Asian Stocks Erase Gain on Bets China Won’t Ease Policy (Source: Bloomberg)
Most Asian stocks fell, with a regional benchmark index erasing earlier gains, after a Chinese manufacturing report exceeded estimates and Vice Premier Li Keqiang said the country will continue to stabilize prices. The MSCI Asia Pacific Index swung between gains and losses, rising 0.02 point, or less than 0.1 percent to 126.63 as of 11:26 a.m. in Tokyo. The measure gained 11 percent in the three months ended March 31, the biggest advance since the third quarter of 2010, amid optimism monetary easing in Japan and Europe will spur growth and the U.S. economic recovery is picking up.
Asian Stocks Post Best Quarter Since 2010 on Bernanke (Source: Bloomberg)
Asian stocks rose this week, with the regional benchmark index capping its biggest quarterly gain since 2010, after Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed. Gains were limited amid concern China’s economic slowdown is weighing on company earnings. Sharp Corp., which fell to a 30-year low earlier this month, surged 27 percent this week in Tokyo after Foxconn Technology Group agreed to buy a stake in the display maker. Toyota Motor Corp., Asia’s biggest carmaker by market value, rose 3 percent. Korea Gas Corp. (036460), the world’s largest buyer of liquefied natural gas, gained 12 percent in Seoul after its Italian partner found reserves in Mozambique. Sun Hung Kai Properties Ltd. (16), the world No. 2 real estate company, plunged 9.8 percent in Hong Kong after the firm’s co-chairmen were arrested in a corruption probe.
“You just don’t have sustainability for the markets to reweight higher like they did three or four months ago,” Andrew Pease, Sydney-based chief investment strategist for the Asia- Pacific region at Russell Investment Group, which manages about $150 billion. “You are not going to see any acceleration from here and you may actually feel a bit of moderation” in the U.S. The MSCI Asia Pacific Index (MXAP) rose 0.2 percent to 126.60 this week. The measure jumped 11 percent for the first three months this year, as U.S. economic optimism and monetary easing in Europe, Japan and China fueled the fastest quarterly rally since September 2010.
Yen Drops Versus Peers as Tankan Fuels Easing Speculation (Source: Bloomberg)
The yen weakened versus all of its major peers after a Bank of Japan (8301) report showed that sentiment failed to improve at the nation’s largest companies, stoking prospects the central bank will boost monetary stimulus. The Japanese currency slid against the dollar and euro as signs that manufacturing is improving in the U.S. and China, the world’s two biggest economies, undermined demand for haven assets. The euro remained higher after a quarterly gain versus the greenback as European governments called for a bigger global financial emergency fund after engineering a firewall to fight the region’s debt crisis. “The worse-than-expected Tankan survey seems to be fueling talk that the BOJ will ease policy further,” Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore, said about the central bank’s quarterly sentiment survey. “This is probably leading to selling of the yen.”
The yen lost 0.4 percent to 83.18 per dollar as as of 10:19 a.m. in Tokyo. It slid 0.4 percent to 110.97 per euro. Europe’s 17-nation currency was little changed at $1.3341 after rising 3 percent versus the greenback in the three months ended March 31.
FOREX-Dollar index hits 1-month low, euro supported
LONDON, March 30 (Reuters) - The dollar fell to its lowest in a month against a basket of currencies, extending falls made earlier this week on expectations of further U.S. monetary stimulus and helping the euro gain before a euro zone finance ministers' meeting.
"Raising the size of the euro zone bailout fund will be supportive for the euro, although the market is already aware of it," said Audrey Childe-Freeman, currency strategist at JP Morgan Private Bank.
