20120308 1033 Global Market Related News.

Malaysia Builders Trailing Most Since 2007 Lure CLSA on $16 Billion Plan (Source: Bloomberg)
Malaysian construction stocks are trailing regional peers by the most since 2007, a buy signal to CLSA Ltd. and Manulife Asset Management as the government’s $16 billion building plan sends profit estimates to a record. While the Bursa Malaysia Construction Index (KLCON) climbed 6.7 percent this year through February, the gauge lagged behind the Bloomberg Asia Pacific Engineering & Construction Index by 12 percentage points, the most for any two-month period since October 2007. The Malaysian gauge has slipped 0.9 percent so far this month as the regional measure lost 2.8 percent. Prime Minister Najib Razak’s government is selecting builders for a railway network and a new financial district in Kuala Lumpur, part of an infrastructure spending plan designed to boost economic growth. IJM Corp. (IJM), Malaysia’s biggest builder by market value, and Ahmad Zaki (AZR) Resources Bhd. won this year’s first contracts in January.
Profits in the Malaysian construction index will climb 37 percent in the next 12 months, according to about 90 analyst projections compiled by Bloomberg. “I’m quite bullish on the sector,” said Loong Chee Wei, a Kuala Lumpur-based analyst at CLSA, ranked No. 2 for Malaysia research last year by Institutional Investor magazine. “All the new contract wins will actually drive the upward re-rating of the stocks.”

China Production Slowdown May Spur Stimulus (Source: Bloomberg)
China may report tomorrow the slowest inflation in 19 months and industrial-production growth near a two-year low, increasing odds the government will step up efforts to stimulate the economy. Consumer prices probably rose 3.4 percent in February from a year before, after a 4.5 percent increase in January, while output growth eased to 12.5 percent, Bloomberg News surveys of economists indicate. Commerce Minister Chen Deming yesterday signaled that export gains were less than analysts forecast. Premier Wen Jiabao’s government this week highlighted plans from endorsing higher minimum wages to boosting public housing that reduce risks of the slowdown turning into a so-called hard landing. Concern over the magnitude of China’s moderation contributed to Asian stocks surrendering recent gains this week, with a benchmark gauge poised to snap an 11-week winning streak.
“Growth will slide further if the government doesn’t increase fiscal investment,” said Joy Yang, a Hong Kong-based economist at Mirae Asset Securities (HK) Ltd. who previously worked at the International Monetary Fund. The data “will boost the case for Wen to step up policy measures to bolster growth,” she said.

Asian Stocks Snap Three-day Retreat on Japan Economy, U.S. Jobs (Source: Bloomberg)
Asian stocks rose, with the regional benchmark index snapping a three-day losing streak, after Japan’s economy shrank less than the government initially estimated, U.S. employers increasing hiring and more investors joined a Greek debt swap. Toyota Motor Corp. (7203), Asia’s biggest carmaker by market value, rose 1.9 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, advanced 2.5 percent after U.S. banks gained on a report that the Federal Reserve is considering a new type of bond-purchase program. BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, gained 0.7 percent after oil prices rose. The MSCI Asia Pacific Index (TPX) added 0.6 percent to 125.18 as of 10:33 a.m. in Tokyo, with almost four stocks rising for each that fell. Seven out of 10 industry groups in the measure advanced.

Japanese Stocks Advance on Rise in U.S. Hiring, Greek Debt Deal Optimism (Source: Bloomberg)
Japanese stocks rose for the first time in four days after U.S. companies increased hiring and more investors signed on to a Greek debt swap needed to secure a bailout. Shares also gained as a report showed Japan’s economy contracted less than initially estimated. Nissan Motor Co. (7201), a Japanese carmaker that gets about 80 percent of its revenue overseas, climbed 1.6 percent after the yen weakened. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest publicly traded bank, gained 1.1 percent. Mitsubishi Corp. (8058), Japan’s top commodities trader by revenue, gained 2.3 percent after oil and copper prices rose. “Investors are feeling less pessimistic about the global economy,” said Seiichiro Iwamoto, who helps oversee about $35 billion at Mizuho Asset Management Co. in Tokyo. “Now that the yen is starting to ease, manufacturers who had really been hurt are coming back.”
The Nikkei 225 Stock Average (NKY) rose 1 percent to 9,670.71 as of 9:30 a.m. in Tokyo. The broader Topix (TPX) Index climbed 1.1 percent to 831.34, with more than three times as many shares advancing as falling. Volume on the gauge was about 10 percent higher than the 100-day average.

