Thursday, November 3, 2011

20111103 1117 Local & Global Economic Related News.

Overseas investors bought  Malaysian stocks in Oct after two months of  outflows, according to data compiled by the Kuala Lumpur stock exchange.  Foreign funds bought RM1.5bn of Malaysian shares last month (vs. outflows of  RM300m in Sep and outflows of RM3.8bn in Aug). (BT)

Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah  said Malaysia will definitely achieve a  5-6%  GDP growth  this  year as the government is prepared to face any uncertainties from Western  financial markets. "We have already tabled the 2012 Budget and we are now  taking measures so that the economic slowdown in the US and Europe will not  affect us,” he said.  The government had allocated RM6bn in stimulus spending via Private  Financing Initiative in 2012 to help prosper the country's economy  against the backdrop of an uncertain global environment.  When asked on concerns raised by several quarters that the government  was at risk of a "debt-fear" due to spending outstripping revenue, Husni  said the RM407bn national debt, that grew 12.3% last year, was still  manageable as it had yet to breach critical threshold (national debt to  GDP of 55% and revenue to debt service ratio of 15%).  With regards to external loans, it must not be above RM35bn. Currently,  it is well below that and the debt servicing ratio for external loan is  roughly 2%. (Bernama)

The government has some RM40bn of untapped cash reserves which it could  use to sustain Malaysia’s economic growth in the event of a global economic  slowdown,  Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah said. The reserves included the government’s trust  fund of about RM30bn, another contingency fund of some RM4bn, and  Kumpulan Wang Amanah Negara which have around RM5bn, he noted. The  government had asked the country’s accountant general to review the usage of  its RM30bn trust fund, of which a portion was “dormant”. (Financial Daily)

It cost the government RM12.2bn to provide  healthcare and medical  treatment for Malaysians from Jan till Sep this year, the Dewan Rakyat was  told yesterday. Health Minister Datuk Seri Liow Tiong Lai said the amount was  98% of the overall expenditure of his ministry  for the period, which totalled  RM12.44bn.  Liow said last year, the ministry spent RM14.45bn or 98% of the  RM14.76bn allocated to it for the purpose.  He added that revenue collected by the ministry last year amounted to  RM311.2m and that from Jan till Sep this year stood at RM238.5m.  (Bernama)

The Employees Provident Fund Board (EPF) clarified that all the 13 loans  worth RM55.1bn it granted without Government Guarantee were made in  accordance with the procedures set. The loans were given out within the  provision of the EPF Act 1991 which gives EPF the power to provide loans to the  Federal and State governments and corporate entities subject to approval from  the EPF Investment Panel and Finance Ministry.  The 13 loans consisted of direct lending to the government (39% of total  loans), government-backed securities (48%) and AAA-rated papers  (13%) that did not require government guarantee. All of the loans under RM55.1bn have demonstrated perfect record in  interest servicing and loan repayment, it said. (Bernama)

The government plans to  dispose several  government-owned land in the  country to the private sector to raise more funds for economic development,  Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah said.  The land parcels measuring between  three and seven acres each, would easily  raise a total of RM1.2bn to the government projected revenue for 2012. They  include land along the River of Life project and a piece of land owned by the  government through the Malaysian Rubber Board. (Bernama)

China: China inflation cooling leaves room for Wen to loosen credit

China’s inflation is showing signs of easing further, giving Premier Wen Jiabao more room to loosen fiscal and monetary policies as the economy cools and Europe’s sovereign-debt crisis threatens exports. China’s central bank has paused in raising interest rates and bank reserve requirements as officials assess the risk that Group of 20 leaders meeting in Cannes, France, this week will fail to contain the crisis. Inflation may moderate to below 5% in November and December, compared with a three-year high of 6.5% in July. [Bloomberg]

The Commerce Ministry predicts that  export growth in  Thailand will fall  below 10% in 2012 because of the severe flooding. The Bank of Thailand has reduced its export-growth forecast for 2011 from 22.4% to about 20%. (The  Nation)

The  Thai government has approved the provision of  soft loans totaling  THB210bn for  flood-hit businesses. These will be provided by both  state-owned and commercial banks with a fixed interest rate of 3% per annum  for three years. (The Nation)

The  Vietnamese consumer confidence index remained unchanged in  3Q11 at 97 pts from 2Q11 due to concerns over the economic volatility. (Nielsen)

India's M3 money supply rose an 14.4% yoy as of 21 Oct, from 16.2% a  fortnight ago, the central bank said. (Reuters)

India: India’s biggest lender to get USD609mil capital infusion
State Bank of India, the nation’s largest lender, will get a capital infusion of more than INR30bn (USD609m) from the government to bolster capital as concern that loans may sour mounts. The funds are a part of the INR140bn that the government plans to invest in state-run lenders, a finance ministry official said in New Delhi, declining to be identified citing government policy. The money is in addition to a INR60bn investment planned for the year to 31 March and will ensure the banks have a Tier 1 capital ratio of more than 8%, said the official. [Bloomberg]

Indonesia’s Danareksa Consumer Confidence Survey slipped to 89.6 in  Oct, from 90.5 in Sep. (Bloomberg)

