20130108 1100 Global Markets Related News.

Malaysia Funds Subway With First Exchange Bonds: Southeast Asia (Bloomberg)
Malaysia, Southeast Asia’s biggest local-currency bond market, will let retail investors fund Kuala Lumpur’s new subway when it starts marketing its first exchange- traded notes to individuals.
Prime Minister Najib Razak will unveil details of the issuance today during a presentation at Bursa Malaysia Bhd. (BURSA), the exchange operator for the nation’s stocks and bonds based in the capital. DanaInfra Nasional Bhd., a state-owned company that’s financing the rail network, will kick off the offerings.
The country joins Indonesia, Thailand and the Philippines in tapping the general public for funds and providing an alternative investment to bank deposits and equities. The new securities will help boost market volumes, Tajuddin Atan, chief executive officer at the bourse, said in an e-mail on Jan. 6. Malaysia sold a record amount of debt last year as companies help fund the government’s $444 billion development program to build railways, roads and power plants.
The securities will “provide retail investors with an opportunity to be part of a major public infrastructure project,” Ranjit Ajit Singh, chairman of Malaysia’s Securities Commission, said in an e-mail yesterday. “One of the key components of our capital-market strategy is to continue to grow the bond market, which is already the fourth largest in Asia.”

Asian Stocks Swing Between Gains, Losses; Mazda Declines (Bloomberg)
Asian stocks swung between gains and losses as Japanese exporters declined after the yen’s advance dimmed the outlook for overseas earnings. Oil producers rose as crude futures gained.
Mazda Motor Corp. (7261), which gets about 72 percent of its sales outside of Japan, sank 3.3 percent. Aozora Bank Ltd. (8304) declined 3.6 percent, extending losses for a second day, after the Japanese lender confirmed Cerberus Capital Management LP will sell most of its holdings. Woodside Petroleum Ltd., Australia’s second-largest oil producer, gained 1 percent as crude oil traded near a four-month high.
The MSCI Asia Pacific Index (MXAP) lost 0.1 percent to 131.33 as of 10:35 a.m. Tokyo time, erasing earlier gains of as much as 0.3 percent. The regional benchmark gauge posted its seventh weekly advance last week, the longest winning streak since March last year, after the U.S. Congress approved a budget deal and manufacturing reports from China and the U.S. added to signs of a global recovery.
“We don’t expect a no-brainer, one-way climb for stocks,” said Michael Kurtz, chief global equity strategist at Nomura Holdings Inc. in Hong Kong. “Japan for its part has delivered a key step toward expectations of a major pro-reflation policy shift.”
Japan’s Nikkei 225 Stock Average climbed 22 percent through yesterday from Nov. 14 when elections were announced, driving the gauge into a bull market on expectations a new government would call for more stimulus, and as a weakening currency boosted the earnings outlook for exporters. Prime Minister Shinzo Abe, a proponent for more monetary policy easing, will have a chance to reshape the Bank of Japan early this year, when the terms of Governor Masaaki Shirakawa and his two deputies expire.

Japanese Stocks Swing Between Gains, Losses as Yen Rises (Bloomberg)
Japanese stocks swung between gains and losses as the yen headed for its biggest two-day gain against the dollar in two months, cutting the earnings outlook for exporters.
Mazda Motor Corp. (7261), an automaker that gets 28 percent of its sales in North America, dropped 3.9 percent. Aozora Bank Ltd. fell 2.8 percent, extending yesterday’s 10 percent plunge, after confirming Cerberus Capital Management LP is set to offload most of its stake in the lender. Shiseido Co. gained 3.1 percent after BNP Paribas recommended buying the cosmetics maker’s shares.
The Nikkei 225 Stock Average (NKY) slid 0.1 percent to 10,585.4 at 9:59 a.m. in Tokyo with trading volume 23 percent higher than the 30-day average. The broader Topix Index fell 0.1 percent to 880.34.
“The yen’s weakness has been excessive and is getting adjusted today as well,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of about 6 trillion yen ($69 billion). “It’s no surprise the market is experiencing a correction because the recent rally ignored technical overheating signs.”
The Nikkei 225’s 14-day relative strength index, a technical indicator of price momentum, showed shares may have been overbought after the benchmark gauge last week rose to a 22-month high.
The Topix has risen about 22 percent since Nov. 14 when elections were announced, driving the gauge into a bull market on expectations a new government would call for more stimulus. An advance of 20 percent or more from a low signals a bull market to some investors.
Goldman Sachs Group Inc. raised its 12-month target for the Topix to 1,000 from 930 amid optimism new Prime Minister Shinzo Abe’s policies will bolster th

