Monday, September 10, 2012
Bollinger band reading : correction range bound little upside biased.
MACD Histogram : falling lower, seller taking exposure.
Support : 2920, 2900, 2850, 2800 level.
Resistance : 2950, 2970, 3020, 3050 level.
FCPO closed recorded small gain having technical rebound after more than 200 points slump with slower volume transacted. Soy oil currently trading higher after last Friday closed lower by more than 1% while crude oil price continue to trade firmer.
Price climbed higher as 2 cargo surveyors reported improving export figures but gains capped limited as MPOB official body reported both lower than expected exports and higher than expected stocks level.
Daily chart reading wise, FCPO is currently trading within a correction range bound little upside biased 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.
Posted by MW Chong at 6:14 PM
FKLI closed : 1608 changed : -7 points, volume : lower.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histogram : falling lower, seller in control.
Support : 1600, 1595, 1590, 1575 level.
Resistance : 1615, 1623, 1630, 1640 level.
FKLI closed recorded loss with reducing volume transacted doing 13 points discount compare to cash market closed little lower. Last Friday U.S. market closed little higher and today Asia markets swung between gains and losses ended mixed while European markets currently trading little lower.
Mixed reaction acrossed the world markets after U.S. and China reported slower economy data lead to more easing measures speculation.
Daily chart wise, study adjusted to suggestinga downside biased market development with possible pullback correction.
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.
Posted by MW Chong at 5:48 PM
DJIA chart reading : side way range bound little upside biased.
Hang Seng chart reading : pullback correction little downside biased.
KLCI chart reading : pullback correction downside biased.
Posted by MW Chong at 5:32 PM
GLOBAL MARKETS: Asian shares crept up with soft Chinese data overshadowed by expectations for fresh stimulus from the Federal Reserve and for Europe to make progress in tackling its debt crisis. European stocks were set to dip following last week's rally, although losses could be limited by mounting expectations of a new round of stimulus measures by the U.S. Federal Reserve in the wake of lower-than-expected monthly jobs data. U.S. stocks held steady at four-year highs on Friday, closing out their best week since June as a sharply disappointing jobs report only fueled expectations that the Federal Reserve would act to stimulate the economy next week. (Reuters)
FOREX: The euro fell against the dollar but still held near a four-month high, after weak U.S. jobs data fanned speculation that the Federal Reserve would launch more monetary stimulus this week. (Reuters)
FOREX-Euro slips but cushioned by Fed stimulus hopes
SINGAPORE/SYDNEY, Sept 10 (Reuters) - The euro eased against the dollar on Monday but still held near a four-month high, after weak U.S. jobs data fanned speculation that the Federal Reserve would launch more monetary stimulus this week.
"The weak payrolls report has put QE3 firmly on the agenda for this week," said Annette Beacher, head of Asia-Pacific Research at TD Securities.
U.S. job growth cools, posing challenge for Obama, Fed (Reuters)
U.S. jobs growth slowed sharply in August, dealing a blow to President Barack Obama as he seeks re-election and setting the stage for the Federal Reserve to pump additional money into the sluggish economy next week.
Weak China trade data confirms outlook worsening (Reuters)
China's exports grew at a slower pace than forecast in August while imports surprisingly fell, underlining the mounting challenge facing Beijing's policymakers as domestic demand flags while the global economic outlook darkens.
China approves $157-billion infrastructure spending
SHANGHAI/BEIJING, Sept 7 (Reuters) - China has given the green light to 60 infrastructure projects worth more than $150 billion, as it looks to energise an economy mired in its worst slowdown in three years, fuelling hopes the world's growth engine may get a lift from the fourth quarter.
Prices of shares and steel futures contracts jumped on the plans to build highways, ports and airport runways, which are among the most ambitious unveiled in China this year.
COLUMN-China commodity imports mixed, volatility to persist
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
SINGAPORE, Sept 10 (Reuters) - The trick with China's commodity imports is working out whether the bottom has been reached or whether several more months of mixed signals are likely.
Certainly the August figures contained something to support virtually any argument you would care to make about the outlook for demand.
GRAINS: Chicago soybeans edged lower, falling for five out of six sessions on hopes that late season rains in the United States would help salvage some of an oilseed crop battered by devastating drought across the grain belt. (Reuters)
Informa lowers forecasts for U.S. corn production (Reuters)
Private analytics firm Informa Economics lowered its estimate of the U.S. corn yield to 119.8 bushels per acre, from its previous forecast of 120.7, days before the U.S. Department of Agriculture updates its monthly crop forecasts, trade sources said Friday.
China's August refinery, power output inch up on yr (Reuters)
China's refinery throughput and power generation rose slightly in August from a year earlier, with higher crude runs helped by a fuel price hike that helped pare some of the heavy refining losses, data from the National Bureau of Statistics showed on Sunday.
OIL: Brent crude futures climbed above $114 a barrel, but gains were limited as expectations for the U.S. Federal Reserve to launch further stimulus measures offset weak Chinese industrial output data. (Reuters)
BHP shuts Australian coal mine due to weak prices, high costs
SYDNEY, Sept 10 (Reuters) - BHP Billiton , the world's biggest miner, said on Monday it would cease production at its Gregory open cut coal mine in the state of Queensland from Oct. 10 due to weak coal prices, high costs and a strong Australian dollar.
Prices for coal, iron ore and other commodities have been tumbling in recent weeks due to slowing growth in top consumer, China.
U.S. steel, coal shares surge on China building plan
Sept 7 (Reuters) - China's approval of a $157 billion infrastructure building plan sent U.S. steel and coal company shares surging on Friday on the hopes it would stimulate the two sectors that have struggled to rebound from the recession.
The biggest gainer was coal miner Alpha Natural Resources , whose shares rose more than 16 percent on the New York Stock Exchange, while iron ore miner Cliffs Natural Resources added 14 percent and U.S. Steel gained 8 percent.
S.African police brace as Lonmin workers set to return on Monday (Reuters)
South African police are braced for possible violence ahead of Monday's back-to-work deadline for striking workers at Lonmin's flagship platinum mine, where 44 people died in labour strife last month, most of them at the hands of police.
Specs up gold, silver length to most bullish since March
Sept 7 (Reuters) - Money managers, including hedge funds and other large speculators, raised their bullish bets in gold and silver to their largest holding since March on expectations of easing measures from major central banks.
Speculators in gold raised their net length by 13,088 contracts to 144,775 contracts during the week ended Sept. 4, data from the Commodity Futures Trading Commission (CFTC) showed on Friday.
Iron Ore-Shanghai rebar gains for 2nd day, gives iron ore hope
SINGAPORE, Sept 10 (Reuters) - China steel futures rose for a second day on Monday, supported by hopes that Beijing's approval of more than $150 billion in infrastructure projects would resuscitate steel demand, providing fuel for a recovery in iron ore prices.
Price offers for imported iron ore cargoes in China rose by up to $4 per tonne on Monday, after the benchmark rate jumped by $2, or 2.3 percent, to $89 a tonne on Friday.
Shanghai steel posts biggest day gain on building drive
SINGAPORE, Sept 7 (Reuters) - Shanghai steel futures rose 5 percent, their biggest percentage gain on record, and spot iron ore posted its biggest gain in 10 months on Friday after China approved infrastructure projects to revive its economy, raising prospects of higher steel demand.
China gave the go-ahead for 60 infrastructure projects this week which analysts estimate total more than 1 trillion yuan($158 billion), or 2.1 percent of China's economy.
China Aug iron ore imports up 7.9 pct as domestic output drops
BEIJING, Sept 10 (Reuters) - China's imports of iron ore in August rose 7.9 percent from the previous month to a three-month high with buyers turning to the international market as a collapse in prices forced domestic producers to slash output.
Total imports of the steelmaking raw material reached 62.45 million tonnes in August, defying expectations and a collapse in domestic steel demand to reach their highest level since May.
EU says may be regional fund help for Italian steel plant
CERNOBBIO, Sept 9 (Reuters) - The European Commission is prepared to play its part in trying to save the giant ILVA steel mill in the southern Italian city of Taranto, with financial support potentially available through the EU regional fund, Industry Commissioner Antonio Tajani said.
"We are ready to do whatever we can. We are committed to keeping the steel industry in Europe," Tajani told Reuters at the margins of a conference in northern Italy at the weekend.
