Friday, August 17, 2012

20120817 1803 FCPO EOD Daily Chart Study.


FCPO closed : 2962, changed : +20 points, volume : higher.
Bollinger band reading : correction range bound.
MACD Histogram : rising higher, buyer in advantage.
Support : 2950, 2920, 2900, 2880, 2840 level.
Resistance : 2950, 2970, 3020, 3050 level.
Comment :
FCPO closed firmer with improving volume changed hand. Soy oil currently trading little higher after overnight closed marginally lower while crude oil price currently pulling back little lower after yesterday closed higher.
Positive sentiment continues today on better demand prospect and still relatively wide price discount compare to rival soy oil plus persisting U.S. dry weather.
Daily chart reading adjusted to suggesting a correction range bound market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120817 1734 FKLI EOD Daily Chart Study.


FKLI closed : 1645.5 changed : -5 points, volume : higher.
Bollinger band reading : pullback correction little upside biased.
MACD Histogram : turned falling, buyer seller battling.
Support : 1640, 1630, 1623, 1615 level.
Resistance : 1650, 1660, 1670, 1680 level.
Comment :
FKLI closed recorded loss with little improved volume traded doing 4 points discount compare to cash market closed closed slightly lower. Overnight U.S. markets closed higher and today Asia markets ended mostly recorded gains while European markets currently having positive development.
Better U.s. housing and housing permits data send world markets traded higher while awaits U.S. consumer confident data. Back home, last minutes liquidation ahead of long holidays send FKLI falling lower.
Technical chart study revised to calling a pullback correction little upside biased market development with MACD indicator turned having negative crossed down.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20120817 1701 Regional Markets EOD Daily Chart Study.

  DJIA chart reading : upside biased. 
 Hang Seng chart reading : correction range upside biased.
KLCI chart reading :  pullback correction little upside biased.

20120817 1658 Global Markets & Commodities Related...


GLOBAL MARKETS: Asian shares firmed as German Chancellor Angela Merkel voiced support for the European Central Bank's efforts to contain the debt crisis in the euro zone, soothing investor nerves and prompting them to shift money to riskier assets. European stock index futures pointed to a higher open, extending their sharp three-week rally, helped by growing hope that the worst of the euro zone crisis might be over. The S&P 500 closed at its highest level since early April on Thursday after comments from German Chancellor Angela Merkel that appeared to support the European Central Bank's efforts to fight the region's debt crisis, while Cisco Systems jumped after it raised its dividend. (Reuters)

FOREX: The euro held onto most of its gains from the previous session, bolstered by expectations for impending action to stem Europe's more than two-year old debt crisis.  (Reuters)

FOREX-Euro holds onto most gains on hopes for ECB action, Aussie slides
The euro held onto most of its gains from the previous session, bolstered by expectations for impending action to stem Europe's more than two-year old debt crisis.
"The Germans will fight tooth and nail to defend the euro ... while the EUR/USD remains very weak, the recent stabilisation in the currency is a big relief to policymakers," said Kathy Lien, Managing Director of FX Strategy for BK Asset Management.

Merkel backs Draghi, urges rapid move to closer union  (Reuters)
German Chancellor Angela Merkel voiced support for ECB President Mario Draghi's crisis-fighting strategy on Thursday and pressed her European partners to move swiftly towards a closer integration of fiscal policies, saying time was running short.

Euro zone heading into another recession (Reuters)
The euro zone will slip into recession and won't grow until 2013, according to the latest Reuters poll of economists who also don't expect any new aggressive policy response from the European Central Bank.

Russia grain stocks at farms at lowest since 2006 (Reuters)
Russia's grain farms started the 2012/13 marketing season with stocks at historically low levels due to strong demand, reflecting fears of a possible restriction on Russia's grain exports.

GRAINS: U.S. wheat rose for a third straight session on renewed concerns of reduced supplies from Russia, although the market is still facing a fourth straight week of declines as a drought-driven rally in grain markets loses momentum. (Reuters)

Chevron appeals Brazil ban, seeks oil field restart (Reuters)
Chevron, the No. 2 U.S. oil company, has appealed against an injunction banning it and its drilling contractor Transocean Ltd from operating in Brazil while civil and criminal charges over an oil spill last November are judged.

OIL: Brent crude slipped below $115 as supply worries eased on a possible release of oil reserves by the United States while Israeli comments on Iran reduced fears of a potential conflict in the Middle East that could disrupt exports. (Reuters)

Euro Coal-Prices steady, market watches Colombia strikes
LONDON, Aug 16 (Reuters) - Physical European prompt coal prices were unchanged at around $93-$94 a tonne for a second day on Thursday as the market waited to see when Colombian shipments would resume and whether that would trigger a bout of selling and a further price fall.
Prices dropped by $2 a tonne on Tuesday after a Colombian court ruled that a strike by workers on the Fenoco railway was illegal and the workers voted to return to work, but the union is waiting for the Labour Ministry to confirm whether the vote was legal or not.

Indonesian tin producers cut exports due to low prices
JAKARTA, Aug 16 (Reuters) - At least six producers in Indonesia's main tin mining hub of Bangka Belitung have cut exports on the grounds that current global prices for the metal are too weak, company executives said.
Indonesia is the world's top tin exporter, but with current low demand thinning producers' profit margins to below cost, there may be further disruptions to shipments, officials said.

Brazil's Vale expects iron ore price to recover in Sept (Reuters)
Brazil's Vale, the world's No. 2 mining company, expects iron ore prices to start recovering in September due to falling stocks in China, Chief Executive Murilo Ferreira said on Thursday.

Iron Ore-Shanghai rebar hits record low, ore at 2-1/2 yr trough
SINGAPORE, Aug 17 (Reuters) - Shanghai steel futures fell to record lows on Friday and are heading for their fifth weekly loss in six as slower demand in top steel market China drags down prices, trapping iron ore at 2-1/2 year troughs.
Brazil's Vale , the world's biggest iron ore miner, said it expects prices to start rebounding next month as Chinese steel mills replenish stockpiles, although traders said they were unsure given that the sustained decline in prices since early July has failed to draw buyers back into the spot market.

China aluminium buying may shore up LME prices
HONG KONG, Aug 16 (Reuters) - Chinese manufacturing plants and merchants have increased purchases of spot primary aluminium in Asia, traders said, to take advantage of London Metal Exchange prices that are down more than a fifth from their year highs.
The spike in buying by the world's top aluminium consumer  comes despite premiums for spot metal over LME prices rising by a quarter since late May and could help prop up LME prices.

Brazil's Vale expects iron ore price to recover in Sept
RIO DE JANEIRO, Aug 16 (Reuters) - Brazil's Vale, the world's No. 2 mining company, expects iron ore prices to start recovering in September due to falling stocks in China, Chief Executive Murilo Ferreira said on Thursday.
Ferreira said supplies of the metal in China, Brazil's main trading partner, would last 20 days rather than the previous 30 days and could soon pressure global markets.

Gold demand hits lowest in over 2 years in Q2 -WGC
LONDON, Aug 16 (Reuters) - Gold demand fell to its lowest level in more than two years in the second quarter, the World Gold Council said on Thursday, as a drop in buying in major consumers India and China outweighed a record quarter for central bank purchases.
Overall gold consumption fell 7 percent or nearly 76 tonnes to 990 tonnes in the three months to June, its lowest quarterly level since the first three months of 2010, the WGC said in its quarterly Gold Demand Trends report.

