SapuraCrest: Orders two new ships costing USD227m. SapuraCrest Petroleum Bhd unit TL Offshore Sdn Bhd has issued two letters of award to Cosco Nantong Shipyard Co Ltd to build two ships costing a total USD227m (RM714.4m). The acquisition will enable TL Offshore to capitalise on the positive outlook for the installation of pipelines and facilities segment of the oil and gas industry. (Source: The Star)
MAA: Open to acquisitions. MAA Holdings Bhd is considering buying companies to boost profits to the level before it sold its core insurance business. The group expects to achieve scale in business rapidly by buying good companies cheap and selling them expensive. (Source: Business Times)
Malaysia Airports (MAHB) is privatising the construction and financing of the integrated complex at KLIA2 under a 25-year concession period to Segi Astana Sdn Bhd – joint venture between WCT and MAHB. The construction cost is RM530.3m to be funded through external borrowings and shareholders equity. WCT will hold 70% or RM74.24m of Segi Astana’s paid-up capital and MAHB 30% or RM31.818m.
• The complex comprises of a transportation hub for the Express Rail Link, buses, taxis, car rental services and private transport. It would have a commercial complex consisting of a shopping mall with net lettable area of approximately 350,000 sq ft; and car parks with 6,000 parking bays.
• The concession shall be for a period of up to 25 years and may be extended for a further period of 10 years at the option of the concession company. Upon the expiry of the concession period, Segi Astana shall transfer the integrated complex including the building, fittings and relevant documents at no cost to MAHB
• Segi Astana would pay MAHB a lease rental of RM31.818 million which will be net off against the subscription price payable by MAHB in respect of their 30% equity holding in Segi Astana. MAHB may also be entitled to royalty payments. (Financial Daily)
From next year, Bursa Malaysia will have teeth to go after listed companies that make questionable choices in appointing board members and top managers. The latest amendments to the exchange's listing requirements include an obligation imposed on listed companies to ensure that each of the directors, CEOs and CFOs has "the character, experience, integrity, competence and time" to carry out his role. If the companies cannot provide convincing evidence that they have complied with this rule in appointing and retaining these directors, CEOs or CFOs, the exchange can direct the companies to make the necessary changes. (Starbiz)
SapuraCrest has issued two letters of award to Cosco Nantong Shipyard for the construction of two pipelay cum heavylift offshore construction vessels at a combined contract price of US$227m. The vessels will be completed and delivered within 26-28 months from 23 Aug 11. Funded by internally generated fund and bank borrowings, the vessels will enable SapuraCrest to capitalise on the positive outlook in the installation of pipelines and facilities segment. (BMSB)
Sime Darby said the acquisition of a 30% stake in Malaysian property developer Eastern and Oriental Bhd. may boost earnings. “Taking on this 30% stake, at the stroke of a pen, we have property market presence in three key areas -- Klang Valley, Penang and Johor,” Sime Group CEO Mohd Bakke Salleh said in an interview.
• “We’re looking at this company as a brand that we can latch onto and also benefit from particularly in terms of high-end, niche development, hospitality business and more importantly, the entrepreneurial way of things.” Sime Darby may be forced by the Securities Commission to make a mandatory general offer, or full takeover, for Eastern and Oriental as the company, together with the three shareholders who sold the 30% stake, have about 41% interest, the Edge Financial Daily reported, citing market talk.
• “This story actually caught on and it spread like wildfire and people believed in it,” Mohd Bakke said. “Currently, it doesn’t even cross our mind, because we decided just to take a stake below the mandatory trigger level.” Any general offer wouldn’t have implications on dividend payment ability or hurt earnings as the company’s gearing at 0.3 is “very low,” Bakke said. Sime was open to the possibility of making a general offer in the future, he added. (Bloomberg)
Pakistan, the world’s third-largest buyer of palm oil, may boost purchases from Indonesia next year after it agreed to slash a tax on imports under a free-trade treaty, reducing dependence on Malaysia. Purchases from Indonesia, the biggest producer, may increase to as much as 30% of Pakistan’s annual imports of about 1.9 million metric tons from an estimated 5% this year, Abdul Rasheed Janmohammad, vice chairman of the Pakistan Edible Oil Refiners Association, said. Under the treaty, the South Asian nation will reduce by 15% the duty it levies on palm oil, Commerce Secretary Zafar Mahmood said. (Bloomberg)
Palm oil price in Malaysia may average RM3,100 a ton in 2012, Derom Bangun, deputy chairman of the Indonesian palm oil board, said. Indonesia’s 2012 palm oil production may rise to 25.9m tons from 24.1m tons this year, Bangun said. Indonesian biodiesel producers will likely use 700,000 tons of palm oil next year, he also said. The use of palm oil for biodiesel will support palm oil prices next year as this will reduce exports, he added. (Bloomberg)
Kuala Lumpur mayor Tan Sri Ahmad Fuad Ismail said that Tradewinds Corp Bhd (TCB) has been granted a development order for the 20-year-old Hotel Istana, located at the corner of Jalan Raja Chulan and Jalan Sultan Ismail. Ahmad Fuad said the order was granted this year to make way for another project. The 30-year-old Hotel Istana sits on a freehold land measuring 11,803 sq m. The 25-storey hotel has a room inventory of 516 rooms.
• TCB had last year been granted an order that would allow it to bring down the 39-yearold Crowne Plaza Mutiara Hotel and the 32-year-old Kompleks Antarabangsa.The demolishment of these two assets located along Jalan Sultan Ismail is to make way for a "multi-billion-ringgit" mixed commercial development. The project, dubbed the "Tradewinds Centre", is said to involve a total gross area of 3.17m sqm. (BT)
Bank Islam is still open to the idea of growing through M&A despite two unsuccessful attempts earlier. It was speculated some time back that Bank Islam was eyeing a merger with Maybank Islamic Bank but the talks fizzled out. Lately, Bank Islam was in the news with a potential tie-up with Bank Muamalat but that did not take off due to lack of synergies between the two banks. (Star Biz)
MISC Bhd : To proceed with capex plan
MISC Bhd, the world’s largest owner and operator of liquefied natural gas (LNG), will proceed with its committed capital expenditure of between RM4.0bil and RM5.0bil in mainly new vessels for the next two to three years despite the signs of a prolonged economic downturn. MISC’s president and chief executive officer Datuk Nasarudin Md Idris said that although they will take deliveries of committed programmes, capital expenditure plans on new programmes, like clean petroleum production freight, have been deferred. According to its annual report, MISC has 14 newbuilds on order for the next two years for its petroleum shipping division. MISC recently saw both Standard & Poor’s and Moody’s rating agencies downgrade its debt paper ratings on concerns about continued operating losses in its petroleum, chemical and liner businesses and large capital expenditure plans. According to MISC chairman Datuk George Manharlal Ratilal, the company has over RM3.0bil of cash. It also has a few unutilised credit lines to draw down from. MISC expects its petroleum, chemical and liner shipping divisions to continue to suffer losses this year, but is hopeful that its other divisions, mainly LNG shipping, tank terminal and offshore business, will help cushion the effects of it. – Business Time
SP Setia is highly confident of meeting its sales target of RM3bn after raking in RM2.3bn in the first 10 months of its current financial year to October (Bloomberg)
Former Bursa Malaysia CEO Datuk Yusli Mohamed Yusoff has been appointed the chairman of Mudajaya Group. Yusli will replace Asgari Mohd Fuad Stephens as chairman, though Asgari will remain as a board member of the company. Elsewhere, in a string of other board changes,
• Mudajaya's managing director Ng Ying Loong tendered his resignation effective 30 Sep, citing family commitments as the main reason. Ng's role will be assumed by Anto Joseph, who has been with the group for the last 18 years and has co-helmed the group as joint MD since April. However, Ng will continue playing a key role in the group as advisor to the board. (BT)
MAA Holdings is considering buying companies to boost profits to the level before it sold its core insurance business, its top executive says. MAA executive chairman Tunku Datuk Ya'acob Tunku Abdullah said without any acquisition, it would take up to 10 years for its existing businesses in unit trusts and takaful to reach pre-MAA Assurance levels.
• MAA has overseas businesses via PT MAA Life Assurance and PT MAA General Assurance in Indonesia. It also has a general insurance operations in the Philippines, MAA General Assurance Philippines, Inc. (BT)
Results from the latest Illegal Cigarettes Study for the period March – May 2011 revealed that the level of illegal cigarettes in Malaysia has hit 37.3%, up from an annualised average of 36.3% in 2010. It is estimated that this illegal trade is costing the Government RM2bn loss in tobacco excise revenue annually. (BT)
Eversendai has secured RM371m worth of projects in India, Qatar and Oman through its various subsidiaries. The contracts are expected to contribute positively to the earnings of the group for FY12 ending Dec 31. (Financial Daily)
Naza Group’s joint group executive chairman SM Nasarudin SM Nasimuddin said in the next four years, the company targets to produce 170,000 vehicles under its Kia and Peugeot range. "We have been in the automotive manufacturing industry since 2007 and produced about 150,000 units of vehicles in various segments. We are positive that the company will perform better in the future. To help achieve our production target, we will introduce 16 new models throughout the four-year period," he said. (BT)
Mitsubishi Motors Malaysia, the distributor of Mitsubishi Motors vehicles, expects its market share to at least double by 2015, thanks to the tie-up between Mitsubishi Motors Corp and Proton Holdings. "It is a very positive collaboration. In the near future, Mitsubishi model line up will be much wider with competitive prices. Our responsibility is to sell these cars, and to offer good services to the customer, with the total customer satisfaction.
• Our current market share is around 2%, and for the non-national brand, we are having a 5% market share. We believe our market share can more than double, or maybe triple, after this collaboration," said CEO Tetsuya Oda. (BT)
Ireka Corp Bhd, which is expanding its property development portfolio, aims to launch three projects next year with a combined gross development value of RM700m. The three projects, wholly-owned by Ireka, are located in Nilai (Negri Sembilan) and Bangi (Selangor). "We are optimistic of the prospects in the property sector. We see strong growth opportunities in industrial parks and the mid-market residential and commercial segments," said its group executive director, Lai Voon Hon. (BT)
EON Capital Bhd : Special dividend for EON Cap investors
EON Capital Bhd (EON Cap) shareholders on the register as at Sept 15 will receive a tax-exempt final special dividend of about 2.45 sen per share in addition to a capital repayment of RM2.60. The capital repayment will be on Sept 23 while the special dividend will be paid later. In addition to the first special dividend of RM5.16 paid in June, the total payout to EON Cap shareholders will amount to about RM7.78 per share. EON Cap had in May this year completed the disposal of its entire assets and liabilities including EON Bank Group to Hong Leong Bank Bhd. Trading in EON Cap shares on Bursa Malaysia had been suspended since Sept 9. Pending Bursa’s confirmation, EON Cap shall be delisted on Sept 26, the next market day after the completion of the capital repayment. – StarBiz
Tobacco Sector : Manufacturers hope for moderate tax increase approach
Tobacco manufacturers have appealed to the government for a moderate tax increase approach in the upcoming Budget 2012. In a statement, the Confederation of Malaysian Tobacco Manufacturers (CMTM) said that smaller and gradual tax increases will allow consumers to adjust to price changes, and are therefore less likely to fuel demand for illegal cigarettes. Last year, the government had imposed an increase in excise duty of three sen per cigarette stick. Citing the latest “Illegal Cigarettes Study for the period March – May 2011”, the CMTM said the level of illegal cigarettes in Malaysia had hit 37.3%, up from an annualised average of 36.3% in 2010. According to the study, illegal trade is costing the government RM2.0bil in loss in tobacco excise revenue annually. The CMTM was established by the three major cigarette manufacturers in Malaysia, namely, British American Tobacco Malaysia Bhd, JT International Bhd and Phillip Morris Malaysia. – Bernama
Friday, September 23, 2011
20110923 1128 Local & Global Economic Related News.
The international reserves of Bank Negara Malaysia (BNM) amounted to RM414.5bn (US$137.1bn) as at 15 Sep 2011, up from RM412.1bn (US$136.3bn) as at 29 Aug 2011. The reserves position is sufficient to finance 9.5 months of retained imports and is 4.5 times the short-term external debt. (BNM)
PM Datuk Seri Najib Tun Razak on Thursday unveiled four approaches for entrepreneurship development in the country to be more successful and viable. The approaches are introducing new ideas which are more creative; inject innovations in business; applying stronger and popular branding; and using websites to expand the market for products.
• Najib said among the approaches or new ideas that should be practised was to look at areas where the business competition was not that intense to the extent the margin or profit to entrepreneurs was negligible.
• PM announced RM50m initial allocation under the Small-Scale Dynamic Entrepreneur Programme to help traders, particularly in rural areas. (Bernama)
Dow posts biggest two-day slump since 2008 on policy concern
US stocks slumped, giving the DJIA its biggest two-day decline since December 2008, amid investors’ concern that policy makers are running out of tools to avoid another global economic recession. All 10 industries in the S&P’s 500 Index retreated at least 1.8% as losses were led by commodity and industrial shares. The S&P 500 fell 3.2% to 1,129.56 at 4pm New York time, dropping 7.1% in four days. The Dow lost 391.01 points, or 3.5%, to 10,733.83, bringing its two-day retreat to 5.9%. (Bloomberg)
US: Dollar gains most in 2 weeks as Fed acts to support US growth
The dollar rose the most in two weeks against the yen after the Federal Reserve moved to lower only long-term borrowing costs and on concern the Bank of Japan may act to stem gains in the nation’s currency. The Dollar Index climbed to a seven-month high after the Federal Open Market Committee said there are “significant downside risks” to the economic outlook. The euro advanced versus the yen as Greece said it will accelerate budget cuts to keep emergency loans flowing. New Zealand’s dollar weakened after data showed economic growth almost stalled. Australia’s dollar slid below parity with the greenback after a survey said China’s manufacturing may slow. (Bloomberg)
U.S. initial jobless claims decreased by 9,000 to 423,000 in the week ended 17 Sep (432,000 in the prior week), Labor Department figures showed. Economists forecast 420,000 claims. (Bloomberg, U.S. Department of Labor)
U.S. continuing claims decrease by 28,000 to 3,727,000 during the week ended 10 Sep, a from the preceding week's level of 3,755,000. (U.S. Department of Labor)
The U.S. leading index for economic indicators increased more than forecast in Aug, easing concern the economy is headed for recession. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.3% in Aug (+0.6% in Jul), the research group said. Economists projected a 0.1% rise in Aug. (Bloomberg)
U.S. home prices declined in the 12 months through Jul as concerns that the economy may enter another recession sapped the confidence of would-be buyers. Prices dropped 3.3% yoy in Jul, the Federal Housing Finance Agency said in a report. On a mom basis, they rose 0.8%, more than the 0.1% gain estimated by economists. (Bloomberg)
The eurozone composite index, based on a survey of purchasing managers in services and manufacturing industries, fell below 50, indicating contraction for the first time since Jul 09, Markit Economics said in an initial estimate. The index fell to 49.2 in Sep (50.7 in Aug). Economists forecast a drop to 49.8. (Bloomberg)
• The euro-area services indicator fell to 49.1 this month from 51.5 in Aug, Markit said.