Indian iron ore exports fall over 40 pct in Apr-June
MUMBAI, Sept 8 (Reuters) - Exports of iron ore from India, once the world's third-biggest supplier, fell more than 40 percent in the April-June quarter, mainly because of a slowing China as well falling global prices.
A 30 percent export duty imposed by the government led to a further drop in overseas sales, making Indian ores less attractive compared with Brazil or Australia.
Indonesia's Aug refined tin exports down 32 pct on low prices
JAKARTA, Sept 7 (Reuters) - Shipments of refined tin from Indonesia fell 32 percent in August on the month, a trade ministry official said on Friday, as current low prices for the metal hold down supplies from the world's top exporter.
Indonesia's August tin exports fell to 5,645.87 tonnes from 8,298.47 tonnes in July, as low prices forced tin producers to close operations and hold back on spot market sales. Shipments in July had dropped 14 percent on the month.
COLUMN-Indonesian pain threshold found, what next for tin?
--Andy Home is a Reuters columnist. The opinions expressed are his own--
LONDON, Sept 7 (Reuters) - Indonesian tin exports slumped in August to 5,646 tonnes, the lowest monthly print since January. Cumulative exports of 61,259 tonnes in the first eight months of this year represented a 10-percent decline from the same period of 2011.
This will come as no surprise to the tin market.Indonesian producers have made it quite clear that they think the recent international price has been too low and have reacted accordingly.
China copper imports fall in August as demand slows
HONG KONG, Sept 10 (Reuters) - China's August copper imports fell 2.9 percent from the previous month, preliminary customs data showed on Monday, reversing July's uptrend as the economic slowdown in the world's top consumer of the metal cut demand.
The slight decline was in line with importers' expectations as most Chinese buyers did not place spot orders in August.
BASE METALS: Shanghai copper and zinc hit their highest levels in four months as hopes that the United States and China will roll out more stimulus measures offset a slight decline in China's August copper imports. (Reuters)
PRECIOUS METALS: Gold inched up towards a 6-1/2-month high hit in the previous session, buoyed by expectations for the Federal Reserve to take imminent easing action after the latest data painted a bleak picture of the U.S. job market. (Reuters)
METALS-Copper, zinc at 4-month highs on stimulus hopes
SHANGHAI, Sept 10 (Reuters) - Shanghai copper and zinc hit their highest levels in four months on Monday as hopes that the United States and China will roll out more stimulus measures offset a slight decline in China's August copper imports.
"We are mostly looking forward to the Federal Reserve meeting for announcement of QEIII, which we think will boost commodities more than infrastructure-building programmes in China and more policy details from the euro zone," said a Shanghai-based trader with an international firm. "But if the Fed doesn't roll out a QEIII soon, base metals prices are expected to fall."
PRECIOUS-Gold hovers near 6-1/2-mth high on Fed stimulus hopes
SINGAPORE, Sept 10 (Reuters) - Gold held steady near a 6-1/2-month high on Monday, buoyed by expectations for the Federal Reserve to take imminent easing action after the latest data painted a bleak picture of the U.S. job market.
"The possibility of QE3 has definitely grown, but the risk is also climbing as if we were about to draw the last card at a poker game," said a Shanghai-based trader.
Baltic index down on weak panamax rates
Sept 7 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Friday on weak panamax rates.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 0.89 percent to 669 points, levels not seen since February.
Posted by MW Chong at 4:15 PM
GLOBAL MARKETS-Asian shares inch up, euro zone and Fed QE3 eyed
TOKYO, Sept 10 (Reuters) - Asian shares crept up o with expectations rising that weak U.S. jobs data would prompt the Federal Reserve to announce fresh stimulus this week and Europe to make use of this week's key events to push forward its debt crisis management.
"Unsatisfactory economic conditions and a failure to meet its (full employment) mandate suggest that the FOMC is set to act soon. At a minimum, we expect the FOMC to extend its forward guidance on rates at next week's meeting, although there is a strong likelihood it will deliver even more," Amber Rabinov at ANZ Research said in a note.
COMMODITIES-Rally on QE3 bets; gold at 6-month high
NEW YORK, Sept 7 (Reuters) - Commodities rose broadly on Friday as the dollar fell to a near four-month low against the euro after disappointing U.S. job numbers for August led to bets there will be more stimulus for the world's largest economy.
"It was a decidedly negative report," John Kilduff, partner at Again Capital LLC, a commodities-focused hedge fund in New York, said, referring to the jobs numbers.
OIL-Oil rises as jobs data reinforces stimulus hopes
NEW YORK, Sept 7 (Reuters) - Oil prices rose on Friday in volatile trading after a disappointing U.S. August jobs report weakened the dollar and bolstered expectations for stimulus from the U.S. Federal Reserve, even while denting the outlook for petroleum demand.
"It was a decidedly negative report due to the meager number of jobs created in August and the downward revision for the two prior months," said John Kilduff, partner at Again Capital LLC in New York.
China's August refinery, power output inch up on yr
BEIJING, Sept 9 (Reuters) - China's refinery throughput and power generation rose slightly in August from a year earlier, with higher crude runs helped by a fuel price hike that helped pare some of the heavy refining losses, data from the National Bureau of Statistics showed on Sunday.
Still, the weak growth of below three percent for refinery and power output marks a significant deceleration which began last year and highlights how demand from Chinese factories has eased on falling orders from the United States and Europe, the country's two largest export markets.
Still 186,000 bpd Gulf oil output shut after Isaac-govt
Sept 9 (Reuters) - Nearly 14 percent of Gulf of Mexico oil production and nearly 10 percent of natural gas output remained shut on Sunday, more than a week after Hurricane Isaac passed over the region, U.S. regulators said.
While operators have restored most of the output following the most disruptive storm in years, about 186,000 barrels per day (bpd) of offshore oil production was still shut, the U.S. Bureau of Safety and Environmental Enforcement. On Saturday an estimated 352,000 bpd had been closed.
NATURAL GAS-Glitch halts electronic NYMEX natural gas for one hour
NEW YORK, Sept 7 (Reuters) - The New York Mercantile Exchange halted electronic U.S. natural gas trade for nearly one hour on Friday due to a technical problem, the second glitch this year to roil trade on the world's biggest energy exchange.
"They were making markets here on the floor, but (electronic trade platform) Globex was down for about an hour. There was no chaos. It was pretty calm and collected," a trader on the NYMEX floor said.
EURO COAL-DES ARA discounts widen on slack demand
LONDON, Sept 7 (Reuters) - Physical coal prices were little changed again on Friday at around $90 a tonne, a level many players consider to be high given the dearth of spot demand globally.
"Steady prices of $90 or more with almost nobody buying are hard to believe in when the discounts being talked are so wide," one European trader said.