U.S. Stocks Rise as S&P 500 Posts Best Start Since 1998 (Source: Bloomberg)
U.S. stocks rose this week, with the Standard & Poor’s 500 Index completing the biggest first- quarter rally since 1998, after Federal Reserve Chairman Ben S. Bernanke said he will keep stimulating the economy and Europe agreed to increase rescue funds. WellPoint Inc. (WLP) surged 11 percent, leading health-care stocks to the biggest rally among 10 S&P 500 groups, amid speculation the U.S. Supreme Court won’t eliminate the insurance mandate while leaving intact other costly provisions in an industry overhaul. Pfizer Inc. (PFE) climbed 3.8 percent after a Goldman Sachs Group Inc. analyst said the drugmaker may split itself up. Red Hat Inc. (RHT) jumped 15 percent after the software maker forecast earnings that beat analysts’ estimates.
The S&P 500 rose 0.8 percent to 1,408.47 and closed at the highest level since May 2008 on March 26. It advanced 12 percent during the first quarter, including a 3.1 percent increase in March. The Dow Jones Industrial Average added 131.31 points, or 1 percent, to 13,212.04 this week. The Nasdaq Composite Index climbed 0.8 percent and surged 19 percent during the quarter, the most to start a year since 1991. “The market can continue to rally into May and the early part of June,” Jon Fisher, a fund manager at Fifth Third Asset Management in Minneapolis, which oversees about $16 billion of assets, said in a telephone interview. “You have all that monetary policy unleashed in the market globally. At the same time, you got a huge improvement in sentiment. Outlooks for the rest of the year are going to continue to be positive.”
European Stocks Retreat for Second Week After S&P Warning (Source: Bloomberg)
European stocks fell for a second week as Standard & Poor’s said Greece may have to restructure its debt again and a European Central Bank policy maker said a bigger firewall will not solve the fiscal crisis. Lenders and oil companies led the drop, with Banca Popolare di Milano Scarl (PMI) slumping 14 percent and Total SA (FP) losing 6.1 percent. FirstGroup Plc (FGP) plunged 18 percent after the U.K. bus and train operator said its bus business faced “challenging trading conditions.” Finmeccanica SpA (FNC), Italy’s biggest defense company, rallied 15 percent after forecasting a return to profit in 2012.
The Stoxx Europe 600 Index (SXXP) declined 0.9 percent to 263.32 this past week, even after jumping 1 percent on March 30. The benchmark measure climbed 7.7 percent in the first quarter, its best performance during the first three months of the year since 2006, as the ECB disbursed 1 trillion euros ($1.3 trillion) in three-year loans to the region’s financial institutions and U.S. economic reports beat estimates. “The markets started the first quarter with a dash, but the finish seems to be a lumbered one as liquidity fuel dries out,” said Manish Singh, the London-based head of investment at Crossbridge Capital, which has more than $2 billion under management. “The same old worries still linger -- slowing gross domestic product growth in Europe and a likelihood of Europe’s sovereign stresses flaring again. However, the selloff in the market is more a case of lack of buyers than eagerness to sell.”
World Bank Board Said to Plan Decision on President April 16 (Source: Bloomberg)
The World Bank plans to pick its new president April 16 after interviewing the three candidates for the post the previous week, according to three officials at the lender’s board. Nigerian Finance Minister Ngozi Okonjo-Iweala is scheduled to meet the 25-person board April 9, according to the officials, who spoke on condition of anonymity because the dates haven’t been made public. Former Colombian finance minister Jose Antonio Ocampo is to be interviewed on April 10, followed by the U.S. candidate, Dartmouth College President Jim Yong Kim on April 11, the officials said. The new president will succeed Robert Zoellick, whose term ends June 30. The U.S. is the bank’s largest shareholder, and an American has always held the top job. The bank had previously said it would make a decision by April 20. World Bank spokesman Frederick Jones declined to comment because the selection process is decided by the board.