S&P 500 Rebounds on Employment Data (Source: Bloomberg)
U.S. stocks advanced, following the biggest decline in 2012 for the Standard & Poor’s 500 Index, after a private report showed American companies increased hiring and more investors signed on to a Greek debt swap. Equities extended gains on a report that the Federal Reserve is discussing a new type of bond-buying program. Financial and industrial shares rose the most among 10 groups in the S&P 500. Bank of America Corp. (BAC) and Caterpillar Inc. (CAT) advanced at least 2.2 percent. Apple (AAPL) Inc. added 0.1 percent after introducing a new version of the iPad with a sharper screen. The S&P 500 rose 0.7 percent to 1,352.63 at 4 p.m. New York time, after slumping 1.5 percent yesterday. The Dow Jones Industrial Average added 78.18 points, or 0.6 percent, to 12,837.33. The Russell 2000 Index of small companies gained 1.1 percent to 795.95. About 6.1 billion shares changed hands on U.S. exchanges, or 9.1 percent below the three-month average.
“The market just wants to go up,” said Jack Ablin, who helps oversee $55 billion as chief investment officer at Harris Private Bank. “The ADP report was positive. The bigger participation in the Greek debt swap is encouraging. Plus, there’s a report that says that the Fed would continue to buy bonds, but they are not going to expand their balance sheet.”

Europe Stocks Advance on U.S. Hiring Report, Greek Debt Swap; Cobham Jumps (Source: Bloomberg)
European (SXXP) stocks rose, rebounding from yesterday’s biggest drop since November, after a report showed hiring in U.S. companies accelerated and as investors with more than half of Greek bonds agreed to a debt swap. Deutsche Boerse AG (DB1) advanced 2.3 percent after UBS AG recommended buying the stock. Cobham Plc (COB) jumped the most since at least 1989 after saying it’s in talks for acquisitions. Adidas AG (ADS) fell 3 percent as it forecast 2012 net income that missed analyst estimates. The Stoxx Europe 600 Index climbed 0.6 percent to 260.10 at the close in London. The benchmark gauge retreated 2.7 percent yesterday, the biggest drop since Nov. 21, and has still gained 6.4 percent so far this year.
“We don’t think yesterday’s move is the beginning of a longer-term correction, so it rather presents a good opportunity to add to positions,” Patrick Moonen, senior strategist at ING Investment Management in The Hague, Netherlands, said in a telephone interview. “Overall, if you look at macro data, surprises are still positive -- in the U.S. but also in the U.K. and the euro zone.”

Emerging-Market Stocks in Deepest Losing Streak of Year on Greek Debt Swap (Source: Bloomberg)
Emerging-market stocks fell, completing the worst three-day slump since November, as concern Greece’s debt swap won’t get enough investor support and prospects Chinese exports are dropping damped appetite for riskier assets. The MSCI Emerging Markets Index (MXEF) retreated for a third day, losing 0.3 percent at the close in New York to 1,037.71, the lowest since Feb. 1. The three-day loss is the steepest since Nov. 23. Usinas Siderurgicas de Minas Gerais SA slid to the lowest this month as Brazil’s second-largest steelmaker said fourth- quarter profit tumbled 84 percent. China Life Insurance Co. (2628), the nation’s largest insurer, plunged the most in more than four months after reporting 2011 net income may drop by as much as 50 percent. Want Want China Holdings Ltd. (151) reached the highest-ever closing price after Citigroup Inc. raised its rating on China’s largest maker of rice cakes.
Greece is stepping up pressure on holders of its bonds to comply with a debt swap that runs through tomorrow and is viewed as necessary to avert a default. Investors with at least 58 percent of the eligible debt have agreed to the swap so far. China’s Commerce Minister Chen Deming said exports rose about 7 percent in the first two months of 2012, suggesting the reading for February will be below all forecasts of economists surveyed by Bloomberg.

China Stock-Index Futures Rise Before Release of Inflation, Economic Data (Source: Bloomberg)
China’s stock-index futures rose, signaling gains for equities, on speculation the government will increase efforts to stimulate the economy as the country’s industrial-production growth slows and inflation cools. Qingdao Port Group Co. may gain as the China Daily said the company plans to start operation of an ore terminal this year. China Vanke Co. (000002), the nation’s largest listed developer, may lead real-estate companies lower after central bank adviser Li Daokui said the government will keep property curbs in place even as prices fall. “Investors are watching for any new government measures to boost the economy,” said Chen Liqiu, a strategist at Jianghai Securities Co. in Shanghai. “The global economy has improved recently. That’s good for sentiment but we need more long-term concrete data to increase overall confidence.”
Futures on the CSI 300 Index expiring in March, the most active contract, gained 0.2 percent to 2,620.8 as of 9:17 a.m. local time. The Shanghai Composite Index (SHCOMP) sank 15.65 points, or 0.7 percent, to 2,394.79 yesterday. The CSI 300 Index (SHSZ300) lost 0.7 percent to 2,603. The Bloomberg China-US 55 index of the most- traded Chinese stocks in the U.S. added 0.7 percent to 104.85 in New York.