Posted by MW Chong at 11:12 AM
Exports contracted by 1.9% yoy in July (+5.4% in Jun) while imports increased 9.5% yoy (+3.6% in Jun), leaving a trade surplus of RM3.6bn (+RM9.2bn in Jun). Economists had projected exports and imports would increase by 3.3% and 5.4% respectively. The International Trade and Industry Ministry said the decline in exports were due to the slower economic activities in China, South Korea, India and the European Union. It also disappointed on weak demand for the electrical and electronic products as well as palm oil and crude rubber. (BT)
The international reserves of Bank Negara Malaysia (BNM) amounted to RM431.1bn (US$134.9bn) as at 30 Aug 2012, up from RM430.5bn (US$134.7bn) as at 15 Aug 2012. The reserves position is sufficient to finance 9.5 months of retained imports and is 3.9 times the short-term external debt. (BNM)
Malaysia and the US are hoping to see a conclusion to the Trans-Pacific Partnership (TPP) multilateral trade negotiations by end-2013, PM Datuk Seri Najib Tun Razak said on Sunday. There were several issues yet to be satisfied and both governments are hoping that resolutions would be found for the outstanding issues by then, he said. (Bernama)
Allocations for almost all ministries will be increased under Budget 2013 to be tabled in Parliament on 28 Sep, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said Saturday. He said the Cabinet approved the draft Budget 2013 which was tabled for the ministers' perusal at the weekly cabinet meeting on Wednesday. "We engaged the World Bank and under the Strategic Reform Initiative, we went through one by one the ministries' expenditures. So, basically all the ministries will get more allocations and only one or two will get less based on the rationalisation initiative," he said. The budget aims to ensure that there is an operating surplus, the fiscal deficit is reduced and the debt-to-GDP ratio is maintained at below 55%, he said. On income tax rate, he said: “As far as I know, the government does not intend to increase the tax rate.” (Bernama, The Star)
The federal government is confident of channeling more vessel repair jobs to Labuan now as the outlook of the oil and gas (O&G) sector in the island has improved. Defence Minister, Datuk Seri Zahid Hamidi said Labuan Shipyard Engineering Sdn Bhd (LSE), one of Asia's largest shipyard involved in vessel repairs and fabrication, has proven its capability to complete the various projects given. "I have given my assurance to send more vessels to LSE with the condition that 30% of the jobs be shared among local companies,” he said. (Bernama)
Japan’s index of leading economic indicators fell to a seasonally adjusted 91.8 in Jul, from 93.2 in the preceding month whose figure was revised up from 92.6. Economists were looking for a decline to 91.6. The coincident index dropped to 92.8 in Jul from 94.1 in Jun. (RTTNews)
Asia-Pacific Economic Cooperation leaders in a joint statement after the Summit in Vladivostok said, “High public deficits and debts in some advanced economies are creating strong headwinds to economic recovery globally. The events in Europe are adversely affecting growth in the region. In such circumstances, we are resolved to work collectively to support growth and foster financial stability, and restore confidence.” (Bloomberg)
China will widen the yuan's trading band at some point, Guo Jianwei, deputy director of the People's Bank of China's second monetary policy department, said whilst declining to give a timetable for any move. (Bloomberg)
China’s industrial production increased 8.9% yoy in Aug, the slowest pace in three years. That compared with the 9% median estimate of economists and a 9.2% pace in Jul. (Bloomberg)
China’s urban fixed-asset investment growth in the first eight months eased to 20.2% yoy (20.4% in Jul). (Bloomberg)
The Chinese government has approved plans for new roads, railways and urban infrastructure is estimated to have a combined value of about Rmb1tr (US$158bn). (Bloomberg)
China’s consumer prices rose 2.0% yoy in Aug (1.8% in Jul) amid higher costs for food. Producer prices fell 3.5% yoy in Aug (-2.9% in Jul), more than the 3.2% that economists had forecast. (AFP)
China’s retail sales rose 13.2% yoy in Aug, a touch higher than 13.1% in Jul, and in line with the median estimate. (Bloomberg)
In China, the value of land purchased by developers rose 66% yoy in Aug after falling 39% in Jul. Investment in new projects gained 33% after a 25% increase the previous month. (Bloomberg)
Following an inspection in 16 provinces to check on the implementation of its property curbs, speculation has arisen that China may set new property controls as early as this month. (Beijing Review)
France's Socialist President Francois Hollande pledged €30bn in new taxes and savings to balance the budget and fund a turnaround in two years, whilst Germany's finance minister Wolfgang Schaeuble warned that debt-laden eurozone states must stick to promised reforms and cuts despite last week's offer of help from the ECB that calmed markets. (AFP)
Indonesia’s foreign reserves rose to US$108.99bn in Aug (US$106.56bn in Jul). (Bloomberg)
Indonesia’s government estimates that there will be an additional budget expenditure of Rp12tr (US$1.26bn) due to a shift in macroeconomic assumptions in the revised state budget. (IFT)
The Philippines’ foreign reserves rose to US$80.8bn in Aug (US$79.8bn in Jul). (Bloomberg)
Thailand’s foreign reserves for the week ended 31 Aug rose to US$179.2bn from US$178bn the previous week. (Bloomberg)
Singapore’s foreign reserves rose to US$246.1bn in Aug (US$244.1bn in Jul). (Bloomberg)
Deputy Governor of the State Bank of Vietnam Le Minh Hung asserted that the IMF and the Vietnamese Government have never discussed, nor intend to discuss access to the IMF's credit to deal with the nation’s bad debts. (Vietnam News)
Vietnamese rice exports totalled more than 928,000 tonnes in Aug, a 33% yoy and 22% mom surge, to bring the free-on-board export value to nearly US$399m, up 23% mom and 18% yoy. (Vietnam News)
Myanmar's parliament has approved a new draft foreign investment law aimed at opening the country up to capital and job creation. The final draft dropped a controversial clause requiring foreign investors to invest a minimum of US$5m. It also increases the maximum foreign shareholding in 13 sectors considered sensitive, including manufacturing, farming, agriculture and fisheries, to 50% from 49% proposed earlier. The new law allows foreign investors to lease land for an initial period of 50 years with an option to renew, compared to 35 years under old rules. (Bangkok Post)
China: Slowing industrial output signals more stimulus before power shift
China’s industrial output grew at the slowest pace in three years and President Hu Jintao said economic expansion faces “notable downward pressure.” Production increased 8.9% in August y-o-y and fixed-asset investment growth in the first eight months eased to 20.2%. Inflation accelerated for the first time in five months to 2% y-o-y. However, the decline in producer prices extended into the sixth month, with a drop of 3.5%. (Bloomberg)
South Korea: Producer-price inflation of 0.3% shows rate cut room
South Korea’s producer prices returned to inflation in August after a dip into deflation in the previous month. Prices rose 0.3% y-o-y, after a 0.1% decline in July. The gain was 0.7% m-o-m. Producer-price inflation has moderated this year from levels as high as 7% during 2011, highlighting room for cutting benchmark interest rates to support growth. Twelve economists in a Bloomberg News survey all forecast that the Bank of Korea will make a reduction at its next meeting on 13 Sept. (Bloomberg)
UK: Business confidence fell to record low in August
UK business confidence fell to a record low last month and a gauge of output indicated that the economy is set to remain weak, according to BDO LLP. The sentiment gauge fell to 89.1 from 93.1 in July, the lowest since the series began in 1992. The output measure dropped to 90.8 from 93.9, further below the 95 mark that points to positive growth one quarter ahead. BDO said the decline suggests growth “is likely to remain elusive in the final quarter.” (Bloomberg)
UK: Surveys show employment prospects brighten
A survey by Lloyds Bank showed Britons’ assessment of employment prospects rose to minus 43 last month from minus 51 in July. Lloyds’ index of consumers’ job security increased 5 points to minus 14. In another report, KPMG LLP and the Recruitment and Employment Confederation said their index of hiring of full-time staff rose to 48.4 in August from 47.3 in July. Readings below 50 indicate contraction. (Bloomberg)
US: Hiring weakens in August, jobless rate drops
Job growth slowed sharply in August with the data reinforcing concern about the weak labour market and triggering speculation that the Federal Reserve may take aggressive action in a bid to underpin the US economy. Nonfarm payrolls grew by a seasonally adjusted 96,000 in August, well shy of estimates and down from 141,000 jobs added in July. Meanwhile, the nation’s unemployment rate fell to a seasonally adjusted 8.1%, down from 8.3% in July, because it reflected 368,000 people dropping out of the labour force. While unemployment dropped by 250,000 to 12.5m for August, employment also fell, dipping 119,000 to 142.1m. (Market Watch)
US tax increases and spending cuts set to take effect by the beginning of next year pose one of the biggest risks to the global economy, IMF Managing Director Christine Lagarde said, with the other two being the euro crisis and medium-term public financing. (Bloomberg)
US non-farm payrolls in Aug advanced 96,000 following revised gains of 141,000 in Jul. Economists were expecting a 125,000 gain. The unemployment rate fell to 8.1% from 8.3% in Jul and consensus due to a sharp drop in the labour force, whilst average hourly earnings experienced no change on a mom basis (a revised 0.1% in Jul), worse than consensus of 0.2%. Private payrolls increased 103,000 in Aug after gaining 162,000 the prior month. The consensus called for a 134,000 boost. The average workweek for all employees stood at 34.4 hours, the same as Jul’s revised figure, but coming short of consensus of 34.5 hours. (Bloomberg)