• The manufacturing gauge decreased to 48.4 from 49. Both indexes dropped more than economists had forecast. (Bloomberg)
Eurozone industrial new orders fell by 2.1% mom in Jul (-1.2% in Jun). On a yoy basis, industrial new orders increased by 8.4% (10.6% in the prior month). (Eurostat)
EU: EU presses Greece on asset sales, civil service to win aid
The European Commission pressed Greece to spell out “key elements” of a new savings package such as the timetable for state asset sales in order to qualify for the next aid installment. Stabilizing Greece’s situation is the “immediate challenge” facing European officials who are grappling with the debt crisis and trying to prevent contagion from any “uncontrolled default,” EU Economic and Monetary Affairs Commissioner Olli Rehn said. “A condition for the new program is that Greece implements all the corrective measures required, without any wavering,” Rehn said. “In the past couple of weeks Greece has gone a long way toward meeting these demands, but we are not quite there yet.” (Bloomberg)
EU: Services, manufacturing shrink more than forecast
Euro-area services and manufacturing output shrank for the first time in more than two years in September as the region’s worsening debt crisis added to concerns that the economy could slide back into a recession. A composite index based on a survey of purchasing managers in both industries fell below 50, indicating contraction, for the first time since July 2009, London-based Markit Economics said in an initial estimate. The index fell to 49.2 this month from 50.7 in August, a deeper slide than the drop to 49.8 that economists had forecasted. Europe’s economy is cooling as governments struggle to restore investor confidence in their ability to prevent a Greek default and stop the crisis from spreading. (Bloomberg)
Hong Kong: Warns inflation yet to peak after prices rise 5.7%
Hong Kong’s government warned that inflation is yet to peak after consumer prices rose 5.7% in August because of higher costs for rents and vegetables. The increase was less than a 7.9% gain in July, the biggest in 15 years that was partly caused by changes to public housing subsidies, a government statement showed. The underlying rate last month excluding such one-off factors was 6.3%, the highest since Aug 2008. Hong Kong officials are concerned that low interest rates in the US and other advanced economies will lead to capital inflows that fuel inflation and asset bubbles. (Bloomberg)
International Monetary Fund Managing Director Christine Lagarde said the European Central Bank must continue to provide “solid, reliable” funding for eurozone banks and economies as parliaments in the region pass measures into law to fight the region’s debt crisis. (Bloomberg)
China will levy a tax on resource producers based on the value and volume of their output, according to a statement on the government’s website, citing a decision from a State Council meeting. The country will adjust tax ratios on crude oil and natural gas exploration, the statement said, without giving details. It currently imposes a tax on producers of oil, gas and coal based on output volume. (Bloomberg)
China: Yuan options turn more bearish on global slump
Options traders are the most bearish on the Chinese Yuan since Mar 2009 amid concern Europe’s debt crisis and stalling US economic growth will cut demand for goods from the world’s biggest exporter. The premium earned on three-month put options granting the right to sell the Yuan was 0.725ppt more than call options on buying it today, according to the currency’s three- month risk-reversal rate tracked by Bloomberg. The contracts favored Yuan purchases by as much as 0.3ppt in June. Risk-reversal rates for the currencies of Brazil, Russia and India were the most bearish in more than a year this week. (Bloomberg)
The preliminary HSBC China Manufacturing PMI fell to 49.4 in Sep from a final reading of 49.9 in Aug. The fall in the PMI could reignite some concerns over a sharp economic slowdown in China, due to weakening global demand for Chinese goods and various tightening measures. (Wall Street Journal)
Bank Indonesia stepped in on Thursday to prop up the rupiah, intervening in the forex market and buying government bonds after selling by foreign investors drove the domestic currency sharply lower. Bank Indonesia bought Rp1.74tr (US$196m) of long-dated, mostly 21-year government bonds as it sought to stabilise a selloff that also took gains in benchmark 10-year sovereign yields to 120bp in two weeks. (Reuters)
Thai exports rose 31.1% yoy in Aug (+38.3% in Jul), according to the Ministry of Commerce. Imports surged 44% yoy to US$22.77bn because of strong demand for commodities, to post a trade deficit of US$1.2bn (US$2.8bn surplus in Jul). Economists had expected 28% yoy and 22% yoy increases in exports and imports, respectively for a trade surplus of US$1.4bn (Reuters)
Floods in the country have taken a toll on Thailand's economic growth, with losses estimated at THB58.4bn.
• The Business and Economic Forecast Centre predicts the country's economic growth this year will be in the range of 3.5%-4%, compared to earlier forecasts of 4%-4.5%.
• The last two months of flooding in the northern and central parts of the country, coupled with the Apr-May floods in the south, had had a serious impact on the economy.
• The agricultural sector has been the hardest hit, with estimated losses of THB31.5bn, followed by the trading sector THB11.7bn), public property (THB8.7bn), housing (THB2.2b), tourism (THB1.8bn) and industry (THB1.4bn). (Bernama
PM Datuk Seri Najib Tun Razak on Thursday unveiled four approaches for entrepreneurship development in the country to be more successful and viable. The approaches are introducing new ideas which are more creative; inject innovations in business; applying stronger and popular branding; and using websites to expand the market for products.
• Najib said among the approaches or new ideas that should be practised was to look at areas where the business competition was not that intense to the extent the margin or profit to entrepreneurs was negligible.
• PM announced RM50m initial allocation under the Small-Scale Dynamic Entrepreneur Programme to help traders, particularly in rural areas. (Bernama)
Dow posts biggest two-day slump since 2008 on policy concern
US stocks slumped, giving the DJIA its biggest two-day decline since December 2008, amid investors’ concern that policy makers are running out of tools to avoid another global economic recession. All 10 industries in the S&P’s 500 Index retreated at least 1.8% as losses were led by commodity and industrial shares. The S&P 500 fell 3.2% to 1,129.56 at 4pm New York time, dropping 7.1% in four days. The Dow lost 391.01 points, or 3.5%, to 10,733.83, bringing its two-day retreat to 5.9%. (Bloomberg)
US: Dollar gains most in 2 weeks as Fed acts to support US growth
The dollar rose the most in two weeks against the yen after the Federal Reserve moved to lower only long-term borrowing costs and on concern the Bank of Japan may act to stem gains in the nation’s currency. The Dollar Index climbed to a seven-month high after the Federal Open Market Committee said there are “significant downside risks” to the economic outlook. The euro advanced versus the yen as Greece said it will accelerate budget cuts to keep emergency loans flowing. New Zealand’s dollar weakened after data showed economic growth almost stalled. Australia’s dollar slid below parity with the greenback after a survey said China’s manufacturing may slow. (Bloomberg)
U.S. initial jobless claims decreased by 9,000 to 423,000 in the week ended 17 Sep (432,000 in the prior week), Labor Department figures showed. Economists forecast 420,000 claims. (Bloomberg, U.S. Department of Labor)
U.S. continuing claims decrease by 28,000 to 3,727,000 during the week ended 10 Sep, a from the preceding week's level of 3,755,000. (U.S. Department of Labor)
The U.S. leading index for economic indicators increased more than forecast in Aug, easing concern the economy is headed for recession. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.3% in Aug (+0.6% in Jul), the research group said. Economists projected a 0.1% rise in Aug. (Bloomberg)
U.S. home prices declined in the 12 months through Jul as concerns that the economy may enter another recession sapped the confidence of would-be buyers. Prices dropped 3.3% yoy in Jul, the Federal Housing Finance Agency said in a report. On a mom basis, they rose 0.8%, more than the 0.1% gain estimated by economists. (Bloomberg)
The eurozone composite index, based on a survey of purchasing managers in services and manufacturing industries, fell below 50, indicating contraction for the first time since Jul 09, Markit Economics said in an initial estimate. The index fell to 49.2 in Sep (50.7 in Aug). Economists forecast a drop to 49.8. (Bloomberg)
• The euro-area services indicator fell to 49.1 this month from 51.5 in Aug, Markit said.
• The manufacturing gauge decreased to 48.4 from 49. Both indexes dropped more than economists had forecast. (Bloomberg)
Eurozone industrial new orders fell by 2.1% mom in Jul (-1.2% in Jun). On a yoy basis, industrial new orders increased by 8.4% (10.6% in the prior month). (Eurostat)
EU: EU presses Greece on asset sales, civil service to win aid
The European Commission pressed Greece to spell out “key elements” of a new savings package such as the timetable for state asset sales in order to qualify for the next aid installment. Stabilizing Greece’s situation is the “immediate challenge” facing European officials who are grappling with the debt crisis and trying to prevent contagion from any “uncontrolled default,” EU Economic and Monetary Affairs Commissioner Olli Rehn said. “A condition for the new program is that Greece implements all the corrective measures required, without any wavering,” Rehn said. “In the past couple of weeks Greece has gone a long way toward meeting these demands, but we are not quite there yet.” (Bloomberg)
EU: Services, manufacturing shrink more than forecast
Euro-area services and manufacturing output shrank for the first time in more than two years in September as the region’s worsening debt crisis added to concerns that the economy could slide back into a recession. A composite index based on a survey of purchasing managers in both industries fell below 50, indicating contraction, for the first time since July 2009, London-based Markit Economics said in an initial estimate. The index fell to 49.2 this month from 50.7 in August, a deeper slide than the drop to 49.8 that economists had forecasted. Europe’s economy is cooling as governments struggle to restore investor confidence in their ability to prevent a Greek default and stop the crisis from spreading. (Bloomberg)
Hong Kong: Warns inflation yet to peak after prices rise 5.7%
Hong Kong’s government warned that inflation is yet to peak after consumer prices rose 5.7% in August because of higher costs for rents and vegetables. The increase was less than a 7.9% gain in July, the biggest in 15 years that was partly caused by changes to public housing subsidies, a government statement showed. The underlying rate last month excluding such one-off factors was 6.3%, the highest since Aug 2008. Hong Kong officials are concerned that low interest rates in the US and other advanced economies will lead to capital inflows that fuel inflation and asset bubbles. (Bloomberg)
International Monetary Fund Managing Director Christine Lagarde said the European Central Bank must continue to provide “solid, reliable” funding for eurozone banks and economies as parliaments in the region pass measures into law to fight the region’s debt crisis. (Bloomberg)
China will levy a tax on resource producers based on the value and volume of their output, according to a statement on the government’s website, citing a decision from a State Council meeting. The country will adjust tax ratios on crude oil and natural gas exploration, the statement said, without giving details. It currently imposes a tax on producers of oil, gas and coal based on output volume. (Bloomberg)
China: Yuan options turn more bearish on global slump
Options traders are the most bearish on the Chinese Yuan since Mar 2009 amid concern Europe’s debt crisis and stalling US economic growth will cut demand for goods from the world’s biggest exporter. The premium earned on three-month put options granting the right to sell the Yuan was 0.725ppt more than call options on buying it today, according to the currency’s three- month risk-reversal rate tracked by Bloomberg. The contracts favored Yuan purchases by as much as 0.3ppt in June. Risk-reversal rates for the currencies of Brazil, Russia and India were the most bearish in more than a year this week. (Bloomberg)
The preliminary HSBC China Manufacturing PMI fell to 49.4 in Sep from a final reading of 49.9 in Aug. The fall in the PMI could reignite some concerns over a sharp economic slowdown in China, due to weakening global demand for Chinese goods and various tightening measures. (Wall Street Journal)
Bank Indonesia stepped in on Thursday to prop up the rupiah, intervening in the forex market and buying government bonds after selling by foreign investors drove the domestic currency sharply lower. Bank Indonesia bought Rp1.74tr (US$196m) of long-dated, mostly 21-year government bonds as it sought to stabilise a selloff that also took gains in benchmark 10-year sovereign yields to 120bp in two weeks. (Reuters)
Thai exports rose 31.1% yoy in Aug (+38.3% in Jul), according to the Ministry of Commerce. Imports surged 44% yoy to US$22.77bn because of strong demand for commodities, to post a trade deficit of US$1.2bn (US$2.8bn surplus in Jul). Economists had expected 28% yoy and 22% yoy increases in exports and imports, respectively for a trade surplus of US$1.4bn (Reuters)
Floods in the country have taken a toll on Thailand's economic growth, with losses estimated at THB58.4bn.
• The Business and Economic Forecast Centre predicts the country's economic growth this year will be in the range of 3.5%-4%, compared to earlier forecasts of 4%-4.5%.
• The last two months of flooding in the northern and central parts of the country, coupled with the Apr-May floods in the south, had had a serious impact on the economy.
• The agricultural sector has been the hardest hit, with estimated losses of THB31.5bn, followed by the trading sector THB11.7bn), public property (THB8.7bn), housing (THB2.2b), tourism (THB1.8bn) and industry (THB1.4bn). (Bernama
20110923 1119 Global Market Related News.
GLOBAL MARKETS-Euro, S&P futures firm on G20; Asian stks weak
HONG KONG, Sept 23 (Reuters) - The euro rose briefly early on Friday on talk of a G20 emergency statement to address the euro zone crisis, but the prospect of a global recession kept Asian stocks firmly on track for their worst weekly drop since November 2008.
Alarm about the risk of another economic downturn, after the U.S. Federal Reserve's dire forecast at its two-day policy meeting which finished on Wednesday, pushed world stocks to 13-month lows as investors shed risky assets from portfolios and scurried to safer havens.
Global Stocks Enter Bear Market (Source: Bloomberg)
Stocks fell, pushing the MSCI All- Country World Index of 45 nations into a bear market for the first time in more than two years, after the worsening European debt crisis and threat of a U.S. recession erased more than $10 trillion from equities since May. The MSCI index has lost more than 20 percent since peaking on May 2, meeting the common definition of a bear market, after slipping 4.5 percent to a 13-month low of 277.38. The MSCI World (MXWO) Index of shares in developed nations also fell into a bear market yesterday, plunging 4.2 percent. The MSCI Emerging Markets Index reached the 20 percent threshold on Sept. 13.
The world is poised for a financial crisis, Mohamed El- Erian, chief executive officer of Pacific Investment Management Co., said in Washington yesterday. The Federal Reserve said Sept. 21 that there are “significant downside risks” in the U.S. economy, prompting the central bank to announce a $400 billion plan to spur growth as the recovery from the worst contraction since the Great Depression falters.
Asian Stocks Set for Worst Week Since 2008 on Recession Concern (Source: Bloomberg)
Asian stocks fell, driving a regional benchmark index toward its biggest weekly drop in almost three years, as concern intensified that policy makers worldwide may be running out of tools to avert another global economic recession. BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, slumped 2.8 percent after crude oil and metal prices tumbled yesterday. Alumina Ltd. (AWC), a partner in the largest global producer of the material used to make aluminum, retreated 1.4 percent in Sydney. Korea Zinc Co., which produces gold and silver, plunged 13 percent in Seoul and Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, lost 2.7 percent. The MSCI Asia Pacific excluding Japan Index dropped 2.5 percent to 370.04 as of 10:32 a.m. in Tokyo. The gauge is set for an 11 percent weekly drop, the most since October 2008.
The measure has tumbled 16 percent this month amid concern Europe’s debt crisis is spreading and signs of slowing U.S. economic growth. Japanese markets are closed today for a public holiday.
European Stocks Drop as Fed Sees ‘Significant’ Economic Risks; Rio Tumbles (Source: Bloomberg)
European stocks tumbled to a two- year low as the Federal Reserve signaled “significant downside risks” to the world’s largest economy and Moody’s Investors Service downgraded three U.S. banks. Logitech International SA (LOGN), the world’s biggest maker of computer mice, plunged 12 percent after cutting its forecasts for the second time in two months. Rio Tinto Group, the world’s second-largest mining company, sank the most in more than two years as copper fell for a fifth day. LVMH Moet Hennessy Louis Vuitton SA (MC) and Burberry Group Plc (BRBY) led luxury stocks lower. The Stoxx Europe 600 Index sank 4.6 percent to 214.89 at the 4:30 p.m. close in London, the lowest since July 2009. Today’s drop was the biggest in five weeks and extends the decline from this year’s high on Feb. 17 to 26 percent amid concern the global economic recovery is stalling and the European debt crisis is spreading.