Chinese smelters want gov't to revive metal stockpiling scheme
HONG KONG, Aug 16 (Reuters) - Hit by slowing economic growth, China's smelters are lobbying the government to revive a state-run scheme to stockpile industrial metals that would support prices and possibly lead to a surge in imports, industry sources said on Thursday.
China is the world's top consumer of industrial metals such as copper and aluminium. After the 2008/09 financial crisis, smelters successfully lobbied the government to allow the State Reserves Bureau (SRB) to launch an ad-hoc stockpiling programme that triggered an increase in imported metals in 2009.

Weak monsoon to hit Indian gold demand in H2- WGC
MUMBAI, Aug 16 (Reuters) - Gold demand in India, the world's top consumer, is likely to fall by a fifth in the second half of 2012 from a year ago on higher prices and as weak monsoon rains hurt incomes of rural households, a senior World Gold Council (WGC) official said.
Lower demand during the second half will drag the country's total demand in 2012 to 688-700 tonnes from 933.4 tonnes a year ago, Ajay Mitra, managing director of India and the Middle East at the WGC, said on Thursday.

BASE METALS: London copper extended gains, with German Chancellor Angela Merkel's public support for the European Central Bank's efforts to fight the euro zone debt crisis boosting appetite for risk.  (Reuters)

PRECIOUS METALS: Gold traded nearly flat, holding on to gains in the previous session from its biggest daily rise in two weeks on German Chancellor Angela Merkel's support for more action by the European Central Bank to contain the bloc's debt crisis.  (Reuters)

METALS-Copper rises on hopes for firm action on Europe crisis
London copper extended gains, with German Chancellor Angela Merkel's public support for the European Central Bank's efforts to fight the euro zone debt crisis boosting appetite for risk.
"Merkel's comments gave the markets some hope and those who have been looking for opportunities to buy in did that," said a Shanghai-based trader.

PRECIOUS-Gold steady; heightened hopes of ECB action support
Gold traded steady, holding on to gains in the previous session from its biggest daily rise in two weeks on German Chancellor Angela Merkel's support for more action by the European Central Bank to contain the bloc's debt crisis.
"The market is still moving on changing expectations of central bank actions, and is so far unwilling to push prices out of the $1,590 to $1,630 range," said Nick Trevethan, a senior commodity strategist at ANZ in Singapore.

Baltic index dips as capesize rates touch 3-year lows
Aug 16 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Thursday as rates for capesize vessels sank to touch more than three-year lows due to chronic oversupply and limited activity.
The main index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, fell 8 points or 1.1 percent to 720 points.

Weak rates weigh on DryShips results, shares down
Aug 16 (Reuters) - Weak shipping rates weighed on DryShips Inc's  quarterly results, taking the shine off a jump in demand at its drilling unit Ocean Rig UDW  .
Shares of the company fell as much as 7 percent in extended trade. They closed at $2.31 on Thursday on the Nasdaq.

Asia Dry Bulk-Rates likely to keep falling on China slowdown
SINGAPORE, Aug 16 (Reuters) - Rates for panamax ships on key Asian dry bulk freight routes are expected to fall towards lows for the year next week, as an economic slowdown in China cuts into demand for seaborne coal and iron ore, ship brokers said on Thursday.
In the panamax market, the rate for vessels travelling via the transpacific route on Wednesday dropped nearly 8 percent to a two-month low of $5,822 a day, from $6,316 last week. Rates have struggled to recover since hitting a three-year low of $4,895 a day in June.

20120817 1121 Global Markets & Commodities Related.


GLOBAL MARKETS-Shares firm on Merkel remarks
TOKYO, Aug 17 (Reuters) - Shares firmed on Friday as German Chancellor Angela Merkel voiced support for the European Central Bank's efforts to contain the euro zone's debt crisis, soothing investor nerves and prompting them to scale back safety bids.
Merkel said ECB President Mario Draghi's declarations last month to do whatever it takes to save the euro and raising the prospect of buying the bonds of stricken Spain and Italy were "completely in line" with the approach taken by European leaders.

COMMODITIES-Most markets stronger on positive U.S. data
NEW YORK, Aug 15 (Reuters) - Most commodity markets ended stronger on Wednesday backed by some positive U.S. economic data and as investors hoped that the European Central Bank would provide economic stimulus to debt-burdened Italy and Spain.
"Sentiment is still pretty negative towards the growth outlook and markets now are waiting to see whether we do get some sort of policy response and if so, what form that takes and what the implications could be for metals demand," said Gayle Berry, analyst at Barclays Capital.

OIL-Oil at 3-mth peak on stimulus hope, Middle East worry
NEW YORK, Aug 16 (Reuters) - Oil prices hit a three-month peak on Thursday as comments from German Chancellor Angela Merkel that appeared to back the European Central Bank's efforts to combat the euro zone crisis lifted equities, pressured the dollar and fed hopes for more economic stimulus.
"Oil got a pop on the Merkel comments, as did stocks, and the dollar is weaker and U.S. crude got some follow-through buying after pushing above yesterday's high," said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Connecticut.

White House studying potential oil reserve release
WASHINGTON, Aug 16 (Reuters) - The White House is "dusting off old plans" for a potential release of oil reserves to dampen rising gasoline prices and prevent high energy costs from undermining the success of Iran sanctions, a source with knowledge of the situation said on Thursday.
U.S. officials will monitor market conditions over the coming weeks, watching whether gasoline prices fall after the Sept. 3 Labor Day holiday, as they historically do, the source said.

NATURAL GAS-US natgas futures end down for 2nd day on mild forecast
NEW YORK, Aug 16 (Reuters) - Front-month U.S. natural gas futures ended lower on Thursday for the second straight day following wild price swings, after a government report showed a smaller-than-expected weekly inventory build.
"I think a number of factors were at play in taking the zestiness out of the bulls," Gelber & Associates analyst Pax Saunders said.

EURO COAL-Prices steady, market watches Colombia strikes
LONDON, Aug 16 (Reuters) - Physical European prompt coal prices were unchanged at around $93-$94 a tonne for a second day on Thursday as the market waited to see when Colombian shipments would resume and whether that would trigger a bout of selling and a further price fall.
"Although the union is challenging the legality of the vote and will probably appeal the court decision, any reversal would likely be some months down the line, with the tighter prompt engendered by these strikes still likely to fade," Credit Suisse said in a research note on Thursday.

Emerging countries will not match China metals appetite
LONDON, Aug 16 (Reuters) - The next group of emerging countries to urbanise will probably not sustain the voracious demand for metals demonstrated by China over the last decade, but could match its thirst for oil, commodities experts say.
China's huge appetite for metals over the last decade to build skyscrapers and infrastructure has sent metals prices surging, including copper over 600 percent, and sparked a wave of fund investment in the sector.

20120817 1052 Malaysia Corporate Related News.

Affin Holdings announced that it has received approval from Bank Negara Malaysia to start negotiations with DRB-Hicom and Khazanah to acquire an equity stake in Bank Muamalat. The negotiations are to be completed on or before 31 Dec 12. (BMSB)

WCT Bhd has been awarded RM1bn highway project from the Oman government via a joint venture with Oman Roads Engineering Company LLC.The company said the Ministry of Transport and Communications of Oman had accepted its tender for the construction and completion of Batinah Expressway, Package 2 in Oman. The scope of works comprises the construction and completion of a 44.75km dual four lanes expressway, and is expected to complete in 36 months.The joint venture with Oman Roads are in the ratio of 80:20.