Perwaja clinches deal
Perwaja Holdings Bhd’s almost one-year wait to secure an iron ore mining concessionaire has finally ended with the official award of a 243ha concession in Bukit Besi by the Terengganu government, said a source close to the group. He said the concession would enable Perwaja’s unit Perwaja Steel SB to mine iron ore under a mining lease which would be subject for renewal every 10 years, up to 42 years. (StarBiz)
Petronas sees challenging year
Petroliam Nasional Bhd (Petronas) said the outlook for the rest of its financial year 2012 (FY12) will be challenging amid geopolitical problems in Sudan where it has presence, coupled with the unfavourable economic situation in the eurozone and the United States. Petronas’ net profit for the second quarter ended 30 June dived 29.9% y-o-y to RM15.2bn from RM21.7bn, while second quarter revenue fell at a slower pace of 3% to RM70.7bm from RM72.9bn. (StarBizWeekly)
Petronas Dagangan is working to expand its business network by opening more modern and sophisticated fuel stations nationwide. The expansion is in tandem with its plans to upgrade its fuel stations as "one-stop centres" for the convenience of vehicle drivers and public. Petronas Dagangan is now focused on expanding its network to 1,000 fuel stations country-wide by end-September. (Bernama)
P&O gets offer from S. African firm
Pacific & Orient Insurance Bo Bhd (P&O) has been approached by Sanlam Ltd to acquire 49% equity interest in the company. In a filing with Bursa Malaysia, P&O said Sanlam was one of the largest financial services groups in South Africa and was listed on the Johannesburg Stock Exchange. It said approval had been obtained from Bank Negara to begin preliminary negotiations for the proposed divestment. (StarBizWeekly)
Takaful Malaysia eyes property investments in UK
Syarikat Takaful Malaysia Bhd, a provider of general and family takaful, is on the threshold of investing in properties in the UK due to its better structured property leases and higher returns compared to similar investments locally. The company is now a step closer towards setting up a wholly-owned subsidiary in Labuan International Offshore Financial Centre that will act as a special-purpose vehicle (SPV) to handle its overseas property investment. (Malaysian Reserve)
AmG, Kurnia extend merger completion deadline
AMG Insurance Bhd (AmG) and Kurnia Asia Bhd have extended the cut-off date to 12 Sept to fulfill the conditions for the proposed acquisition of the entire stake in Kurnia Insurans (M) Bhd. In an exchange filing last Friday, the 51%-owned subsidiary of AMMB Holdings Bhd said except for the extended cut-off date, all other terms of the sales and purchase agreement, and the supplemental letter dated 18 July, shall remain the same. (Malaysian Reserve)
DRB-Hicom subsidiary inks JV with German firm
DRB-Hicom Bhd’s wholly-owned subsidiary Hicom Polymers Industry SB last Friday inked a joint-venture (JV) agreement with Germany’s HBPO GmbH to design, develop and supply front-end modules for vehicle original equipment manufacturers in the country. As part of its expansion plans, DRB-Hicom said the JV marks another significant milestone towards realising its aspiration to become an automotive industry leader in the region, as both parties intend to have this cooperation extended to other Asean countries to enlarge their footing in the region. (Malaysian Reserve)
TSH’s uphill battle for Pontian United
TSH Resources Bhd may need to sweeten its offer for the takeover of Pontian United Plantations Bhd (PUPB), having only received 8.2% acceptance so far and extended the offer deadline three times until last Friday. As at last Friday, only 8.2% stake in PUPB or 710,567 shares were taken up for the RM90 per share offer from TSH and the Lee family. The RM90 is to be settled in cash and TSH shares. (Financial Daily)
IHH’s knowledge transfer a boom to medical tourism
Malaysia’s prominence as a medical tourism hub will be given a boost through the transfer of knowledge and expertise within IHH Healthcare Bhd, the Malaysian-owned world’s second largest private hospital operator. IHH, Asia’s biggest healthcare services provider recently recorded strong performance in the second quarter ended 30 June with a net profit of RM403.5m. (BT)
AirAsia close to major deal with Airbus
AirAsia is putting finishing touches to a deal to buy up to 100 Airbus jets, ending a flirtation with Canada’s Bombardier and putting Asia’s largest budget carrier on course for regional expansion, sources familiar with the matter said last Friday. The deal for A320-family jets, potentially worth about USD9bn (RM27.9bn), is designed to fuel the growth of what is fast becoming a cluster of related airlines under Tan Sri Tony Fernandes, who placed a record order for 200 Airbuses last year. (BT)
The High Court has dismissed with costs an application by CIMB Holdings Bhd. and PricewaterhouseCoopers (PwC) to set aside a winding-up petition brought by ZAQ Construction Sdn. Bhd. against Asia Petroleum Hub Sdn. Bhd. (APH). According to the news report, the court announced that it would hear ZAQ Construction’s application to wind up APH and appoint a liquidator this week, a move that will further complicate matters in the bank’s bid to salvage the APH project. If ZAQ is successful in its petition, it will add to the already complicated ownership issues related to APH. (Edge Weekly)
The Employee Provident Fund expects more than a 10% returns from its 20% stake in Britain's Battersea Power Station redevelopment and considers its involvement in the project as further diversification of its funds into the British property sector. It did not, however, state the time frame as to when it would rake in the returns. "The most important feature is our partners SP Setia Bhd and Sime Darby Bhd. I would not have gone into it unless the two of them are in it, "said EPF chief executive officer Tan Sri Azlan Zainol. "There will be demand for it as every week, British properties are being promoted and marketed in Malaysia and other parts of Asia, particularly in Hong Kong and Singapore," he added. (StarBiz)
The Employees Provident Fund (EPF) is looking at investment opportunities in properties in the UK and Australia worth GBP400m-500m (RM2-2.5bn) in the next two years. CEO Tan Sri Azlan Zainol said the fund has to date invested GBP1bn in seven buildings in the UK. He added that 23% of EPF funds have been approved for investment overseas, of which 12% is invested already. (Bernama)
The secondary residence property market could face a slowdown in transactions within the next 6 to 12 months due to oversupply of properties caused by speculative buyers. Malaysian Institute Estate Agents (MIEA) deputy president Siva Shanker said "secondary properties in secondary locations," namely apartments within the RM150,000 and RM300,000 price range, could be difficult to sell as an oversupply situation has resulted. "A lot of people in the past would have bough these properties for speculation." said Siva. Siva pointed out that because transactions start slowing down, there is misconception that property prices will crash. (StarBiz)
The 34m shares reserved for public subscription of IGB REIT IPO has been oversubscribed 21.75 times, and the offer price has been fixed at RM1.25 per unit. The IGB REIT joint bookrunners said following the completion of the bookbuilding for the institutional tranche of 469m offer units, which was also oversubscribed, the institutional and retail price has been fixed at RM1.25 per unit. (Malaysian Reserve)
Malaysia Airports (MAHB) has taken possession of Runway 3, one of the major components for KLIA2. The Runway 3 contract worth RM291.2m was awarded to Gadang Holdings in 2010. The job includes building taxiways, site preparation, earthworks and main drainage. Gadang completed the job last month and handed it over to MAHB on August 28. With the completion of Runway 3, Gadang CEO Tan Sri Kok Onn said the company is now eyeing earthwork packages for projects under the Economic Transformation Programme (ETP).Kok said working on the KLIA2 project has been one of the biggest achievements for Gadang. "There were a lot of challenges because of the soil condition. We were supervised by our consultant and had full support from MAHB. MAHB has acknowledged that we did a good job and they are happy with the result," Kok said. (BT)
Volkswagen (VW) Group Malaysia is on track to achieve its long-term target of capturing 10% of the passenger car market. Currently, VW holds over 2% of the annual local passenger car market. The company experienced growth in car sales in Malaysia since the transformation of the business module since 2006. (Bernama)
UDA Holdings Bhd has denied rumours that Kompleks Niaga Utama (KNU) at Bangsar will be sold and demolished. In a statement, it said it is in the midst of redeveloping the complex, due to take place next year. The company said the complex's tenants have been informed of this plan about nine months ago and their contracts have been renewed on a monthly basis. "We are now in the process of obtaining the Development Order full approval from Kuala Lumpur City Hall," it said. (BT)
Mydin Mohamed Holdings Bhd will be investing RM65m in the wholesale hypermarket to be opened at the Gopeng Rural Transformation Centre (RTC) at the end of November. Managing director Datuk Ameer Ali Mydin said the Mydin Mall would operate under a different concept than the other Mydin outlets as the management would give priority to products produced by small and medium enterprises (SMEs) in and around Gopeng. (Malaysian Reserve)
Asia FX By Cornelius Luca - Sun 09 Sep 2012 17:18:46 CT (Source:CME/www.lucafxta.com)
The foreign currencies open little changed in the Far East after surging on Friday, as the weak US non-farm payrolls report encouraged hopes for a new round of quantitative easing. Of course, the ECB already agreed on a new bond-buying programme to lower struggling euro zone countries' borrowing costs, so the ball is in the court of the Fed. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is slightly bullish. The LGR short-term model is long on all foreign currencies. Good luck!