Indonesia’s Consumer Confidence Index rose to 116.2 in Oct from 115.0  in Sep. (Bloomberg)

EU: EU Pushes Papandreou on Greek Euro vote as G-20 leaders meet
European leaders urged Greek Prime Minister George Papandreou to swiftly spell out how he intends to stick to the terms of a bailout plan after he handed voters a veto over the week-old package. Crisis talks were under way in the French resort of Cannes on the eve of a Group of 20 Summit after Papandreou was summoned by European counterparts to explain his call for a referendum that risks delaying aid the country needs to avert default. In Athens, Greek lawmakers debated a confidence motion that could bring down his government. [Bloomberg]

EU: Greece to decide Euro membership in December vote as EU cuts aid
European leaders cut off aid payments to Greece and said a referendum in five weeks will determine whether the debt-strapped nation becomes the first to exit the 17-country euro area. Crisis talks ended in the French resort of Cannes with German Chancellor Angela Merkel and French President Nicolas Sarkozy withholding EUR8bn (USD11bn) of assistance and warning it will surrender all European aid if it votes against a bailout package agreed only last week. [Bloomberg]

Eurozone purchasing managers index fell to 47.1 in Oct, from 48.5 in Sep.  The sub-50 reading means activity has now been shrinking for three months.  (WSJ)

Europe’s bailout fund is delaying a €3bn (US$4.1bn) bond sale after Greek  Prime Minister George Papandreou’s request for a referendum on the rescue  pact for his country roiled markets. The European Financial Stability Facility is  putting off the 10-year issue “due to market conditions,” according to  spokesman Christof Roche. The fund may wait for the outcome of the 3-4 Nov  Group of 20 summit before selling the bonds, according to a person with  knowledge of the matter. (Bloomberg)

US: Bernanke says more stimulus is ‘on the table’ as risks remain

Federal Reserve Chairman Ben S. Bernanke said unemployment is still “far too high” and the Fed may take further steps to boost growth, such as buying mortgage bonds or changing the way it communicates its policy goals to the public. Additional stimulus “remains on the table,” Bernanke said at a press conference in Washington, declining to specify conditions that would prompt a move. “While we still expect that economic activity and labor market conditions will improve gradually over time, the pace of progress is likely to be frustratingly slow.” [Bloomberg]

US: Fed says ‘downside risks’ remain as economic outlook cut
Federal Reserve policy makers said the economy has picked up while “significant downside risks” remain, and they refrained from taking any additional steps to ease monetary policy. Fed officials also lowered their economic-growth projections compared with June and said the unemployment rate will decline at a slower pace.
Policy makers led by Bernanke may be waiting to see if unconventional policy steps from their last two meetings help the expansion gain strength before embarking on new initiatives. [Bloomberg]

US stocks advance as Fed says it may act to safeguard recovery
US stocks advanced, rebounding from a two-day drop in the S&P’s 500 Index, as the Federal Reserve said economic growth strengthened and it is prepared to take action if needed to safeguard the recovery. Gauges of commodity and financial shares had the biggest gains in the S&P 500 among 10 industries, rising at least 2.2%. Bank of America Corp, Chevron Corp. and Alcoa Inc. rallied more than 2.4%. The Dow Jones Industrial Average added 178.08 points, or 1.5%. (Bloomberg)

US auto sales jumped 7.5% in Oct, hitting their second fastest pace of year and  defying the sluggish economy. Auto makers sold 1,021,313 cars and light trucks  in Oct, according to market researcher Autodata Corp. The seasonally adjusted  annualized selling rate in Oct was 13.26m vehicles, Auto data said, the highest  rate since Feb’s 13.29m, and up from the 13.1m level in Sep. (WSJ)

US mortgage applications increased 0.2% from one week earlier, according  to data from  the Mortgage Bankers Association’s (MBA) Survey for the week  ended 28 Oct. The refinance index decreased 0.2% from the previous week. The  seasonally adjusted purchase index increased 1.8% from one week earlier.  (MBA)

US  employers’ announced  job cuts rose  13% yoy to 42,759 in Oct (212% in  Sep), according to  Challenger, Gray & Christmas Inc. Consumer products  companies led the Oct job cuts with 7,169 announced reductions, according to  Challenger. Retail companies followed with 4,264 planned cuts. (Bloomberg)

US private-sector employment increased by 110,000 in Oct (116,000 in Sep)  on a seasonally adjusted basis, according to the latest ADP National  Employment Report released. Economists had expected ADP to report an Oct  increase of 100,000. Service-sector jobs increased by 114,000 last month, and  manufacturing jobs fell by 8,000. (WSJ)

The US Federal Reserve left unchanged its pledge to keep the benchmark  interest rate near zero through at least mid-2013 as long as unemployment  remains high and the inflation outlook stays “subdued.” (Bloomberg)

US Federal Reserve policy makers raised their assessment of the economy while saying “significant downside risks” remain and refrained from taking any  additional steps to ease monetary policy. “Economic growth strengthened somewhat in 3Q, reflecting in part a  reversal of the temporary factors that had weighed on growth earlier in  the year,” the Federal Open Market Committee said.  At the same time, it repeated that “there are significant downside risks  to the economic outlook, including strains in global financial markets.”  (Bloomberg)

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