Effective 1 Sep 2012, Amir Hamzah Azizan, 45, will step down as CEO of Petronas Dagangan and will be replaced by Aminul Rashid Mohd Zam Zam, 47. Amir will remain as a board member. (BMSB)

Perdana Petroleum is looking into the possibility of buying more vessels as it feels that the market is now slowly moving into the right direction, said its managing director, Shamsul Saad. The company presently has 14 vessels which comprises of eight units of anchor handling tug supply (AHTS) vessels, two 5,000 BHP AHTS, six mid-size AHTS between 10,000 and 12,000 BHP and six maintenance & hook-up work vessels being four work barges and two workboats. “We are working closely with Dayang Enterprise for our long term business model. We are aiming to participate in more long term charters towards the year end,” said Shamsul. (StarBiz)

Perdana Petroleum shareholders yesterday approved the company's proposed disposal of its 26.9% stake in Petra Energy to Wah Seong for RM97m or RM1.68/share. (BMSB)

Khazanah Nasional will unveil the names of its remaining 3 non-core units where it will either reduce its stakes or divest them entirely in the next 3 to 6 months. Its managing director, Tan Sri Azman Mokhtar, said the three had been identified and would go through an evaluation phase before an announcement could be made. "We expect to announce it during announcement of the first-quarter financial results in January next year and by that time we will able to provide more details. “The 3 companies could come from any sectors," he told reporters. (Bernama)

Reliance Industries Ltd, is in talks with British oil giant BP to buy its petrochemical plant in Malaysia. "Serious discussions are happening," The Economic Times reported, quoting an investment banker with direct knowledge of the matter. It said the meeting between Reliance Industries and BP officials with regard to the purified terephthalic acid (PTA) plant in Kuantan, Pahang, with an annual capacity of 610,000 tonnes, was held in Hong Kong. BP Malaysia's manager for communication and external affairs Zukifli Othman, however, said the company never comments on speculation. PTA is the key raw material for the manufacture of polyester for fabric, as well as audio and videotapes, and in making plastic drink bottles. BP kicked off a US$38bn (RM118.5bn) divestment programme in 2010 to reposition itself as a smaller company with the focus on promising markets, and raise cash to shore up investor confidence, following the oil spill in the Gulf of Mexico. Since then, it has divested assets worth US$24bn (RM74.8bn). (Economic Times India)

Government: Khazanah plan to divest or reduce stakes in 3 companies in 3-6 months
Khazanah Nasional will unveil the names of its remaining 3 non-core units where it will either reduce its stakes or divest them entirely in the next 3 to 6 months. Its MD, Tan Sri Azman Mokhtar, said the three had been identified and would go through an evaluation phase before an announcement could be made. He said Khazanah expects to announce it during announcement of the first-quarter financial results in January next year and by that time we will able to provide more details. (Bernama)

Panasonic Malaysia is targeting at least 1,000 subscribers a month for its private branch exchange (PBX) solutions, following its tie-up with Maxis and Atrixx International. Panasonic Malaysia, Maxis and Atrixx yesterday signed a collaborative arrangement agreement to provide cost-saving benefits on telephone charges and office communication when using a Panasonic PBX, Maxis Global System for Mobile Communications (GSM) Line and Atrixx GSM Gateway. Lee said under the collaborative deal, Panasonic will provide the PBX system which connects to normal fixed voice service and Atrixx will provide a GSM Gateway which bridge Maxis GSM wireless to a Panasonic PBX system. Maxis will offer a GSM Line promotion via its Maxis Fixed Line Saver (FLS) with Unity Hotline, where normal fixed voice service is extended via Maxis GSM network. Lee also said, the service aims to provide small medium industries and small and medium enterprises (SMEs) with value-added cost-saving benefits through this unique collaboration. (BT)

KNM Group announced that its Heads of Agreements with Zecon and Gulf Asian Petroleum dated July 25, 2011 have duly lapsed and no financial close have been reached as at to-date. In filings with Bursa Malaysia, it said no final definitive agreements have been executed and there are no costs to be borne by either party. (StarBiz)

Alam Maritim has been awarded a contract for the provision of shore approach pipeline installation work. It said the 30-day contract is estimated at RM50m on a lump-sum basis. (Bernama)

1Malaysia Development Bhd (1MDB) plans to raise as much as US$2bn in an IPO of its power assets. The IPO might take place in the first quarter of next year. 1MDB has spent RM10.8bn purchasing the electricity generation plants. Proceeds would be used to repay debt. (Bloomberg)

Admuda Sdn Bhd, which is 60% owned by Brahims Holdings Bhd, has raised its investment to RM150m from RM130m previously to set up a sugar refinery in Sarawak. "We're borrowing about RM130m from Maybank. The money is to build the sugar refinery in Kuching and working capital to import raw sugar," said Admuda chairman Tan Sri Abdul Aziz Shamsudin. (BT)

Malaysian Biotechnology Corp Sdn Bhd (MBC) has appointed Professor Emeritus Datuk Dr Zakri Abdul Hamid as chairman effective Aug 15. Dr Zakri is currently the Science Adviser to the Prime Minister. (BT)

Felda Global Ventures: Sets sights on Sarawak Plantation
Financial executives familiar with the deal said Felda Global Ventures Holdings (FGVH) is eyeing a meaningful stake in Sarawak Plantation, controlled by Datuk Abdul Hameed Sepawi and the state government. FGVH, the executives said, is seeking to grow its landbank and production of crude  palm oil via the acquisition and is looking at buying more than the 30.39% that Abdul Hameed holds in Sarawak Plantation to grow its plantation acreage. (Financial Daily)

MISC: Back to profit in 2Q FY2012
MISC  is back in the black in the  2Q2012, after two consecutive quarters of  losses. The company's net profit rose 209% to RM380.95m on the back of RM2.49bn revenue in the same quarter of the previous year. MISC said it had recorded losses in the last two quarters due to provisions made in respect of its planned cessation of its the liner related business. It said that group revenue from continuing operations of RM2.48bn had declined slightly by about 4%, compared with the previous corresponding period. This was largely attributed to lower earning days and freight rates in the chemical and petroleum businesses. Despite lower revenue, group profit before tax from continuing operations has increased to RM458.5m from RM379.6m in  2Q FY2011 driven mainly by higher contributions from the offshore and tank terminal businesses. (StarBiz)

DRB-Hicom: Move to pare down borrowings to acquire Proton and Pos Malaysia
DRB-Hicom seems to reverse its acquisition trail as the conglomerate sells its financial services assets after taking Proton Holdings private in addition to buying an equity interest in Pos Malaysia. DRB-Hicom announced on Thursday that Affin Bank had obtained Bank Negara Malaysia’s approval to start negotiation to buy the group’s stake in Bank Muamalat Malaysia, in which it holds 70% equity interest. (Financial Daily)

Sime Darby: Files RM863m suit in Qatar
Sime Darby has filed a 1bn Qatar riyals (RM863m) legal suit against Qatar Petroleum (QP) in relation to an engineering project offshore in Qatar undertaken by the Malaysian conglomerate’s wholly-owned subsidiary, Sime Engineering Sdn Bhd (SDE). Sime Darby told Bursa Malaysia that on Aug 15, SDE had filed a statement of claim at the Qatar Court against QP. The claim was regarding the outstanding involves, compensation, performance bonds and additional costs in relation to the engineering project, pursuant to a contract signed by both SDE and QP on Sep 27, 2006. (StarBiz)