US: The non-farm payrolls increased by 96,000 jobs in August following a downwardly revised increase of 141,000 jobs in July. The unemployment rate fell to 8.1% in August from 8.3% in July due to a notable decrease in the size of the workforce.
Canada: Labor productivity declined to -0.4% in the second quarter from 0% in the first quarter.
Canada: The unemployment rate remained unchanged at 7.3% in August.
Canada: Ivey Purchasing Managers Index rose to 65.2 in August from 58.8 in July.
Today's economic calendar
China: Consumer Price Index for August
China: Producer Price Index for August
China: Industrial Production for August
China: Retail sales for August
China: Trade balance for August
Japan: Bank lending for August
Japan: Gross Domestic Product for the second quarter
Japan: Current account for July
Japan: Consumer Confidence Index for August
Japan: Eco Watchers Survey: Outlook for August
Australia: Home loans for July
Australia: Investment lending for homes for July
Most Asian Stocks Decline on Economic Growth Concerns (Bloomberg)
Most Asian stocks fell after reports from the U.S., China and Japan added to signs of a deepening slowdown in the world’s biggest economies ahead of this week’s the Federal Reserve policy meeting. The MSCI Asia Pacific Index (MXAP) slipped 0.1 percent to 119 as of 9:26 a.m. in Tokyo, with three shares falling for every two that rose. The MSCI Asia Pacific Excluding Japan Index added 0.2 percent. Markets in Hong Kong and China are yet to open.
Japan Stocks Drop as Second-Quarter Economic Growth Slows (Bloomberg)
Japanese stocks fell after the nation’s gross domestic product missed estimates, adding to concern growth is slowing in the world’s largest economies. Mitsubishi Estate Ltd. (8802) led property shares lower as Japan’s economy expanded in the second quarter at half the pace the government initially estimated. Tokyo Electron Ltd. and Nikon Corp., suppliers to Intel Corp. (INTC), lost more than 2.4 percent after the world’s biggest semiconductor maker cut its sales forecast. Toho Holdings Ltd. surged 9.8 percent as the maker of medical tools said it will spend 5 billion yen buying back its shares. The Nikkei 225 (NKY) Stock Average fell 0.3 percent to 8,846.36 as of 9:16 a.m. in Tokyo. The broader Topix Index slid 0.3 percent to 733.23, with about three shares declining for every one that rose. Japan’s data today adds signs of a global slowdown after a report yesterday showed China’s industrial production dropped and the U.S. last week reported weaker-than- estimated payrolls.
“The economic statistics are really bad and in the long run you’re going to have some real savage assessments of what needs to be done to revive growth,” said Philip Parker, chief investment officer at Parker Asset Management Ltd. in Sydney, where he manages about $200 million. “We don’t want to invest money until the markets have come down.”
S&P 500 Futures, Oil Retreat as China’s Industrial Output Slows (Bloomberg)
U.S. equity futures fell, oil dropped and the New Zealand dollar slid as China’s industrial output grew at the slowest pace in three years and President Hu Jintao said the economy faces “notable downward pressure.” Standard & Poor’s 500 Index futures lost 0.1 percent to 1,436.60 as of 7:16 a.m. in Tokyo after the equity gauge last week reached the highest level since 2008. Oil retreated 0.1 percent to $96.30 a barrel in New York. The New Zealand dollar depreciated 0.2 percent to 81.09 U.S. cents. Industrial production in China increased 8.9 percent in August from a year earlier and fixed-asset investment growth in the first eight months eased to 20.2 percent, the National Bureau of Statistics said yesterday in Beijing. Inflation accelerated for the first time in five months. The data underscore risks that full-year growth in the world’s second- biggest economy will slide to its lowest level in more than two decades.
The S&P 500 last week added 2.2 percent to 1,437.92, its biggest rally since June. It rose within 10 percent of its all- time high in October 2007. The Dow Jones Industrial Average finished at the highest level since December 2007. U.S. retail sales probably improved for a second month in August as consumers overcame a lack of jobs and stagnant wages, economists said before reports this week. A 0.7 percent increase in purchases would follow a 0.8 percent July advance, according to the median forecast of 66 economists surveyed by Bloomberg News ahead of Commerce Department figures on Sept. 14.
European Stocks Post Largest Weekly Gain in Three Months (Bloomberg)
European stocks posted the largest weekly advance since June as European Central Bank President Mario Draghi outlined an unlimited bond-buying program to regain control of interest rates and stem the sovereign debt crisis. Italian banks led a gauge of European lenders to the best performance on the Stoxx Europe 600 Index, with Banca Monte dei Paschi di Siena SpA and UniCredit SpA (UCG) rallying at least 16 percent. Ashtead Group Plc (AHT), a U.K. construction-equipment rental company, rose to a record after saying full-year earnings will be higher than forecast. Rhoen-Klinikum AG (RHK) sank 23 percent. The benchmark Stoxx 600 increased 2.3 percent to 272.30 this past week. The gauge has climbed 16 percent from this year’s low on June 4 amid speculation central banks around the world will take further measures to support an economic recovery.
The ECB deal “was a great victory for the periphery,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland. “It confirmed that Spain and Italy are too big to fail and that we will find all the resources to keep them alive. We have solved the liquidity side of the problem but if the economy continues to worsen, the discussion about solvency will rapidly come back. So it’s very good news in the short-term, but still holds some risk for the medium-term.” National benchmark indexes increased in all of the 18 western European markets this week. The U.K.’s FTSE 100 rose 1.5 percent, France’s CAC 40 added 3.1 percent and Germany’s DAX Index climbed 3.5 percent. Italy’s FTSE MIB rallied 6.7 percent, while Spain’s IBEX 35 jumped 6.2 percent.
Treasuries Snap Loss as China Data Fuels Growth Concern (Bloomberg)
Treasuries snapped a loss from last week as a slowdown in Chinese industrial production increased concern global economic growth is waning. China’s industrial output rose 8.9 percent in August from 12 months earlier, the slowest pace in three years, data from the National Bureau of Statistics showed yesterday. The Treasury Department is scheduled to sell $32 billion of three-year notes tomorrow, $21 billion of 10-year debt the next day and $13 billion of 30-year bonds on Sept. 13. Benchmark 10-year yields were little changed at 1.66 percent as of 9:55 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.625 percent security due in August 2022 was 99 23/32. “Worldwide, the economic data are bad,” said Hajime Nagata, who helps oversee the equivalent of $131.8 billion as an investor in Tokyo at Diam Co., a unit of Dai-Ichi Life Insurance Co., Japan’s second-biggest life insurer. Diam is betting on gains in Treasuries, he said.
U.S. job growth slowed more than economists predicted, a government report showed Sept. 7, fueling bets the Federal Reserve will add stimulus to the economy through bond purchases as soon as this week. The central bank’s policy-setting committee meets Sept. 12-13. Treasuries fell last week as European officials announced plans to buy bonds to curb the euro region’s sovereign-debt crisis, easing demand for the safest securities. U.S. 10-year yields increased 12 basis points, or 0.12 percentage point.
Asia-Pacific Leaders Focus on Trans-Atlantic Danger to Recovery (Bloomberg)
The annual meeting of 21 leaders in the Asia-Pacific region spent much of the two-day event in Russia’s Far East focused on the other side of the planet, discussing threats to the world economy posed by the European debt crisis and a looming U.S. budget showdown. Heads of the Asia-Pacific Economic Cooperation Summit in Vladivostok, including Chinese President Hu Jintao and Chilean President Sebastian Pinera, spoke of the dangers the European debt crisis poses to their economies. International Monetary Fund Managing Director Christine Lagarde discussed the so-called U.S. fiscal cliff of tax increases and spending cuts at a lunchtime gathering of the leaders, who collectively oversee 56 percent of world economic output.