U.S. Stocks Decline Ahead of Corporate Earnings Season (Bloomberg)
U.S. stocks fell, after the Standard & Poor’s 500 Index climbed to a five-year high, as investors awaited the start of the corporate earnings season tomorrow.
Boeing Co. slumped 2 percent as a 787 Dreamliner operated by Japan Airlines Co. caught fire on the ground today at Boston’s Logan International Airport. Applied Materials Inc., the world’s largest producer of chipmaking equipment, declined 1.2 percent after being downgraded at JPMorgan Chase & Co. Amazon.com Inc. rallied 3.6 percent to a record high after Morgan Stanley upgraded the world’s largest online retailer.
The S&P 500 fell 0.3 percent to 1,461.89 at 4 p.m. New York time. The Dow Jones Industrial Average lost 50.92 points, or 0.4 percent, to 13,384.29. About 5.8 billion shares changed hands on U.S. exchanges, 5 percent below the three-month average.
“We’ve come a long way in a very short time,” Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York, said in a phone interview. “I’m expecting better-than-anticipated earnings. Yet we need to see some consolidation first.”
The S&P 500 ended last week at the highest level since 2007 after data showed employers added workers in December at about the same pace as the prior month. The gauge rallied 2.5 percent on Jan. 2 after Republicans and Democrats agreed on a compromise budget that avoided the so-called fiscal cliff of sweeping tax increases and spending cuts.

German Stocks Decline Amid U.S. Budget Deficit Concerns (Bloomberg)
German stocks declined as continuing concern that the U.S. budget deal won’t reduce the fiscal deficit quickly enough offset gains in lenders after central banks eased a liquidity rule at a meeting in Switzerland.
Infineon Technologies AG (IFX) fell 2.2 percent as Bank of America Corp. downgraded the stock. Deutsche Bank AG (DBK) and Commerzbank AG (CBK) rose 2.8 percent and 4.2 percent, respectively, after global central bank chiefs agreed to water down and delay a planned bank-liquidity regulation.
The DAX (DAX) lost 0.6 percent to 7,732.66 at the close of trading in Frankfurt. The gauge has still gained 1.6 percent this year as U.S. lawmakers struck a New Year deal to prevent most scheduled tax increases and delay spending cuts in the world’s largest economy. The broader HDAX Index dropped 0.5 percent today.
“Everyone was hoping that they would find a proper solution before the year-end,” Guillermo Hernandez Sampere, head of trading at Fpm Frankfurt Performance Mgmt AG, who helps manage about 500 million euros ($652 million), said, referring to the U.S. budget discussions. “What they have done is to buy more time. We have not received the solution that the market was looking for.”
Republicans are planning to use the need to raise America’s $16.4 trillion debt ceiling to force President Barack Obama to accept spending cuts to entitlement programs such as Medicare. Congress must act as early as mid-February to prevent a default.

Emerging Stocks Retreat From Valuations at September High (Bloomberg)
Emerging-market stocks declined after a seven-week rally sent valuations to the most expensive level since September. Technology shares slumped before earnings this week from companies including Samsung Electronics Co. (005930)
Samsung sank for a third day in Seoul. Largan Precision Co. (3008), which makes camera lenses, tumbled 7 percent in Taipei after Deutsche Bank AG said the company’s sales missed its forecast. Centrais Eletricas Brasileiras SA (ELET6) drove a drop in Brazilian power producers on concern low water levels at hydropower dams may compel the country to ration electricity. Istanbul’s ISE National 100 Index rallied to a record high.
The MSCI Emerging Markets Index fell 0.2 percent to 1,075.76 after seven weeks of gains, the longest rising stretch since October 2010. The measure traded at 12.63 times trailing earnings last week, the highest level since the week ended Sept. 28. About 49 companies on the developing-markets gauge are scheduled to post results in the next two weeks including Infosys Ltd. (INFY) and HTC Corp. (2498), data compiled by Bloomberg show.
“The markets look a little overbought,” David Semple, who helps oversee about $37 billion as director of international equity at Van Eck Global, said by phone in New York. “The key is to see whether earnings start to follow the modestly better growth trajectory for many countries.”

