Asian corporate earnings have shown signs of improvement, stock markets have rallied hard and fund raising activity has picked up, but the tone from company executives remains cautious.
With much of the April-June quarterly reporting season passed, Reuters Asia specialist correspondents and editors in the financial, autos, resources and technology sectors offer their insight on current trends.
Double-click in [brackets] for related news.
[E-ASIA-RES-NEWS-LEN] Top Asian company earnings news
[E-ASIA-RES-LEN] for all Asia company earnings news
[E-ASIA-LEN-RESF] for Asia company earnings previews
BANKS CHEER AS IPO, CORP DEBT FLOWS PICK UP
Banks in Asia are throwing themselves at companies preparing to dish out fees for public stock offerings, a scramble fueled by the eye-popping surge in most Asian equity markets. The big test for Western investment banks is to try and get hired to underwrite the recently re-opened Chinese A-share market, where some massive IPOs have launched with more in the queue. CSCEC, a Chinese construction company, raised a whopping $7.3 billion and jumped on its market debut, fuelling fears about Chinese asset bubbles. JPMorgan and Macquarie are said to be among the banks helping a Chinese railway group launch a roughly $5 billion public float.
A rebound in markets and equity capital markets helped most major Japanese banks return to profit in the most recent quarter, confirming the worst is probably past.
The Asian fixed income market is also helping send fees to investment banks, especially in places like South Korea and China where corporate bonds are flowing. Bank of America and Barclays are among the banks arranging a bond offering for state-owned Korea National Oil Corp. Currency swaps are also helping to fill banks' pocketbooks.
Michael Flaherty (firstname.lastname@example.org)
> World's biggest IPO debut fuels China bubble concern
> Japan's MUFG back to black; Mizuho stumbles again
> India stake sales to please market; no deficit cure
MAKING UP FOR DEMAND SLUMP WITH COST CUTS
After Honda Motor Co and Nissan Motor Co surprised markets with first-quarter operating profits, investors will be looking for the possibility of a similar surprise when Toyota Motor Corp reports on Aug. 4.
Honda and Nissan avoided the losses analysts expected with deep cost reductions rather than any improvement in global demand, which continues to slump despite support from some governments to prop up sales with subsidies and tax breaks.
Toyota is a major beneficiary of the Japanese eco-car tax incentive thanks to its hybrid cars and could get a boost from the U.S. government's cash for clunkers scheme but auto executives have begun to express fears over a collapse in demand once the stimulus programmes around the world run their course.
In the absence of an economic recovery in the major markets of the United States, Europe and Japan, analysts are looking at how much automakers are spending on profit-eroding sales incentives as competition intensifies, and whether rare pockets of demand in places such as China and India can be maintained.
Chang-Ran Kim (email@example.com)
> Honda, Nissan eke out profit but cautious on demand
> Mazda, M'bishi Motors post 3rd straight qtrly loss
> Speedbumps ahead as Hyundai cruises in fast lane
CHINA'S IRON ORE TUG OF WAR, RESOURCE HUNT CONTINUE
From iron ore contracts to controversial arrests of four Rio Tinto employees to mega M&A deals -- China is still commanding centre stage in Asia's resources markets.
The CISA, the country's main steel body, continues to hold out for a better deal than the 33 percent cut agreed to by Asian rivals, but spot prices have now risen by almost three-quarters from their April lows, topping $100 a tonne and a one-third premium over Asian contract prices. Frustration is growing, with steel makers cutting their own deals with miners and the CISA complaining excessive imports are undermining its bargaining powers.
Meanwhile, the murky detentions of high-level Rio Tinto staff members casts a long a shadow of uncertainty over how international companies will approach sensitive negotiations with China's state-controlled giants in the future.
China is still confident despite the controversy, however. CNPC and CNOOC are in pursuit of Repsol's Argentine unit YPF in what could be a $14.5 billion mega deal; CNOOC will also bid for Kosmos Energy's $3-$5 billion stake in Ghana's Jubilee field and has agreed to buy a stake in an Angolan block with Sinopec. The jury's is still out on which further deals, if any, China can clinch.
Joseph Chaney (firstname.lastname@example.org)
> China steel body threatens new rules for iron ore [ID:nPEK111262]
> Pressure builds on China steel as iron ore hits $100 [ID:nPEK7715]
> CNOOC, Sinopec to buy Angola stake from Marathon [ID:nBNG227876]
RECOVERY IS ON THE WAY, BUT DON'T GET CARRIED AWAY
Caution, the buzz word for Asia's technology sector.
The latest earnings parade from the likes of Sony, Toshiba, Samsung and LG Electronics a definite recovery is underway, but not enough for companies to bravely call the bottom.
China's stimulus package has stoked rural consumer demand for flat screen TVs, cellphones and PCs, but there is uncertainty if such demand will be maintained .
Samsung posted its best quarterly profit in nearly 3 years, on strong memory chips and robust sales of TVs and mobile phones, but said it was prepared for a possible slowdown in the liquid crystal display business.
Sony, which is feeling the pain in every corner of its operations ranging from semiconductors to LCD TVs to videogames, cut quarterly losses by one-fourth mainly due to cost cuts, but stuck by its full-year loss outlook.
With companies rushing to ramp up production to take advantage of tenative signs of recovery, oversupply could yet dislodge the turnaround and bring out the bears from their hibernation.
Anshuman Daga (email@example.com)
> Sony, Sharp post Q1 losses, Nintendo loses steam
> Samsung Elec sounds caution despite big profit
> TSMC signals strong chips recovery, ups spending
(Editing by Lincoln Feast)