Yen Drops on Record Japan Current-Account Deficit; Aussie Slides on Jobs (Source: Bloomberg)
The yen weakened against most of its major peers after Japan posted a record current-account deficit, threatening to undermine the currency’s haven status. Japan’s currency also declined as Asian shares rallied, supporting demand for higher-yielding assets. The euro advanced for a second day against the yen before Greece’s debt-swap talks with private creditors conclude at 10 p.m. Athens time today. New Zealand’s dollar halted yesterday’s gain against its U.S. counterpart after the Reserve Bank kept its benchmark rate at a record low. “Japan’s current-account deficit exceeded expectations, fueling concerns about its economic growth and fiscal problems,” said Yuji Saito, director of the foreign-exchange department in Tokyo at Credit Agricole CIB. “This is spurring selling of the yen.”
The yen fell 0.2 percent to 81.22 per dollar as of 10:32 a.m. in Tokyo from the close in New York yesterday. It lost 0.1 percent to 106.73 per euro. The 17-nation euro dipped 0.1 percent to $1.3141.

Risk currencies on defensive on fresh Greece doubts
TOKYO, March 7 (Reuters) - Risk currencies bounced off multi-week lows but were still seen vulnerable, while the Japanese yen held firm, as doubts over whether Greece can pull together a bond swap deal prompted players to cut exposure to risky assets.
"I think we are at a watershed now. If the Greek debt swap goes well and the U.S. job data points to continued recovery, then the market could return to the risk-on mood," said a trader at a Japanese bank."But if Greece cannot get the deal, then that would be a game changer," he added.

Treasuries Stay Lower Before U.S. Announces Size of Next Week’s Auctions (Source: Bloomberg)
Treasuries stayed lower before the U.S. announces today the sizes of three auctions of coupon- bearing debt scheduled for next week. The government will probably sell $32 billion of 3-year notes, $21 billion of 10-year securities, and $13 billion of 30- year bonds, according to Wrightson ICAP LLC, an economic advisory company in Jersey City, New Jersey, that specializes in government finance. Treasuries (YCGT0025) fell yesterday as a report showed U.S. companies added jobs last month and as Greece garnered support for the nation’s debt exchange. “We are headed for next week’s auctions,” said Tomohisa Fujiki, an interest-rate strategist at BNP Paribas Securities Japan Ltd. in Tokyo. “Treasuries should fall.”
Ten-year yields held at 1.97 percent as of 10:02 a.m. in Tokyo, Bloomberg Bond Trader prices showed. The 2 percent security due in February 2022 changed hands at 100 1/4. The rate rose three basis points, or 0.03 percentage point, yesterday. The record low was 1.67 percent set Sept. 23.

Consumer Credit in U.S. Rises More Than Forecast, Capping Three-Month Gain (Source: Bloomberg)
Consumer borrowing in the U.S. rose more than forecast in January, capping the biggest three-month gain in more than a decade, as demand for autos improved and Americans sought more education. Credit increased by $17.8 billion to $2.51 trillion, Federal Reserve figures showed today in Washington. The gain topped the $10.5 billion median forecast of economists surveyed by Bloomberg News. In the three months to January, borrowing climbed by the most since mid 2000. Improving finances as hiring strengthens may be allowing households to take on more debt in order to sustain spending on big-ticket items like automobiles. Nonetheless, a jobless rate exceeding 8 percent may be prompting other Americans to pursue higher education or specialized training to get a leg up in the job market.
“Consumer borrowing is back, fueled by a healthy interplay of rising demand for big-ticket items and relaxing credit standards,” said Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston. “We appear to be in the early stages of a virtuous cycle, where credit easing facilitates more spending.”

