Economy: Mustapa says trade with China remains strong
International Trade and Industry Minister Datuk Seri Mustapa Mohamed on Wednesday allayed concerns over a slowing Chinese economy, which could impact external demand for Malaysian products, saying bilateral trade and investment ties remained strong. He said China had introduced some measures to ensure its economy continued to grow at a reasonable rate and, given that situation, Malaysia hoped to sustain the trade levels. Exports from China expanded by 15% last month, supported by a 6% growth in imports as consumption levels remain buoyant. Malaysia enjoyed an 8.7% growth in total trade last year, mostly due to an Asian-driven export market with the support of China, Asean and India. (Business Times)
Economy: BNM says domestic growth still strong, rates appropriate
Bank Negara Malaysia's (BNM) bank governor Tan Sri Dr Zeti Akhtar Aziz said domestic growth remains strong despite global economic uncertainties and that the country's interest rates were appropriate. She said that despite the eurozone crisis, domestic growth is still strong while inflation is moderating. (Financial Daily)
Banking: BNM refutes news report about NPLs sale to foreign parties
Bank Negara Malaysia (BNM) has refuted a news report that banking institutions had sold non-performing loans (NPLs) to foreign parties. It had on Wednesday described the news report as inaccurate and misleading. The central bank said that the amount of NPLs sold in the news report was grossly overstated, adding that since 2005, NPLs sold by banks is less than RM3bn. (StarBiz)
China: New bank lending may be RMB1trn in June
New bank lending may reach RMB900bn to RMB1trn this month, China Securities Journal reports today, citing an unidentified person. Industrial and Commercial Bank of China, China Construction Bank Corp, Bank of China and Agricultural Bank of China lent a combined RMB25bn in the first half of June, according to the newspaper. New bank lending was RMB682bn in April and RMB793bn in May, according to the report. (Bloomberg)
China: Top advisers propose easing property curbs
Media reports indicated that a group of senior Chinese advisors has called on the government to relax property market restrictions to ensure brisk growth in the domestic economy. China Daily cited a proposal from the Chinese People’s Political Consultative Conference, the country’s top advisory body that is influential in policymaking, as saying that Beijing should consider loosening property purchase restrictions. The proposal also suggested China should rely on interest rate cuts rather that reductions in banks’ reserve requirement ratios to stimulate economic growth. (Reuters)
Japan: Europe debt crisis restrains rebound in exports
Japan reported its first trade deficit with the EU since the Finance Ministry began tracking data in 1979 as the debt crisis roiling Spain and Greece limits a rebound in Japanese exports. An overall shortfall of 907.3bn yen ($11.5bn) for May, reported today in Tokyo, was bigger than all 24 estimates in a Bloomberg News survey of economists. Exports rose 10% from a year earlier, the most in 17 months, while imports exceeded estimates. The trade gap with the EU was 11.1bn yen. Shipments to the EU fell 0.9% even as they surged 38% to the U.S., underscoring the threat to Japan’s recovery as Group of 20 leaders meeting in Mexico press Europe to step up damage control. Governor Masaaki Shirakawa said Wednesday that Europe poses the biggest risk as Japan’s economy returns to the path of moderate recovery. (Bloomberg)
Japan: BOJ members say Japan could be ‘adversely affected’ by Euro
Bank of Japan board members said the central bank has been pursuing “powerful monetary easing” and a few said Europe’s sovereign-debt crisis could hurt Japan’s economy, a record of last month’s gathering showed. Board members agreed that it was appropriate to monitor the effects of the BOJ’s asset purchases, which were expanded at the previous meeting in April, according to the minutes of the 22-23 May meeting released in Tokyo. One member warned that the risk of automatically adding stimulus could affect the stability of the economy and prices. The meeting was held prior to the second Greek election and a few members expressed concern that Japan’s economy could be “adversely affected” by the materialization of “substantial risk” stemming from the European crisis. These members said “the bank should stand ready to take appropriate actions without ruling out any option in advance. (Bloomberg)
Greece: Samaras to Name New Government