Obama Urges Coordinated Action Among Allies to Aid Recovery (Source: Bloomberg)
President Barack Obama used the annual meeting of the United Nations General Assembly to press leaders, in public and private, to take “coordinated action” to prevent the world’s economy from slipping into a recession. As a bid by Palestinians for United Nations recognition dominated discussions at the world body in New York, Obama conferred with French President Nicolas Sarkozy, U.K. Prime Minister David Cameron and Japanese Prime Minister Yoshihiko Noda on finding a way to sustain a fragile recovery amid the European debt crisis and sluggish U.S. growth. “We acted together to avert a depression in 2009,” Obama said in his speech to the General Assembly yesterday. “We must take urgent and coordinated action once more.”
Geithner Predicts Europe Will Act With ‘More Force’ to Resolve Debt Crisis (Source: Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner said Europe will act “with more force” to combat a sovereign-debt crisis that is threatening global growth. “You are going to see them act with more force in the coming weeks and months,” Geithner said at a National Journal event in Washington today. “It’s a difficult challenge to do because it’s not just about financial support.” Geithner spoke as finance ministers and central bankers from the Group of 20 nations gather in Washington for the annual meetings of the International Monetary Fund and World Bank, where the European crisis will be a focus. He said European countries will do what is necessary to address the debt crisis and they, along with the IMF, have the capacity to meet the challenge.
Home Prices Decline 3.3% in U.S. as Buyer Confidence Sapped (Source: Bloomberg)
U.S. home prices declined in the 12 months through July as concerns that the economy may enter another recession sapped the confidence of would-be buyers. Prices dropped 3.3 percent, the Federal Housing Finance Agency in Washington said in a report today. Compared with June, they rose 0.8 percent, more than the 0.1 percent gain that was the average estimate in a Bloomberg poll of 15 economists. Americans are becoming more pessimistic about the economy after growth weakened in the first half of the year to its slowest pace since the recovery began. The unemployment rate has stayed above 9 percent for more than two years, with the exception of slight dips in February and March. The median income for U.S. households dropped in 2010 to the lowest level since 1996, according to a Census Bureau report this month.
U.S. Leading Economic Indicators Rose 0.3% in August, More Than Estimated (Source: Bloomberg)
The index of U.S. leading economic indicators increased more than forecast in August, easing concern the economy is headed for recession. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.3 percent after a 0.6 percent gain in July, the New York-based research group said today. Economists projected a 0.1 percent rise in August, according to the median forecast in a Bloomberg News survey. The figure was boosted by a surge in money supply, a sign investors may be losing confidence in the global economy and reducing their holdings of riskier assets. The Federal Reserve yesterday decided to extend maturities of its Treasury holdings in a bid to push down long-term borrowing costs and said the economy faces “significant downside risks.”
U.S. Consumer Confidence Falls to Lowest Since June ’09 in Bloomberg Index (Source: Bloomberg)
Consumer confidence in the U.S. dropped last week to the weakest point since the recession ended in June 2009 as Americans’ views of the economy worsened. The Bloomberg Consumer Comfort Index fell to minus 52.1 in the period to Sept. 18 from minus 49.3 in the prior week. Sentiment among men slumped to an all-time low. A monthly expectations gauge held at minus 34, the worst reading since March 2009. Stock-market volatility linked to Europe’s debt crisis, declining home values and a lack of job creation help explain why the smallest share of Americans since February 2009 say the economy is improving. Federal Reserve officials yesterday employed another round of unconventional monetary policy to help shore up an economy showing “significant downside risks.”
Treasury 30-Year Bonds Head for Biggest Weekly Gain Since 2008 Recession (Source: Bloomberg)
Treasury 30-year bonds headed for their best week since the U.S. economy was in a recession in 2008 after the Federal Reserve and Pacific Investment Management Co., manager of the world’s biggest bond fund, issued warnings on the economy. Long bonds have returned 16 percent this month, according to Bank of America Merrill Lynch data. The MSCI All Country World Index of stocks handed investors a 10 percent loss, according to data compiled by Bloomberg. The difference between two- and 30-year yields narrowed to 2.56 percentage points yesterday, the least since March 2009. “We’re darn close to a recession,” said Marc Fovinci, who helps oversee $2.9 billion as head of fixed income at Ferguson Wellman Capital Management Inc. in Portland, Oregon. “We bought last week” in the Treasury market.
China Can Help World ‘At the Margin’: Yi (Source: Bloomberg)
China can support the European and global economies “at the margin,” though Europe must find the solution to its debt crisis itself, Chinese central bank Deputy Governor Yi Gang said. “At the margin we can do quite a bit to help,” Yi said in a panel discussion yesterday at the International Monetary Fund in Washington. At the same time, “the real solution of the European sovereign debt crisis has to be done by Europeans themselves.” The remarks come amid investors’ expectations that China may help stabilize the euro region, after Italy this month followed Spain, Portugal and Greece in seeking investment from the world’s fastest-growing major economy. Chinese Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled this month developed nations should cut deficits and open markets rather than rely on China to bail out the world economy.
China’s Stocks Fall to 14-Month Low on Policy, Economy Outlook (Source: Bloomberg)
China’s stocks fell, dragging the benchmark index to its lowest level in more than 14 months, on concern the global economy may not avoid entering a recession. China Vanke Co. sank 1.9 percent, pacing losses by developers after the Shanghai Securities News said some trust firms had halted real estate trust business. Industrial & Commercial Bank of China (601398) Ltd. declined 1 percent after the central bank asked lenders to maintain a stable loan-to-deposit ratio during public holidays next month. The Shanghai Composite Index lost 1.4 percent to 2,407.70 as of 9:49 a.m. local time, set to close at the lowest level since July 5, 2010. The MSCI All-Country World Index of 45 nations yesterday entered a bear market for the first time in more than two years, after the worsening European debt crisis and threat of a U.S. recession erased more than $10 trillion from equities since May.
China’s Banking Regulator Evaluates Trust Companies’ Loans to Developers (Source: Bloomberg)
China’s banking regulator is looking into financing of developers through trust companies as part of a broader evaluation of real estate lending, a person familiar with the matter said. The inquiries by the China Banking Regulatory Commission are part of regular monitoring and aren’t targeting any individual company, said the person, who declined to be identified because the regulator’s queries were meant to be private. Chinese property developers led by Greentown China Holdings Ltd. (3900) plunged in Hong Kong trading yesterday on concern tightened access to loans will force them to cut prices. Greentown said it hasn’t received any notice following a Reuters report that the banking regulator ordered trust companies to report dealings with the developer.
India’s Rate-Increase Cycle ’Nearing Its End,’ Gokarn Says (Source: Bloomberg)
The Reserve Bank of India is close to the end of its record series of interest-rate increases as inflation will probably slow next year, Deputy Governor Subir Gokarn said. “You could say that the cycle is nearing its end,” he said, “Given the projection that inflation will start coming down and will continue to move down from December onwards.” He declined to specify when the Reserve Bank of India may stop raising rates. The inflation rate will drop because “oil prices do not appear to be going higher,” and “we are seeing some deceleration in domestic growth because demand is being moderated,” Gokarn said in an interview in New York yesterday. Rising interest rates have helped slow consumer demand, he said.
Greece on Edge of Biggest Insolvency 24 Centuries After First City Default (Source: Bloomberg)
History’s first sovereign default came in the 4th century BC, committed by 10 Greek municipalities. There was one creditor: the temple of Delos, Apollo’s mythical birthplace. Twenty-four centuries later, Greece is at the edge of the biggest sovereign default and policy makers are worried about global shock waves of a insolvency by a government with 353 billion euros ($483 billion) of debt -- five times the size of Argentina’s $95 billion default in 2001. “There is a monstrously large amount of uncertainty and a massive range of possibilities,” said David Mackie, chief European economist at JPMorgan Chase & Co. in London. “A macroeconomic disaster could be averted but only by aggressive policy action” by central banks and governments.
Greece Speeds Budget Cuts to Ensure Aid as Transport Workers Hold Strike (Source: Bloomberg)
Greece said it will accelerate budget cuts to keep emergency loans flowing, extending austerity measures that have deepened a recession and failed to ease doubts that it can avoid default. Public-transit workers unions will hold a second 24-hour strike tomorrow, extending today’s action that shut subway, tram, train, and bus services, to protest cuts in civil servants’ wages and pensions. The latest round of deficit fighting was demanded by international lenders to ensure Greece reach targets in a 110 billion-euro ($151 billion) bailout and receive a payment due next month.
“The situation is extremely critical and even dangerous because there is a high level of anxiety in the euro area, the European banking system and the world economy,” Greek Finance Minister Evangelos Venizelos told lawmakers in Athens today, according to a transcript provided by the ministry.
Lagarde: ECB Must Continue ‘Reliable’ Funding (Source: Bloomberg)
International Monetary Fund Managing Director Christine Lagarde said the European Central Bank must continue to provide “solid, reliable” funding for euro-area banks and economies as parliaments in the region pass measures into law to fight the region’s debt crisis. The ECB “plays and can play and I hope will continue to play a critical role,” Lagarde, who took the helm at the IMF in July, said in a Bloomberg Television interview with Tom Keene today. Investors should also “allow the time for democracy” in euro countries that need to approve changes to the bailout mechanism agreed upon by leaders in July. The Washington-based IMF this week cut its global growth forecast and predicted “severe” repercussions if Europe failed to contain its debt turmoil. The ECB started buying Italian and Spanish government bonds last month after investors demanded euro-era record yields while policy makers grew increasingly divided over the best way to fight the crisis.
IMF’s Lagarde Says ‘Downside Risks’ Are High for Global Economic Recovery (Source: Bloomberg)
International Monetary Fund Managing Director Christine Lagarde said “downside risks” are high for the world economy. “We’re in it together and we will be able to solve it together,” Lagarde said in an interview on Bloomberg Television with Tom Keene. “Growth has slowed, the downside risks are high.” Lagarde said she will try to instill a “sense of urgency” at the IMF’s annual meetings this week.
South Africa Keeps Lending Rate at 30-year Low as Economic Growth Slows (Source: Bloomberg)
South Africa’s central bank left its benchmark lending rate unchanged at a 30-year low today to help support economic growth while curbing price pressures from a weakening rand. The repurchase rate was kept at 5.5 percent for a fifth consecutive meeting, Governor Gill Marcus said in a televised speech from the capital, Pretoria, today. That was in line with the forecast of 18 of 19 economists surveyed by Bloomberg. The rand plummeted to 8.3264 against the dollar today, its lowest level in more than two years as concerns of a weakening global economy spurred a sell-off of riskier assets. Africa’s largest economy expanded at the slowest pace in two years in the second quarter, while inflation has stayed inside the bank’s 3 percent to 6 percent target range.
“Downside risks on the growth side, the lack of core inflationary pressures and the widening output gap are being counteracted by the risks surrounding headline inflation pressures, from the currency in particular,” Peter Attard Montalto, an economist at Nomura Plc in London, said in an e- mailed note today.
Dollar Strengthens on Concern Growth Slowing; Commodity Currencies Decline (Source: Bloomberg)
The dollar jumped and currencies of commodity exporters tumbled on concern global growth is stalling after the Federal Reserve said yesterday it saw “significant downside risks” to the U.S. economy. The Dollar Index climbed to a seven-month high as the Fed’s statement stoked concern the global economy is headed for a recession and currency volatility surged to a 16-month high. The euro reached a fresh decade-low against the yen after region’s services and manufacturing contracted. Brazil’s real erased losses against the dollar as the central bank sought to stem the decline. “We’re seeing a disproportionate amount of buying in the dollar right now because there really is no other choice for a safe haven,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp. “Investors have finally recognized that the deterioration in the Group-of-Seven outlook is going to have negative consequences for emerging markets.”
Australian, New Zealand Dollars Advance as IMF, World Bank Hold Meetings (Source: Bloomberg)
The Australian and New Zealand dollars rebounded from their lowest levels in more than five months as policy makers gather in Washington for annual meetings of the International Monetary Fund and World Bank. The so-called Aussie gained versus most of its 16 major counterparts after U.K. Prime Minister David Cameron and five other leaders of Group of 20 nations urged French President Nicolas Sarkozy to use his chairmanship of the body to find agreement on actions to boost the global economy. New Zealand’s currency rose against the yen for the first time this week as a technical indicator signaled currency losses were too rapid. “Traders tend to speculate around meetings, particularly” when major leaders are involved, said Kara Ordway, a foreign- exchange strategist at City Index Asia Pacific in Sydney. “I do think this will be a catalyst for them, combined with such big moves overnight, to cover their short positions.”
FOREX-Dollar at 7-mth high as Fed outlook hits risk
LONDON, Sept 22 (Reuters) - The dollar rose to a seven-month high after the Federal Reserve flagged "significant downside risks" to the economy, but stopped short of bold monetary easing, leading to a sell off in higher-yielding currencies. Analysts questioned whether the Fed's move to shift its portfolio in favour of long-term debt would bolster the economy.
HONG KONG, Sept 23 (Reuters) - The euro rose briefly early on Friday on talk of a G20 emergency statement to address the euro zone crisis, but the prospect of a global recession kept Asian stocks firmly on track for their worst weekly drop since November 2008.
Alarm about the risk of another economic downturn, after the U.S. Federal Reserve's dire forecast at its two-day policy meeting which finished on Wednesday, pushed world stocks to 13-month lows as investors shed risky assets from portfolios and scurried to safer havens.
Global Stocks Enter Bear Market (Source: Bloomberg)
Stocks fell, pushing the MSCI All- Country World Index of 45 nations into a bear market for the first time in more than two years, after the worsening European debt crisis and threat of a U.S. recession erased more than $10 trillion from equities since May. The MSCI index has lost more than 20 percent since peaking on May 2, meeting the common definition of a bear market, after slipping 4.5 percent to a 13-month low of 277.38. The MSCI World (MXWO) Index of shares in developed nations also fell into a bear market yesterday, plunging 4.2 percent. The MSCI Emerging Markets Index reached the 20 percent threshold on Sept. 13.
The world is poised for a financial crisis, Mohamed El- Erian, chief executive officer of Pacific Investment Management Co., said in Washington yesterday. The Federal Reserve said Sept. 21 that there are “significant downside risks” in the U.S. economy, prompting the central bank to announce a $400 billion plan to spur growth as the recovery from the worst contraction since the Great Depression falters.
Asian Stocks Set for Worst Week Since 2008 on Recession Concern (Source: Bloomberg)
Asian stocks fell, driving a regional benchmark index toward its biggest weekly drop in almost three years, as concern intensified that policy makers worldwide may be running out of tools to avert another global economic recession. BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, slumped 2.8 percent after crude oil and metal prices tumbled yesterday. Alumina Ltd. (AWC), a partner in the largest global producer of the material used to make aluminum, retreated 1.4 percent in Sydney. Korea Zinc Co., which produces gold and silver, plunged 13 percent in Seoul and Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, lost 2.7 percent. The MSCI Asia Pacific excluding Japan Index dropped 2.5 percent to 370.04 as of 10:32 a.m. in Tokyo. The gauge is set for an 11 percent weekly drop, the most since October 2008.
The measure has tumbled 16 percent this month amid concern Europe’s debt crisis is spreading and signs of slowing U.S. economic growth. Japanese markets are closed today for a public holiday.
European Stocks Drop as Fed Sees ‘Significant’ Economic Risks; Rio Tumbles (Source: Bloomberg)
European stocks tumbled to a two- year low as the Federal Reserve signaled “significant downside risks” to the world’s largest economy and Moody’s Investors Service downgraded three U.S. banks. Logitech International SA (LOGN), the world’s biggest maker of computer mice, plunged 12 percent after cutting its forecasts for the second time in two months. Rio Tinto Group, the world’s second-largest mining company, sank the most in more than two years as copper fell for a fifth day. LVMH Moet Hennessy Louis Vuitton SA (MC) and Burberry Group Plc (BRBY) led luxury stocks lower. The Stoxx Europe 600 Index sank 4.6 percent to 214.89 at the 4:30 p.m. close in London, the lowest since July 2009. Today’s drop was the biggest in five weeks and extends the decline from this year’s high on Feb. 17 to 26 percent amid concern the global economic recovery is stalling and the European debt crisis is spreading.