Delloyd Ventures: Challenging year ahead
Delloyd Ventures expects the operating environment for its automotive business to remain challenging for FY2013, due to higher raw material and personnel costs. Its group MD Datuk Seri Tee Boon Kee said overhead cost is expected to increase and put a dent on margins due to the new minimum wage policy. Nevertheless, he said Delloyd Ventures will strive to minimize higher costs by improving efficiency and increasing sales volume. (Financial Daily)

Glove: Medical device makers may get tax breaks
The government will consider giving tax breaks and non-fiscal incentives to rubber glove, condom and catheter manufacturers as the industry moves away from being labour intensive to invest in advanced technologies and generate a high multiplier effect on the economy. Deputy International Trade and Industries Minister Datuk Mukhriz Mahathir said the rubberbased medical devices industry is one where they can consider according a second round of tax holiday or investment tax allowance. (Business Times)

Glove: Thailand, Malaysia and Indonesia agree to cut rubber shipments
Thailand, Malaysia and Indonesia agreed to cut rubber exports by 300,000 metric tons to boost prices, Thai Deputy Minister for Agriculture and Agricultural Cooperatives Nattawut Saikuar said. Futures advanced. Thailand will make the biggest reduction, he told reporters. The countries will also cut down aging trees on an area of about 100,000 hectares, said the International Tripartite Rubber Council. (Bloomberg)

20120817 1052 Local & Global Economy Related News.

Malaysia’s overall financial literacy ranking has improved from 9th in 2010 to 6th, with a score of 68 index points out of 100, according to the latest MasterCard Worldwide Index of Financial Literacy survey. Measured on three major components of basic money management, financial planning and investment, Malaysia demonstrated an overall increase in all three categories, said MasterCard in a press release. (Star)

Global demand for gold has fallen to its lowest level in two years owing to less buying in the main markets of India and China, despite rising demand from central banks, the World Gold Council said. Worldwide demand fell 7.0% yoy in 2Q12, down to 990 tonnes worth an estimated US$51.2bn, with gold prices on average 7.0% higher than a year earlier. (CNA)

US housing starts slipped 1.1% mom in Jul to a 746,000 pace (+6.8% in Jun), slightly lower than the market expectation of 750,000. Housing permits gained 6.8% mom in Jul (-3.1% in Jun) to 812,000 units, topping market expectations for 766,000 units. (Bloomberg)

US jobless claims rose 2,000 in the 11 Aug week to 366,000 (a revised 364,000 in the earlier week), although this level still compares well with levels in Jul. Economists were expecting a gain to 365,000. (Bloomberg)

Eurozone CPI fell 0.5% mom in Jul (-0.1% in Jun), whilst on a yoy basis, the gauge rose 2.4% in Jul, the same as in Jun. The data were unchanged from the preliminary release and also in line with economists’ forecasts. Core inflation picked up marginally, rising 1.7% yoy in Jul from a 1.6% gain in Jun. (Dow Jones)

European Union officials are seeking to prevent the 17 states that share the euro from dominating its forum for resolving disputes among financial regulators, the European Banking Authority, according to two people familiar with the plans. (Bloomberg) German Chancellor Angela Merkel backed the European Central Bank’s insistence on conditions for helping reduce borrowing costs in indebted countries, saying Germany is “in line” with the ECB’s approach to defending the euro. (Bloomberg)

China's trade outlook for 2012 is worsening, darkened especially by growing problems in Europe, the Commerce Ministry said as it revealed the longest run of falling inward investment growth in the economy since the 2008 to 2009 global crisis. (Reuters)

China’s foreign direct investment fell 8.7% yoy to US$7.58bn in Jul, the lowest level in two years. Chinese financial institutions sold a net Rmb3.8bn of foreign currency last month, indicating capital is flowing out as property curbs and weakness in exports slow growth and the yuan weakens. (Bloomberg)

The Japanese government expects a key gauge of national price trends to rise for the first time in 16 years in the next fiscal year, in a sign of confidence that a recent economic recovery is helping to bring the country out of nearly two decades of deflation. (AWSJ)

South Korea’s jobless rate was 3.1% last month compared to 3.2% in Jun, whilst the seasonally adjusted rate was also at 3.1% in Jul, down from Jun's 3.2%. (AFP)

In order to sustain their long-term wellbeing and wealth, Asian economies should keep public debt below 60% of GDP, according to the Asian Development Bank. (Bangkok Post)

Singapore’s bonds are rising at a pace that’s more than 10 times their global peers as a prolonged debt crisis in Europe leaves the island state among just seven countries ranked as top-rated havens. (Bloomberg)

64% of recent graduates in Singapore expect a monthly salary of at least S$3,000 for their first job, according to an annual survey conducted by JobsCentral. (Bernama)

Thailand, Malaysia and Indonesia agreed to cut rubber exports by 300,000 metric tons to boost prices, Thai Deputy Minister for Agriculture and Agricultural Cooperatives Nattawut Saikuar said. The countries will also cut down aging trees on an area of about 100,000 hectares. The combined measures will remove 450,000 tons from the market. (Jakarta Globe)

Indonesia plans to increase government capital spending by 15% next year as President Susilo Bambang Yudhoyono pledges to boost infrastructure that he says is needed to ensure sustainable growth. Capital spending will rise to Rph193.8tr (US$20bn) in 2013, Yudhoyono said in his annual budget address. The budget deficit may narrow to 1.6% of GDP from 2.23%, as economic growth is forecast to accelerate to 6.8% from an estimated 6.3- 6.5% this year, he said. (Bloomberg)

The Indonesia government suggested raising the price of subsidized fuel oil price of Rp1,500/litre to Rp6,000/litre in 2013, just like what was planned earlier this year, an official in the Ministry of Energy and Mineral Resources says. Meanwhile, the government has not yet calculated the raised tariff on basic power. (IFT)

Bank Indonesia expects its new rule shortening hedging duration to a minimum of one week will be effective in one to two months, and will help stabilize the rupiah that is pressured by a growing current account deficit. (The Jakarta Globe)

Indonesia risks losing a "golden opportunity" to boost economic growth if it fails to improve infrastructure and streamline investment regulations, President Susilo Bambang Yudhoyono warned. "We realise that we still have a number of constraints regarding the investment climate and legal uncertainties," he said. "This has the potential to create uncertainty... and loss of opportunity to achieve higher and better-quality growth," he said. (CNA)

The Indonesian government plans to increase energy subsidies by more than Rp70tr to Rp274.7tr next year, according to the 2013 state financial note. Out of the total planned energy subsidies, Rp193.8tr will be allocated for fuel subsidies while the rest is for electric subsidies. (The Jakarta Post)

Vietnamese Prime Minister Nguyen Tan Dung assured that the country will continue working with Japan to deepen bilateral cooperation in all areas, specifically economics, trade, investment and development aid. (Vietnam News)

Philippines’ Bureau of Internal Revenue collected P83.5bn in Jul, falling short of its monthly target by P3.8bn after a rare feat in Jun when it exceeded the month’s goal by about 8%. (Business Inquirer)

Philippine banks have enough capital to withstand risks such as loan defaults prompted by exposure of corporate borrowers to the raging eurozone crisis, according to the Bangko Sentral ng Pilipinas. (Business Inquirer)

20120817 1039 Global Markets Related News.

Asia FX By Cornelius Luca - Thu 16 Aug 2012 16:44:39 CT (Source:CME/www.lucafxta.com)
The appetite for risk improved on Wednesday after German Chancellor Merkel supported ECB President Draghi's comments about defending the euro. This always makes for a nice catalyst in the short term, but talk remains cheap. The European and commodity currencies advanced, while the yen remains under pressure. The US stock markets advanced. Gold, oil and silver gained as well. The short-term outlook for most of the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short only the yen.  Good luck! 