Employment Probably Kept Growing in March: U.S. Economy Preview (Source: Bloomberg)
Payrolls in the U.S. probably increased by more than 200,000 workers in March for a fourth consecutive month as companies became more optimistic about the outlook for growth, economists said before a report this week. Employment rose by 205,000 after climbing by 227,000 in February, according to the median projection of 54 economists surveyed by Bloomberg News. The last time hiring advanced at a similar pace and period was in late 1999-early 2000. The jobless rate probably held at a three-year low of 8.3 percent. The pickup in hiring has boosted consumer confidence to a four-year high, raising the odds that gains in household spending, which accounts for 70 percent of the economy, can be sustained. The improvement in the job market may also help Americans weather the rising cost of gasoline, which Federal Reserve Chairman Ben S. Bernanke said posed a risk to growth.
“The underlying health of the economy is getting better,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “We’re getting to a point where some of the hurdles to getting a healthier expansion are starting to be removed.”
Treasuries Fall for Second Day After China Manufacturing (Source: Bloomberg)
Treasuries fell for a second day after Chinese factories expanded and as economists said data this week will show U.S. manufacturing and employment increased. U.S. government securities handed investors a 1.3 percent loss in the first quarter, the most since the last three months of 2010, based on Bank of America Merrill Lynch indexes. Treasuries slid as the world’s largest economy showed signs of improvement, a shift from 2011 when the debt returned 9.8 percent, the figures show. Ten-year notes yield 45 basis points more than same-maturity German bunds, the most in 13 months. “The best is over for Treasuries,” said Hiroki Shimazu, an economist in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s third-largest publicly traded bank by assets. “The labor market is much stronger than in the second half of last year. Manufacturing will stay at a high level.”
Ten-year yields rose three basis points, or 0.03 percentage point, to 2.24 percent as of 11:06 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The price of the 2 percent security due in February 2022 slid 1/4 or $2.50 per $1,000 face amount, to 97 7/8. While the 10-year note yield has risen from a record low 1.67 percent set Sept. 23, it’s still less than the average for the past decade of 3.86 percent.
China Manufacturing Gain Masks Exporters’ Woes (Source: Bloomberg)
A stronger reading for a Chinese manufacturing gauge failed to end predictions for policy loosening as analysts described the gain as seasonal and a separate survey showed exporters struggling. A Purchasing Managers’ Index (CPMINDX) rose to a one-year high of 53.1 in March, China’s logistics federation and the National Bureau of Statistics said yesterday. The gauge has a pattern of rising each March. In contrast, a PMI from HSBC Holdings Plc and Markit Economics showed manufacturing contracting and export orders falling. Premier Wen Jiabao has pledged to “fine-tune” economic policies as needed as weakness in export demand and a cooling housing market restrain an economy that probably grew at the slowest pace in almost three years in the first quarter. Analysts in a Bloomberg News survey last week unanimously said that banks’ reserve requirements will fall this year, while nine of 20 predicted lower benchmark borrowing costs.
“Policy easing is still needed to avoid a hard landing,” said Shen Jianguang, a Hong Kong-based economist for Mizuho Securities Asia Ltd., who previously worked for the International Monetary Fund and European Central Bank. Fiscal spending will be “the driving force” and more cuts in bank reserve requirements are needed, he said.
China Bans Mircoblog Comment as 6 Detained on Coup Rumor (Source: Bloomberg)
A ban on Internet users commenting on posts to China’s two largest microblogging sites enters its third day after the government closed 16 websites and detained six people for spreading rumors of a coup attempt in Beijing. Sina Corp. (SINA), the largest provider of the Twitter-like service with more than 300 million registered users, and Tencent Holdings Ltd. (700), the No. 2 player, announced the 72-hour suspension of the commenting function starting at 8 a.m. March 31, citing a need to clear up rumors and illegal information. Speculation on the Internet on March 20 of a coup attempt helped spark the biggest jump in four months in the cost of insuring against a default on Chinese government bonds. That was five days after Bo Xilai, earlier seen as a contender for promotion to China’s top decision-making body, was removed as party secretary of the municipality of Chongqing.