Payroll Upward Revisions in U.S. Point to Stronger Labor Market: Economy (Source: Bloomberg)
Employment gains in the U.S. have been understated since the middle of 2010, showing the expansion is in a better position to withstand headwinds such as rising gasoline prices. The Labor Department has raised its initial estimate of payroll employment in all but two months since July 2010 through the end of last year. The upward revisions are likely to continue, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, because job gains have been revised “sharply higher” in seven of the last eight expansions. The size of the revisions to monthly job growth was bigger in the second half of 2011 than in the first, helping explain a jump in wages and salaries that may invigorate American households, whose spending accounts for about 70 percent of gross domestic product. Stronger consumer finances put the world’s largest economy in a better position to withstand rising higher costs and fallout from a slump in Europe.
“The revisions tell us that the household sector was in much better financial condition than we previously thought,” LaVorgna said in a telephone interview. “When you have extra income, people have more firepower.”

Finance Chiefs See Pickup in U.S. Hiring as Confidence Improves (Source: Bloomberg)
Companies in the U.S. are poised to boost employment as confidence in the economy climbed to the highest level in a year, a quarterly survey of chief financial officers showed today. A gauge of executives’ optimism in the world’s largest economy rose to 59.2 from January through March from 53.3 the prior period, according to a report issued today by Duke University/CFO Magazine. The managers plan to increase payrolls by 2.1 percent over the next 12 months, the biggest gain since mid 2006. “For the first time since the recession started, there is good news for the U.S. economy,” John Graham, director of the survey and a finance professor at Duke University’s Fuqua School of Business, said in an interview. “That is what we have really been waiting for on the economy -- for employment to pick up.”
A 2.1 percent increase would represent a gain of 2.32 million private payroll jobs, which exclude government agencies, or about 193,000 a month over the next year. Companies boosted staff levels by 2.09 million workers in 2011.

Productivity in U.S. Cools as Labor Costs Jump (Source: Bloomberg)
The productivity of U.S. workers rose at a slower pace in the fourth quarter and labor costs jumped, indicating businesses are reaching the limit of wringing efficiency from their workforce. The measure of employee output per hour climbed at a 0.9 percent annual rate, after a 1.8 percent gain in the prior three months, revised figures from the Labor Department showed today in Washington. Expenses per worker climbed at a 2.8 percent rate, more than twice as much as previously estimated. Productivity will probably remain restrained as businesses gain confidence in the economic expansion and take on more workers to meet growing demand. Nonetheless, rising labor costs and slowing efficiency may put pressure on corporate profits.
Less productivity means “the only way to increase output is to hire more people,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, who was the only analyst in a Bloomberg News survey to accurately forecast the jump in labor costs. “It’s a positive for the labor market,” he said, at the same time “margins should be getting squeezed a bit.”

ADP Says U.S. Added 216,000 Jobs in February (Source: Bloomberg)
Companies in the U.S. added more workers in February than a month earlier, another sign of labor market strength, data from a private report based on payrolls showed today. Employment increased by 216,000 for the month after a revised 173,000 gain in January, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 215,000 increase this month. Further employment gains would help generate the wage gains necessary to sustain household spending, which accounts for about 70 percent of the economy. Businesses added 225,000 jobs in February, and the unemployment rate held at 8.3 percent, economists project a Labor Department report will show in two days. “Everything is pointing to broader employment gains,” Troy Davig, a senior U.S. economist at Barclays Capital Inc. in New York, said before the report. “As people start experiencing a steadier stream of income, that will translate into consumption and that will start building a stronger foundation for growth.”

China Production Slowdown May Spur Stimulus (Source: Bloomberg)
China may report tomorrow the slowest inflation in 19 months and industrial-production growth near a two-year low, increasing odds the government will step up efforts to stimulate the economy. Consumer prices probably rose 3.4 percent in February from a year before, after a 4.5 percent increase in January, while output growth eased to 12.5 percent, Bloomberg News surveys of economists indicate. Commerce Minister Chen Deming yesterday signaled that export gains were less than analysts forecast. Premier Wen Jiabao’s government this week highlighted plans from endorsing higher minimum wages to boosting public housing that reduce risks of the slowdown turning into a so-called hard landing. Concern over the magnitude of China’s moderation contributed to Asian stocks surrendering recent gains this week, with a benchmark gauge poised to snap an 11-week winning streak.
“Growth will slide further if the government doesn’t increase fiscal investment,” said Joy Yang, a Hong Kong-based economist at Mirae Asset Securities (HK) Ltd. who previously worked at the International Monetary Fund. The data “will boost the case for Wen to step up policy measures to bolster growth,” she said.

