Thursday, September 29, 2011

20110929 1055 Global Economic Related News.

Bank Negara had consulted property developers, seeking their inputs on increasing the  real property gains tax  (RPGT) to curb speculation. If announced, it will be the second  time the central bank has moved to curb excessive speculation in the property market in  the last twelve months, after capping loans for buyers of third property to 70% in Nov-10.  Developers are concerned that imposing fresh regulation will be an unwelcome gamechanger, because of concerns on the global economic situation. (BT)

The government may introduce a  new mechanism to increase the  level of selfsufficiency in rice production in the coming Budget, said Deputy Minister of Agriculture  & Agro-based Industries, Chua Tee Yong. The plan is one of the most emphasized in the  wish list of the ministry in the planning of the budget, and hopefully it would be in the  Budget plan to be unveiled by PM Datuk Seri Najib Tun Razak on 7 Oct. If the plan is  implemented, it could increase the yield of rice production by some 4% or 5% from the  current 3.7%, he noted. (Bernama)

The government hopes to announce the minimum wage for workers before the year-end,  Human Resources Minister Datuk Dr S. Subramaniam said Wednesday. The newly set-up  National Wages Consultative Council (NWCC) has been entrusted to come out with  recommendations on a minimum wage within two and a half months.  
• The NWCC Bill, which was gazetted on 15 Sep and came  into effect on 23 Sep,  empowers the council to decide on a minimum wage and also undertake studies.
• Former Chief Judge of Sabah and Sarawak Tan Sri Steve Shim Lip Kiong is the NWCC  chairman and former Human Resources Ministry secretary-general Datuk Dr Syed  Mohamad Syed Abdul Kadir is his deputy. (The Star)  

Household debt in Malaysia remains manageable for the banking system and ongoing  supervision are conducted to ensure it does not become an issue for the economy, said  Bank Negara.  
• The low unemployment rate of 3.5% for the past 3 years had allowed households to  borrow.
• Household borrowings over the past decade had jumped at an annual rate of 13.9% and  were now 77% of GDP and 55% of total loans in the banking system, mostly for homes  and cars.  
• Of the RM619.9bil in household loans, about 45% of that is to finance home purchases  and 19% is for the purchase of automobiles. Loans for consumption purchases  accounted for 20% of household debt. (The Star)  

Greece: Papandreou wins property tax vote to meet rescue aid target
Greek Prime Minister George Papandreou won parliamentary backing for a property tax to meet deficit reduction targets required to avoid default, prompting an offer of support from German Chancellor Angela Merkel. Papandreou’s Socialist Pasok party won the vote by 155 to 142 after Finance Minister Evangelos Venizelos told Greeks they face economic collapse if they don’t plug a budget gap that is exceeding the target set in a bailout, putting an EUR8bn aid payment due next month at risk. (Bloomberg)

Germany: September inflation accelerated to fastest in 3 years
Inflation in Germany accelerated more than economists forecast in September to the fastest pace in 3 years. The inflation rate increased to 2.8% from 2.5% in August, trumping economists’ prediction of 2.6%. (Bloomberg)

Germany: Merkel faces biggest test in euro vote
German Chancellor Angela Merkel faces a battle for her political survival on Thursday when some of her coalition, worried about throwing good money after bad by bailing out Greece, could humiliate her in a parliament vote on euro-zone rescue schemes. Support from the center-left opposition will ensure Germany passes the bill on new powers for the European Financial Stability Facility. But if dissent in her coalition forces Merkel to rely on opposition votes to pass the new powers for the EUR440bn rescue fund, it would be politically damaging for the conservative chancellor. (Bloomberg)

France: Sarkozy government pledges to leave 2012 spending unchanged
French President Nicolas Sarkozy’s government presented a 2012 budget that keeps spending unchanged from this year, with higher debt and pension charges continuing to weigh on its deficit. The deficit in 2012 will be EUR81.8bn, or 4.5% of economic output, down from EUR95.5bn, or 5.7%, this year. (Bloomberg)