Treasuries Have Worst Start to a Year Since 2009 (Bloomberg)
Treasuries are off to their worst start to a year since 2009 as money managers prepared to bid at three debt sales this week starting with a $32 billion note auction today.
U.S. government securities handed investors a 0.7 percent loss in 2013 as of yesterday, according to Bank of America Merrill Lynch indexes. It was the biggest decline for the first week of a year since the Treasury Department was preparing to ramp up debt sales as it tried to snap a recession during the global financial crisis. Bonds slid last week as lawmakers averted the so-called fiscal cliff and the Federal Reserve indicated it may stop its debt purchases in 2013.
“The Fed may reduce the amount of Treasuries it buys as the economy grows,” said Kei Katayama, who buys non-yen debt in Tokyo for Daiwa SB Investments Ltd., which manages the equivalent of $56.8 billion and is a unit of Japan’s second- largest brokerage. “Yields will go up, but only gradually.”
Benchmark 10-year rates held at 1.90 percent as of 9:37 a.m. in Tokyo, based on Bloomberg Bond Trader prices. The 1.625 percent note maturing in November 2022 changed hands at 97 18/32. The yield climbed to 1.97 percent on Jan. 4, the most since April.
Treasuries securities maturing in 10 years and longer were the world’s worst-performing bonds in local currency terms in the past month with a 4.7 percent loss, based on 144 bond indexes tracked by Bloomberg and the European Federation of Financial Analysts Societies.

Yen Gains a Second Day on Bets Declines Were Excessive (Bloomberg)
The yen headed for the biggest two- day gain in two months, extending a rally from its 2 1/2 year low on speculation recent declines were excessive.
Japan’s currency strengthened against all of its 16 major counterparts even amid prospects the nation’s newly elected prime minister, Shinzo Abe, will press the central bank to expand monetary stimulus at a Jan. 21-22 meeting in an effort to revive growth. The euro remained higher after rising for two days amid speculation the European Central Bank will refrain from cutting borrowing costs this week.
“The yen has had a very sharp depreciation and it must be due for some kind of consolidation,” said Derek Mumford, a Sydney-based director at Rochford Capital, a currency risk- management company. “I do think dollar-yen needs a bit of a breather. The fact that the Bank of Japan (8301) is under pressure to make monetary policy even easier and print money is going to drive the yen weaker over time.”
Japan’s currency rose 0.3 percent to 87.51 per dollar at 9:57 a.m. in Tokyo, gaining 0.7 percent so far this week, the biggest two-day percentage advance since Nov. 8. It touched 88.41 on Jan. 4, the weakest since July 2010. The yen added 0.3 percent to 114.78 per euro. The euro bought $1.3118 from $1.3117, after gaining 0.5 percent over the previous two days.
The yen’s 14-day relative strength index against the dollar was at 26 today, below the 30 level that traders view as a signal that an asset’s price has fallen too fast. The similar gauge versus the euro was at 30.

Wages a Balm for U.S. Workers Facing Payroll-Tax Shock (Bloomberg)
An improving job market is boosting wages and providing needed relief just as every American worker gets hit with a tax increase.
Hourly earnings climbed 0.3 percent on average in December for a second month, the biggest back-to-back increase since the economic recovery began in mid-2009, Labor Department figures showed Jan. 4. Combined with a lengthening of the workweek, that brought the average weekly paycheck to $818.69, up 1.2 percent from October and the steepest two-month gain since February- March 2007, before the recession began.
The boost comes just as the fiscal pact passed by Congress last week lets the payroll tax used to pay for Social Security benefits rise to 2010 levels, reducing paychecks by $41.67 from someone earning $50,000 who is paid twice a month. The higher salaries, together with the lowest gasoline prices in almost a year, will provide a lift to household spending, which accounts for about 70 percent of the world’s largest economy.
“Let’s not be too quick to write off the American consumer,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Paychecks are a little healthier. The outlook for the consumer is probably a bit brighter than people think.”
Arnaud Collin is among those recognizing a more attractive salary will help draw the workers he needs. The chief marketing officer at Los Altos, California-based Catalog Spree, developer of a mobile shopping application, says “there’s just more competition” in the Silicon Valley region for people with skills in commerce and mobile marketi