Asian leaders vowed to work together to counter the effects of the debt crisis in Europe and the tepid recovery in the U.S. The export-oriented countries of the Asia-Pacific region, where economic expansion in countries such as Chile and China exceeds global growth by several percentage points, are vulnerable to slowdowns in their biggest markets. “High public deficits and debts in some advanced economies are creating strong headwinds to economic recovery globally,” the APEC leaders said in a joint statement. “The events in Europe are adversely affecting growth in the region. In such circumstances, we are resolved to work collectively to support growth and foster financial stability, and restore confidence.”
Retail Sales Probably Increased in July: U.S. Economy Preview (Bloomberg)
Retail sales probably improved for a second month in August as consumers overcame a lack of jobs and stagnant wages, economists said before reports this week. A 0.7 percent increase in purchases would follow a 0.8 percent July advance, according to the median forecast of 66 economists surveyed by Bloomberg News ahead of Commerce Department figures on Sept. 14. Other reports may show inflation accelerated and manufacturing stagnated. Rising food and fuel prices and disappointing gains in payrolls may further damage household finances, making it a challenge for retailers such as Gap Inc. (GPS) and Macy’s Inc. (M) to keep luring customers in the second half of 2012. Widespread labor- market weakness bolsters the case for Federal Reserve policy makers to take additional action to spur growth when they gather this week.
“It’s going to be difficult,” said Gus Faucher, a senior economist at PNC Financial Services Group Inc. in Pittsburgh, whose retail sales forecast matched the median estimate. “Income is basically flat, and at the same time people are spending more for food and energy. If job growth remains flat like this, we are going to see weak growth in consumer spending.” The economy added 96,000 workers last month, less than the 130,000 projected by the median forecast of economists surveyed by Bloomberg, figures from the Labor Department showed last week. The unemployment rate fell to 8.1 percent after 368,000 Americans left the workforce. More than 12.5 million Americans remain unemployed.
U.S. Fiscal Cliff Endangers World Economy, Lagarde Tells APEC (Bloomberg)
U.S. tax increases and spending cuts set to take effect by the beginning of next year pose one of the biggest risks to the global economy, International Monetary Fund Managing Director Christine Lagarde said today. While Lagarde has warned about the U.S. fiscal situation before, this time she took her case directly to leaders attending the Asia-Pacific Economic Cooperation Summit in Vladivostok, Russia. She said the fiscal cliff was one of “three key risks” -- the other two being the euro crisis and medium-term public financing. “We discussed over lunch with the leaders of APEC, the global economic situation, with the three key risks that we see on the horizon,” Lagarde told reporters today. She said there are a “combination of factors that could also increase the vulnerabilities of emerging economies.”
Lagarde made the comments to an organization whose membership oversees 56 percent of global economic output. The more than $480 billion so-called fiscal cliff of automatic spending cuts and revenue changes would probably cause a recession if left unchanged, the nonpartisan Congressional Budget Office said in a report last month. Among the leaders attending the summit were Russian President Vladimir Putin, Chinese President Hu Jintao, Secretary of State Hillary Clinton and Japanese Prime Minister Yoshihiko Noda. Lagarde also restated the IMF’s support for the European Central Bank’s plan to buy the bonds of member nations such as Italy and Spain. Lagarde said the IMF, if it were involved, would want to help in both the design and the monitoring of any program. “Clearly when we get involved we want to be involved both in the design and monitoring of programs,” Lagarde said. “We don’t particularly like to do monitoring without having participated actively in the design.”
U.S. payroll growth seen tepid, may force Fed's hand
WASHINGTON, Sept 7 (Reuters) - The U.S. labor market likely took a step back in August, an outcome that could compel the Federal Reserve to pump additional money into the sluggish economy.
Growth in nonfarm payrolls is expected to have slowed last month to 125,000 from 163,000 in July, according to a Reuters survey of economists. The unemployment rate is seen holding steady at 8.3 percent.
Clinton Advice on Working With China: First Be Yourself (Bloomberg)
Hillary Clinton has some advice for the next secretary of state on negotiating with Chinese leaders: “You have to be yourself, you have to be America, you have to stand up for American values, interests and security.” In an interview with Bloomberg Radio after her sixth -- and probably last -- visit to China as the top U.S. diplomat, Clinton reflected on the lessons of 3 1/2 years trying to resolve issues with a rising power that is the world’s second- largest economy. Along with growing investments and influence around world, China has a key vote on the most important crises before the United Nations Security Council.
Clinton, who has said she will step down within months regardless of whether President Barack Obama wins re-election, was in Beijing last week trying to persuade Chinese leaders to adopt a code of conduct to resolve territorial disputes that have sparked skirmishes with its neighbors in the South China Sea. She also wanted China to support the West in backing tougher action against President Bashar al-Assad in Syria. Her meetings with almost every top Chinese leader or leader-in-waiting were both friendly and frank, by all accounts, though neither issue was resolved. At a joint press conference on Sept. 5, Clinton and Chinese Foreign Minister Yang Jiechi said they remained divided over how to address the maritime claims and the violence in Syria. At the same time, each took pains to highlight U.S.-China unity on other issues, including economic recovery measures and diplomacy to avert nuclear threats from Iran and North Korea.
China Slower Output Gains Complicate Easing Policies (Bloomberg)
China’s industrial output grew at the slowest pace in three years and President Hu Jintao said economic expansion faces “notable downward pressure,” signaling that officials may need to add further to stimulus after approving subway and road projects. Production increased 8.9 percent in August from a year earlier and fixed-asset investment growth in the first eight months eased to 20.2 percent, the National Bureau of Statistics said yesterday in Beijing. Inflation accelerated for the first time in five months. The data underscore risks that full-year growth in the world’s second-biggest economy will slide to its lowest in more than two decades and undermine support for the ruling Communist Party during its once-a-decade power transition to a new generation of leaders later this year. The rebound in inflation, excess capacity in some industries and banks’ bad loan risks from past monetary easing highlight the potential cost of ramping up stimulus efforts.
“Politicians want a benign backdrop for their party congress gathering and slumping stock prices and a worsening growth slowdown could spoil the party,” said Lu Ting, chief China economist at Bank of America Corp. in Hong Kong. “Putting together the economic fundamentals and the timing of major political events, there will be a second round of policy easing including cuts to banks’ reserve requirements and some fiscal stimulus.”
Hu Says China’s Growth Is Facing ‘Notable Downward Pressure’ (Bloomberg)
Chinese President Hu Jintao said a slowdown in exports is putting downward pressure on the world’s second-biggest economy, and he pledged to boost domestic demand and promote more balanced growth. “Economic growth is facing notable downward pressure, some small and medium enterprises are facing a hard time and exporters are facing more difficulties,” Hu said yesterday at the Asia-Pacific Economic Cooperation CEO Summit in Vladivostok, Russia. “We have an arduous task of creating jobs for new entrants to the labor force.” The slowdown is increasing pressure on Hu as China tries to ensure a smooth once-a-decade transition of power to a new generation of leaders at a Communist Party Congress this year. Europe’s debt crisis and anemic U.S. growth may hinder a rebound in exports while at home a slump in earnings is deterring companies from spending and banks face rising bad debts.
“The Chinese government has been trying to reduce the share of investments as a share of GDP and in the meantime accelerate private consumption,” Jing Ulrich, Hong Kong-based chairman of global markets for China at JPMorgan Chase & Co., said in an interview in Vladivostok. “But here comes more stimulus, mainly targeted at fiscal spending and infrastructure. What does this mean for the rebalancing of the overall growth drivers for the economy?”
Japan Halves Growth Estimate for Past Quarter to Annual 0.7% (Bloomberg)
Japan’s economy expanded in the second quarter at half the pace the government initially estimated, underscoring the risk of a contraction as Europe’s debt crisis caps exports. Gross domestic product grew an annualized 0.7 percent in the three months through June, the Cabinet Office said in Tokyo today, less than a preliminary calculation of 1.4 percent. The median forecast of 26 economists surveyed by Bloomberg News was for a revised 1 percent gain. The current-account surplus fell 41 percent from a year earlier to 625.4 billion yen ($8 billion) in July, a finance ministry report showed. Gridlock in parliament may limit fiscal stimulus just as Japan’s expansion is restrained by weakness in global demand, strength in the yen, and the winding down of car-purchase subsidies. A slowdown in Asia may further curtail exports and add to pressure for monetary easing after Chinese data yesterday suggested the region’s biggest economy is losing steam.