EU: Proposes financial transactions tax to start in 2014
The European Union proposed a financial transactions tax that would take effect in 2014 and raise about EUR57bn a year. The proposal would apply a tax of 0.1% on trading of stocks and bonds, with a 0.01% rate for derivatives contracts. Those minimum rates would apply throughout the 27-nation bloc. (Bloomberg)

US: Demand for capital goods rises by most in 3 months
Orders for US capital goods climbed in August by the most in 3 months, a sign business investment continues to support the recovery. Bookings for goods like computers and communications gear, excluding military hardware and aircraft, climbed 1.1%, the most since May. (Bloomberg)

US stocks retreat as concern grows over European debt crisis
US stocks declined, halting a three-day rally for the S&P’s 500 Index, amid growing concern that European leaders are divided over how to handle Greece’s debt crisis. All 10 industry groups in the S&P 500 fell at least 0.6%, with companies most-tied to economic growth dropping the most. The S&P 500 lost 2.1% at 4pm New York time, The Dow Jones Industrial Average fell 179.79 points, or 1.6%, to 11,010.90 with all 30 stocks retreating. (Bloomberg)

US Senate plans to vote next week on legislation to crack down on  China's currency practices, despite concerns that could heighten trade tensions and further threaten global  economic growth. (Reuters)

U.S. mortgage applications increased 9.3% from one week earlier, according to data  from the Mortgage Bankers Association’s (MBA) Survey for the week ended 23 Sep. The  Refinance Index increased 11.2% from the previous week. The seasonally adjusted  Purchase Index increased 2.6% from one week earlier. (MBA)  

U.S. durable goods orders decreased 0.1% in Aug after a 4.1% gain in the previous  month, the Commerce Department reported. Economists  forecast a 0.2% decrease.  (Bloomberg)      

U.S. shipments of capital goods orders, used in calculating gross domestic product,  increased 2.8% in Aug (+0.4% in Jul), the most since Mar. (Bloomberg)  

Global regulators will stick to planned  capital surcharges of as much as 2.5% for the  world’s biggest banks while adjusting how the levies are calculated. The Basel Committee  on Banking Supervision decided against changing the surcharge levels amid criticisms from banks that the measures may stymie the financial system’s recovery. (Bloomberg)        

U.S. President Barack Obama said Europe’s debt crisis continues to be a drag on the  U.S. economy and the response of governments there hasn’t been as robust as needed.  “In Europe, we haven’t seen them deal with their banking system and their financial system  as effectively as they needed to,” Obama said. Obama didn’t specify what steps should be  taken. (Bloomberg)  

Thailand’s industrial output  rose more than  estimated in Aug as demand for autos  recovered following the March earthquake in Japan. The industrial production index rose  7% yoy (-0.7% in Jul). The median estimate was for a 4% increase. (Bloomberg)  

Thailand’s  finance ministry cut its  economic growth forecast for this year as the  faltering global recovery threatens demand for exports and floods damage agricultural  crops. The economy may grow 3.8%-4.3% in 2011, compared with a Jun forecast for a  4%-5% expansion. Gross domestic product may increase 3.5%-4.5% yoy in 3Q11.  (Bloomberg)    

Indonesia's government made a rare plea to state-owned insurance firms and banks not  to sell government bonds in the face of foreign selling over euro zone worries. Authorities  also urged large state firms to coordinate before they buy dollars to protect the  rupiah,  which has fallen 4% against the dollar this month. (Reuters)  

Vietnam's retail sales in 9M11 rose 22.8% yoy, but just 3.9% after accounting for inflation,  the General Statistics Office said. (Reuters)  

China's export growth is likely to slow down in the remaining months of 2011, but that  won't automatically translate into a weaker currency, Vice Commerce Minister Chen Jian  said. (Reuters)  

China's Ministry of Finance may allow some  local governments to issue around  Rmb30bn (US$4.7bn) of  bonds, in a moderate step toward eventually letting local  governments handle their own bond issuances, underwriting sources said. (Reuters)    

Philippine economic managers have met with government departments to implement  faster budget spending. Spending in the 8M11 fell 8.1% yoy. (Bloomberg )

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