Obama Said Close to Choosing Lew for Treasury Following Geithner (Bloomberg)
President Barack Obama is close to choosing White House Chief of Staff Jack Lew for Treasury secretary with an announcement as soon as this week, according to two people familiar with the matter.
Selecting Lew to replace Timothy F. Geithner would also require Obama to install a new chief of staff, the first step in a White House staff shuffle for his second term. Many of the president’s senior aides may be taking new roles as the president recasts his team, said the people, who requested anonymity to discuss personnel matters.
While Obama hasn’t made a final decision to pick Lew, his staff has been instructed to prepare for his nomination, said one of the people. Among the leading candidates to replace Lew as Obama’s chief of staff are Denis McDonough, currently a deputy national security adviser, and Ron Klain, who had served as Vice President Joe Biden’s chief of staff.
The next Treasury secretary will play a leading role in working with Congress to raise the government’s $16.4 trillion debt ceiling. The U.S. reached the statutory limit on Dec. 31, and the Treasury Department began using extraordinary measures to finance the government. It will exhaust that avenue as early as mid-February, the Congressional Budget Office says.
Geithner plans to leave the administration by the end of January even if the debt ceiling issue hasn’t been settled.

Japan Weighing BOJ Accord With Employment Mandate, Mainichi Says (Bloomberg)
The Japanese government and the Bank of Japan (8301) are discussing a policy accord aimed at achieving stable employment conditions, the Mainichi newspaper reported.
The agreement won’t define any specific policies to be followed by the central bank and won’t set a timeframe for achieving a 2 percent inflation goal sought by Prime Minister Shinzo Abe, the Mainichi reported today, without citing anyone and without giving any further details.
While Federal Reserve officials are debating how soon to end their cash infusions, Japan’s central bank is under pressure from Abe to do more to end deflation and boost growth. The yen has weakened around 8 percent since mid-November as Abe has called for unlimited liquidity, with the currency sliding through 88 per dollar in Tokyo last week for the first time since July 2010.
As of 9:32 a.m. in Tokyo, the yen was at 87.43 per dollar.
The result of the government’s discussions with the BOJ will be announced at the central bank’s meeting on Jan. 21-22, the Mainichi said.
A BOJ spokesman declined to comment on the report.
Last month, the Fed linked the outlook for its main interest rate to unemployment, saying rates will stay low “at least as long” as the U.S. jobless rate remains above 6.5 percent.
Japan’s unemployment rate fell to a four-year low of 4.1 percent in November, the government said last month.
BOJ Governor Masaaki Shirakawa’s board pledged last month to review its inflation goal of 1 percent after Abe called for the target to be doubled.

N.Z. Consumer Confidence, Spending Boosted by House Price Rises (Bloomberg)
New Zealand consumers increased spending for a third month in December, emboldened by rising house prices, adding to the case for a faster economic recovery and higher interest rates in 2013.
Spending on credit and debt cards rose 0.5 percent from November, Paymark, which processes three-quarters of all card transactions, said in an e-mailed statement today. House prices in Auckland, home to a third of the nation’s 4.4 million people, rose at the fastest pace in five years, another report showed.
Rising property values and record-low interest rates have boosted consumer confidence, encouraging spending in the weeks before Christmas and in the immediate aftermath when retailers offer large discounts. Central bank Governor Graeme Wheeler kept the official cash rate at 2.5 percent last month and signaled he will be monitoring the economy for signs of emerging pressure on inflation.
“The Auckland housing market is quite strong,” said Craig Ebert, a senior economist at Bank of New Zealand Ltd. in Wellington. “Strong’s good in terms of construction, but not if it just spills over to inflation which seems to be happening up there.”
Eight of 16 economists surveyed by Bloomberg News last month forecast Wheeler will raise borrowing costs this year, probably in the fourth quarter. New Zealand’s currency has gained 2.3 percent the past three months on expectations of faster growth and rate rises. It bought 83.69 U.S. cents at 10:40 a.m. in Wellington.