Obama Urges Coordinated Action Among Allies to Aid Recovery (Source: Bloomberg)
President Barack Obama used the annual meeting of the United Nations General Assembly to press leaders, in public and private, to take “coordinated action” to prevent the world’s economy from slipping into a recession. As a bid by Palestinians for United Nations recognition dominated discussions at the world body in New York, Obama conferred with French President Nicolas Sarkozy, U.K. Prime Minister David Cameron and Japanese Prime Minister Yoshihiko Noda on finding a way to sustain a fragile recovery amid the European debt crisis and sluggish U.S. growth. “We acted together to avert a depression in 2009,” Obama said in his speech to the General Assembly yesterday. “We must take urgent and coordinated action once more.”
Geithner Predicts Europe Will Act With ‘More Force’ to Resolve Debt Crisis (Source: Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner said Europe will act “with more force” to combat a sovereign-debt crisis that is threatening global growth. “You are going to see them act with more force in the coming weeks and months,” Geithner said at a National Journal event in Washington today. “It’s a difficult challenge to do because it’s not just about financial support.” Geithner spoke as finance ministers and central bankers from the Group of 20 nations gather in Washington for the annual meetings of the International Monetary Fund and World Bank, where the European crisis will be a focus. He said European countries will do what is necessary to address the debt crisis and they, along with the IMF, have the capacity to meet the challenge.
Home Prices Decline 3.3% in U.S. as Buyer Confidence Sapped (Source: Bloomberg)
U.S. home prices declined in the 12 months through July as concerns that the economy may enter another recession sapped the confidence of would-be buyers. Prices dropped 3.3 percent, the Federal Housing Finance Agency in Washington said in a report today. Compared with June, they rose 0.8 percent, more than the 0.1 percent gain that was the average estimate in a Bloomberg poll of 15 economists. Americans are becoming more pessimistic about the economy after growth weakened in the first half of the year to its slowest pace since the recovery began. The unemployment rate has stayed above 9 percent for more than two years, with the exception of slight dips in February and March. The median income for U.S. households dropped in 2010 to the lowest level since 1996, according to a Census Bureau report this month.
U.S. Leading Economic Indicators Rose 0.3% in August, More Than Estimated (Source: Bloomberg)
The index of U.S. leading economic indicators increased more than forecast in August, easing concern the economy is headed for recession. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.3 percent after a 0.6 percent gain in July, the New York-based research group said today. Economists projected a 0.1 percent rise in August, according to the median forecast in a Bloomberg News survey. The figure was boosted by a surge in money supply, a sign investors may be losing confidence in the global economy and reducing their holdings of riskier assets. The Federal Reserve yesterday decided to extend maturities of its Treasury holdings in a bid to push down long-term borrowing costs and said the economy faces “significant downside risks.”
U.S. Consumer Confidence Falls to Lowest Since June ’09 in Bloomberg Index (Source: Bloomberg)
Consumer confidence in the U.S. dropped last week to the weakest point since the recession ended in June 2009 as Americans’ views of the economy worsened. The Bloomberg Consumer Comfort Index fell to minus 52.1 in the period to Sept. 18 from minus 49.3 in the prior week. Sentiment among men slumped to an all-time low. A monthly expectations gauge held at minus 34, the worst reading since March 2009. Stock-market volatility linked to Europe’s debt crisis, declining home values and a lack of job creation help explain why the smallest share of Americans since February 2009 say the economy is improving. Federal Reserve officials yesterday employed another round of unconventional monetary policy to help shore up an economy showing “significant downside risks.”
Treasury 30-Year Bonds Head for Biggest Weekly Gain Since 2008 Recession (Source: Bloomberg)
Treasury 30-year bonds headed for their best week since the U.S. economy was in a recession in 2008 after the Federal Reserve and Pacific Investment Management Co., manager of the world’s biggest bond fund, issued warnings on the economy. Long bonds have returned 16 percent this month, according to Bank of America Merrill Lynch data. The MSCI All Country World Index of stocks handed investors a 10 percent loss, according to data compiled by Bloomberg. The difference between two- and 30-year yields narrowed to 2.56 percentage points yesterday, the least since March 2009. “We’re darn close to a recession,” said Marc Fovinci, who helps oversee $2.9 billion as head of fixed income at Ferguson Wellman Capital Management Inc. in Portland, Oregon. “We bought last week” in the Treasury market.
China Can Help World ‘At the Margin’: Yi (Source: Bloomberg)
China can support the European and global economies “at the margin,” though Europe must find the solution to its debt crisis itself, Chinese central bank Deputy Governor Yi Gang said. “At the margin we can do quite a bit to help,” Yi said in a panel discussion yesterday at the International Monetary Fund in Washington. At the same time, “the real solution of the European sovereign debt crisis has to be done by Europeans themselves.” The remarks come amid investors’ expectations that China may help stabilize the euro region, after Italy this month followed Spain, Portugal and Greece in seeking investment from the world’s fastest-growing major economy. Chinese Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled this month developed nations should cut deficits and open markets rather than rely on China to bail out the world economy.
China’s Stocks Fall to 14-Month Low on Policy, Economy Outlook (Source: Bloomberg)
China’s stocks fell, dragging the benchmark index to its lowest level in more than 14 months, on concern the global economy may not avoid entering a recession. China Vanke Co. sank 1.9 percent, pacing losses by developers after the Shanghai Securities News said some trust firms had halted real estate trust business. Industrial & Commercial Bank of China (601398) Ltd. declined 1 percent after the central bank asked lenders to maintain a stable loan-to-deposit ratio during public holidays next month. The Shanghai Composite Index lost 1.4 percent to 2,407.70 as of 9:49 a.m. local time, set to close at the lowest level since July 5, 2010. The MSCI All-Country World Index of 45 nations yesterday entered a bear market for the first time in more than two years, after the worsening European debt crisis and threat of a U.S. recession erased more than $10 trillion from equities since May.
China’s Banking Regulator Evaluates Trust Companies’ Loans to Developers (Source: Bloomberg)
China’s banking regulator is looking into financing of developers through trust companies as part of a broader evaluation of real estate lending, a person familiar with the matter said. The inquiries by the China Banking Regulatory Commission are part of regular monitoring and aren’t targeting any individual company, said the person, who declined to be identified because the regulator’s queries were meant to be private. Chinese property developers led by Greentown China Holdings Ltd. (3900) plunged in Hong Kong trading yesterday on concern tightened access to loans will force them to cut prices. Greentown said it hasn’t received any notice following a Reuters report that the banking regulator ordered trust companies to report dealings with the developer.
India’s Rate-Increase Cycle ’Nearing Its End,’ Gokarn Says (Source: Bloomberg)
The Reserve Bank of India is close to the end of its record series of interest-rate increases as inflation will probably slow next year, Deputy Governor Subir Gokarn said. “You could say that the cycle is nearing its end,” he said, “Given the projection that inflation will start coming down and will continue to move down from December onwards.” He declined to specify when the Reserve Bank of India may stop raising rates. The inflation rate will drop because “oil prices do not appear to be going higher,” and “we are seeing some deceleration in domestic growth because demand is being moderated,” Gokarn said in an interview in New York yesterday. Rising interest rates have helped slow consumer demand, he said.
Greece on Edge of Biggest Insolvency 24 Centuries After First City Default (Source: Bloomberg)
History’s first sovereign default came in the 4th century BC, committed by 10 Greek municipalities. There was one creditor: the temple of Delos, Apollo’s mythical birthplace. Twenty-four centuries later, Greece is at the edge of the biggest sovereign default and policy makers are worried about global shock waves of a insolvency by a government with 353 billion euros ($483 billion) of debt -- five times the size of Argentina’s $95 billion default in 2001. “There is a monstrously large amount of uncertainty and a massive range of possibilities,” said David Mackie, chief European economist at JPMorgan Chase & Co. in London. “A macroeconomic disaster could be averted but only by aggressive policy action” by central banks and governments.
Greece Speeds Budget Cuts to Ensure Aid as Transport Workers Hold Strike (Source: Bloomberg)
Greece said it will accelerate budget cuts to keep emergency loans flowing, extending austerity measures that have deepened a recession and failed to ease doubts that it can avoid default. Public-transit workers unions will hold a second 24-hour strike tomorrow, extending today’s action that shut subway, tram, train, and bus services, to protest cuts in civil servants’ wages and pensions. The latest round of deficit fighting was demanded by international lenders to ensure Greece reach targets in a 110 billion-euro ($151 billion) bailout and receive a payment due next month.
“The situation is extremely critical and even dangerous because there is a high level of anxiety in the euro area, the European banking system and the world economy,” Greek Finance Minister Evangelos Venizelos told lawmakers in Athens today, according to a transcript provided by the ministry.
Lagarde: ECB Must Continue ‘Reliable’ Funding (Source: Bloomberg)
International Monetary Fund Managing Director Christine Lagarde said the European Central Bank must continue to provide “solid, reliable” funding for euro-area banks and economies as parliaments in the region pass measures into law to fight the region’s debt crisis. The ECB “plays and can play and I hope will continue to play a critical role,” Lagarde, who took the helm at the IMF in July, said in a Bloomberg Television interview with Tom Keene today. Investors should also “allow the time for democracy” in euro countries that need to approve changes to the bailout mechanism agreed upon by leaders in July. The Washington-based IMF this week cut its global growth forecast and predicted “severe” repercussions if Europe failed to contain its debt turmoil. The ECB started buying Italian and Spanish government bonds last month after investors demanded euro-era record yields while policy makers grew increasingly divided over the best way to fight the crisis.
IMF’s Lagarde Says ‘Downside Risks’ Are High for Global Economic Recovery (Source: Bloomberg)
International Monetary Fund Managing Director Christine Lagarde said “downside risks” are high for the world economy. “We’re in it together and we will be able to solve it together,” Lagarde said in an interview on Bloomberg Television with Tom Keene. “Growth has slowed, the downside risks are high.” Lagarde said she will try to instill a “sense of urgency” at the IMF’s annual meetings this week.
South Africa Keeps Lending Rate at 30-year Low as Economic Growth Slows (Source: Bloomberg)
South Africa’s central bank left its benchmark lending rate unchanged at a 30-year low today to help support economic growth while curbing price pressures from a weakening rand. The repurchase rate was kept at 5.5 percent for a fifth consecutive meeting, Governor Gill Marcus said in a televised speech from the capital, Pretoria, today. That was in line with the forecast of 18 of 19 economists surveyed by Bloomberg. The rand plummeted to 8.3264 against the dollar today, its lowest level in more than two years as concerns of a weakening global economy spurred a sell-off of riskier assets. Africa’s largest economy expanded at the slowest pace in two years in the second quarter, while inflation has stayed inside the bank’s 3 percent to 6 percent target range.
“Downside risks on the growth side, the lack of core inflationary pressures and the widening output gap are being counteracted by the risks surrounding headline inflation pressures, from the currency in particular,” Peter Attard Montalto, an economist at Nomura Plc in London, said in an e- mailed note today.
Dollar Strengthens on Concern Growth Slowing; Commodity Currencies Decline (Source: Bloomberg)
The dollar jumped and currencies of commodity exporters tumbled on concern global growth is stalling after the Federal Reserve said yesterday it saw “significant downside risks” to the U.S. economy. The Dollar Index climbed to a seven-month high as the Fed’s statement stoked concern the global economy is headed for a recession and currency volatility surged to a 16-month high. The euro reached a fresh decade-low against the yen after region’s services and manufacturing contracted. Brazil’s real erased losses against the dollar as the central bank sought to stem the decline. “We’re seeing a disproportionate amount of buying in the dollar right now because there really is no other choice for a safe haven,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp. “Investors have finally recognized that the deterioration in the Group-of-Seven outlook is going to have negative consequences for emerging markets.”
Australian, New Zealand Dollars Advance as IMF, World Bank Hold Meetings (Source: Bloomberg)
The Australian and New Zealand dollars rebounded from their lowest levels in more than five months as policy makers gather in Washington for annual meetings of the International Monetary Fund and World Bank. The so-called Aussie gained versus most of its 16 major counterparts after U.K. Prime Minister David Cameron and five other leaders of Group of 20 nations urged French President Nicolas Sarkozy to use his chairmanship of the body to find agreement on actions to boost the global economy. New Zealand’s currency rose against the yen for the first time this week as a technical indicator signaled currency losses were too rapid. “Traders tend to speculate around meetings, particularly” when major leaders are involved, said Kara Ordway, a foreign- exchange strategist at City Index Asia Pacific in Sydney. “I do think this will be a catalyst for them, combined with such big moves overnight, to cover their short positions.”
FOREX-Dollar at 7-mth high as Fed outlook hits risk
LONDON, Sept 22 (Reuters) - The dollar rose to a seven-month high after the Federal Reserve flagged "significant downside risks" to the economy, but stopped short of bold monetary easing, leading to a sell off in higher-yielding currencies. Analysts questioned whether the Fed's move to shift its portfolio in favour of long-term debt would bolster the economy.
20110923 1118 Global Commodities Related News.
COMMODITIES-Sliding global demand, Fed policy sinks markets
NEW YORK/LONDON Sept 22 (Reuters) - Commodity markets were sharply lower on Thursday afternoon as they continued to be battered by news from the day before that the U.S. Federal Reserve would not deliver for a third time easy money to rescue a trembling economy.
"We can have bear market rallies, but I can't see in the background where the big good news is going to come from," said Sean Corrigan, chief investment strategist at Diapason Commodities Management in Switzerland.
Corn (Source: CME)
US corn futures slump as economic jitters fuel heavy selling amid many asset classes, pushing corn to a 2 1/2-month low. Traders reduce risk following the FOMC's gloomy outlook and increasing concerns about European debt. Meanwhile, commodity funds sell an estimated 25,000 contracts, a large amount. The selling was an accelerated version of what likely would have played out during a longer period of time due to declining demand for corn, says John Kleist of ebottrading.com. "Because of the financial crisis, we're down here a lot faster than I thought it would happen." CBOT December corn loses 35 3/4c to $6.50/bushel.
Wheat (Source: CME)
US wheat futures close sharply lower as widespread selling hits commodity and equity markets. Traders reduce risk amid concerns about a global economic slowdown, with commodity funds selling an estimated 6,000 wheat contracts at CBOT. Economic gloom adds to worries about declining foreign demand, as Egypt, the world's top wheat buyer, bought 240,000 tons from Russia and none from the US. CBOT December wheat closes down 33c, or 4.9%, at a 2 1/2-month low of $6.33 3/4 a bushel. KCBT December loses 39 1/2c, or 5.2%, to $7.21; MGEX December slides 20 1/2c, or 2.4%, to $8.20.
Rice (Source: CME)
Rice futures finish with heavy losses after temporarily dropping the daily 50c limit amid widespread selling in many markets caused by increased concerns about the global economy. Export demand offered no support to prices today as weekly rice sales to foreign buyers were weak at 31,500 metric tons. CBOT November rice slumps 47.5c, or 2.8%, to $16.66 1/2 per hundredweight.
Domestic wheat dulls China's hunger for corn, for now
SINGAPORE/BEIJING, Sept 22 (Reuters) - China is likely to at least quadruple corn imports in the next crop year to fatten its animal feed sector and squeeze food inflation, but how much grain it buys will depend on the amount of wheat it uses for rations from its large reserves.
