Monday, May 21, 2012

20120521 1156 Local & Global Economy Related News.

Data from the United Nations World Tourism Organisation (UNWTO) revealed that Malaysia maintained its 14th place among 25 top destinations by international tourism receipts. Thailand has moved up a notch to 11th placing, raking in a total of US$26.3bn (RM82.5bn) in revenue last year while Singapore leapt to the 15th position from 18th place in 2010, raking in US$18bn (RM56.4bn). Malaysia's tourism receipts last year was marginally above that of Singapore's at US$18.3bn (RM57.4bn). (BT)

Motor vehicle sales last month dwindled to 47,736 units from 50,936 units in the same month last year, the Malaysian Automotive Association (MAA) said. Sales volume in April 2012 was 5,847 units or 10.9% lower compared to 53,583 units in the previous month. "Rush for deliveries and invoicing by companies having financial year ended March 31 resulted in higher March sales," it said. MAA said although consumer sentiments remained stable, tightening of the hire purchase loan approvals had resulted in longer leadtime for completion of sales process and had caused some slowdown in new vehicle registrations. MAA expects car sales to improve this month due to introduction of new models. (Bernama, Malaysian Reserve)

Financial markets are becoming unhooked from economic fundamentals, Asia's officials warned, as policy makers monitor the dangers posed by any Greek exit from the euro region. Malaysian central bank Governor Zeti Akhtar Aziz said such an event could cause contagion comparable to the Asian financial crisis. South Korea’s Finance Minister Bahk Jae Wan said the range of won fluctuation is excessive while noting that economic fundamentals “are strong.” There are no plans for new measures to encourage stability in the markets at the moment. “Market participants have used the heightened uncertainty to raise volatility in financial markets,” Philippine central bank Governor Amando Tetangco said. “Risk appetite is weak and flight-to-quality trades will likely be prevalent in the market.” “We have room in our enhanced policy tool kit to respond should there be excesses in market movements, and should such movements begin to put our inflation target at risk,” Tetangco said. The developments in Greece this have deepened the risk of contagion, he said. Thailand’s banking system has THB2.5tr (US$80bn) of liquidity, five times more than required, central bank Governor Prasarn Trairatvorakul said. The Bank of Thailand doesn’t see a need to add additional liquidity, which could fuel inflationary pressures, he said. (Bloomberg)

Group of Eight leaders pushed for Greece to stay in the euro area and supported boosting growth whilst affirming “the importance of a strong and cohesive euro zone for global stability and recovery.” They also sent a strong message to Iran that tough energy sanctions would be firmly applied, vowing to ensure oil markets are well supplied to prevent crude prices soaring. (Bloomberg)

China: Home prices, car inventories add to signs of slower growth
China’s home prices fell in a record number of cities last month and car dealers posted inventory levels that foreshadowed deeper price cuts, adding to signs of slowing growth in the world’s second-largest economy. The eastern city of Wenzhou led declines in new-home prices last month with a 12.3% drop y-o-y while prices in Beijing fell 1% and in Shanghai slid 1.3%. A monthly survey showed average car prices fell 1.9% y-o-y in April, a fourth straight decline this year. China had cut banks’ reserve requirements by 50bps for the third time in six months on 12 May to spur lending. (Bloomberg)

China’s State Information Center expects annual growth to slow to 7.5% in 2Q12, the slowest since 1Q09, largely due to curbs on the property sector and external headwinds. (Reuters)

Chinese Premier Wen Jiabao said the government will focus more on bolstering economic growth, indicating policies may be loosened further as inflation moderates. (Bloomberg)

China’s State Administration of Foreign Exchange has approved US$26bn in quotas for 138 qualified foreign institutional investors (QFII) as of 16 May, and is working to speed up further approvals, after doubling quotas for QFIIs last month to US$80bn from US$30bn. (Bloomberg)

China's state-owned companies reported an 8.6% yoy profit decline in the first four months as the world's second-biggest economy continued to slow. (Global Times)

China’s MNI flash business sentiment index reading eased to 52.99 in May from 56.04 in Apr. (MNI)

