Monday, June 27, 2011

20110627 1316 Global Market Related News.

DJIA chart reading : correction range bound little downside biased.

Hang Seng chart reading : correction range bound downside biased.

Biggest Banks Must Hold 2.5 Percentage Points More Capital in Basel Accord (Source: Bloomberg)
Global regulators said banks deemed too big to fail must hold as much as 2.5 percentage points in additional capital as part of efforts to prevent another financial crisis. As many as 30 banks may face some level of surcharges, according to a person familiar with the discussions. The additional capital buffers will range from 1 percentage point to 2.5 percentage points, the Basel Committee on Banking Supervision said in a statement yesterday. From 28 to 30 banks, including as many as eight in the U.S., may face surcharges, said the person, who declined to be identified because the talks are private.

Central Banks Need to Raise Rates: BIS (Source: Bloomberg)
Central banks need to start raising interest rates to control inflation and may have to act faster than in the past, the Bank for International Settlements said. “Tighter global monetary policy is needed in order to contain inflation pressures and ward off financial stability risks,” the BIS said in its annual report published yesterday in Basel, Switzerland. “Central banks may have to be prepared to raise policy rates at a faster pace than in previous tightening episodes.”

Banks Should Seek Capital Boosts: BIS (Source: Bloomberg)
Banks should be pushed to meet the higher capital requirements before a series of deadlines starting in 2013, unless earlier introduction of the rules would threaten lending, the Bank for International Settlements said. The Basel Committee on Banking Supervision’s requirements, which will more than triple the core reserves that banks must hold to protect themselves from insolvency, are “the core regulatory response to problems revealed by the financial crisis,” the BIS said in its annual report. The stance of the group that acts as a bank for central banks echoes comments by Mervyn King, governor of the Bank of England, that U.K. lenders can “do more than just follow” the timetable for meeting the standards.

BIS Urges Europe to End Debate And Resolve Debt Crisis ‘Once And For All’ (Source: Bloomberg)
The Bank for International Settlements urged Europe to end its dithering and find a permanent solution to the sovereign debt crisis. “For well over a year, European policy makers have been scrambling to put together short-term fixes for the hardest-hit countries while debating how to design a viable and credible long-term solution,” the BIS said in its annual report published today in Basel, Switzerland. “They need to finish the job, once and for all.”

Asian Stocks Decline by Most in a Week on U.S. Economy, Greece (Source: Bloomberg)
Asian stocks fell by most in a week ahead of the release of data that will show the U.S. economy is faltering and on concern Greece may not meet bailout conditions, hurting the outlook for exporters. Toyota Motor Corp. (7203), the world’s No. 1 carmaker by sales, dropped 2.1 percent. Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, declined 2.2 percent in Seoul after Apple Inc. sued the company charging patent infringement. Commonwealth Bank of Australia Ltd., the nation’s largest lender by market value, slipped 1.3 percent after regulators raised capital adequacy requirements for the world’s biggest lenders.

U.S. Spending, Manufacturing Cooled in Slowdown (Source: Bloomberg)
Consumer spending probably climbed at the slowest pace in almost a year and manufacturing cooled as dimmer job prospects and elevated commodity costs weighed on the U.S. expansion, economists said reports this week will show. Purchases rose 0.1 percent in May, the smallest gain since June 2010, according to the median estimate of 63 economists in a Bloomberg News survey before a Commerce Department figures tomorrow. The disaster in Japan also held back American factories this month, a survey of purchasing managers may show.

U.S. Stocks Fall on Concern Debt Crisis in European Nations Will Intensify (Source: Bloomberg)
U.S. stocks fell this week, giving the Standard & Poor 500 Index its seventh loss in eight weeks, amid concern the European debt crisis isn’t contained. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) fell at least 1.5 percent after European Central Bank President Jean- Claude Trichet said June 22 the turmoil threatens to infect banks. Micron Technology Inc. (MU) sank 7.9 percent, the most in the S&P 500, after reporting revenue and profit that missed analysts’ projections. Red Hat Inc. (RHT), the largest seller of the Linux operating system, jumped 9.3 percent after beating estimates with its earnings forecast.

A Plan to Tax the Foreign Income of U.S. Companies: Robert Pozen (Source: Bloomberg)
The current system for taxing foreign source income of U.S. corporations makes no sense. In theory, income earned by controlled foreign subsidiaries of American companies is taxed at the U.S. corporate rate of 35 percent; in practice, the Treasury receives no taxes on that income as long as it is held overseas.

Wen Sees China Inflation Capped at 5% (Source: Bloomberg)
Premier Wen Jiabao said China can keep full-year inflation within 5 percent, affirming forecasts that price gains will slow in the second half from the fastest pace in almost three years. “I see difficulties in reaching the full-year inflation target of 4 percent,” Wen said in comments broadcast today by Hong Kong-based Cable TV. “But it still can be kept below 5 percent after the efforts we have made.” He spoke at a Chinese community event in London, the broadcaster said.