China's emergence as a significant importer would bolster prices at a time when corn supplies are estimated at 16-year lows, and traders say Beijing has little choice but to shop abroad due to its rapidly growing meat consumption.
Wheat at 6-week low, corn falls for 3rd day on Fed warning
SINGAPORE, Sept 22 (Reuters) - U.S. grain futures slid, with wheat falling 1 percent to its lowest in six weeks and corn losing ground for a third straight session, weighed down by a warning from the U.S. Federal Reserve of significant risks to the economy.
"Today's selloff is linked to the pessimistic macro-economic sentiment," said Lynette Tan, an investment analyst at Phillip Futures in Singapore.
Ukraine raises grain harvest f'cast to 52-53 mln T
KIEV, Sept 22 (Reuters) - Ukraine has raised its 2011 grain harvest outlook from the previous estimate of 51 million tonnes, First Deputy Prime Minister Andriy Klyuev said on Thursday.
"We will harvest 52-53 million tonnes of grain in 2011," he told the parliament.
China's rising corn demand to spur imports -COFCO Exec
CHANGCHUN, Sept 22 (Reuters) - China is likely to harvest 181.5 million tonnes of corn this year while its consumption is projected to rise to 181.3 million tonnes, an executive with a state-owned trading house said in a prepared speech on Thursday, reflecting a trend that could lead China to become a regular corn importer in the future.
The estimated 2011 output growth, 4.25 million tonnes, cannot meet demand growth, estimated at 11.6 million tonnes, from 2010, Fan Zhenyu, deputy general manager with COFCO's corn division, said in remarks for a prepared speech to a corn conference.
CWG cuts U.S. corn yield estimate to 147.3 bu/acre
CHICAGO, Sept 21 (Reuters) - Commodity Weather Group (CWG) said on Wednesday it had lowered its yield forecast for the 2011 U.S. corn crop to 147.3 bushels per acre, from its August estimate of 148.7.
The firm estimated U.S. corn production at 12.370 billion bushels.
Drought bedevils U.S. winter wheat, minor rain to fall
CHICAGO, Sept 21 (Reuters) - Drought kept a harsh grip on the U.S. Plains hard red winter wheat region, with only minor amounts of rainfall forecast for this week on powder dry soils, an agricultural meteorologist said Wednesday.
"Pretty limited relief. They had some showers over the past weekend and at mid-week maybe a half inch or less in the Texas Panhandle and Oklahoma, then dry from there on out," predicted John Dee, a meteorologist with Global Weather Monitoring.
OECD Farm Support Hit 30-Yr Low In 2010 As China's Surged To Record (Source: CME)
Soaring food prices meant the world's richest countries paid the lowest support to farmers in decades last year, even as China boosted its agricultural payments to a record $147 billion. Data from the Organization for Economic Cooperation and Development showed the share of farmers' income derived from subsidies fell to 18% in 2010, down from 22% in 2009, marking a "record low since the start of the series in 1986." Carmel Cahill, agriculture counselor in the OECD's directorate for Trade and Agriculture, said the fall is "mainly due to current market conditions," as higher food prices have meant farmers need less support. Last year, the 34 countries that make up the OECD spent $227 billion on farming subsidies, down almost 6% from 2009, the data show. But she added that in some regions, like Europe, the decline marked a long-term reduction in assistant--a policy advocated by the Paris-based body--and a trend that could be supported by higher food prices in the future.
"The medium-term outlook suggests that prices for the main agricultural commodities will be significantly higher over the next decade than the previous decade," she said. The lowering farm support in OECD countries contrasts markedley with many emerging economies, where pressure from expanding populations has spurred investment in domestic food production. In China, the world's second-largest economy, farming payments rose 40% to a record $147 billion in 2010 compared with 2009. That pushed the share of Chinese farm income derived from subsidies to 17%, only one percentage point below the OECD average of 18%, the data show. Much of this was down to policies triggered by the rise in world prices, which account for about 60% of China's support mechanisms, noted Cahill. In Russia too, "producer support has increased since the mid-1990s to a level that currently exceeds the OECD average," said the report.
"The recent food price surges have increased concerns on import dependency and have further strengthened the focus on increasing domestic food supplies." Agricultural subidies are a contentious polticial issue in many countries and were a key factor in the breakdown of the moribund Doha world trade talks. Debate on how to reform Europe's Common Agricultural Policy next month and the U.S.'s farm bill next year will give a key indication of whether lawmakers still see farming support as a priority amid the gathering financial gloom. Cahill said that with food prices expected to continue high over the next decade the opportunity to cut payments is there, but there is no guarantee that governments will do that. "The direction that they're moving in is toward allowing market signals to play out," she said.
IGC Cuts World Corn 2011-12 Output View 4Mln Tons To 845Mln Tons (Source: CME)
International Grains Council cut its estimate for world 2011-12 corn output by 4 million metric tons to 845 million tons due to diminishing prospects for the U.S. harvest. The London-based body reduced its forecast for this year's crop in the world's largest corn producer by 10 million tons from its previous estimate to 315 million tons--which would be the smallest crop since 2008-09. And despite a 4 million ton upward revision to prospects in both Brazil and Argentina, which are now expected to produce a total of 95.2 million tons, the IGC said world consumption is still expected to outstrip supply in 2011-12. "The further downward revision in the U.S. maize production forecast is only partly balanced by an enhanced outlook for crops shortly to be planted in South America," it said.
Still, improving prospects for the world wheat crop, which was revised up by 2 million tons to 679 million tons thanks to "upward revisions for Russia, Ukraine and Australia," means "there is little overall change in the 2011-12 supply and demand outlook," said the council.
Tesco Moves First In Cutting U.K. Prices (Source: CME)
Tesco PLC said it will invest GBP 500 million ($775 million) in price cuts in a move that could spark a price war among U.K. supermarkets. The supermarket chain said it will cut prices on thousands of essential items from Monday, with most of the financial investment going into reducing the price of Tesco's own-branded goods. It will also simplify and scale back promotions and end its double-Clubcard-points promotion for its loyalty scheme, which has been running for the past two years, to fund the move, which U.K. Chief Executive Richard Brasher insisted wouldn't affect margins. Analysts believe the move will prompt competing grocers to launch their own initiatives, and force those supermarkets that match prices on Tesco products to reduce their prices in line with Tesco's. Still, a severe price war is unlikely as investors and analysts think the cut-throat U.K grocery market is relatively rational.
Shore Capital analyst Clive Black said Tesco's price initiative is "measured, planned and rational," although it will still put pressure on Tesco's supermarket competitors, whether through margin investment or lost revenue. Wal-Mart Stores Inc.-owned Asda Supermarkets said it will continue to guarantee that its shopping basket is 10% cheaper than its rivals. Wm Morrison Supermarkets PLC declined to comment on Tesco's move, while J Sainsbury PLC and Ocado Group PLC weren't immediately available for comment. The difficult consumer environment in the U.K. has forced all retailers to compete more vigorously on price, with a raft of promotions such as price-match promises, new marketing tag-lines focusing on value and offers of cash returns if customers can shop for cheaper elsewhere. Tesco has lagged behind its U.K. rivals for several quarters, not least because it is the most heavily exposed to nonfood sales.
Sales of these goods have suffered as food and fuel-price inflation have crimped consumer spending on no nessential items. "We're giving customers a more straightforward shop - reducing the number of promotions and putting the emphasis on clear and reliable savings that everyone can benefit from," Mr. Brasher said. He said there will be some price cuts on nonfood items but the main thrust of the cost savings will be focused on everyday grocery essentials. Coordinated price cuts aren't new to the U.K. grocery market. Supermarkets traditionally invest in new-year promotions, and in January Tesco pledged GBP 340 million of price cuts, while Morrisons promised to cut weekly shopping bills by GBP 40 a week and Sainsbury announced savings of GBP 300 million. Panmure analyst Philip Dorgan believes Ocado will be the hardest hit by a Tesco price move, because it matches the prices on more than 7,000 of Tesco's products and doesn't have the same scale as the other, larger supermarkets.
Tesco shares closed down 2.25%, or 8 pence, at GBP 3.56 in a sharply lower London market.
Corn Futures Gain to $6.535 a Bushel in Chicago, Wheat, Soybeans Advance (Source: Bloomberg)
Corn for December delivery rose 0.5 percent to $6.535 a bushel on the Chicago Board of Trade at 9.04 a.m. in Sydney. November-delivery soybeans advanced 0.45 percent to $12.88 a bushel. Wheat for December delivery gained 0.8 percent to $6.39 a bushel.
Coffee Output in Vietnam May Reach Record on Weather, Area, Survey Shows (Source: Bloomberg)
Vietnam, the second-largest coffee grower, may produce a record crop in the upcoming harvest as favorable weather and a larger cultivated area boost output in the 2011-2012 season, increasing global supplies. Production may total 1.32 million metric tons, according to the median estimate in a Bloomberg survey of 12 traders, growers and exporters. That compares with 1.12 million tons, or 18.7 million, 60-kilogram bags, in the last crop, according to a U.S. Department of Agriculture estimate. For 2011-2012, the USDA has forecast output of 1.24 million tons, which would be an all-time high, according to data stretching back to 1959. Record production from Vietnam, the largest grower of robusta coffee, used in instant drinks, may boost exports and further lower prices that have shed 24 percent from their peak this year. Coffee has slumped on speculation that supplies may gain as a slowdown in global growth pares demand.
ICE cocoa, sugar, coffee join commodities retreat
LONDON, Sept 22 (Reuters) - ICE cocoa, raw sugar and arabica coffee futures all fell in early trade, tracking a broad-based setback in crude oil and other commodity markets.
Indonesia's cocoa output is seen rising 19 percent to around 500,000 tonnes next year, from 420,000 tonnes this year, the country's cocoa association said.Production will still be down from 2010 levels because of crop disease, an official at the association said.
Japan lowers 2011/12 sugar import estimate
TOKYO, Sept 22 (Reuters) - Japan has revised down its sugar import estimate for the year to September 2012 from three months ago as local sugar beet output is likely to rise and inventories remain sufficient, a government official said on Thursday.
Japan now estimates sugar imports for the year from Oct. 1 to Sept. 30, 2012 at 1.304 million tonnes on a refined basis, down 3.7 percent from a year earlier, a quarterly report from the Ministry of Agriculture showed.
Indonesia cocoa output to rise 19 pct in 2012 - assoc
JAKARTA, Sept 22 (Reuters) - Indonesia's cocoa output is seen rising 19 percent to around 500,000 tonnes next year, from 420,000 tonnes this year, the country's cocoa association said on Thursday.
Production will still be down from 2010 levels because of crop disease, an official at the association said at a conference.
S Africa sugarcane output seen up 6 pct-attache
Sept 21 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in South Africa:
"Sugar cane production in South Africa is expected to increase by only 6 percent to 16.98 million tonnes in the 2011/12 season due to the worst drought in 20 years that hit the main sugar producing area in 2010.
Sustainable cocoa powder demand lags butter-Cargill
LONDON, Sept 21 (Reuters) - Demand for sustainable cocoa powder is lagging that of sustainable cocoa butter, U.S. agribusiness Cargill said.
Demand for sustainable cocoa butter from chocolate manufacturers has been driving demand for sustainably grown cocoa beans, Taco Terheijden, sustainable cocoa manager at Cargill, said on the sidelines of a conference.
India initial 2011/12 sugar output seen at 24.6 mln T
NEW DELHI, Sept 21 (estimated by the farm minister last week. That was also an initial estimate.
"This is a conservative estimate and production will not fall below this. There are also reports that production could be 25.0-25.5 million tonnes," Thomas said.
India cotton exports seen up 17 pct over govt f'cast
MUMBAI, Sept 21 (Reuters) - India's cotton exports could rise 17 percent, or 1.4 million tonnes, over an official forecast in the year to September 2012, spurred by a record harvest, a weaker domestic currency and a freer trade policy, the top exporter of the fibre said.
India contributes 22 percent of global output and is expected to have a bumper harvest of 6.14 million tonnes, pushing it into competition with suppliers from Latin America, Australia and Africa, that will squeeze world prices.
Uralkali: Potash Market May Reach 58 Mln-59 Mln Tons In 2011 (Source: CME)
The global potash market may reach between 58 million and 59 million metric tons in 2011, above the pre-crisis level of 56 million tons in 2007, Russian fertilizer giant OAO Uralkali said. "Given the current market trends and the fact that major potash producers work at the capacity exceeding 90%, Uralkali believes that the potash market in 2011 may reach 58-59 million tons," Uralkali said in a statement. The company said potash prices are still significantly lower than before the global financial crisis started in 2008. "Despite the volatility on the international commodities markets, the potash market continues to be very resilient, largely due to strong demand," Uralkali said. "The situation on the potash market in first half of 2011 as well as its development in the second half gives us confidence to believe that the upward trend will continue in 2012," the company said.
U.S. ethanol output falls 8,000 barrels per day
Sept 21 (Reuters) - U.S. ethanol production fell nearly 1 percent last week as gasoline demand dipped, limiting blender consumption. The Energy Information Administration said on Wednesday that U.S. ethanol production totaled 871,000 barrels per day in the seven days to Sept. 16, down 8,000 barrels per day, or 0.9 percent, from the previous week.
S.Korea's Aug crude oil imports down 3.8 pct yr/yr -KNOC
SEOUL, Sept 22 (Reuters) - South Korea's crude oil imports fell about 4 percent on the year in August, swinging from two months of year-on-year growth due to delayed maintenance shutdowns at some local refining units.
Crude imports by South Korea, the world's fifth-largest crude buyer, stood at 72.8 million barrels last month compared to 75.6 million barrels imported a year earlier, state-run Korea National Oil Corp (KNOC) said on Thursday.
China resumes tax on some naphtha, fuel oil
BEIJING, Sept 22 (Reuters) - China will resume its consumption tax on naphtha and fuel oil from Oct 1 when producers of the two products sell them to ethylene and aromatics makers, the Ministry of Finance said on Thursday.
The charge will be refunded to ethylene and aromatics makers based on the actual volumes of naphtha or fuel oil they use.
Oil tumbles more than 4 pct on recession fears
NEW YORK, Sept 22 (Reuters) - Oil tumbled more than 4 percent on Thursday after alarmingly weak Chinese industrial data and a bleak economic outlook from the U.S. Federal Reserve triggered the biggest commodity sell-off since May.
"We're just not seeing any real signs of life out there economically. Traders are heading to higher ground," said Rob Kurzatkowski, futures analyst with OptionsXpress.
NYMEX-Natural gas ends down, front hits 11-month low
NEW YORK, Sept 22 (Reuters) - U.S. natural gas futures trimmed early losses but still ended lower on Thursday, with mild weather and a government report showing another big inventory build driving the front contract to an 11-month low.
"The (EIA build) was neutral to bearish. We're going to see a lot more gas go into storage over the next couple of weeks, particularly if spreads to winter stay wide, and that should put storage in good shape," a Massachusetts trader said.
Euro Coal-Prices stable despite general slump
LONDON, Sept 22 (Reuters) - Prompt physical coal prices were little changed on Thursday although swaps fell by over $1 in line with the slump in world stocks by more than 4 percent.
"Very prompt physical prices have barely moved, they're flat to Wednesday's levels in fact, because the front months are well bid for Richards Bay and DES ARA," one utility source said.