“Europe’s debt crisis and the yen’s strength restrained companies from spending in the second quarter,” said Takashi Shiono, an economist at Credit Suisse Group AG in Tokyo. “Japan’s economy will probably contract in the third quarter as the boost from the government’s car subsidy program wanes and the downward pressure from weak external demand materializes.” The Nikkei 225 Stock Average fell 0.3 percent as of 9:26 a.m. local time after a 2.2 percent surge on Sept. 7.
Samaras’s Coalition Partners Balk at Cuts as Troika Disagrees (Bloomberg)
Greek Prime Minister Antonis Samaras failed to secure agreement from his coalition partners on 11.5 billion euros ($14.7 billion) of spending cuts required by the country’s lenders to release funds needed to keep the country in the euro. Democratic Left leader Fotis Kouvelis, whose party is one of the three in Samaras’s coalition government, said no decision had been taken on the package and that poorer Greeks must be protected from more austerity. The three leaders agreed to meet again on Sept. 12, two days before euro area finance ministers meet to be briefed on Greek progress. “The recession is deep and if these measures aren’t accompanied by growth measures, they will be ineffective,” Kouvelis said after the meeting with Samaras and Pasok leader Evangelos Venizelos in Athens yesterday. “Our European partners need to know that Greeks can’t take anymore. Nothing can be taken for granted.”
Samaras has said his two-year package of spending cuts contains unfair and painful decisions that are necessary to restore credibility and keep the country in the euro area. With his New Democracy party holding just 129 seats in the 300-seat chamber, he relies on Pasok’s 33 seats and Democratic Left’s 17 to secure parliamentary approval. Agreement on the cuts, which must be approved by the so- called troika of inspectors from the euro area, European Central Bank and International Monetary Fund, may allow the release of a 31 billion-euro payment that will mainly go to recapitalize the nation’s banks and boost liquidity in a cash-starved economy undergoing a fifth year of recession.
Hollande Sees Two-Year Time Frame to Fix French Economy (Bloomberg)
French President Francois Hollande said his government will set up a two-year agenda to fix the euro zone’s second-largest economy, including measures to overhaul labor contracts and state-sponsored jobs to ease unemployment. “I have a mission: bring this country on the path of recovery,” Hollande said today on TF1 television. “I am going to set a recovery agenda. We have two years to roll out a policy for jobs, a policy for competitiveness and a policy to rebuild public finances.” He promised to have unemployment falling by 2014.
Italy’s Grilli Welcomes Potential IMF Role in ECB Plan (Bloomberg)
Italian Finance Minister Vittorio Grilli praised the International Monetary Fund’s oversight of bailouts and welcomed a potential role for the institution in European Central Bank President Mario Draghi’s bond-buying plan. “It’s only natural and understandable that if the IMF can and would continue to be involved, that would be a positive element,” Grilli said yesterday in an interview with Guy Johnson of Bloomberg Television in Cernobbio, Italy. “The way the euro zone has been working through these years has been through the involvement of the European institutions and the IMF. And I think that collaboration and the expertise put together has worked very well.”
Grilli and Prime Minister Mario Monti are cutting Italy’s budget deficit in an attempt to lower borrowing costs without the help of rescue funds from Europe. Draghi, who announced his support program Sept. 6, said he would seek the involvement of the IMF to set conditions and monitor compliance for any country that requests help from the ECB. Grilli reiterated Italy’s intention to solve the crisis without outside support. “We’ve already said many times that we don’t have, today, the intention or a plan” to ask for any program, Grilli said.
Draghi gets ECB backing for unlimited bond-buying
The European Central Bank agreed on Thursday to launch a new and potentially unlimited bond-buying programme to lower struggling euro zone countries' borrowing costs and draw a line under the debt crisis. (Reuters)
Posted by MW Chong at 9:51 AM
Hedge Funds Lift Bets to 16-Month High Before Rally (Bloomberg)
Hedge funds raised bullish commodity bets to the highest in 16 months before speculation that policy makers in the U.S., China and Europe will revive global growth pushed prices higher for a sixth week. Money managers increased their net-long positions across 18 U.S. futures and options by 2.3 percent to 1.33 million contracts in the week ended Sept. 4, the highest since May 3, 2011, U.S. Commodity Futures Trading Commission data show. Wagers on a silver rally climbed for a sixth week and to the highest since Feb. 28, while those for cocoa jumped 57 percent to the most since May 2010.
U.S. unemployment stayed above 8 percent for a 43rd month in August, and the stagnating labor market means the Federal Reserve will move closer to adding fresh stimulus measures, according to Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. European Central Bank President Mario Draghi announced a bond-buying program Sept. 6 and China’s government approved plans for 1,254 miles of roads, subway projects in 18 cities and other infrastructure projects. “The European fears have calmed to an extent, and China may see a bottoming over the next two quarters,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $325 billion. “Commodities have probably turned a corner, and optimism about easing in the U.S. is putting a bid under prices.”
DTN Closing Grain Comments 09/07 14:51 (CME)
Wheat Steals the Show Again. All three wheat markets posted solid double-digit gains for a second straight day, pulling corn to a slightly higher close. A late round of sell orders pulled soybeans to solid losses to close out the holiday-shortened week.(CME)
Pro Farmer: After the Bell Wheat Recap (CME)
Wheat futures posted double-digit gains in the first several contract months in Chicago and Kansas City. Minneapolis wheat posted slightly lesser gains. Wheat futures also posted gains for the week. USDA will update its wheat Supply & Demand table next Wednesday, but there will not be an updated wheat production estimate -- that will come in the Small Grains Summary on Sept. 28.
Wheat Market Recap Report (CME)
December Wheat finished up 13 1/4 at 905, 7 1/2 off the high and 20 1/4 up from the low. March Wheat closed up 11 3/4 at 915 1/2. This was 19 1/2 up from the low and 6 1/4 off the high. December Chicago wheat traded sharply higher on the day and closed near the high end of the daily range. Kansas City and Minneapolis wheat traded higher as well. Spillover buying from yesterday's explosive trade offered support, along with a sharply lower US Dollar. Unfavorable weather in Australia and Argentina were also supporting factors to finish the week. Australia remains dry over the next 2 weeks and recent rainfall in Argentina has now raised fears that wheat fields could be flooded. Exports sales for the week ending August 30th were in line with trade estimates. Total sales were reported at 573,000 tonnes and the current sales pace for the 2012/13 marketing year is now 35% of the USDA forecast vs. the 5 year average of 45% for this time of the year.
Some traders believe that the recent slide in Black Sea production, along with an expected slowdown in their export sales pace, could mean better demand for US wheat in the second half of the crop year. December Oats closed down 1/2 at 390 1/2. This was 3 1/2 up from the low and 4 1/4 off the high.
Pro Farmer: After the Bell Corn Recap (CME)
Corn futures ended about steady to slightly higher compared with last week's close to remain within the boundaries of the sideways trading range. Upside potential was limited by a lack of fresh news this week, while pressure was limited by tight supplies. Traders expect next week's USDA Crop Production Report to show a smaller crop, but USDA will lower demand if supplies tighten.
Corn Market Recap for 9/7/2012 (CME)
December Corn finished up 1 at 799 1/2, 5 1/4 off the high and 7 1/4 up from the low. March Corn closed up 1 at 802 1/2. This was 7 up from the low and 4 3/4 off the high. December corn finished the day slightly lower but traded both sides of the unchanged. Corn saw support today from a sharply higher wheat market and also on thoughts that next week's USDA report will show a drop in the 2012/13 corn yield. The lower trade in soybeans kept prices gains in check. A closely followed market analyst reported their US corn yield to 119.8 bushels per acre vs. prior estimates of 120.7 but they also feel that eventually the final yield could be 126.5 which was down from 131 previously. The analyst also cut their production estimate to 10.310 billion bushels vs. their previous forecast of 10.338. The firm released a second final production number, much like the yield, at 11 billion bushels vs. prior estimates of 11.224. Export sales for the week ending August 30th were disappointing with total sales reported at just 25,000 tonnes vs. trade estimates of 200-350,000. The current sales pace for 2012/13 is just 25% of the USDA estimates vs. the 5 year average of 29%. The sharp drop in the US dollar provided support to commodities throughout the session as traders look ahead to next week's FOMC meeting. November Rice finished up 0.33 at 14.955, equal to the high and 0.375 up from the low.