“Although the punishment was not harsh, it does send a message to other Internet companies to be more cautious in terms of content control,” JPMorgan Chase & Co. analysts Dick Wei and Evan Zhou wrote in a note dated April 1. Tencent fell 1.1 percent to HK$214.20 in Hong Kong trading as of 10:29 a.m. local time. Sina fell 1.1 percent to $65.00 in Nasdaq trading on Mar. 30.
Japan Tankan Confidence Not Improving, Threatens Rebound (Source: Bloomberg)
Sentiment among Japan’s largest manufacturers failed to improve in March as executives predicted the yen will rebound against the dollar, hurting exporters' sales and profits. The quarterly Tankan index was unchanged from minus 4 in December, the Bank of Japan said today in Tokyo. That was less than the median estimate of 25 economists surveyed by Bloomberg News for a reading of minus 1. A negative number means pessimists outnumber optimists. A weakening currency and gains in stock prices this year are giving only a limited boost to confidence as exporters struggle to regain ground lost when the yen surged to a postwar record in October. Today’s report showed that executives expect the sentiment index to remain negative at minus 3 in June and the yen to strengthen about 6 percent from today’s level to average 78.14 per dollar this fiscal year.
“The Tankan signals business managers think it will take awhile for the economy to regain momentum,” Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former BOJ official. “They’re still concerned about the risk of the yen appreciating again because they’ve been traumatized by a strong currency.”
S. Korean Inflation Moderates to Slowest Pace in 20 Months (Source: Bloomberg)
South Korea’s consumer prices rose 2.6 percent in March from a year earlier, the slowest pace in 20 months, before a central bank meeting next week to set benchmark interest rates. The median estimate in a Bloomberg News survey of 11 analysts was for a 3.2 percent increase. Prices fell 0.1 percent from February, Statistics Korea said today. The Bank of Korea aims to keep inflation at the midpoint of a range of between 2 percent and 4 percent over the medium term. The central bank kept the benchmark seven-day repurchase rate unchanged at 3.25 percent for a ninth month in March as Europe’s debt crisis and austerity measures capped demand for exports. “Inflation may creep up again due to high oil prices and elevated inflation expectations, with the economy likely to gain pace from the second quarter” said Kim Nam Hyun, a Seoul-based fixed income analyst at Eugene Investment (001200) & Futures.
Government subsidies for child care and an expanded free school lunch program cut consumer prices by 0.5 percentage points, Ahn Hyung Jun, a director at Statistics Korea, told reporters in Gwacheon today.
South Korean Exports Fall 1.4% on Weakness in Global Demand (Source: Bloomberg)
South Korea’s exports were less than analysts forecast in March, sliding 1.4 percent from a year earlier on weakness in global demand. Imports fell 1.2 percent, leaving a trade surplus of $2.3 billion, the Ministry of Knowledge Economy said in an e-mailed statement today. The median estimate in a Bloomberg News survey of 13 economists was for a 1.3 percent gain in exports. Signs that Europe’s debt crisis is easing may improve the outlook for shipments from South Korea, where the economy grew at the slowest pace in two years in the fourth quarter. The Asian nation’s central bank refrained from altering borrowing costs for a ninth month in March as officials balanced price pressures from oil costs against risks posed by stresses in the euro region. “As external conditions remain fragile, accommodative policy is still required to help the economy gain a firmer footing,” Ronald Man, a Hong Kong-based analyst at HSBC Holdings Plc, said before the release. “Korea remains on path for a gradual recovery in 2012.”
Stocks rallied last quarter on signs of improvement in the global economy.
Japanese Stock Futures Gain on U.S. Confidence, Spending (Source: Bloomberg)
Japanese stocks rose, with the Nikkei 225 Stock Average (NKY) gaining for the first time in four days, as stronger-than-forecast U.S. consumer sentiment and spending bolstered optimism on the global economic recovery. Honda Motor Co. (7267), a carmaker that gets almost half of its revenue in North America, advanced 2.7 percent. Fanuc Corp. (6954), a producer of robotics for mainland factories, gained 2.7 percent on stronger Chinese manufacturing data. Mitsubishi Corp. (8058), Japan’s biggest commodities trader by revenue, climbed 1.6 percent after oil and metals prices rose. “The U.S. economy is moving toward a recovery, boosting expectations Japan will follow,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd. “Investors are buying shares, looking on the bright side of Chinese data.” The Nikkei 225 Stock Average rose 0.8 percent to 10,163.59 at the trading break in Tokyo, with volume 17 percent higher than the 100-day average. The broader Topix Index gained 0.7 percent to 860.26.