Brazil Speeds Up Interest Rate Cuts to Single Digit to Revive GDP Growth (Source: Bloomberg)
Brazil’s central bank surprised analysts by accelerating the pace of interest rate cuts, bringing borrowing costs below 10 percent for only the second time on record as it seeks to revive growth. Policy makers, led by central bank President Alexandre Tombini, reduced the Selic rate by 0.75 percentage point to 9.75 percent, surprising 59 of 62 analysts who expected it would be lowered by a half point for a fifth straight meeting. The move was anticipated by two analysts, while one forecast a one percentage point cut, according to a Bloomberg survey. “Giving continuity to the adjustment process of monetary conditions, the Copom decided to reduce the Selic rate to 9.75 percent a year, without bias, by five votes in favor and two votes for the reduction of the Selic rate by 0.5 percentage points,” policy makers said in their statement posted on the central bank’s website.
Industrial production in January had its biggest drop in more than three years as global demand slowed and a rally in the real made imports cheaper. By reducing borrowing costs, President Dilma Rousseff’s administration is trying to fuel investment in the second-biggest emerging market after China and discourage foreigners from flooding the economy with dollars seeking higher-yielding assets.

New Zealand Signals Rates on Hold Much of 2012 as Currency Eases Inflation (Source: Bloomberg)
New Zealand (ANZ)’s central bank signaled it may leave interest rates at a record low for much of the year as a surging currency eases inflation and diminishes the prospect of higher borrowing costs. The local dollar fell. “Sustained strength in the New Zealand dollar would reduce the need for further increases in the cash rate,” Governor Alan Bollard said at a news conference in Wellington today after leaving the official cash rate at 2.5 percent. The central bank’s forecasts “are not inconsistent with a story that would see that remaining in place for much of this year,” he said. New Zealand’s dollar has gained 11 percent in the past year, the best performing Group of 10 currency, reducing the cost of imports, while weak economic growth is also curbing inflation. Bollard today forecast consumer prices will rise 1.4 percent in the year ending Sept. 30, the weakest annual pace in more than 12 years, adding to the case for him to extend a yearlong rate pause.
Currency strength “creates more of a drag on the economy,” said Doug Steel, economist at Bank of New Zealand Ltd. in Wellington, who revised his rate forecast after today’s statement. He now expects the next rate rise in December, after earlier predicting an increase in September.

Investors With 60% of Greek Bonds Agree to Swap (Source: Bloomberg)
Investors with about 60 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate, putting the country on the verge of the biggest sovereign restructuring in history. Greece’s largest banks, most of the country’s pension funds, and more than 30 European banks and insurers including BNP Paribas (BNP) SA, Commerzbank AG (CBK) and Assicurazioni Generali SpA (G) have agreed to the offer. That brings the total to about 124 billion euros ($163 billion), based on data compiled by Bloomberg from company reports and government statements. The goal of the exchange is to reduce the 206 billion euros of privately held Greek debt by 53.5 percent and turn the tide against the debt crisis that has roiled Europe for more than two years.
While Greece would prefer a voluntary deal, the government has said it will use collective action clauses to force holders of Greek-law bonds into the swap if the so-called private sector involvement falls short and it gets sufficient approval from investors to change the bonds’ terms. “Adding up the commitments to participate in the Greek PSI, it is now clear that the CAC hurdles will very likely be cleared,” Commerzbank’s head of fixed-income strategy, Christoph Rieger, said in a note yesterday. Under the rules of the exchange, investors holding at least 50 percent of the eligible bonds must vote on the swap, and 66 percent of those must agree to amend the bonds to enable the government to impose the collective action clauses, Rieger said.

German Factory Orders Unexpectedly Fall on Slump in Export Demand: Economy (Source: Bloomberg)
German factory orders unexpectedly declined in January as foreign demand for investment goods such as machinery slumped. Orders (GRIORTMM), adjusted for seasonal swings and inflation, fell 2.7 percent from December, when they gained 1.6 percent, the Economy Ministry in Berlin said today. Economists forecast a 0.6 percent increase, according to the median of 37 estimates in a Bloomberg News survey. From a year ago, orders dropped 4.9 percent when adjusted for work days. “It’s an ugly number but it was caused by a sharp drop in big-ticket items so it masks the overall robustness of the German economy,” said Alexander Koch, an economist at UniCredit Group in Munich. “The confidence indicators signal a gradual recovery.”
The economy, Europe’s largest, contracted in the fourth quarter of 2011 as the sovereign debt crisis curbed demand for its exports across the euro region. Still, business, consumer and investor confidence all jumped last month after Greece clinched a second bailout and the European Central Bank flooded the banking system with a record amount of cash, pushing down yields on government debt and lifting stock markets.