Oil Rises After Slipping to Six-Week Low on Economy; Heads for Weekly Drop (Source: Bloomberg)
Oil rose from a six-week low in New York as investors speculated the biggest weekly decline in almost two months is exaggerated before central bankers from the Group of 20 nations meet in Washington to discuss the global economic slowdown. Futures rose as much as 1.6 percent after plunging 6.3 percent yesterday. Finance heads are gathering for the International Monetary Fund’s annual meeting, while European officials said they may use leverage to increase the firepower of their regional bailout fund. OPEC said it will decide whether to cut supply after monitoring the global economy over the next two months and the pace of Libya’s output recovery. “After such a big move often there are shorts that are looking to take a profit,” Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty Ltd. in Sydney, said by telephone. “We haven’t seen any evidence yet of people getting aggressively into oil. The macro situation is also a very poor backdrop for oil at the moment.”
Brent crude falls more than $1 on grim econ outlook
SINGAPORE, Sept 22 (Reuters) - Brent crude lost more than $1 on Thursday on concerns oil consumption may fall, as steps announced by the U.S. Federal Reserve were seen as insufficient to jump-start an economy the central bank said faces significant downside risks. "It is hard to ignore the macroeconomic picture. Oil seems to have fallen in line with equity markets," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.
Iron Ore’s Four-Year Slide Hitting Mining Earnings: Commodities (Source: Bloomberg)
Iron ore is set for the first four- year drop since at least 1982 as supplies surge, threatening to end record earnings at Vale SA (VALE3), Rio Tinto Group and BHP Billiton Ltd. (BHP), the world´s biggest producers. Global prices may fall 29 percent to an average $123 a metric ton in 2015 from a record $173 this year, according to the median estimates of 10 analysts surveyed by Bloomberg News. The decline contrasts with estimates for little change in copper and a 10 percent increase for aluminum in the same period, London Metal Exchange futures prices show. Iron ore supplies for export will jump 53 percent by 2015 even as slower growth in Chinese steelmaking saps demand, Goldman Sachs & Partners Australia Pty. said. That will reduce prices and profit that reached records this year for BHP and Brazil’s Vale, whose net income will fall almost 50 percent by mid-decade, according to data compiled by Bloomberg.
Copper Tumbles Most Since 2008 on China Manufacturing Data, Global Concern (Source: Bloomberg)
Copper futures plunged the most since 2008 as a China factory index signaling contraction added to speculation that metal demand will slump amid signs of faltering economies in the U.S. and Europe. A preliminary index of China purchasing managers was 49.4 this month, according to HSBC Holdings Plc and Markit Economics. A reading below 50 indicates contraction. Copper has dropped 22 percent this year as Europe’s debt crisis and the possibility of another contraction in the U.S. economy hampered demand. In 2008, during the U.S. recession, copper fell 54 percent. “The meltdown of 2008 is in the cards if the defaults start in Euroland,” said David Threlkeld, the president of Resolved Inc., a trading company in Scottsdale, Arizona.
Gold Set for Worst Week in More Than Four Months on Global Asset Selloff (Source: Bloomberg)
Gold headed for its worst weekly performance in more than four months as investors sold the metal alongside global equities and other commodities on concern the world economy will falter. Immediate-delivery gold traded little changed at $1,739.97 an ounce at 6:44 a.m. in Singapore, after shedding 2.4 percent yesterday, the most in two weeks. The metal, which slumped to a one-month intraday low of $1,722.03 yesterday, is down 4 percent this week, the biggest such drop since the period to May 6. “Gold has been caught up in the overall flight to the exit, but in a normal, sensible world, we should expect to see some support from the fear and trepidation investors are facing,” Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd., wrote in an e-mail.
NEW YORK/LONDON Sept 22 (Reuters) - Commodity markets were sharply lower on Thursday afternoon as they continued to be battered by news from the day before that the U.S. Federal Reserve would not deliver for a third time easy money to rescue a trembling economy.
"We can have bear market rallies, but I can't see in the background where the big good news is going to come from," said Sean Corrigan, chief investment strategist at Diapason Commodities Management in Switzerland.
Corn (Source: CME)
US corn futures slump as economic jitters fuel heavy selling amid many asset classes, pushing corn to a 2 1/2-month low. Traders reduce risk following the FOMC's gloomy outlook and increasing concerns about European debt. Meanwhile, commodity funds sell an estimated 25,000 contracts, a large amount. The selling was an accelerated version of what likely would have played out during a longer period of time due to declining demand for corn, says John Kleist of ebottrading.com. "Because of the financial crisis, we're down here a lot faster than I thought it would happen." CBOT December corn loses 35 3/4c to $6.50/bushel.
Wheat (Source: CME)
US wheat futures close sharply lower as widespread selling hits commodity and equity markets. Traders reduce risk amid concerns about a global economic slowdown, with commodity funds selling an estimated 6,000 wheat contracts at CBOT. Economic gloom adds to worries about declining foreign demand, as Egypt, the world's top wheat buyer, bought 240,000 tons from Russia and none from the US. CBOT December wheat closes down 33c, or 4.9%, at a 2 1/2-month low of $6.33 3/4 a bushel. KCBT December loses 39 1/2c, or 5.2%, to $7.21; MGEX December slides 20 1/2c, or 2.4%, to $8.20.
Rice (Source: CME)
Rice futures finish with heavy losses after temporarily dropping the daily 50c limit amid widespread selling in many markets caused by increased concerns about the global economy. Export demand offered no support to prices today as weekly rice sales to foreign buyers were weak at 31,500 metric tons. CBOT November rice slumps 47.5c, or 2.8%, to $16.66 1/2 per hundredweight.
Domestic wheat dulls China's hunger for corn, for now
SINGAPORE/BEIJING, Sept 22 (Reuters) - China is likely to at least quadruple corn imports in the next crop year to fatten its animal feed sector and squeeze food inflation, but how much grain it buys will depend on the amount of wheat it uses for rations from its large reserves.
China's emergence as a significant importer would bolster prices at a time when corn supplies are estimated at 16-year lows, and traders say Beijing has little choice but to shop abroad due to its rapidly growing meat consumption.
Wheat at 6-week low, corn falls for 3rd day on Fed warning
SINGAPORE, Sept 22 (Reuters) - U.S. grain futures slid, with wheat falling 1 percent to its lowest in six weeks and corn losing ground for a third straight session, weighed down by a warning from the U.S. Federal Reserve of significant risks to the economy.
"Today's selloff is linked to the pessimistic macro-economic sentiment," said Lynette Tan, an investment analyst at Phillip Futures in Singapore.
Ukraine raises grain harvest f'cast to 52-53 mln T
KIEV, Sept 22 (Reuters) - Ukraine has raised its 2011 grain harvest outlook from the previous estimate of 51 million tonnes, First Deputy Prime Minister Andriy Klyuev said on Thursday.
"We will harvest 52-53 million tonnes of grain in 2011," he told the parliament.
China's rising corn demand to spur imports -COFCO Exec
CHANGCHUN, Sept 22 (Reuters) - China is likely to harvest 181.5 million tonnes of corn this year while its consumption is projected to rise to 181.3 million tonnes, an executive with a state-owned trading house said in a prepared speech on Thursday, reflecting a trend that could lead China to become a regular corn importer in the future.
The estimated 2011 output growth, 4.25 million tonnes, cannot meet demand growth, estimated at 11.6 million tonnes, from 2010, Fan Zhenyu, deputy general manager with COFCO's corn division, said in remarks for a prepared speech to a corn conference.
CWG cuts U.S. corn yield estimate to 147.3 bu/acre
CHICAGO, Sept 21 (Reuters) - Commodity Weather Group (CWG) said on Wednesday it had lowered its yield forecast for the 2011 U.S. corn crop to 147.3 bushels per acre, from its August estimate of 148.7.
The firm estimated U.S. corn production at 12.370 billion bushels.
Drought bedevils U.S. winter wheat, minor rain to fall
CHICAGO, Sept 21 (Reuters) - Drought kept a harsh grip on the U.S. Plains hard red winter wheat region, with only minor amounts of rainfall forecast for this week on powder dry soils, an agricultural meteorologist said Wednesday.
"Pretty limited relief. They had some showers over the past weekend and at mid-week maybe a half inch or less in the Texas Panhandle and Oklahoma, then dry from there on out," predicted John Dee, a meteorologist with Global Weather Monitoring.
OECD Farm Support Hit 30-Yr Low In 2010 As China's Surged To Record (Source: CME)
Soaring food prices meant the world's richest countries paid the lowest support to farmers in decades last year, even as China boosted its agricultural payments to a record $147 billion. Data from the Organization for Economic Cooperation and Development showed the share of farmers' income derived from subsidies fell to 18% in 2010, down from 22% in 2009, marking a "record low since the start of the series in 1986." Carmel Cahill, agriculture counselor in the OECD's directorate for Trade and Agriculture, said the fall is "mainly due to current market conditions," as higher food prices have meant farmers need less support. Last year, the 34 countries that make up the OECD spent $227 billion on farming subsidies, down almost 6% from 2009, the data show. But she added that in some regions, like Europe, the decline marked a long-term reduction in assistant--a policy advocated by the Paris-based body--and a trend that could be supported by higher food prices in the future.
"The medium-term outlook suggests that prices for the main agricultural commodities will be significantly higher over the next decade than the previous decade," she said. The lowering farm support in OECD countries contrasts markedley with many emerging economies, where pressure from expanding populations has spurred investment in domestic food production. In China, the world's second-largest economy, farming payments rose 40% to a record $147 billion in 2010 compared with 2009. That pushed the share of Chinese farm income derived from subsidies to 17%, only one percentage point below the OECD average of 18%, the data show. Much of this was down to policies triggered by the rise in world prices, which account for about 60% of China's support mechanisms, noted Cahill. In Russia too, "producer support has increased since the mid-1990s to a level that currently exceeds the OECD average," said the report.
"The recent food price surges have increased concerns on import dependency and have further strengthened the focus on increasing domestic food supplies." Agricultural subidies are a contentious polticial issue in many countries and were a key factor in the breakdown of the moribund Doha world trade talks. Debate on how to reform Europe's Common Agricultural Policy next month and the U.S.'s farm bill next year will give a key indication of whether lawmakers still see farming support as a priority amid the gathering financial gloom. Cahill said that with food prices expected to continue high over the next decade the opportunity to cut payments is there, but there is no guarantee that governments will do that. "The direction that they're moving in is toward allowing market signals to play out," she said.
IGC Cuts World Corn 2011-12 Output View 4Mln Tons To 845Mln Tons (Source: CME)
International Grains Council cut its estimate for world 2011-12 corn output by 4 million metric tons to 845 million tons due to diminishing prospects for the U.S. harvest. The London-based body reduced its forecast for this year's crop in the world's largest corn producer by 10 million tons from its previous estimate to 315 million tons--which would be the smallest crop since 2008-09. And despite a 4 million ton upward revision to prospects in both Brazil and Argentina, which are now expected to produce a total of 95.2 million tons, the IGC said world consumption is still expected to outstrip supply in 2011-12. "The further downward revision in the U.S. maize production forecast is only partly balanced by an enhanced outlook for crops shortly to be planted in South America," it said.
Still, improving prospects for the world wheat crop, which was revised up by 2 million tons to 679 million tons thanks to "upward revisions for Russia, Ukraine and Australia," means "there is little overall change in the 2011-12 supply and demand outlook," said the council.
Tesco Moves First In Cutting U.K. Prices (Source: CME)
Tesco PLC said it will invest GBP 500 million ($775 million) in price cuts in a move that could spark a price war among U.K. supermarkets. The supermarket chain said it will cut prices on thousands of essential items from Monday, with most of the financial investment going into reducing the price of Tesco's own-branded goods. It will also simplify and scale back promotions and end its double-Clubcard-points promotion for its loyalty scheme, which has been running for the past two years, to fund the move, which U.K. Chief Executive Richard Brasher insisted wouldn't affect margins. Analysts believe the move will prompt competing grocers to launch their own initiatives, and force those supermarkets that match prices on Tesco products to reduce their prices in line with Tesco's. Still, a severe price war is unlikely as investors and analysts think the cut-throat U.K grocery market is relatively rational.
Shore Capital analyst Clive Black said Tesco's price initiative is "measured, planned and rational," although it will still put pressure on Tesco's supermarket competitors, whether through margin investment or lost revenue. Wal-Mart Stores Inc.-owned Asda Supermarkets said it will continue to guarantee that its shopping basket is 10% cheaper than its rivals. Wm Morrison Supermarkets PLC declined to comment on Tesco's move, while J Sainsbury PLC and Ocado Group PLC weren't immediately available for comment. The difficult consumer environment in the U.K. has forced all retailers to compete more vigorously on price, with a raft of promotions such as price-match promises, new marketing tag-lines focusing on value and offers of cash returns if customers can shop for cheaper elsewhere. Tesco has lagged behind its U.K. rivals for several quarters, not least because it is the most heavily exposed to nonfood sales.
Sales of these goods have suffered as food and fuel-price inflation have crimped consumer spending on no nessential items. "We're giving customers a more straightforward shop - reducing the number of promotions and putting the emphasis on clear and reliable savings that everyone can benefit from," Mr. Brasher said. He said there will be some price cuts on nonfood items but the main thrust of the cost savings will be focused on everyday grocery essentials. Coordinated price cuts aren't new to the U.K. grocery market. Supermarkets traditionally invest in new-year promotions, and in January Tesco pledged GBP 340 million of price cuts, while Morrisons promised to cut weekly shopping bills by GBP 40 a week and Sainsbury announced savings of GBP 300 million. Panmure analyst Philip Dorgan believes Ocado will be the hardest hit by a Tesco price move, because it matches the prices on more than 7,000 of Tesco's products and doesn't have the same scale as the other, larger supermarkets.
Tesco shares closed down 2.25%, or 8 pence, at GBP 3.56 in a sharply lower London market.
Corn Futures Gain to $6.535 a Bushel in Chicago, Wheat, Soybeans Advance (Source: Bloomberg)
Corn for December delivery rose 0.5 percent to $6.535 a bushel on the Chicago Board of Trade at 9.04 a.m. in Sydney. November-delivery soybeans advanced 0.45 percent to $12.88 a bushel. Wheat for December delivery gained 0.8 percent to $6.39 a bushel.
Coffee Output in Vietnam May Reach Record on Weather, Area, Survey Shows (Source: Bloomberg)
Vietnam, the second-largest coffee grower, may produce a record crop in the upcoming harvest as favorable weather and a larger cultivated area boost output in the 2011-2012 season, increasing global supplies. Production may total 1.32 million metric tons, according to the median estimate in a Bloomberg survey of 12 traders, growers and exporters. That compares with 1.12 million tons, or 18.7 million, 60-kilogram bags, in the last crop, according to a U.S. Department of Agriculture estimate. For 2011-2012, the USDA has forecast output of 1.24 million tons, which would be an all-time high, according to data stretching back to 1959. Record production from Vietnam, the largest grower of robusta coffee, used in instant drinks, may boost exports and further lower prices that have shed 24 percent from their peak this year. Coffee has slumped on speculation that supplies may gain as a slowdown in global growth pares demand.
ICE cocoa, sugar, coffee join commodities retreat
LONDON, Sept 22 (Reuters) - ICE cocoa, raw sugar and arabica coffee futures all fell in early trade, tracking a broad-based setback in crude oil and other commodity markets.
Indonesia's cocoa output is seen rising 19 percent to around 500,000 tonnes next year, from 420,000 tonnes this year, the country's cocoa association said.Production will still be down from 2010 levels because of crop disease, an official at the association said.
Japan lowers 2011/12 sugar import estimate
TOKYO, Sept 22 (Reuters) - Japan has revised down its sugar import estimate for the year to September 2012 from three months ago as local sugar beet output is likely to rise and inventories remain sufficient, a government official said on Thursday.
Japan now estimates sugar imports for the year from Oct. 1 to Sept. 30, 2012 at 1.304 million tonnes on a refined basis, down 3.7 percent from a year earlier, a quarterly report from the Ministry of Agriculture showed.