Australia Trade Gap Widens More Than Forecast as Imports Gain (Bloomberg)
Australia’s trade deficit widened more than economists forecast in November as stronger imports of transport equipment outpaced higher exports of iron ore in an economy driven by mining investment.
Imports outpaced exports by A$2.64 billion ($2.77 billion), compared with a revised A$2.44 billion shortfall in October, the Bureau of Statistics said in a report in Sydney today. The median estimate in a Bloomberg News survey of 15 economists was for a deficit of A$2.3 billion.
The data validate central bank Governor Glenn Stevens’s decision to reduce interest rates four times last year as commodity prices retreated. Policy makers are trying to revive demand outside of a resource boom that may crest in the first half of 2013 as they seek to extend 21 recession-free years.
A slowing global economy “deflated resource commodity prices in 2012 to the detriment of Australia’s trade performance,” Michael Blythe, chief economist in Sydney at Commonwealth Bank of Australia, said in a research report before the release. “We see trade deficits continuing.”
Exports rose 1 percent to A$24.7 billion, led by a 6 percent gain in metal ores and minerals, today’s report showed. Imports advanced 2 percent to A$27.3 billion on a 6 percent increase in fuels and lubricants, the report showed.

U.K. Home Prices Rise as Halifax Sees Stagnating Market (Bloomberg)
U.K. house prices rose for a second month in December and will probably remain little changed in 2013 as the uncertain economic outlook constrains property demand, according to Halifax.
Values advanced 1.3 percent from the previous month to an average 163,845 pounds ($262,900), the mortgage unit of Lloyds Banking Group Plc said in a statement in London today. The monthly price gain in November was revised to 1.6 percent from a previous estimate of 1 percent. From a year earlier, values rose 2.6 percent in December.
While the British economy emerged from a recession in the third quarter and the Bank of England is trying to boost the availability of credit, uncertainty about the recovery is curtailing property demand. Nationwide Building Society said last week that house prices may decline “modestly” in 2013.
“During 2012, house prices were broadly flat and we expect this subdued trend to continue,” said Blerina Uruci, an economist at Barclays Plc in London. “However, we forecast a gradual recovery to emerge toward the second half supported by improving economic conditions, loose monetary policy and restricted supply. We also expect the BOE’s Funding for Lending Scheme to provide some support to prices, albeit modest.”
Prices were 0.6 percent higher in the fourth quarter compared with the third, and were down 0.3 percent from a year earlier, according to today’s report.

Cameron, Clegg See U.K. Economy ‘Healing’ as Deficit Cut (Bloomberg)
Prime Minister David Cameron and his deputy Nick Clegg, announcing new priorities for their governing coalition, said the U.K. economy is “healing” as they vowed to push ahead with deficit-reduction plans.
“I am confident the British economy is healing; I am confident we are doing the right things to tackle the black hole in the public finances,” Liberal Democrat leader Clegg said at a news conference, after the leaders were asked if they could see growth returning after suffering a double-dip recession. “Of course we want the healing process to take place faster, but look at the headwinds we’re having to deal with,” such as the crisis in the euro area and consumer debt, he said.
Cameron, who leads the Conservative Party, and Clegg were highlighting their shared agenda in Cameron’s Downing Street office as they published a “Mid-Term Review” summing up the government’s achievements since 2010 and setting out policies to take them to the next election in 2015. It is more than 2 1/2 years since they gave a joint news conference in the rose garden at the London residence to mark the formation of the coalition.
The 46-page document published today, titled “The Coalition: Together in the National Interest,” says detailed plans will be published before the summer for public spending for the 2015-16 fiscal year. Any spending or deficit-reduction plans made then will outlive the current coalition commitment that runs to the election in May 2015.
Cameron said the coalition had confounded expectations that it would not last much beyond the fall of 2010.

Draghi Seeks Extended Calm in 2013 on Fading Euro Economy (Bloomberg)
European Central Bank President Mario Draghi will turn his attention to nursing the euro region back to economic health this week as the urgency to deploy emergency crisis measures recedes after three years.
Draghi’s Governing Council, which holds its first session this year on Jan. 10, will seek to extend the calm it’s instilled on markets with last year’s pledge to do anything in its power to end the crisis, economists said. While policy makers will probably keep interest rates unchanged for now, the threat of unlimited bond purchases has bought time to focus more on ending the region’s looming recession.
“Draghi’s threat is working,” Tobias Blattner, an economist at Daiwa Capital Markets in London, said in an interview. “Foreign investors are gradually coming back and Spain can live with the current yield levels,” he said, referring to a 10-month low in Spanish borrowing costs.
Draghi and European policy makers are returning to work with the turmoil that has ravaged the region’s bond markets at bay. Even so, they face potential pitfalls arising from mounting debt in Spain, next month’s parliamentary election in Italy and continuing austerity in Greece.
European finance ministers are also assembling a rescue package for Cyprus, the crisis’s fifth bailout.