Greek Prime Minister Antonis Samaras is set to announce the members of his government Thursday after securing agreement from the country’s political leaders on a coalition that will seek relief from austerity measures tied to international loans. Samaras was sworn in as prime minister Wednesday, the country’s fourth premier since November, after his New Democracy party won a June 17 election with almost 30% of the vote. He’s joining forces with the socialist Pasok party, which finished third, and the sixth-place Democratic Left, to hold 179 seats in the 300-member parliament, ending a period of political limbo that began with an inconclusive May 6 election. (Bloomberg)
EU: German economic expansion to slow, Finance Ministry report says
Germany’s economic expansion is set to slow in the course of the year, the Finance Ministry said in its monthly report, citing weaker indicators. German tax revenue fell 4.3% in May y-o-y, hurt by changes in tax collection that is delaying inflows by several months, the ministry in Berlin said in the report. Tax revenue in the first five months rose 3.6% y-o-y, it said. (Bloomberg)
France: Pushing for Europe debt redemption fund
France’s Labor Minister Michel Sapin said the nation is championing a plan for excessive European debt to be pooled into a common fund as officials seek solutions to end to a debt crisis that’s engulfed Spain and now threatens Italy. Sapin said proposals for a so-called European Redemption Fund, developed by Chancellor Angela Merkel’s council of economic advisers and backed by German opposition parties, are gaining traction in Europe even though Merkel herself hasn’t warmed to it. The proposal amounts to using all the strength of the European economy as a whole, while making sure the countries that are today getting hammered by too-high interest rates see the normal part of their debt financed in normal conditions. (Bloomberg)
UK: Jobless claims unexpectedly rise as Euro crisis bites
UK unemployment claims unexpectedly rose in May, suggesting the labor market may be starting to succumb to Europe’s intensifying debt crisis. Jobless-benefit claims climbed 8,100 from April to 1.6 million, the Office for National Statistics said. The unemployment rate as measured by International Labour Organization methods was unchanged at 8.2% in the three months though April. The claimant-count numbers tend to lead what happens in unemployment, so these numbers are a bit worrying, said personnel. The figures suggest the labor-market recovery is running out of steam, increasing pressure on Prime Minister David Cameron. His budget cuts have been blamed by the opposition Labour Party for pushing the UK into its first double-dip recession since the 1970s at a time when the euro-region crisis is casting a shadow on prospects for the economy. (Bloomberg)
UK: King overruled in 5-4 vote against BOE stimulus extension
Bank of England Governor Mervyn King was overruled for the first time in almost three years as he joined a push to expand stimulus that’s gathering momentum as the danger of Europe’s debt crisis intensifies. The Monetary Policy Committee voted 5-4 to keep its bondpurchase target at 325bn pounds ($511bn) this month. That defeated votes by King, Adam Posen and David Miles for a 50bn-pound expansion, and Paul Fisher’s bid for 25bn pounds. It’s the first time King has voted in the minority since August 2009, showing the central bank is moving closer to adding stimulus after it halted expansion of its quantitative-easing program in May. (Bloomberg)
US: Fed officials sees lower US growth, slow progress on jobs
Federal Reserve officials cut their estimates for 2012 growth after last month’s slowdown in hiring and see little progress on unemployment during the rest of the year. Fed officials lowered their central tendency estimate for US 2012 GDP growth to 1.9% to 2.4% from 2.4% to 2.9% in April. Estimates for 2013 centered around 2.2% to 2.8%, compared with 2.7% to 3.1% in the previous forecast. Consumers and businesses are restraining spending as European financial stress has knocked down US stock prices. Yields on corporate borrowing rates have increased as investors flee from risk. (Bloomberg)
US: Fed expands Operation Twist to year-end, prepared to do more
The Federal Reserve will expand its Operation Twist program to extend the maturities of assets on its balance sheet and said it stands ready to take further action to put unemployed Americans back to work. The central bank will prolong the program through the end of the year, selling $267bn of shorter-term securities and buying the same amount of longer-term debt in a bid to reduce borrowing costs and spur the economy. (Bloomberg)
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