while Perusahaan Negara Gas recorded lower earnings due to higher depreciation expenses.

Japan: Carmaker Toyota Motor will raise production capacity in Brazil to meet rising local demand. Convenience store operator Seven-Eleven Japan, part of retail conglomerate Seven & I Holdings, will expand its network by 200 stores over the next three years.

Korea: Kookmin Bank's board approved the transition to a financial holding company, which entails spinning off its credit card unit. Samsung Electronics forecast that its 2008 revenues would rise 10% and profits would exceed last year's 7.4trn won; it also plans to build a Vietnam plant with an annual capacity of 100m mobile phones.

Malaysia: Maybank won majority control of Bank Internasional Indonesia, paying a group led by Temasek Holdings US$1.5bn for a 55.7% stake. It also bought 15% of Vietnam's An Binh Bank for RM430m in cash. In quarterly results, SP Setia's earnings were bolstered by development revenues, while United Malacca posted stronger profits on increased output of fresh fruit bunches and high prices for crude palm oil and palm kernel.

Philippines: Jollibee Foods Corp opened an outlet in China, its first after a six-year break.

Singapore: United Overseas Bank received approval to set up its first branch in India.

Taiwan: TSMC unveiled the chip industry's first 40nm manufacturing process technology, which will enable smaller and more powerful energy-efficient chips.

Thailand: Kasikornbank and Siam Commercial Bank reported healthy year-on-year loans growth in February. PTT Exploration & Production's Arthit natural gas field has begun operations. Minor International and Kempinski Hotels & Resorts will jointly develop luxury resorts in Europe and Asia.

We hold all the above companies highlighted.

Asian Fixed Income
A recovery in risk appetite and some positive corporate results supported credit spreads. Combined with sustained inflation concerns, this led to broad bond market weakness, mirroring a sell-off in US Treasuries. The performance of Asian currencies was mixed, with the Philippine peso and Vietnamese dong, in particular, sold down. The Vietnamese central bank moved to support exporters by sharply depreciating the currency, despite headline inflation that has reached almost 20%. In contrast, following marked weakness in recent weeks, the Pacific currencies, Indian rupee and South Korean won rallied strongly.

Aberdeen Asset Management Asia Limited