Tuesday, May 22, 2012

20120522 1023 Local & Global Economy Related News.

The Malaysia leading index (LI) decreased 0.5% mom in Mar (+1.7% mom in Feb). The coincident index (CI) increased 0.9% mom in Mar (+3.6% mom in Feb) while the lagging index rose 1.3% mom (unchanged in Feb). The level of diffusion index for both LI and CI remain above 50%, suggesting that the Malaysian economy will continue to expand albeit at a moderate rate in the near term. (Department of Statistics)

Economy: Australia to seal trade deal with Malaysia
Australia will sign a free trade agreement (FTA) with Malaysia on Tuesday in a move it hopes  will add new momentum to stalled bilateral trade talks with other key Asian trading partners.  Australia is still negotiating free trade deals with South Korea, Japan and China, with progress  in reaching agreement with Beijing and Tokyo slow.  Australia already boasts FTAs with New  Zealand, the United States, Singapore, Thailand and Chile, and reached a regional trade deal  with 10 ASEAN countries in 2010. The agreement with Malaysia is a step further than the  ASEAN deal, granting Australia's service sector the right to operate majority-owned  operations in Malaysia and allowing access to Malaysia without endorsement from other  ASEAN countries. Under the deal, more than 97% of tariffs on Australian goods sold in  Malaysia will be eliminated. In return Australia has agreed to accelerate the removal of  tariffs for goods from Malaysia. Malaysia is Australia's ninth-biggest trading partner with  two-way trade worth about $13bn a year. (Reuters)

Standard & Poor’s holds that foreign investment in Indonesia is being hampered by bureaucracy, corruption, legal uncertainty, infrastructure deficiencies and inflexible labour markets, maintaining the country’s sovereign debt at junk on the nation’s failure to reduce the fuel subsidy, among its concerns over government policy. (Business Times)

The Indonesian government has spent just over 10% of the total 2012 capital spending budget of Rp168.87tr in 1Q12, and aims to disburse 25% of capital spending by the end Jul, leaving 75% to be spent in 2H12. (Jakarta Post)

Thailand’s economy grew 0.3% yoy in 1Q12 (-8.9% in 4Q11), whilst on a qoq basis, GDP grew 11% after seasonal adjustment (-10.8% in 4Q11), thanks to recovery from the floods and the government’s stimulus measures to alleviate high living costs. The National Economic and Social Development Board also maintained its optimistic 5.5-6.5% GDP growth for 2012 and urged the Bank of Thailand not to tighten monetary policy early. (AFP, The Nation)

Thailand, the world's biggest rubber exporter, plans to buy more than 10,000 tonnes on the Tokyo and Shanghai exchanges to boost prices, said Rubber Estate Organisation managing director Chanachai Plengsiriwat. (The Nation)

China, holder of US$1.17tr of US Treasuries, can now bypass Wall Street when buying US government debt and go straight to the US Treasury, in what is the Treasury's first-ever direct relationship with a foreign government, according to documents viewed by Reuters. (Reuters)

Japan’s all-industry activity index fell 0.3% mom in Mar (-0.1% in Feb), the third consecutive month of decline and worse than economists’ forecast of a 0.1% fall largely on the back of contraction in the construction sector. On a yoy basis, the measure stood at 5.5% in Mar (1.6% in Feb). (RTTNews)

Japan’s leading index rose to a revised 96.4 in Mar (96.1 in Feb; 96.6 in the initial estimate), whilst the coincident index climbed to 96.7 (95.2 in Feb; 96.5 in the initial estimate). The lagging index came in at 86.7 (86.3 in Feb), in line with the initial estimate. (RTTNews)

Japan is in talks with Myanmar on an investment treaty, with Tokyo eyeing terms to help its companies establish themselves in the isolated nation as it embraces democratic reforms. (AFP)

Germany and France pledged to do whatever was needed to keep Greece in the eurozone, with French Finance Minister Pierre Moscovici calling on Europe to support investment and economic growth in Greece “at a time when it is going through a violent recession.” (AFP)