China Stock Prices Signal Rally by Top Brokers (Source: Bloomberg)
The lowest Chinese stock valuations since economic growth collapsed three years ago are a sign to the nation’s biggest brokerages that it’s time to buy. The Shanghai Composite Index’s 6.2 percent retreat this quarter sent the gauge to 11.6 times estimated profit, data compiled by Bloomberg show. It took the global financial crisis and a decline in China’s growth rate to a seven-year low of 6.8 percent to push valuations this low in November 2008. The Shanghai gauge rebounded 49 percent in the next six months.

Wen Says China Will Continue to Buy European Government Debt, Support Euro (Source: Bloomberg)
Chinese Premier Wen Jiabao pledged support for Europe as the region copes with a sovereign debt crisis, saying China will remain an investor in European markets. “China is a long term investor in Europe’s sovereign debt market,” Wen said in translated comments at a press conference with Hungarian Prime Minister Viktor Orban in Budapest yesterday. “In recent years, we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.”

China Is Long-Term Investor in EU Bonds: Wen (Source: Bloomberg)
Premier Wen Jiabao said China will keep investing in Europe’s sovereign bond market, providing a vote of confidence in the region roiled by the debt crisis. “China has actually increased the purchase of government bonds of some European countries, and we haven’t cut back on our euro holdings,” Wen told the British Broadcasting Corp. yesterday in an interview. These acts “show our confidence in the economies of Europe and the euro-zone.”

China Money Rate Slumps Most in a Month After Central Bank Pumps In Funds (Source: Bloomberg)
China’s money-market rate fell the most in more than a month on speculation the central bank’s injection of capital will help ease a cash shortage in the financial system. The People’s Bank of China added a net 87 billion yuan ($13.4 billion) of funds last week and has pumped in 467 billion yuan in the past six weeks. A total of 142 billion yuan of central bank bills and repurchase agreements will mature this week, compared with 88 billion yuan last week, according to Guo Caomin, a bond analyst at Industrial Bank Co. in Shanghai.

China banks must cut loans to property speculators
BEIJING, June 24 (Reuters) - China has reiterated orders to banks to curtail lending to property developers who are speculating on rising house prices to guard against overheating in the frothy sector.
Clarifying media reports that regulators have asked banks to reduce lending to developers, a media officer at China Banking Regulatory Commission said loan restrictions should only apply to companies suspected of carrying out speculation.

Shanghai Sea-Cargo Volume to Increase 10% Annually as Plants Move Inland (Source: Bloomberg)
Shanghai port, the world’s busiest for containers, expects volumes to rise about 10 percent annually for the next five years as manufacturers open plants in western and inland China in search of lower-cost labor. Rising production in these regions has benefited Shanghai because of increasing cargo volumes along the Yangtze river, Chen Xuyuan, president of harbor operator Shanghai International Port (Group) Co., said in a June 23 interview. The river, Asia’s longest, stretches 6,397 kilometers (3,975 miles) across China before meeting the East China Sea in Shanghai.

Japanese Stocks Drop Ahead of Greek Vote, U.S. Consumer Spending Report (Source: Bloomberg)
Japanese stocks fell ahead of a vote in Greece’s parliament that may forestall a European banking crisis and before a report expected to show slowing growth in U.S. consumer spending, dimming the outlook for export earnings.

Euro Exit Plan is ‘Probably Inevitable’: Soros (Source: Bloomberg)
Billionaire investor George Soros said it’s “probably inevitable” that a mechanism will be put in place to allow weaker economies to exit the euro. “There’s no arrangement for any countries leaving the euro, which in current circumstances is probably inevitable,” Soros, 80, said at a panel discussion in Vienna yesterday on whether liberal democracy is at risk in Europe. “We are on the verge of an economic collapse which starts, let’s say, in Greece, but it could easily spread. The financial system remains extremely vulnerable.”
Concern Greek lawmakers will fail to pass austerity measures to ensure the next installment of the nation’s bailout is roiling global markets and pushed the euro to a record-low against the Swiss franc last week. Greece is one of three euro- region members to have sought international bailouts amid the sovereign debt crisis.

U.K. Home Prices Fall For Second Month on Subdued Demand, Weak Confidence (Source: Bloomberg)
U.K. house prices fell for a second month in June as the growth in the supply of properties for sale outpaced demand, Hometrack Ltd. said. The average cost of a home slipped 0.1 percent from May, the London-based property researcher said in an e-mailed report today. From a year earlier, values were down 3.9 percent. In London, prices increased 0.2 percent on the month.

Greek deal lifts equities, euro up after Ifo
LONDON, June 24 (Reuters)- Greece's deal with international lenders for more money in return for more budget austerity lifted world equities on Friday and drained demand for safe-haven government bonds.
Oil prices rose slightly after tumbling to a 4-month low in the previous session on news of an International Energy Agency-coordinated release of emergency stockpiles.

FOREX-Euro rebounds after German IFO, but could struggle
LONDON, June 24 (Reuters) - The euro recouped losses on Friday after a better-than-expected German business sentiment survey lent it vital support but investors were wary of pushing it much higher as uncertainty lingered about Greece's ability to execute austerity plans.
The Munich-based Ifo think-tank said its closely watched business climate index rose to 114.5 in June from an originally reported 114.2 in May, easily beating expectations for a drop to 113.5.

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