Overnight
US: Housing starts fell 1.1% to an annual rate of 746,000 in July from the revised June estimate of 754,000. However, new building permits surged 6.8% to a seasonally adjusted annual rate of 812,000, the highest level since August of 2008, from 755,000.
US: The initial jobless rose to 366,000 from the previous week's revised figure of 364,000 (from the 361,000 originally reported for the previous week).
US: the Philadelphia Fed manufacturing improved to −7.1 in August from −12.9 in July.
Canada: Foreign portfolio investment in Canadian securities contracted $7.89 billion in June from +$26.11 billion in May.
Canada: Manufacturing shipments fell 0.4% in June from in 0.0% May.

Most Asian Stocks Climb After U.S. Housing Permits Rise (Source: Bloomberg)
Most Asian stocks rose, with the region’s benchmark index trading near a three-month high, as U.S. housing permits reaching a four-year high helped temper concerns about the strength of a global recovery. Santos Ltd. (STO), an Australia’s oil and gas producer that reported earnings today, climbed 3.6 percent as oil traded above $95 a barrel on the improving U.S. economic outlook. Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded lender, rose 1.1 percent as German Chancellor Angela Merkel backed the European Central Bank’s conditions for assisting indebted countries. Samsung Electronics Co. (005930), South Korea’s largest exporter, fell 2.8 percent as it rested its case in one of its patent-infringement cases against Apple Inc. The MSCI Asia Pacific Index (MXAP) rose 0.2 percent to 120.74 as of 9:16 a.m. in Tokyo, with more than three stocks climbing for every two that declined. Markets in Hong Kong and China are yet to open. The measure closed at 120.93 on Aug. 9, the highest since May 8. 
“The U.S. economic deterioration is being curtailed,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Euro-region officials are going along with the ECB, reducing uncertainty.” The Asia-Pacific gauge fell 6.6 percent from this year’s high on Feb. 29 through yesterday on concern Europe’s debt crisis and slower growth in China and the U.S. are hurting earnings. 

Japanese Stocks Gain on U.S. Building Permits, Merkel Remarks (Source: Bloomberg)
Japanese stocks rose for a second day, with the Nikkei 225 (NKY) Stock Average heading for the highest week since May 4, after U.S. building permits reached a four- year high and German Chancellor Angela Merkel reiterated her commitment to working with the European Central Bank. Uniden Corp., an electronic equipment maker that counts North America as its biggest market, rose 1.7 percent. Nippon Sheet Glass Co. (5202), a glassmaker that generates about 40 percent of its sales in Europe, gained 1.8 percent. Yamaha Motor Co., Japan’s second-largest maker of motorcycles, jumped 5.1 percent after its investment rating was boosted by Credit Suisse Group. “The U.S. economic deterioration is being curtailed,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Euro-region officials are going along with the ECB, reducing uncertainty. There’s less anxiety out there so we should investors continuing to buy.” 
The Nikkei 225 rose 0.3 percent to 9,119.54 as of 9:30 a.m. in Tokyo, heading for a weekly gain of 2.6 percent gain. Volume on the gauge was 7.6 percent above the 30-day average even with many investors taking the week off for O-bon holidays. The broader Topix gained 0.3 percent to 761.30, with about seven shares advancing for every six that fell. 

S&P 500 Rises to Highest Since April on Housing, Cisco (Source: Bloomberg)
U.S. stocks advanced, sending the Standard & Poor’s 500 Index toward the highest level since April, as building permits jumped in July to a four-year peak. Cisco Systems Inc. rallied 8 percent on better-than- expected earnings while Sears Holdings Corp. climbed 5.6 percent as its loss narrowed. Facebook Inc. dropped 6.6 percent as 271.1 million of its shares will be allowed to trade. Wal-Mart Stores Inc. fell 3.5 percent after posting second-quarter sales that trailed analysts’ estimates. The S&P 500 rose 0.3 percent to 1,409.34 at 10:46 a.m. in New York. The Dow Jones Industrial Average added 34.07 points, or 0.3 percent, to 13,198.85. Trading in S&P 500 companies was almost in line with the 30-day average at this time of day. 
“We’re in a situation where the economy is growing, jobs are being created, and the consumer seems to be feeling better about spending,” Jason Benowitz, who helps manage $5 billion at Roosevelt Investment Group Inc. in New York, said in a phone interview. “The fact permitting is improving in the housing market suggests the future is going to be there. On the other hand, you have to counterweight the less likely chance of further monetary easing.” New-home construction in the U.S. fell 1.1 percent to a 746,000 annual rate from June’s 754,000 pace, Commerce Department figures showed today in Washington. The median estimate of 79 economists surveyed by Bloomberg News called for 756,000. Building permits, a proxy for future construction, rose to an 812,000 pace, the most since August 2008.

Jobless Claims 
Jobless claims climbed by 2,000 to 366,000 in the week ended Aug. 11, Labor Department figures showed. The median forecast of 45 economists surveyed by Bloomberg News called for an increase to 365,000. The four-week moving average, a less volatile measure, dropped to 363,750, the fewest since the week ended March 31. The Fed Bank of Philadelphia’s general economic index increased to minus 7.1 in August from minus 12.9 the previous month. Economists forecast the gauge would improve to minus 5, according to the median estimate in a Bloomberg survey. A reading of zero is the dividing point between contraction and expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware. The S&P 500 added 0.1 percent yesterday as investors weighed manufacturing data for clues on whether the Federal Reserve will move to stimulate the economy. 
The index has fluctuated around 1,400 for the past seven trading sessions, with intraday price movement averaging 0.6 percent, the smallest fluctuation over a comparable period since January 2011, according to data compiled by Bloomberg. 

European Stocks Climb to Highest Since March (Source: Bloomberg)
European stocks advanced to their highest level since March as U.K. retail sales beat forecasts and U.S. building permits jumped to their highest in four years. Novozymes A/S (NZYMB), the world’s biggest maker of industrial enzymes, gained 4.8 percent after reporting second-quarter profit that exceeded analysts’ projections. Mediaset SpA (MS) surged 11 percent amid reports Middle East investors are buying shares in the Italian broadcaster. Telekom Austria AG (TKA) slid 5.6 percent after cutting its profit and sales forecast for 2012. The Stoxx Europe 600 Index (SXXP) climbed 0.3 percent to 271.22 at the close, its highest level since March 19. European stocks have rallied for the last 10 weeks amid optimism that policy makers will do more to stimulate the global economy. The Stoxx 600 has surged 16 percent from its lowest level this year on June 4. 
“It seems that investors are comfortable with building a degree of risk in anticipation of stimulus measures from the Federal Reserve and the European Central Bank,” said Ishaq Siddiqi, a market strategist at ETX Capital in London. “The weaker the data, the more likely we are to see a response from the Fed.” The volume of shares changing hands on the Stoxx 600 was 17 percent lower than the average of the last 30 days, according to data compiled by Bloomberg. In the U.K., retail sales rose 0.3 percent in July, the Office for National Statistics said in London. The median forecast of economists surveyed by Bloomberg had called for a 0.1 percent decline. The ONS also revised sales in June to a 0.8 percent gain from a 0.1 percent advance. 

