Tuesday, June 19, 2012

20120619 0956 Global Economy Related News.

Leaders of emerging economies want the IMF to put in place reforms to increase their influence before they step up contributions to a fund to prevent future crises, and expect their money to be used only after current resources "are substantially utilised." (AFP)

After searching for months for cash, the IMF looks able to firm up a huge emergency "firewall" fund for crisis prevention after Chinese Vice Finance Minister Zhu Guangyao announced that big emerging economies would chip in to help realise the international lender’s US$430bn target. (AFP)

Out of 70 Chinese cities tracked by the government, 43 registered mom falls in home prices in May, the same number as Apr, the National Bureau of Statistics said. (AFP)

China is expected to kick-start a trial program that would allow banks to turn loans into securities and free up funds for lending. The securitisation program, endorsed by banking regulators and the Ministry of Finance, could remove as much as Rmb50bn of loans from balance sheets, according to senior Chinese banking executives. (WSJ)

China has promised Taiwanese investors on the mainland up to US$95bn in loans from four major state banks over the next three to four years as it tries to build commercial ties with the island. (The Jakarta Post)

Japan’s department store sales fell 1.0% yoy in May (+1.3% in Apr), marking the first yoy drop in three months. (Bloomberg)

The Bank of Japan raised its assessment on exports and output but warned of risks to the economy from slowing Chinese growth and fallout from Europe's sovereign debt crisis. (Reuters)

India: Unexpectedly holds rate as inflation curbs easing
India unexpectedly left interest rates unchanged as the fastest inflation among the biggest emerging markets narrows scope to bolster an economy struggling with trade and budget deficits and Europe’s debt turmoil. Governor Duvvuri Subbarao left the benchmark repurchase rate at 8%, the Reserve Bank of India said in a statement in Mumbai yesterday. Hours after the decision, Fitch Ratings cut India’s sovereign credit outlook to negative, joining Standard & Poor’s in signaling the country is at risk of losing its investment grade rating on concern growth will deteriorate. Subbarao’s room to counter the weakest Indian economic expansion in almost a decade is being limited in part by a plunge in the rupee, which has stoked an inflation rate already above 7%. (Bloomberg)

Fitch Ratings downgraded India's BBB- credit outlook from stable to negative yesterday in reflection of “India's limited progress on fiscal consolidation and, in particular, on reducing the central government deficit despite improvement in the financial health of state governments." (Agencies)

EU: Greek coalition talks enter second day amid Merkel aid warning
Greek election winner Antonis Samaras begins a second day of talks to form a coalition after holding “constructive” meetings with two party leaders, racing to forge a government that keeps bailout aid flowing. Samaras secured initial agreement yesterday from Socialist Pasok leader Evangelos Venizelos, the former finance minister who negotiated the second rescue, and said he’d hold further talks yesterday with Fotis Kouvelis, the leader of the Democratic Left party. If those three team up, they will hold a majority of 179 seats in the 300-member Greek parliament. With German Chancellor Angela Merkel offering little flexibility on emergency loans needed to keep Greece in the euro and avert economic collapse, leaders in Athens are scrambling to forge a government that can negotiate changes to some of the austerity measures linked to the EUR240bn (USD303bn) pledged by international lenders. (Bloomberg)

EU: Spanish bad loans jump, adding to recession concerns
More Spanish loans went unpaid in April, suggesting the country’s recession is forcing more companies and consumers into default as the government struggles to restore investor confidence. Bad loans as a proportion of total lending jumped to 8.72% in April, the highest since 1994, from 8.37% in March and 6.36% a year ago as EUR4.8bn (USD6.1bn) of credit soured in the month, according to data published yesterday by the Bank of Spain in Madrid. Spain’s 10-year government bond yields yesterday reached a euro-era record as concern the region’s debt crisis may deepen outweighed optimism about the results of Greece’s election. Euro finance chiefs called for a new government to emerge “swiftly” from yesterday’s contest, which showed the pro-bailout New Democracy party in a position to form a coalition. (Bloomberg)

US: Obama in Mexico grabs sideline meetings on European debt
President Barack Obama, working to help contain Europe’s sovereign debt crisis, pressed leaders of the world’s largest economies yesterday, including Germany’s Angela Merkel, to find a consensus plan as financial markets escalated pressure on Spain. Chiefs of the Group of 20 nations are in Los Cabos, Mexico, for two days of meetings as Spanish borrowing costs soared to a euro-era record and elections in Greece failed to damp the threat of contagion that threatens the global and U.S. economies as well as Obama’s re-election prospects. “We are going to be very busy,” Obama said as he left a morning meeting with the summit’s host, Mexican President Felipe Calderon. “We are confident that this will be a productive summit.” In addition to Calderon, Obama was meeting yesterday on the sidelines of the summit with Merkel and Russian President Vladimir Putin, with whom he discussed violence in Syria and other issues. The two leaders have been at odds over Syria, with Obama pressing Putin to help ease out Syrian President Bashar al- Assad. The Russian leader has protected Assad with United Nations Security Council vetoes and Russia has sold weapons to the Assad regime. (Bloomberg)

The US NAHB/Wells Fargo housing market index rose to 29 in Jun, the highest level in five years, from a revised 28 in May, matching consensus. (Bloomberg)

US median household net worth dived 35% to US$66,740 in the five year period, the Census Bureau said (comparisons with prior periods is difficult because of inflation adjustment issues). (Reuters)

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