GRAINS: Chicago soybean futures fell to pull further away from a record high hit earlier this week as rains improved harvest prospects in parts of the U.S. Midwest that has been scorched by the worst drought in 56 years. Wheat was little changed after rallying in the previous session on expectations that major producer Russia could soon run short of exportable supply after a drought-hit harvest, prompting importers to turn to a more abundant U.S. wheat crop. (Reuters)
Russia sees grain output at 120-125 mln T in 2020 (Reuters)
Russia will boost its annual grain output to 120-125 million tonnes by 2020, of which 35-40 million tonnes would be available for export, President Vladimir Putin said on Friday
China Q4 rapeseed imports seen up 86 pct on year -think-tank (Reuters)
China, the world's top soy importer, has increased imports of rapeseed to bridge a shortage of soybeans expected in coming months after severe drought cut supplies from the United States, an official think-tank estimated on Friday.
India's monsoon splashes into drought-hit states (Reuters)
India's monsoon has splashed back into life, lifting the threat of prolonged drought in the major rice and sugar producer with a second consecutive week of heavier-than-normal rains that could revive yields of summer crops and enable early winter planting.
Brazil govt holds coffee crop forecast at 50.5 mln bags (Reuters)
Brazil's 2012/13 coffee crop will turn out a record 50.5 million 60-kg bags, government crop supply agency Conab said on Thursday, holding to the forecast it gave in May.
SOFTS: ICE cocoa futures edged up towards the prior session's 10-month high while raw sugar rebounded from a two-year low, supported by gains in many financial markets linked to European Central Bank moves to support the region's economy. Arabica coffee futures on ICE also rose in early trade. (Reuters)
Oil Trades Near One-Week High Amid Economic Stimulus Speculation (Bloomberg)
Oil traded near the highest level in a week in New York amid speculation that countries from the U.S. to Asia may add stimulus to their economies, boosting demand for fuel. Futures were little changed after rising a third day on Sept. 7. The U.S., the world’s biggest crude user, holds a Federal Reserve meeting to discuss monetary policy this week, after the European Central Bank last week agreed on unlimited bond purchases to ease the euro-region’s debt crisis. Industrial production in China, the world’s second-biggest oil consumer, rose at the slowest pace in three years in August, data from the National Bureau of Statistics showed yesterday. “The economy is the key thing that people are watching,” Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management, said by telephone Sept. 9. “There’s some optimism about developments in the euro zone last week, though markets are more concerned about what looks like could be a slowdown in the economy in China.”
Oil for October delivery was at $96.30 a barrel, down 12 cents, in electronic trading on the New York Mercantile Exchange at 9:46 a.m. Sydney time. The contract climbed 0.9 percent to $96.42 on Sept. 7, the highest close since Aug. 31. Front-month prices are 2.6 percent lower this year. Brent oil for October settlement climbed 15 cents to $114.40 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $18.10, from $17.83 on Sept. 7.
Fields of Green a Theme for U.S. Oil Refining Future (CME)
A "Pesto" Cocktail for Eco-Friendly Gasoline?
Amid a recent surge in gasoline prices and Hurricane Isaac forcing the temporary shutdown of several oil refineries at the Gulf of Mexico, along with most crude oil and natural gas production from the region, it's clear the lack of refinery capacity in the U.S. is still a major issue that simply won't go away, energy consultant John Licata said. As a result, Americans are "hostage to rising gasoline prices at the pump now more than ever," Licata said in a recent report. With more stringent government fuel requirements coming and older refineries incapable of breaking down crude to more eco-friendly gasoline, it is possible to see pump prices run even higher. Despite a recent short-term rise in refiner "crack spreads," the margin from breaking down a barrel of crude into gasoline and diesel, the "golden age" of refiners seems largely of the past. So what's next? Refiners may need to focus on "greener" pastures in light of government mandates to produce cleaner-burning fuels.
"This has me thinking refiners are going to be forced to add biogas to their business models in a big way to sustain revenue growth," according to Licata, founder of Blue Phoenix Inc., an independent research firm. "We could soon witness crack spreads being replaced by ‘pesto' spreads, representing a new paradigm for refiners to create green fuel, or the ‘green sauce' for making fuel."
OIL-Oil gains ahead of U.S. jobs data
LONDON, Sept 7 (Reuters) - Oil prices rose ahead of a U.S. jobs report which could point to a stronger economic outlook for the world's largest oil consumer.
"Oil demand continues to be hurt by high prices, it's difficult to buy at these levels because you are buying demand destruction," said Olivier Jakob, at Petromatrix in Zug, Switzerland.
White House consults experts as it mulls tapping oil reserve
WASHINGTON, Sept 6 (Reuters) - Obama administration officials met with a handful of oil market experts on Thursday as the White House considers the merits of another release of emergency oil reserves - potentially one much larger than the last.
The meeting, originally scheduled for August but delayed by summer vacations, did not center entirely on the Strategic Petroleum Reserve (SPR), according to non-government sources who attended the meeting.
Copper Trade Most Bullish Since October on Stimulus: Commodities (Bloomberg)
Copper traders are the most bullish in almost 11 months on mounting speculation central banks will do more to bolster growth, strengthening demand for metals. Twenty-one analysts surveyed by Bloomberg said they expect prices to gain next week and five were bearish. A further four were neutral, making the proportion of bulls the highest since Oct. 14. Hedge funds are betting on higher prices for the first time since May and stockpiles in warehouses monitored by the London Metal Exchange, the largest metals bourse, dropped to the lowest level in almost four years.
Commodities, which entered a bull market last month, may rise another 10 percent, Jeffrey Currie, the head of commodities research at Goldman Sachs Group Inc., said in an interview. The European Central Bank yesterday held interest rates at a record low and President Mario Draghi said policy makers agreed to an unlimited bond-purchase program. Federal Reserve Chairman Ben S. Bernanke pledged in an Aug. 31 speech to promote growth with “additional policy accommodation as needed.” “It’s really expectations of what the next round of initiatives will do for global growth,” said Carole Ferguson, an analyst at Fairfax IS in London. “It’s a good indicator of industrial activity. If there’s any recovery in demand, copper should go up quite a lot.”
MPOB Official Data for the month of Aug 2012 vs Jul 2012
Exports up 10.1% to 1.43 million tonnes
Stocks up 5.8 to 2.1 million tonnes
Output down 1.7% to 1.66 million tonnes
ITS CPO export up 26.8% to 453,302 tonnes for the period of 1~10 Sep 2012.
SGS CPO export up 30% to 460939 tonnes for the period of 1~10 Sep 2012.
Pro Farmer: After the Bell Soybean Recap (CME)
Soybean futures saw choppy trade all week, but bears held the upper hand most of the session today and into the close. Futures ended with double-digit losses for the day and slightly lower for the week. Soymeal and soyoil also ended lower for the day and the week. Action in the soybean market next week will revolve around USDA's Crop Production and Supply & Demand Reports on Wednesday and whether the Federal Reserve announces a third round of quantitative easing on Thursday.
Soybean Complex Market Recap (CME)
November Soybeans finished down 10 1/2 at 1736 1/2, 15 1/2 off the high and 10 1/4 up from the low. January Soybeans closed down 10 at 1735 3/4. This was 9 3/4 up from the low and 15 1/2 off the high. December Soymeal closed down 1.2 at 526.9. This was 4.5 up from the low and 6.3 off the high. December Soybean Oil finished down 0.76 at 56.62, 1.03 off the high and 0.04 up from the low.
November soybeans traded sharply lower in the close as traders took profits ahead of the weekend and next week's USDA report. Soybean meal and oil traded lower as well. A closely followed private analyst estimated that the final US soybean yield would be 35.4 bushels per acre which was down from prior estimates of 37.2. Production was estimated at 2.639 billion bushels vs. prior estimates of 2.791. Both the yield and production estimates are slightly below the current USDA forecast. Ideas that farmers will sell soybeans right off the combine and that harvest will move along at record pace have pressured the November contract since last week. Total export sales for the week ending August 30th were reported at 525,000 tonnes which was slightly below market estimates. The fact that the 2012/13 sales pace is currently 60% of the current USDA estimate vs. the 5 year average of 35% offered support. The US Dollar traded sharply lower on the day which added a positive spin to most commodity markets.
EDIBLES: Malaysian crude palm oil futures fell posting their worst weekly performance since late July, with traders made cautious by the prospect that data next week could show rising inventories in the Southeast Asian country. (Reuters)