Japan’s nationwide department-store sales rose 1.3% yoy in Apr to ¥480bn (14.1% in Mar), the second straight rise on the back of improved consumer confidence and warm weather. Tokyo’s department-store sales rose 6.7% yoy in Apr (26.7% in Mar), also the second consecutive monthly gain. (MNI)

Japan’s Cabinet Office raised its assessment of the economy on the back of “emerging demand for reconstruction,” whilst lowering its evaluation of its largest trading partner China for the first time in three months. Economy Minister Motohisa Furukawa said the economy shows upward movement and gradual growth may continue. (Bloomberg)

Japanese Finance Minister Jun Azumi said he was monitoring currency moves with extra care and was prepared to respond as appropriate. (Reuters)

India: Consumer price inflation accelerated to 10.36% in April
India’s consumer-price inflation accelerated in April, as prices of cereal, pulses, milk and meat products rose. The consumer-price index climbed 10.36% y-o-y, compared with a revised 9.38% advance in March. The Reserve Bank of India last month slashed the benchmark repurchase rate by 50 bps and signaled that inflation might limit the room for further cuts, flagging price risks from the fiscal deficit, energy costs and a weaker currency. India’s wholesale-price index also unexpectedly accelerated in April to 7.23%. (Bloomberg)

EU: Spain raises 2011 deficit to 8.9% on regions’ unpaid bills
Spain revised up its 2011 budget deficit to 8.9% of GDP after accounting for the unpaid bills of regional governments. The revision, from 8.5%, won’t affect this year’s deficit goal of 5.3% of GDP. Most of the slippage in unpaid bills came from Madrid and Valencia. The revision risks fueling investor doubts about Spain’s ability to rein in the euro region’s third-largest budget deficit while battling a second recession in as many years and a 24% unemployment rate. Spain’s new 2011 deficit figure compares with 9.1% for Greece last year and 13.1% for Ireland. (Bloomberg)

The US government loosened a ban on American investments in Myanmar in the strongest acknowledgment yet of the political and economic transformation put in motion by a new government of former army generals. President Barack Obama also appointed Derek Mitchell the first US ambassador to Myanmar in 22 years. (Bloomberg)

US President Barack Obama welcomed Europe's focus on rekindling growth and expressed confidence that Europe has the capacity to meet its economic challenges. (Reuters)

Guarantees provided by US lenders to holders of Greek, Portuguese, Irish, Spanish and Italian government, bank and corporate debt rose 10% qoq to US$567bn in 4Q11, according to the most recent data from the Bank for International Settlements. (Bloomberg)

European officials are working on contingency plans in case Greece exits of the euro zone, the EU's trade commissioner said, while Berlin said it was prepared for all eventualities. (Reuters)

US: Payrolls increase in 32 states
Payrolls increased in 32 states in April, while the unemployment rate dropped in 37, indicating the labor market improved across much of the US. Indiana led the nation with a 17,100 gain in payrolls, followed by Texas with 13,200 more jobs. Nevada remained the state with the highest jobless rate even after it dropped to 11.7% from 12% in March. Unemployment in Rhode Island climbed to 11.2%, putting it in second place, followed by California at 10.9%. The US added the fewest number of workers in April, while the jobless rate unexpectedly fell to a three-year low of 8.1% as people left the labor force. (Bloomberg)

Canada: Inflation accelerates to 2% in April on transport
Canadian consumer price inflation accelerated last month on higher prices for automobiles and clothing, supporting the view that interest rates will probably rise sooner than in the US. The consumer price index rose 2% in April y-o-y compared with a 1.9% gain the prior month. The core inflation rate, which excludes eight volatile components, increased to 2.1% after a March gain of 1.9%.Transportation costs rose 3.2% in April y-o-y, with passenger vehicles up 3.4%. Gasoline prices rose 3.3% y-o-y. Clothing and footwear prices rose 2.4% as stores stocked new spring and summer outfits. Food costs rose 2.5%, with restaurant meals gaining 2.8%. (Bloomberg)

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