Indonesia cocoa output to rise 19 pct in 2012 - assoc
JAKARTA, Sept 22 (Reuters) - Indonesia's cocoa output is seen rising 19 percent to around 500,000 tonnes next year, from 420,000 tonnes this year, the country's cocoa association said on Thursday.
Production will still be down from 2010 levels because of crop disease, an official at the association said at a conference.
S Africa sugarcane output seen up 6 pct-attache
Sept 21 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in South Africa:
"Sugar cane production in South Africa is expected to increase by only 6 percent to 16.98 million tonnes in the 2011/12 season due to the worst drought in 20 years that hit the main sugar producing area in 2010.
Sustainable cocoa powder demand lags butter-Cargill
LONDON, Sept 21 (Reuters) - Demand for sustainable cocoa powder is lagging that of sustainable cocoa butter, U.S. agribusiness Cargill said.
Demand for sustainable cocoa butter from chocolate manufacturers has been driving demand for sustainably grown cocoa beans, Taco Terheijden, sustainable cocoa manager at Cargill, said on the sidelines of a conference.
India initial 2011/12 sugar output seen at 24.6 mln T
NEW DELHI, Sept 21 (estimated by the farm minister last week. That was also an initial estimate.
"This is a conservative estimate and production will not fall below this. There are also reports that production could be 25.0-25.5 million tonnes," Thomas said.
India cotton exports seen up 17 pct over govt f'cast
MUMBAI, Sept 21 (Reuters) - India's cotton exports could rise 17 percent, or 1.4 million tonnes, over an official forecast in the year to September 2012, spurred by a record harvest, a weaker domestic currency and a freer trade policy, the top exporter of the fibre said.
India contributes 22 percent of global output and is expected to have a bumper harvest of 6.14 million tonnes, pushing it into competition with suppliers from Latin America, Australia and Africa, that will squeeze world prices.
Uralkali: Potash Market May Reach 58 Mln-59 Mln Tons In 2011 (Source: CME)
The global potash market may reach between 58 million and 59 million metric tons in 2011, above the pre-crisis level of 56 million tons in 2007, Russian fertilizer giant OAO Uralkali said. "Given the current market trends and the fact that major potash producers work at the capacity exceeding 90%, Uralkali believes that the potash market in 2011 may reach 58-59 million tons," Uralkali said in a statement. The company said potash prices are still significantly lower than before the global financial crisis started in 2008. "Despite the volatility on the international commodities markets, the potash market continues to be very resilient, largely due to strong demand," Uralkali said. "The situation on the potash market in first half of 2011 as well as its development in the second half gives us confidence to believe that the upward trend will continue in 2012," the company said.
U.S. ethanol output falls 8,000 barrels per day
Sept 21 (Reuters) - U.S. ethanol production fell nearly 1 percent last week as gasoline demand dipped, limiting blender consumption. The Energy Information Administration said on Wednesday that U.S. ethanol production totaled 871,000 barrels per day in the seven days to Sept. 16, down 8,000 barrels per day, or 0.9 percent, from the previous week.
S.Korea's Aug crude oil imports down 3.8 pct yr/yr -KNOC
SEOUL, Sept 22 (Reuters) - South Korea's crude oil imports fell about 4 percent on the year in August, swinging from two months of year-on-year growth due to delayed maintenance shutdowns at some local refining units.
Crude imports by South Korea, the world's fifth-largest crude buyer, stood at 72.8 million barrels last month compared to 75.6 million barrels imported a year earlier, state-run Korea National Oil Corp (KNOC) said on Thursday.
China resumes tax on some naphtha, fuel oil
BEIJING, Sept 22 (Reuters) - China will resume its consumption tax on naphtha and fuel oil from Oct 1 when producers of the two products sell them to ethylene and aromatics makers, the Ministry of Finance said on Thursday.
The charge will be refunded to ethylene and aromatics makers based on the actual volumes of naphtha or fuel oil they use.
Oil tumbles more than 4 pct on recession fears
NEW YORK, Sept 22 (Reuters) - Oil tumbled more than 4 percent on Thursday after alarmingly weak Chinese industrial data and a bleak economic outlook from the U.S. Federal Reserve triggered the biggest commodity sell-off since May.
"We're just not seeing any real signs of life out there economically. Traders are heading to higher ground," said Rob Kurzatkowski, futures analyst with OptionsXpress.
NYMEX-Natural gas ends down, front hits 11-month low
NEW YORK, Sept 22 (Reuters) - U.S. natural gas futures trimmed early losses but still ended lower on Thursday, with mild weather and a government report showing another big inventory build driving the front contract to an 11-month low.
"The (EIA build) was neutral to bearish. We're going to see a lot more gas go into storage over the next couple of weeks, particularly if spreads to winter stay wide, and that should put storage in good shape," a Massachusetts trader said.
Euro Coal-Prices stable despite general slump
LONDON, Sept 22 (Reuters) - Prompt physical coal prices were little changed on Thursday although swaps fell by over $1 in line with the slump in world stocks by more than 4 percent.
"Very prompt physical prices have barely moved, they're flat to Wednesday's levels in fact, because the front months are well bid for Richards Bay and DES ARA," one utility source said.
Oil Rises After Slipping to Six-Week Low on Economy; Heads for Weekly Drop (Source: Bloomberg)
Oil rose from a six-week low in New York as investors speculated the biggest weekly decline in almost two months is exaggerated before central bankers from the Group of 20 nations meet in Washington to discuss the global economic slowdown. Futures rose as much as 1.6 percent after plunging 6.3 percent yesterday. Finance heads are gathering for the International Monetary Fund’s annual meeting, while European officials said they may use leverage to increase the firepower of their regional bailout fund. OPEC said it will decide whether to cut supply after monitoring the global economy over the next two months and the pace of Libya’s output recovery. “After such a big move often there are shorts that are looking to take a profit,” Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty Ltd. in Sydney, said by telephone. “We haven’t seen any evidence yet of people getting aggressively into oil. The macro situation is also a very poor backdrop for oil at the moment.”
Brent crude falls more than $1 on grim econ outlook
SINGAPORE, Sept 22 (Reuters) - Brent crude lost more than $1 on Thursday on concerns oil consumption may fall, as steps announced by the U.S. Federal Reserve were seen as insufficient to jump-start an economy the central bank said faces significant downside risks. "It is hard to ignore the macroeconomic picture. Oil seems to have fallen in line with equity markets," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.
Iron Ore’s Four-Year Slide Hitting Mining Earnings: Commodities (Source: Bloomberg)
Iron ore is set for the first four- year drop since at least 1982 as supplies surge, threatening to end record earnings at Vale SA (VALE3), Rio Tinto Group and BHP Billiton Ltd. (BHP), the world´s biggest producers. Global prices may fall 29 percent to an average $123 a metric ton in 2015 from a record $173 this year, according to the median estimates of 10 analysts surveyed by Bloomberg News. The decline contrasts with estimates for little change in copper and a 10 percent increase for aluminum in the same period, London Metal Exchange futures prices show. Iron ore supplies for export will jump 53 percent by 2015 even as slower growth in Chinese steelmaking saps demand, Goldman Sachs & Partners Australia Pty. said. That will reduce prices and profit that reached records this year for BHP and Brazil’s Vale, whose net income will fall almost 50 percent by mid-decade, according to data compiled by Bloomberg.
Copper Tumbles Most Since 2008 on China Manufacturing Data, Global Concern (Source: Bloomberg)
Copper futures plunged the most since 2008 as a China factory index signaling contraction added to speculation that metal demand will slump amid signs of faltering economies in the U.S. and Europe. A preliminary index of China purchasing managers was 49.4 this month, according to HSBC Holdings Plc and Markit Economics. A reading below 50 indicates contraction. Copper has dropped 22 percent this year as Europe’s debt crisis and the possibility of another contraction in the U.S. economy hampered demand. In 2008, during the U.S. recession, copper fell 54 percent. “The meltdown of 2008 is in the cards if the defaults start in Euroland,” said David Threlkeld, the president of Resolved Inc., a trading company in Scottsdale, Arizona.
Gold Set for Worst Week in More Than Four Months on Global Asset Selloff (Source: Bloomberg)
Gold headed for its worst weekly performance in more than four months as investors sold the metal alongside global equities and other commodities on concern the world economy will falter. Immediate-delivery gold traded little changed at $1,739.97 an ounce at 6:44 a.m. in Singapore, after shedding 2.4 percent yesterday, the most in two weeks. The metal, which slumped to a one-month intraday low of $1,722.03 yesterday, is down 4 percent this week, the biggest such drop since the period to May 6. “Gold has been caught up in the overall flight to the exit, but in a normal, sensible world, we should expect to see some support from the fear and trepidation investors are facing,” Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd., wrote in an e-mail.
20110923 1117 Soy Oil & Palm Oil Related News.
Soybeans (Source: CME)
US soybean futures tumbled to six-month lows, fueled by broad based selling across asset classes. Fears of a global economic recession encouraged investors to reduce risk exposure, a feature that overshadowed fresh export demand and crop uncertainties. Almost 100% of the day's losses are attributable to macro economic factors, said Mike Zuzolo, president Global Commodity Analytics and Consulting. Investors pulled money off the table in risky assets, worried global economic weakness will last longer than expected, he adds. CBOT Nov soy dropped 37 1/2c or 2.8% to $12.83/bushel.
Soybean Meal/Oil (Source: CME)
Soy product futures tumble with soybean futures, driven lower by investors reducing exposure in risky commodity markets. Soyoil and soymeal were consumed with the risk off trade theme, as investors reduced positions across broader markets, analyst said. CBOT Dec soymeal was down 2.6% at $335.10/short ton, and Dec soyoil fell 2.5% to 53.94 cents/pound.
Palm drops to one-week lows on cloudy global outlook
KUALA LUMPUR, Sept 22 (Reuters) - Malaysian palm oil dropped to one-week lows after the U.S. Federal Reserve warned of significant risks to the world's largest economy, building on concerns of a recession stalling commodity demand growth.
"Palm oil is finally reacting to a sell-off. The question we should ask is: once the festival season is over, what happens them?" said a trader with a foreign brokerage in Malaysia.
India buys palm olein after Indonesia tax change -trade
KUALA LUMPUR, Sept 22 (Reuters) - India struck deals for 50,000 tonnes of refined, bleached and deodorised (RBD) palm olein from Indonesia in the last week, traders said on Thursday, in an immediate reaction to Jakarta's tax cut on exports of processed oils from September 15.
The world's largest vegetable oil importer bought the RBD palm olein cargoes at $1,100 to $1,120 CIF per tonne for October delivery to meet festival demand, Indonesian and Indian traders said.
US soybean futures tumbled to six-month lows, fueled by broad based selling across asset classes. Fears of a global economic recession encouraged investors to reduce risk exposure, a feature that overshadowed fresh export demand and crop uncertainties. Almost 100% of the day's losses are attributable to macro economic factors, said Mike Zuzolo, president Global Commodity Analytics and Consulting. Investors pulled money off the table in risky assets, worried global economic weakness will last longer than expected, he adds. CBOT Nov soy dropped 37 1/2c or 2.8% to $12.83/bushel.
Soybean Meal/Oil (Source: CME)
Soy product futures tumble with soybean futures, driven lower by investors reducing exposure in risky commodity markets. Soyoil and soymeal were consumed with the risk off trade theme, as investors reduced positions across broader markets, analyst said. CBOT Dec soymeal was down 2.6% at $335.10/short ton, and Dec soyoil fell 2.5% to 53.94 cents/pound.
Palm drops to one-week lows on cloudy global outlook
KUALA LUMPUR, Sept 22 (Reuters) - Malaysian palm oil dropped to one-week lows after the U.S. Federal Reserve warned of significant risks to the world's largest economy, building on concerns of a recession stalling commodity demand growth.
"Palm oil is finally reacting to a sell-off. The question we should ask is: once the festival season is over, what happens them?" said a trader with a foreign brokerage in Malaysia.
India buys palm olein after Indonesia tax change -trade
KUALA LUMPUR, Sept 22 (Reuters) - India struck deals for 50,000 tonnes of refined, bleached and deodorised (RBD) palm olein from Indonesia in the last week, traders said on Thursday, in an immediate reaction to Jakarta's tax cut on exports of processed oils from September 15.
The world's largest vegetable oil importer bought the RBD palm olein cargoes at $1,100 to $1,120 CIF per tonne for October delivery to meet festival demand, Indonesian and Indian traders said.
Thursday, September 22, 2011
20110922 1128 Global Market & Commodities Related News.
GLOBAL MARKETS-Stocks slide as Fed's "Twist" fails to stir buyers
SINGAPORE, Sept 22 (Reuters) - Asian stocks fell on Thursday, following a slide on Wall Street, as investors took fright at a warning from the Federal Reserve that the United States faced a grim economic outlook with "significant downside risks".
The dollar gained on the prospect of higher short-term interest rates after the Fed said it would sell $400 billion of short-term Treasury bonds to buy longer-dated debt in a widely predicted move known as "Operation Twist", aimed at stimulating the economy by forcing down long-term borrowing costs.
Dollar Gains Most in Two Weeks Versus Yen on Fed Bond Plan; Aussie Slides (Bloomberg)
The dollar rose the most in two weeks against the yen after the Federal Reserve acted to lower only long-term borrowing costs and on concern the Bank of Japan may act to stem gains in the nation’s currency. The Dollar Index rose to a seven-month high after the Federal Open Market Committee said it will shift Treasury holdings to longer-term securities. The 17-nation euro rallied versus the yen as Greece said it will accelerate budget cuts to keep emergency loans flowing. New Zealand’s dollar fell to a four-month low after data showed economic growth almost stalled. Australia’s dollar sank below parity with the greenback after a survey said China’s manufacturing may slow. “The reaction to the FOMC was risk off as the Fed was very pessimistic about the U.S. economy, and that’s pushed down riskier assets in general,” said Masafumi Yamamoto, chief currency strategist at Barclays Bank Plc in Tokyo. “Dollar strength across the board pushed up dollar-yen as well.”
Japanese Stocks Decline on Growing Signs of Banking System Instability (Bloomberg)
Japanese stocks fell amid signs of growing instability in the global financial system after the Federal Reserve said there are “significant downside risks” to the U.S. growth outlook and Europe’s risk watchdog said threats to the region’s banks have increased “considerably.” Mitsubishi UFJ Financial Group Inc. (8306) led declines among Japan’s biggest lenders on growing international turmoil and after BNP Paribas SA said the country’s banking industry is “deteriorating.” Honda Motor Co., Japan’s second-largest carmaker, slid 4.1 percent. Softbank Corp. (9984) plunged 11 percent after a report the carrier will lose its position as the exclusive provider of Apple Inc.’s iPhone in Japan.
The Nikkei 225 (NKY) Stock Average lost 1.6 percent to 8,598.32 at the 11 a.m. trading break in Tokyo after investors were disappointed by a Fed plan to support growth in the world’s biggest economy by buying $400 billion of longer-term debt. The broader Topix index dropped 1.7 percent to 744.48. Japan’s stock market will be closed tomorrow for a public holiday.
Fed Will Lengthen Maturity of Securities (Bloomberg)
The Federal Reserve will replace $400 billion of short-term debt in its portfolio with longer- term Treasuries in an effort to reduce borrowing costs further and counter rising risks of a recession. The central bank will buy securities with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting. The action “should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the FOMC said. Chairman Ben S. Bernanke expanded use of unconventional monetary tools for a second straight meeting after job gains stalled and the government lowered its estimate of second- quarter growth. Yields on 30-year Treasuries fell below 3 percent for the first time since 2009 and U.S. stocks had their biggest drop in a month on the Fed’s plan, dubbed “Operation Twist” after a similar Fed action in 1961.