Recap Stock Index Market Report (Source: CME)
The September S&P 500 rallied throughout the US trading session and registered a new contract high. Early support for stocks came on favorable earnings from Cisco Systems and news that they were increasing their dividend. Meanwhile, those gains might have been tempered following earnings from Wal-Mart, which lowered their forward outlook. US economic data this morning was mostly in line with expectations, except for a Philadelphia Fed survey that showed another month of contracting business activity in August. Well-received comments from German Chancellor Angela Merkel in support of efforts taken by the ECB to halt the crisis fueled a mid day rally. Traders said that the market continued to rally during the afternoon hours on light volume. The market receives earnings after the close from Gap Inc.

Most Emerging Stocks Rise as U.S. Building Permits Climb (Source: Bloomberg)
Emerging-market stocks advanced as U.S. building permits jumped in July to a four-year peak, offsetting concern of declining foreign direct investment in China, the world’s second-biggest economy. The MSCI Emerging Markets Index (MXEF) climbed 0.2 percent to 975.82. Brazil’s Bovespa stock index rose to a three-month high as a surprise increase in retail sales buoyed gains for homebuilder PDG Realty SA Empreendimentos & Participacoes. (PDGR3) China Mobile, the biggest phone company by subscribers, fell the most in 12 months as profit growth slowed to the weakest pace in at least 13 years. Building permits, a proxy for future construction, rose to an 812,000 pace last month, the most since August 2008, the Commerce Department said. Retail sales in Brazil jumped more than economists expected in June. Investment in China declined 8.7 percent in July to the lowest level in two years, signaling reduced confidence that economic growth will accelerate. 
Premier Wen Jiabao said downward pressure on economy remained relatively large. “Every significant data point gives you a state of play on the world’s largest economy and that obviously plays through to emerging market assets,” David Semple, who helps oversee about $33 billion as director of international equity at Van Eck Global, said by phone from New York. “People had set themselves up for even worse news from China. There are some glimmers of hope.” 

Morgan Stanley Cuts Emerging Stocks Target, Raises Cash (Source: Bloomberg)
Morgan Stanley (MS) cut its 2012 forecast for emerging-market stocks amid concern the global economy will grow less than estimated and after the benchmark gauge rallied as much as 11 percent from this year’s low in June. Morgan Stanley reduced its year-end estimate for the MSCI Emerging Markets Index by 7 percent to 1,130, compared with 1,210 previously. The target still implies a gain of about 16 percent from the current level. The brokerage also cut its targets for the MSCI Asia Pacific excluding Japan Index by 6 percent to 500, and the Hang Seng China Enterprises Index by 9 percent to 12,200. The MSCI Emerging Markets Index rose to a three-month high of 979.28 on Aug. 9, an increase of about 11 percent from the gauge’s June 4 low, amid optimism that central banks will introduce new stimulus measures. The gauge fell 0.1 percent to 973.08 as of 1:50 p.m. in Hong Kong today. 
“We take some profits after the recent rally and scale back our fully invested overweight equities position, raising cash from zero to 4 percent,” Morgan Stanley analysts led by Jonathan Garner wrote in a report today. The brokerage recently cut its 2012 and 2013 growth estimates for China and South Korea along with major advanced and emerging economies. The MSCI Emerging Markets Index has advanced 6.2 percent this year, compared with an 8.1 percent gain by the MSCI World Index (MXWO) of developed countries. The emerging-markets gauge trades at 10.8 times estimated earnings, compared with 13 for the developed-nations measure, data compiled by Bloomberg show. Morgan Stanley this week cut its 2012 growth forecast for China to 8 percent from 8.5 percent previously, and 2013 estimate to 8.6 percent from 9.0 percent, citing stronger “headwinds” from external demand. It also lowered its 2012 growth estimate for South Korea to 2.8 percent from 3.2 percent. 

FOREX-Dollar at 1-month high vs yen on rising U.S. yields
LONDON, Aug 16 (Reuters) - The dollar rose to a one-month high against the yen , extending gains after recent upbeat U.S. data pushed Treasury yields higher and cooled expectations of further monetary easing by the Federal Reserve. 
"We are seeing an underlying trend for dollar outperformance, partly on the back of euro zone debt problems, which sees reserve managers prefer the U.S. currency, and more generally due to some decent U.S. data," said Geoff Kendrick, currency analyst at Nomura.

Recap Interest Rate Market Report (Source:CME)
The Treasury market waffled around both sides of unchanged today, but in general the charts appeared to favor the bear camp. While headline readings from initial claims and housing starts should have provided support to Treasury prices, ongoing claims and housing permits might have displayed enough positive news to leave the bear camp with an edge from the data front. With equities higher and the Euro rebounding it also seemed as if there was a risk on environment in place and that can channel money away from Treasuries.

Building Permits in U.S. Increase to Four-Year High: Economy (Source: Bloomberg)
American builders took out more residential construction permits in July than at any time in the past four years, a sign the market will continue to improve. Applications, a proxy for future work, rose to an 812,000 annual rate, exceeding the highest estimate of economists surveyed by Bloomberg and the most since August 2008, Commerce Department figures showed today in Washington. Housing starts fell 1.1 percent to a 746,000 rate from June’s 754,000, which was the strongest pace in more than three years. Less costly properties combined with record-low mortgage rates are reviving demand, helping companies like PulteGroup Inc. (PHM) boost profits. Another report showed Americans this month were the most pessimistic on the economic outlook since late last year as fuel costs climb, a hurdle that may prevent the economy from strengthening in the second half of the year. 
“Housing is one of the bright spots in the economy,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The recovery’s resilience will be tested over the next couple months because of Europe, the weakening in China, and also given that the consumer and business moods are rather gloomy right now.” Stocks rose, sending the Standard & Poor’s 500 Index to its highest level since April, as the increase in building permits brightened the outlook for housing. The 500 Index climbed 0.7 percent to 1,415.51 at the 4 p.m. close in New York. The S&P Supercomposite Homebuilding Index advanced 4.4 percent. 

Jobless Claims in U.S. Little Changed as Market Stable (Source: Bloomberg)
The number of Americans filing applications for unemployment benefits was little changed last week, bringing the average over the past month to the lowest level since late March, a sign the labor market has stabilized after employment picked up in July. Jobless claims climbed by 2,000 to 366,000 in the week ended Aug. 11, Labor Department figures showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg News called for an increase to 365,000. The four-week moving average, a less volatile measure, dropped to 363,750, the fewest since the week ended March 31. Employers may be limiting firings as the pace of sales warrants keeping current staff levels, which will probably underpin consumer spending. A pickup in demand and an agreement to forestall the fiscal cliff of tax increases and government spending cuts following the presidential election will probably be needed to induce an increase in hiring. 
“It’s certainly further evidence the labor market doesn’t look like it’s in danger of falling off a cliff,” said Jeremy Lawson, senior U.S. economist at BNP Paribas in New York. “At the same time, the hiring rate is still fairly soft.” 

Americans’ Views on Economy Are Most Pessimistic Since November (Source: Bloomberg)
Americans this month were the most pessimistic on the economic outlook since late last year as fuel prices rose and unemployment remained elevated. The share of households viewing the economy as heading in the wrong direction rose to 45 percent in August, the highest since November, from 36 percent the prior month. The Bloomberg monthly expectations gauge dropped to minus 22 from minus 11. The weekly Bloomberg Consumer Comfort Index fell to minus 44.4 in the period ended Aug. 12, lowest since January, from minus 41.9 “The American public appears to have tired of running harder to stand still, expressing their displeasure with the current state of economic affairs in the country and their own personal finances,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. 
The report raises the risk that a pickup in retail sales last month will not be sustained after gasoline prices climbed by 38 cents a gallon in less than two months. A jobless rate that’s exceeded 8 percent for a post-World War II record 42 months is probably also contributing to concern that the world’s largest economy is failing to make enough progress. Another report today showed the number of Americans filing applications for unemployment benefits was little changed last week, bringing the average over the past month to the lowest level since late March, a sign the labor market has stabilized after employment picked up in July. 