China: Wen growth pledge spurs speculation of stimulus boost

Chinese Premier Wen Jiabao’s pledge to focus more on bolstering growth spurred speculation the government will step up efforts to combat a slowdown in the world’s second-largest economy. Wen called for “putting stabilizing growth in a more important position” and didn’t mention concern about inflation in remarks published yesterday by the official Xinhua News Agency. China may announce stimulus actions in the near term, according to a front-page commentary in the China Securities Journal, which is published by Xinhua. (Bloomberg)

EU: Merkel pressed to share German states’ debt costs
Chancellor Angela Merkel is being pushed by German states to share their borrowing costs to ease their budget squeeze, a policy she has opposed to confront the financial crisis in the rest of the euro region. The opposition Social Democrats plan to press Merkel on so- called Deutschland bonds at a meeting on 24 May, Norbert Walter- Borjans, finance chief of North Rhine-Westphalia, the nation’s biggest state, said in an interview. (Bloomberg)

EU: Construction output rebounded in March on Germany
European construction output rebounded in March, led by surging production in Germany and France, the euro area’s two largest economies. Construction in the 17-nation region increased 12.4% from February, when it declined a revised 10.4%, the European Union’s statistics office in Luxembourg said yesterday. From a year earlier, output slipped 3.8%. In Germany, Europe’s biggest economy, construction output climbed 30.7% from February, when it fell 16.9%, yesterday’s report showed. France reported a gain of 17.8%, while Italian production advanced 9.5%. Spain and Portugal had drops of 1.8% and 6.8%, respectively. The statistics office previously reported a monthly decline of 7.1% in the euro region for February, when unusually cold temperatures hurt construction output across Europe. Ireland and Greece are among countries that aren’t required to provide monthly data. (Bloomberg)

EU: Schaeuble pledges growth measures as Europe leaders prepare to meet
Germany will consider all ideas on bolstering euro area growth, Finance Minister Wolfgang Schaeuble said as he and his French counterpart, Pierre Moscovici, sought to fashion a new strategy amid the Greek electoral impasse. “We will engage all ideas constructively and find solutions in order to strengthen sustainable growth,” Schaeuble said after meeting Moscovici for the first time Monday in Berlin. Moscovici, who became finance minister last week, said President Francois Hollande wants everything on the table, including joint euro-area bonds.   The French push for growth comes as euro heads of state and government grapple with political support in Greece for parties which oppose the terms of the bailout the country has received from its partners. G8 leaders on May 19 urged Greece to stay within the euro area as polls in the country showed a close race between parties supporting and opposing the EU’s bailout deal. (Bloomberg)

EU: To accelerate aid payments to Spain on development projects
The EU said it agreed to speed up payments of infrastructure-development aid to Spain in a move that could accelerate the release of up to 939m euros ($1.2bn) for projects. Johannes Hahn, the EU commissioner  for regional policy, reached the agreement on Monday. The aid comes under the 27-nation bloc’s Cohesion Fund program. The EU said this will release up to 939m euros which can be paid quicker to beneficiaries of environmental and transport projects already completed. (Bloomberg)

US: Swaps clearinghouses said set for systemic designation
A panel of US regulators plans to designate some swaps clearinghouses as systemically important as soon as tomorrow, putting them under heightened supervision, according to two people familiar with the officials’ work. Clearinghouses are required to process most swaps in the $708trn over-the-counter derivatives market under provisions of the 2010 Dodd-Frank Act. The designation will be the Financial Stability Oversight Council’s first delineation of which companies aside from banks would threaten the financial system in the event of a failure. The panel is next scheduled to meet Tuesday. (Bloomberg)

US: End of extended benefits may lower US jobless rate
The declining US jobless rate may soon get another push downward as Americans lose extended unemployment benefits. From 7 April through 12 May, about 370,000 Americans in 23 states stopped getting the benefits, which provide payments for as long as 99 weeks, according to estimates from the National Employment Law Project. People in the remaining six states and the District of Columbia who still qualify may lose eligibility by September, bringing the program to an end, the report showed. Some recipients who lose their benefits may decide to accept jobs they view as less than ideal. Others may give up looking for work and drop out of the labor force, eliminating them from the ranks of the jobless. Those outcomes may trim the unemployment rate by 0.1 percentage point to 0.2 point in the next few months, according to economists Dean Maki at Barclays and Michael Feroli at JPMorgan Chase & Co. (Bloomberg)

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