Thursday, November 24, 2011

20111124 1120 Local & Global Economic Related News.

Malaysia: Inflation up 3.4% in October
The country's inflation rate as measured by the consumer price index (CPI) remained unchanged at 3.4% in Oct on a y-o-y basis, with prices mainly driven by growth in the food component. This was in line with market expectations and was just slightly above the median of 3.3% in a Bloomberg survey of economists. The Statistics Department said m-o-m, prices were up 0.2% with food and non-alcoholic beverages as well as non-food items for Oct 2011 showing increases of 5.7% and 2.4% respectively when compared with the corresponding month. (StarBiz)

China: Lowers reserve ratio for some rural credit cooperatives
China’s central bank is lowering reserve requirements for more than 20 rural cooperative banks by 0.5% point, adding to signs of a shift toward allowing greater credit growth as the economy slows. The move reduces the percentage of deposits that the cooperatives are required to park with the central bank to 16% a “normalization” after an increase a year ago, the People’s Bank of China’s Hangzhou branch said in an e-mailed statement yesterday. The central bank gave no indication whether it may cut reserve requirements for the largest commercial banks, a step that Bank of America Merrill Lynch predicts may come in January. (Bloomberg)

India: Eases rules to boost USD inflows as currency slumps
India’s central bank eased rules for companies to borrow abroad and raised the interest rate on bank deposits by its citizens living overseas to help stem the decline in Asia’s worst-performing currency. Companies borrowing abroad can now pay as much as 3.5% points over the London Interbank Offered Rate for loans longer than three years and up to five years, raising the cap by 50 basis points, or 0.5% point, according to a central bank statement in Mumbai today. For non-resident Indians, the spread over Libor was increased between 25 basis points and 100 basis points for two different deposit plans. The measures follow after the INR plunged to a record low yesterday on concern Europe’s debt crisis will hurt demand for emerging market assets. (Bloomberg)

India: Syndicated loans slide 87% as debt costs swell
India’s companies cut borrowings in the global syndicated-loan market by 87% this month as the INR drop to a record low increases the cost of servicing overseas debt. Uco Bank, a state-owned lender based in Kolkata, raised USD113m on 4 Nov and was the lone borrower this month, compared with the USD1.3bn five companies borrowed in October, according to data compiled by Bloomberg. The INR weakened to a record-low 52.73/USD this week and posted the worst decline among Asia’s most-traded currencies on concern India won’t be able to rein in its budget and trade deficits. Companies are being squeezed after non-INR loans slumped to the least since Aug 2009 and local borrowing costs surged 225 basis points this year. (Bloomberg)

Qatar: Returning to bond markets to tap US demand
Qatar, the world’s fastest growing economy, may benefit from US and European demand for safer assets as the gas-rich nation returns to the debt market for the first time in two years. Investors are seeking bonds from the oil-rich Persian Gulf region after a lull caused by the debt crisis in the US and Europe and the Arab uprisings. State-controlled Abu Dhabi Islamic Bank PJSC received more than USD2bn in bids for its USD500m sukuk this week, while Bahrain raised USD750m and Abu Dhabi Commercial Bank PJSC borrowed USD500m in Islamic bonds. (Bloomberg)

Brazil: Bonds lure biggest investment since 2007 on rates
Investors are pouring the most money into Brazilian bond funds since 2007. Fixed-income funds received BRL2.8bn last month, pushing the YTD amount to a four-year high of BRL67bn and helping drive yields on notes due 2014 down 239 basis points in the past four months to 10.46%. Yields on similar-maturity Mexican government bonds fell 62 basis points, or 0.62% point, in the same period to 4.85%, according to data compiled by Bloomberg. Brazilian bonds have rallied since the central bank began cutting rates in Aug, part of an effort by developing countries from Israel to Indonesia to spur economic growth amid the global slowdown. (Bloomberg)

US stocks decline as European bond risk increases to record
US stocks slumped, sending the Standard & Poor’s 500 Index down for a sixth straight day, as the cost of insuring European government debt against default rose to a record on concern the region’s crisis is worsening. The S&P 500 slid 2.2% to 1,161.79, the lowest since 7 Oct. It lost 7.6% in six days, the most since 10 Aug. The Dow Jones Industrial Average fell 236.17 points, or 2.1%, to 11,257.55. About 6.9bn shares changed hands on US exchanges, 16% below the three-month average, ahead of Thanksgiving. (Bloomberg)

US: Spending to durable goods trim US growth outlook
Americans pulled back on spending in October and manufacturers received fewer orders for durable goods, tempering expectations for a pickup in economic growth in the fourth quarter. Consumer purchases, which account for 70% of the economy, increased 0.1% after a 0.7% gain in September, Commerce Department figures showed yesterday in Washington. Bookings for equipment meant to last at least three years fell 0.7% after a 1.5% drop in September. Unemployment stuck near 9% and confidence at recession levels prompted consumers to curb spending on the eve of the holiday shopping season. Manufacturers may see orders cool as the European sovereign-debt crisis roils financial markets and threatens the global expansion. (Bloomberg)

US: Fed seeks to bolster confidence in banks with stress tests
The Federal Reserve sought to bolster confidence in the US banking system as concerns over the European sovereign-debt crisis roil financial markets and pose risks to the economic expansion. The Fed yesterday told the 31 largest US banks to test their loan portfolios against a deep recession to ensure they have enough capital to withstand losses. Banks with large trading operations will also test against a European market shock. The most severe scenarios outlined by the Fed include an unemployment rate of as much as 13%, an 8% drop in gross domestic product and a 52% plunge in stocks from the third quarter of 2011 to the fourth quarter of 2012. (Bloomberg)

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