Malaysia’s 1MDB Said to Prepare $2 Billion IPO of Power Assets (Source: Bloomberg)
1Malaysia Development Bhd., the state investment company known as 1MDB, plans to raise as much as $2 billion in an initial public offering of its power assets, said a person with knowledge of the matter. The IPO may take place in the first quarter of next year, said the person, who asked not to be identified as the process is private. 1MDB has spent about 10.8 billion ringgit ($3.5 billion) purchasing the electricity generation plants. 1MDB joins Malaysian companies including Malakoff Bhd. in planning IPOs after sales by Felda Global Ventures Holdings Bhd. and IHH Healthcare Bhd. rewarded investors with stock-market gains. Malaysia, whose economy unexpectedly accelerated in the most recent quarter, accounts for two of the world’s three largest IPOs this year, data compiled by Bloomberg show. Proceeds will be used to repay debt, the person said. 1MDB, which is developing an $8 billion financial district in Kuala Lumpur, has total debt of 20.7 billion ringgit, according to data compiled by Bloomberg. 
Malakoff, Malaysia’s largest independent power producer, is planning a share sale that may raise about $1 billion, people with knowledge of the matter said in June. Palm-oil planter Felda Global and IHH Healthcare, Asia’s largest hospital operator, have both advanced 11 percent from their offer prices. 1MDB agreed in March to buy billionaire T. Ananda Krishnan’s power assets for 8.5 billion ringgit. This week, 1MDB agreed to purchase Genting Bhd. (GENT)’s domestic power generation business for 2.3 billion ringgit. Goldman Sachs Group Inc. (GS), which advised 1MDB on both deals, is also likely to be hired for the IPO, the person said. Shahrol Halmi, 1MDB’s chief executive officer, didn’t immediately respond to a phone call seeking comment. Energy is one of the group’s core areas of focus, he said in a statement on March 7, when it announced the acquisition of Ananda Krishnan’s power plants. 

China’s Yuan Decades From Challenging Dollar: Cutting Research (Source: Bloomberg)
To see the status of China’s yuan as a major reserve currency in two decades, one need only look at the yen. The internationalization of Japan’s currency in the 1970s and 1980s boosted its use in trade settlements, fostered global samurai bonds and made it a mainstay of foreign-exchange markets, said Alistair Thornton, an economist at IHS Global Insight in Beijing. Then its star faded, a victim of government reluctance to fully open financial markets to foreign participants and focus on developing financial products, Thornton wrote in an Aug. 14 report on the website of the Sydney-based Lowy Institute. The global proportion of yen reserve holdings peaked at 9 percent in 1991, before falling to about 3 percent, he said. That same fate may befall China. After accelerating the internationalization of the yuan, fundamental changes in China’s economic model including an open capital account, a floating currency and financial-market liberalization are needed to move toward achieving reserve status, Thornton said. 
“It requires facing down tough political opposition and powerful vested interests, a willingness to expose the economy to new and unknown stresses and external volatilities, and a recognition that China needs to implement one of the largest sets of economic and financial reforms in recent history,” he said. “Against a backdrop of a weak and uncertain outlook in the global economy, it would be unsurprising if leaders in China receded into policy conservatism.” The yuan is involved in less than 1 percent of average daily turnover in global currency markets, somewhere between the Russian ruble and the Turkish new lira, Thornton said, citing data from the Bank for International Settlements. That compares with 85 percent for the U.S. dollar and about 40 percent for the euro. 
“Whilst some measure of internationalization is indeed underway, movement towards a reserve currency status commensurate with China’s global economic status will be tortuously slow, relegating the prospect to irrelevance,” he said. “The very best Beijing can hope for within the next couple of decades is a renminbi similar in position to that of the Japanese yen -- an internationalized, but modestly used, reserve currency. Even that will prove a stretch.” 

Korea Corporate Bond Sales Stall for Second Week on Low Premiums (Source: Bloomberg)
Sales of won-denominated corporate bonds in South Korea stalled for a second week as investors balked at the lower yields relative to sovereign notes. Woori Finance Holdings Co. was the only issuer this week, with 250 billion won ($221 million) of five-year notes, after last week’s offerings fell to a three-month low of 200 billion won, according to data compiled by Bloomberg. The extra yield investors demand to hold corporate notes over similar-maturity government bonds rose to 59 basis points this week, two basis points from the lowest premium this year in June, data from the Korea Financial Investment Association show. “The market is slowing due to the low bond yields,” Kim Min-Jeong, a credit analyst at KDB Daewoo Securities Co., said by telephone from Seoul on Aug. 14. “This may be good news for issuers, but for investors it’s unattractive.” 
Sales also faltered this month because companies that needed financing took advantage of the Bank of Korea’s decision to cut rates in July, Kim said. Governor Kim Choong Soo surprised economists by lowering the key rate by a quarter percentage point to 3 percent on July 12, spurring a tripling in corporate bond issuance as yields fell to all-time lows. Woori Finance, the biggest bank holding company by assets, sold the five-year notes to yield 2 basis points more than five- year AAA rated Korea composite financial debentures, according to Bloomberg data. The sale is to refinance 250 billion won of debt maturing this month, Ahn Chul Woo, a general manager with the company’s financial planning department, said last week. 

Singapore July Exports Rise More Than Estimated on Electronics (Source: Bloomberg)
Singapore’s exports rose more than economists estimated in July as companies shipped more electronics and petrochemicals and sold more goods to China. Non-oil domestic exports climbed 5.8 percent from a year earlier, after a revised 6.6 percent increase in June, the trade promotion agency said in a statement today. The median of 14 estimates in a Bloomberg News survey was for a 5 percent gain. Demand from Asian neighbors is supporting sales of Singapore’s goods even as Europe’s sovereign debt crisis and an uneven U.S. recovery crimps demand for products made in the island’s factories. Singapore expects exports to rise at least 4 percent this year, the trade promotion agency said last week, raising its projection from 3 percent previously. Exports will pick up “once we see China growth first and U.S. maybe later on towards the end of the year picking up and rebounding,” Vincent Conti, a Singapore-based economist at Australia & New Zealand Banking Group Ltd., said before the report. 
Singapore’s electronics shipments by companies such as Venture Corp. rose 2 percent in July from a year earlier, after climbing 1.6 percent the previous month. Non-electronics shipments, which include petrochemicals and pharmaceuticals, increased 7.9 percent. Petrochemicals exports gained 11.6 percent, while pharmaceutical shipments advanced 1.3 percent after jumping 24 percent in June. Singapore’s non-oil exports slid a seasonally adjusted 3.6 percent last month from June, when they rose 6.7 percent, today’s report showed. 