DBS to Buy Temasek Stake in Bank Danamon for $4.9 Billion (Source: Bloomberg)
DBS Group Holdings Ltd. (DBS), Southeast Asia’s biggest bank, will buy control of PT Bank Danamon Indonesia (BDMN) for about $4.9 billion to tap a market growing at the fastest pace since before the Asian financial crisis. DBS will pay Temasek Holdings Pte (TMSK) for 45.2 trillion rupiah ($4.9 billion) for its 67 percent stake and plans a bid to buy the rest of the lender, the Singapore-based bank said in a statement to the Singapore stock exchange. DBS is seeking to tap Danamon’s 3,000-branch network, Indonesia’s second largest, serving 6 million customers. The country’s economy, Southeast Asia’s biggest, grew 6.46 percent last year, the fastest pace since before the 1997-98 Asian financial crisis, as rising investment and domestic spending countered a slowdown in export demand. The target for 2012 is 6.5 percent.
The deal will allow DBS “to expand in an important high- growth emerging market,” Jonathan Koh, an analyst at UOB Kay Hian in Singapore, wrote in a note. DBS could “add value by building up Bank Danamon’s corporate banking, investment banking and treasury businesses,” he said.
Euro Leaders Seek Global Help After Firewall Boosted (Source: Bloomberg)
Efforts to resolve the two-year-old European debt crisis swung back to world leaders after euro-area policy makers boosted a firewall designed to overcome doubts about their crisis response and to lure additional emergency aid. Finance ministers from the 17-member monetary union unveiled a package over the weekend including 500 billion euros ($667 billion) in fresh bailout funds on top of 300 billion euros already committed to rescue programs, which together topped the symbolic $1 trillion mark. The total doubles when more than 1 trillion euros lent by the European Central Bank to aid the region’s banks is included. “The political commitment to the eurozone is increasingly clear, and the ECB has shown that, in the final analysis, they’ll do what they have to do,” Erik Nielsen, chief global economist at UniCredit SpA (UCG), wrote in a note to clients yesterday.
Group of 20 nations that rebuffed German-led pleas for more aid in February will be asked to decide this month whether European leaders have done enough to warrant increased resources from the International Monetary Fund. Euro-area finance ministers insisted at a meeting that ended March 31 in Copenhagen that they’ve fulfilled their side of the bargain.
Iraq March Crude Exports Rise to Highest Since 1980 (Source: Bloomberg)
Iraq’s crude oil exports in March rose to the highest level since 1980, a year after former President Saddam Hussein came to power, an Oil Ministry spokesman said. The Middle East country exported 71.827 million barrels, or 2.317 million barrels a day, in March, Asim Jihad said in an e- mailed statement. The exports generated $8.475 billion, with an average price of $118 a barrel, he said. “The exported quantities in March reached a level that Iraq hadn’t seen since 1980,” Jihad said, adding shipments were boosted by a new offshore terminal started operating in February. Iraq holds the world’s fifth-largest oil reserves, according to data from BP Plc (BP/) that include Canadian oil sands. The Arab nation depends on crude exports for money to rebuild the economy after decades of war and sanctions. Iraq has awarded 15 licenses for oil- and gas-drilling rights to foreign companies in the post-Saddam Hussein era, and it plans a new licensing auction in May.
The gain in exports came even as the semi-autonomous Kurdistan region isn’t supplying the agreed quantities, sabotage attacks targeted the northern export pipeline and bad weather slowed tanker shipments in the south, Jihad said.