Yudhoyono Plans Indonesian Spending Boost to Spur Economy (Source: Bloomberg)
Indonesia plans to increase government capital spending by 15 percent next year as President Susilo Bambang Yudhoyono pledges to boost infrastructure that he says is needed to ensure sustainable growth. Capital spending will rise to 193.8 trillion rupiah ($20 billion) in 2013, Yudhoyono said in his annual budget address in Jakarta today. The budget deficit may narrow to 1.6 percent of gross domestic product from 2.23 percent, as economic growth is forecast to accelerate to 6.8 percent from an estimated 6.3 percent to 6.5 percent this year, he said. “We’ll raise capital spending to boost infrastructure in order to support domestic connectivity, energy and food and to support the economy,” the president said, pledging to maintain the fiscal deficit at a “safe level” and reduce debt. 
Yudhoyono, who also said he will give civil servants a raise next year, is increasing spending on roads, seaports and airports as he woos investment to spur Southeast Asia’s largest economy. More than a decade after the Asian financial crisis that forced the nation to seek an International Monetary Fund bailout, Fitch Ratings and Moody’s Investors Services have raised Indonesia to investment grade and the country’s growth is among the fastest in the Group of 20 nations. The rupiah climbed 0.2 percent to 9,494 a dollar today. Yudhoyono said in a speech to lawmakers earlier today that Indonesia should review its subsidy bill and use the savings to boost the country’s infrastructure, calling for fiscal prudence. 

Mexico Economy Weakened Less Than Forecast in Second Quarter (Source: Bloomberg)
Mexico’s economic growth slowed less than analysts forecast in the second quarter as auto exports climbed to a record, helping offset a downturn in shipments of some manufactured goods and oil. Gross domestic product expanded 0.9 percent from the first quarter, an annualized rate of 3.5 percent and down from a revised 1.2 percent in the first three months, the statistics agency said today on its website. That beat the 0.7 percent median estimate of seven economists surveyed by Bloomberg. Economic growth in the U.S., the buyer of 80 percent of Mexico’s exports, slowed to a 1.5 percent annual rate in the second quarter amid unemployment that has held above 8 percent for more than three years. While Mexico’s expansion slowed from the fastest annual pace since 2010 on the weaker U.S. expansion, growth has topped Brazil’s for the past year. The central bank said last month that monetary policy is adequate with the economy on a positive trajectory. 
“We see less growth in the manufacturing sector due to lower growth in the U.S. economy, but we believe this is a good figure overall,” Rafael Camarena, an economist at Banco Santander SA (SAN), said by phone from Mexico City. “If the U.S. economy grows at least two percent this year and a similar figure for 2013, the Mexican economy could see a good performance probably close to four percent this year.” Mexico’s annual growth will slow to 2.9 percent in the third quarter before rising to 3.1 percent in the final three months of the year, according to the median estimates in a Bloomberg survey. 

Thai Growth May Quicken as Yingluck Spending Counters Europe (Source: Bloomberg)
Thailand’s growth probably accelerated last quarter as Prime Minister Yingluck Shinawatra boosted government stimulus, spurring domestic demand as the weakening global economy clouded the outlook for exports. Gross domestic product rose 3.1 percent in the three months through June from a year earlier, which would be the fastest pace of expansion since last year’s floods, according to a Bloomberg News survey of 16 economists. The economy grew 2 percent from the previous quarter, a separate survey showed. The data is scheduled to be released on Aug. 20. Southeast Asian nations from Indonesia to Malaysia have cut interest rates or increased public spending to shore up local demand as Europe’s debt crisis and a faltering U.S. recovery curb exports. Yingluck, who marked her first year in office this month, has shelved politically contentious legislation to focus more on the economy as Thailand confronts overseas risks after recovering from the worst floods in almost 70 years in 2011. 
“The government’s fiscal measures have boosted growth, which in turn feeds into domestic demand -- consumption and private investment,” said Leslie Tang, an economist in Singapore at OSK-DMG. “The biggest risks ahead are external headwinds and a slow disbursement of the fiscal measures that could slow the recovery and rebuilding of the Thai economy.” The baht has lost more than 5 percent against the dollar over the past 12 months, while the benchmark Stock Exchange of Thailand index has gained about 14 percent. 

Merkel Says Germany Backs Draghi’s ECB Aid Conditionality (Source: Bloomberg)
Chancellor Angela Merkel backed the European Central Bank’s insistence on conditions for helping reduce borrowing costs in indebted countries, saying Germany is “in line” with the ECB’s approach to defending the euro. “Obviously time is pressing” on stamping out the debt crisis, though “on many of these issues we feel we’re on the right track,” Merkel told reporters in Ottawa yesterday at a joint press conference with Canadian Prime Minister Stephen Harper. Euro-area policy makers “feel committed to do everything we can to maintain the common currency.” Asked about ECB chief Mario Draghi’s announcement that the central bank may return to sovereign bond-buying, Merkel said recent ECB decisions “have made it clear that the European Central Bank is counting on political action in the form of conditionality as the precondition for a positive development of the euro.” 
Merkel, facing European pressure to ease bailout terms and allow shared debt as well as calls by global partners to stop contagion, returned to the crisis fight after her summer vacation, using the trip to Canada to make her first public comments on the turmoil in a month. She hailed Canada’s budget and debt discipline as a model for the 17-nation euro area. 

Spain Said to Speed EU Bank Bailout on Collateral Limits (Source: Bloomberg)
Spain is about to receive an emergency disbursement from the 100 billion-euro ($123 billion) bailout of its financial system because of restrictions the European Central Bank imposed on bank borrowing, according to a person familiar with the matter. The ECB last month applied limits on how much it will lend banks against government-guaranteed bonds. The rule change meant Spain had to ditch a plan for nationalized lender Bankia group to get a loan from the Frankfurt-based central bank, said the person, who asked not to be named because the matter is private. Bankia group, formed in 2010 from the merger of Spain’s troubled savings banks, will get the first portion of the country’s European Union cash imminently, the person said. The rescue program always included a 30 billion-euro tranche to be paid out first and “mobilized in any contingency,” according to the agreement document dated July 16. 
“Spain needs the money for Bankia as soon as possible because the uncertainty just makes it expensive for the government to raise money in the bond markets,” said Arturo Bris, a professor of finance at the IMD business school in Lausanne, Switzerland. 

U.K. Retail Sales Unexpectedly Rise on Fuel Discounting: Economy (Source: Bloomberg)
U.K. retail sales unexpectedly rose in July as promotions helped to boost gasoline sales and food sales increased. Sales including auto fuel gained 0.3 percent from June, the Office for National Statistics said today in London. The median forecast of 22 economists in a Bloomberg News survey was for a 0.1 percent decline. Sales in June were revised to a 0.8 percent gain from 0.1 percent, which means second-quarter sales fell 0.3 percent, less than initially estimated. The ONS said the change would have a negligible impact on gross domestic product. The report follows factory and construction data suggesting GDP may have fallen less than the 0.7 percent estimated in the second quarter. Jobless claims dropped in July and the Bank of England says cooling inflation may help to bolster demand. Still, with the euro-area crisis showing little sign of abating and the U.K. government cutting spending, any recovery is likely to be only gradual. 
“Together with yesterday’s firm looking jobs numbers, we continue to have doubts about the message from the GDP report, suggesting the U.K. is in a deepening recession,” said James Knightley, an economist at ING Bank NV in London. “That said, the uncertainty over the U.K. data, coupled with worries about Europe and the U.S. fiscal cliff will keep the BOE wary.” The pound advanced against the euro and the dollar. It was 0.1 percent stronger at $1.5694 as of 11:42 a.m. London time and advanced 0.2 percent to 78.21 pence per euro. 

Euro zone July inflation stable as economy slows (Reuters)
Falling communications prices helped keep euro zone consumer inflation stable in July, giving the European Central Bank space to cut interest rates amid a worsening economic climate.