South Africa’s Fiscal Deficit Set to Be 4.5% for 2011-12 (Source: Bloomberg)
South Africa’s budget deficit will probably be 4.5 percent for the 12-month period that ended yesterday, Finance Minister Pravin Gordhan said. The fiscal gap is narrower than a previous estimate of 4.8 percent of gross domestic product, Gordhan told reporters in Pretoria today. The government collected 742.7 billion rand ($96.8 billion) of revenue, 4 billion rand more than forecast, he said. Government spending was 968.5 billion rand, 4 billion rand less than previously estimated, he said. The “domestic environment is improving,” Gordhan said. “Given the mild optimism about the prospects ahead of us, we can see that revenue performance is following some of those indicators.” Standard & Poor’s cut the outlook on the nation’s credit rating last week to negative as growth in Africa’s largest economy slows this year, making it harder for the government to rein in the fiscal deficit. The government unexpectedly lowered its target for the budget gap this fiscal year as tax revenue is forecast to rise.
Economic growth will slow to 2.7 percent this year from 3.1 percent last year, Gordhan said on Feb. 22. Reserve Bank Governor Gill Marcus revised the bank’s forecast higher to 3 percent on March 29, citing an improved global outlook.
Dubai Shares Extend Best Start to Year Since 2005; Egypt Drops (Source: Bloomberg)
Dubai’s benchmark stock index rose, extending its best start to a year since 2005, amid investor optimism corporate earnings may beat expectations as the emirate recovers from the debt crisis. Egyptian shares fell. Gulf Navigation Holding PJSC (GULFNAV), Dubai’s only publicly traded tanker owner, climbed to the highest in week after reporting results. Dubai Financial Market PJSC (DFM) rose to the highest in two weeks. The DFM General Index (DFMGI) advanced 0.8 percent to 1,661.67 at the 2 p.m. close in the emirate, taking this year’s rally to 23 percent. The measure is the third-best performing gauge in the Middle East this year after Egypt’s and Saudi Arabia’s. The EGX 30 Index (EGX30) tumbled the most in a week amid rising political tension between the military and the dominant Islamist group.
Three years after Dubai almost defaulted on about $25 billion of debt, corporate earnings are improving as the economy recovers. Dubai Financial Market, the only publicly traded stock market in the Persian Gulf, is forecast to return to profit this year as trading volumes rise. Emaar Properties PJSC (EMAAR), the developer of the world’s tallest skyscraper, may report a 10 percent increase in net income this year, according to the mean estimate of 12 analysts on Bloomberg. “The global macro picture is more positive than in 2011 and strong corporate results and dividend announcements in the United Arab Emirates are also helping,” said Samer Darwiche, an associate at Dubai-based Gulfmena Investments Ltd.
Suu Kyi’s Party Declares Victory as Myanmar Opens Up (Source: Bloomberg)
Myanmar dissident Aung San Suu Kyi will become a lawmaker for the first time after a victory in by- elections yesterday that may prompt the U.S. and European Union to lift sanctions and end the country’s global isolation. “The Lady has won,” Nyan Win, a spokesman for her National League for Democracy party, said by phone from Yangon, Myanmar’s largest city, amid loud cheers from her supporters. “This is a big victory for us.” The party won at least 35 of 45 seats in the first vote it contested since the army discarded a 1990 victory, Nyan Win said, giving it representation in the 664-member Parliament that will still be dominated by President Thein Sein’s party. Suu Kyi, who spent 15 years under house arrest and was awarded the Nobel Peace Prize for her non-violent struggle, boycotted a 2010 election that ended five decades of direct military rule.
The vote may open the door for the end of sanctions that prevent companies from General Electric Co. (GE) to Standard Chartered Plc (STAN) from investing in the country of 64 million people bordering China and India. Thein Sein has moved to modernize Myanmar’s political and economic system since taking power a year ago, including a managed float of its currency set to take effect yesterday.