Brent crude falls more than $1 on grim econ outlook
SINGAPORE, Sept 22 (Reuters) - Brent crude futures fell more than $1 on concern that measures announced by the U.S. Federal Reserve may not be enough to jump-start an
economy the bank said faces significant downside risks.
"The sell-off appears to be the unwinding of positioning ahead of an anticipated announcement of further liquidity addition, despite clear signalling from the Fed that conditions are not right for this kind of stimulus," Michael McCarthy, chief market strategist at CMC markets, said in a report.
NYMEX-Natural gas down midday after early contract low
NEW YORK, Sept 21 (Reuters) - U.S. natural gas futures remained lower midday Wednesday, with the front-month October contract again pressured to a new contract low and 6-1/2 month low by milder autumn weather that has slowed overall demand.
"We hit a new low today which is not a good sign. (Milder) weather has come into play, and we keep adding (gas drilling) rigs which is not supportive," a Houston-based trader said.
COMMODITIES-Futures fall broadly after Fed fails to reassure
NEW YORK, Sept 21 (Reuters) - Commodities tumbled on Wednesday after the U.S. Federal Reserve's widely expected plan to buy $400 billion in long-term debt failed to convince investors that "operation twist" would be enough to revive growth.
"People were expecting there was going to be some form of stimulus that would engender some kind of growth," said Jason Schenker, president of Prestige Economics in Austin, Texas.
SINGAPORE, Sept 22 (Reuters) - Asian stocks fell on Thursday, following a slide on Wall Street, as investors took fright at a warning from the Federal Reserve that the United States faced a grim economic outlook with "significant downside risks".
The dollar gained on the prospect of higher short-term interest rates after the Fed said it would sell $400 billion of short-term Treasury bonds to buy longer-dated debt in a widely predicted move known as "Operation Twist", aimed at stimulating the economy by forcing down long-term borrowing costs.
Dollar Gains Most in Two Weeks Versus Yen on Fed Bond Plan; Aussie Slides (Bloomberg)
The dollar rose the most in two weeks against the yen after the Federal Reserve acted to lower only long-term borrowing costs and on concern the Bank of Japan may act to stem gains in the nation’s currency. The Dollar Index rose to a seven-month high after the Federal Open Market Committee said it will shift Treasury holdings to longer-term securities. The 17-nation euro rallied versus the yen as Greece said it will accelerate budget cuts to keep emergency loans flowing. New Zealand’s dollar fell to a four-month low after data showed economic growth almost stalled. Australia’s dollar sank below parity with the greenback after a survey said China’s manufacturing may slow. “The reaction to the FOMC was risk off as the Fed was very pessimistic about the U.S. economy, and that’s pushed down riskier assets in general,” said Masafumi Yamamoto, chief currency strategist at Barclays Bank Plc in Tokyo. “Dollar strength across the board pushed up dollar-yen as well.”
Japanese Stocks Decline on Growing Signs of Banking System Instability (Bloomberg)
Japanese stocks fell amid signs of growing instability in the global financial system after the Federal Reserve said there are “significant downside risks” to the U.S. growth outlook and Europe’s risk watchdog said threats to the region’s banks have increased “considerably.” Mitsubishi UFJ Financial Group Inc. (8306) led declines among Japan’s biggest lenders on growing international turmoil and after BNP Paribas SA said the country’s banking industry is “deteriorating.” Honda Motor Co., Japan’s second-largest carmaker, slid 4.1 percent. Softbank Corp. (9984) plunged 11 percent after a report the carrier will lose its position as the exclusive provider of Apple Inc.’s iPhone in Japan.
The Nikkei 225 (NKY) Stock Average lost 1.6 percent to 8,598.32 at the 11 a.m. trading break in Tokyo after investors were disappointed by a Fed plan to support growth in the world’s biggest economy by buying $400 billion of longer-term debt. The broader Topix index dropped 1.7 percent to 744.48. Japan’s stock market will be closed tomorrow for a public holiday.
Fed Will Lengthen Maturity of Securities (Bloomberg)
The Federal Reserve will replace $400 billion of short-term debt in its portfolio with longer- term Treasuries in an effort to reduce borrowing costs further and counter rising risks of a recession. The central bank will buy securities with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting. The action “should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the FOMC said. Chairman Ben S. Bernanke expanded use of unconventional monetary tools for a second straight meeting after job gains stalled and the government lowered its estimate of second- quarter growth. Yields on 30-year Treasuries fell below 3 percent for the first time since 2009 and U.S. stocks had their biggest drop in a month on the Fed’s plan, dubbed “Operation Twist” after a similar Fed action in 1961.
Brent crude falls more than $1 on grim econ outlook
SINGAPORE, Sept 22 (Reuters) - Brent crude futures fell more than $1 on concern that measures announced by the U.S. Federal Reserve may not be enough to jump-start an
economy the bank said faces significant downside risks.
"The sell-off appears to be the unwinding of positioning ahead of an anticipated announcement of further liquidity addition, despite clear signalling from the Fed that conditions are not right for this kind of stimulus," Michael McCarthy, chief market strategist at CMC markets, said in a report.
NYMEX-Natural gas down midday after early contract low
NEW YORK, Sept 21 (Reuters) - U.S. natural gas futures remained lower midday Wednesday, with the front-month October contract again pressured to a new contract low and 6-1/2 month low by milder autumn weather that has slowed overall demand.
"We hit a new low today which is not a good sign. (Milder) weather has come into play, and we keep adding (gas drilling) rigs which is not supportive," a Houston-based trader said.
COMMODITIES-Futures fall broadly after Fed fails to reassure
NEW YORK, Sept 21 (Reuters) - Commodities tumbled on Wednesday after the U.S. Federal Reserve's widely expected plan to buy $400 billion in long-term debt failed to convince investors that "operation twist" would be enough to revive growth.
"People were expecting there was going to be some form of stimulus that would engender some kind of growth," said Jason Schenker, president of Prestige Economics in Austin, Texas.
20110922 0942 Global Economic Related News.
China: China may overtake US as Pakistan’s top provider of FDI
China may overtake the U.S. as the biggest foreign direct investor in Pakistan in the next five years, said Saleem H. Mandviwalla, the chairman of the South Asian nation’s Board of Investment. Pakistan’s relations with the U.S. have frayed since Navy Seals killed Osama bin Laden near Islamabad in May in a unilateral raid. China has emerged as a key ally, Mandviwalla said, as the government strives to overcome declining overseas investment and terrorism that have hobbled growth. (Bloomberg)
New Zealand: New Zealand economic growth slowed to 0.1% in second quarter
New Zealand’s economic growth almost stalled in the second quarter, adding to the case for central bank Governor Alan Bollard to hold interest rates at a record low until next year. Gross domestic product rose 0.1 percent in the three months ended June 30 from the previous quarter, when it increased a revised 0.9 percent, Statistics New Zealand said in a report released today in Wellington. Growth was less than the 0.5 percent median expectation in a Bloomberg News survey of 15 economists. (Bloomberg)
Gold: Surge vexes Asian officials as inflation numbers sent awry
The surging price of gold is fueling inflation from India to Indonesia and forcing statisticians to decide whether jewelry made of the metal still belongs in consumer-price indexes. Gold has climbed 27 percent this year as turbulence in equities and currencies, money printing by central banks, and a decade-long bull market in the metal lure investors to an alternative store of value. Bullion vaults such as the Swiss Precious Metals facility in Singapore are nearing capacity, and Tiberius Asset Management AG warns that gold is in the final, overheated phase of an upswing. (Bloomberg)
US: Fed will shift treasury holdings to longer-term securities
Federal Reserve policy makers will replace much of the short-term debt in their portfolio with longer-term Treasuries in an effort to further reduce borrowing costs and keep the economy from relapsing into a recession. The central bank will buy $400 billion of bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting. (Bloomberg)
US stocks fall as Fed plans bond purchases, sees economic risk
US stocks slumped, giving the S&P’s 500 Index its biggest decline in a month, as the Federal Reserve announced plans to buy USD400bn of long- term debt and cited risks to the economic outlook. Caterpillar Inc. and Dow Chemical Co. fell more than 5.1%, pacing losses among companies most-tied to the economy. Financial shares in the S&P 500 slid 4.9% as a group, to a two-year low, as Moody’s Investors Service cut its ratings on Bank of America, Citigroup and Wells Fargo & Co. The Dow Jones Transportation Average slid 5.3% as railroad shares tumbled after two coal companies cut their forecasts. The benchmark gauge for American equities has dropped 4.1% in three days. The Dow Jones Industrial Average lost 283.82 points to 11,124.84.. (Bloomberg)
Greece: Greece accelerates cuts to wages, pensions to ensure aid payment
Greek Prime Minister George Papandreou’s government said it will accelerate budget cuts, targeting civil servants’ wages and pensioners to keep emergency loans flowing and avoid default. Measures announced yesterday following two rounds of talks with the European Union and the International Monetary Fund include: a 20 percent cut in pensions of more than 1,200 euros ($1,650) a month, according to a government statement; pensions paid to those younger than 55 will be shaved by 40 percent for the amount exceeding 1,000 euros and wages will be lowered for 30,000 state employees. (Bloomberg)
China may overtake the U.S. as the biggest foreign direct investor in Pakistan in the next five years, said Saleem H. Mandviwalla, the chairman of the South Asian nation’s Board of Investment. Pakistan’s relations with the U.S. have frayed since Navy Seals killed Osama bin Laden near Islamabad in May in a unilateral raid. China has emerged as a key ally, Mandviwalla said, as the government strives to overcome declining overseas investment and terrorism that have hobbled growth. (Bloomberg)
New Zealand: New Zealand economic growth slowed to 0.1% in second quarter
New Zealand’s economic growth almost stalled in the second quarter, adding to the case for central bank Governor Alan Bollard to hold interest rates at a record low until next year. Gross domestic product rose 0.1 percent in the three months ended June 30 from the previous quarter, when it increased a revised 0.9 percent, Statistics New Zealand said in a report released today in Wellington. Growth was less than the 0.5 percent median expectation in a Bloomberg News survey of 15 economists. (Bloomberg)
Gold: Surge vexes Asian officials as inflation numbers sent awry
The surging price of gold is fueling inflation from India to Indonesia and forcing statisticians to decide whether jewelry made of the metal still belongs in consumer-price indexes. Gold has climbed 27 percent this year as turbulence in equities and currencies, money printing by central banks, and a decade-long bull market in the metal lure investors to an alternative store of value. Bullion vaults such as the Swiss Precious Metals facility in Singapore are nearing capacity, and Tiberius Asset Management AG warns that gold is in the final, overheated phase of an upswing. (Bloomberg)
US: Fed will shift treasury holdings to longer-term securities
Federal Reserve policy makers will replace much of the short-term debt in their portfolio with longer-term Treasuries in an effort to further reduce borrowing costs and keep the economy from relapsing into a recession. The central bank will buy $400 billion of bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting. (Bloomberg)
US stocks fall as Fed plans bond purchases, sees economic risk
US stocks slumped, giving the S&P’s 500 Index its biggest decline in a month, as the Federal Reserve announced plans to buy USD400bn of long- term debt and cited risks to the economic outlook. Caterpillar Inc. and Dow Chemical Co. fell more than 5.1%, pacing losses among companies most-tied to the economy. Financial shares in the S&P 500 slid 4.9% as a group, to a two-year low, as Moody’s Investors Service cut its ratings on Bank of America, Citigroup and Wells Fargo & Co. The Dow Jones Transportation Average slid 5.3% as railroad shares tumbled after two coal companies cut their forecasts. The benchmark gauge for American equities has dropped 4.1% in three days. The Dow Jones Industrial Average lost 283.82 points to 11,124.84.. (Bloomberg)
Greece: Greece accelerates cuts to wages, pensions to ensure aid payment
Greek Prime Minister George Papandreou’s government said it will accelerate budget cuts, targeting civil servants’ wages and pensioners to keep emergency loans flowing and avoid default. Measures announced yesterday following two rounds of talks with the European Union and the International Monetary Fund include: a 20 percent cut in pensions of more than 1,200 euros ($1,650) a month, according to a government statement; pensions paid to those younger than 55 will be shaved by 40 percent for the amount exceeding 1,000 euros and wages will be lowered for 30,000 state employees. (Bloomberg)
20110922 0939 Malaysia Corporate Related News.
Berjaya Sports Toto Bhd : Net profit jumps 44.0%
Berjaya Sports Toto Bhd (BToto) posted a 44.0% increase in net profit for its 1QFY12 ending July 31 to RM92.1mil from RM64.0mil a year ago. Revenue increased marginally by 1.3% to RM845.8mil from RM835.4mil last year. Earnings per share for the quarter were 6.89 sen compared with 4.78 sen last year. In notes accompanying its financials, BToto said the increase in net profit was driven by higher pre-tax contributions from its foreign unit Berjaya Philippines Inc and principal subsidiary Sports Toto (M) Sdn Bhd. In terms of operational performance, Sports Toto, the group’s principal operating subsidiary, recorded a year-on-year increase in revenue and pre-tax profit of 0.3% and 14.1% respectively in 1Q, despite having fewer number draws in 1Q. BToto attributed the increase in pre-tax profit to a lower prize payout in 1Q. For 1Q, BToto declared its first interim single-tier exempt dividend of 8 sen per share. The entitlement date for the dividend has been fixed for Oct 10.
The first interim dividend amounts to about RM107.0mil, representing 116.2% of the group’s net profit. – The Edge
Malaysia Marine bids for jobs worth RM6bn
Malaysia Marine and Heavy Engineering (MHB), an indirect subsidiary of Petronas, has submitted bids worth between RM5 and RM6bn, says chairman Datuk Nasarudin Md Idris. "The bids are for engineering, procurement, construction, installation and commissioning and construction projects in the oil and gas industry, mostly in Malaysia," he said. MHB was listed on the Main Market of Bursa Malaysia in October last year. "They are now at various stages of being finalised. We have to replenish our order book and we are looking for more projects," he added. Nasarudin said the company's order book currently stood at about RM3.1bn, which would last until 2013. It is derived from upstream projects ranging from the central processing platform to the floating production system for both domestic and international markets. (Malaysian Reserve)
AZRB to build teaching hospital in Kuantan
Ahmad Zaki Resources (AZRB) has signed a 25-year concession agreement with the government to build a teaching hospital in Kuantan, Pahang. The deal marks the first hospital project to be developed under the government's private finance initiative programme. AZRB's unit Peninsular Medical SB inked the agreement with the Ministry of Higher Education (MOHE) and International Islamic University of Malaysia (IIUM) for the design, build, lease, maintenance and transfer of IIUM Teaching Hospital. "The project valued at RM412.6m will be built in Bandar Indera Mahkota, Kuantan, Pahang. The IIUM Teaching Hospital, with 300 beds for inpatients, has the capacity for 735 students," AZRB's chairman Raja Datuk Seri Aman Raja Haji Ahmad said. (BT)
Foreign suitors for Kurnia Insurans?
There were at least four foreign insurers, including two from the US, are among several parties believed to be close to making a bid for Kurnia Insurans (Malaysia) Bhd, according to industry sources. US-based Liberty International Holdings and Chartis Malaysia Insurance Bhd, whose parent AIG Inc was rescued by the US government in 2008, are believed to be vying for the stake owned by investment holding company, Kurnia Asia Bhd. Another potential suitor for the stake in the largest general insurer in the country is Insurance Australia Group Ltd (IAG), which holds a 49% stake in AmBank Group's general insurance arm, AmG Insurance. AmG Insurance is on the lookout for a sizeable insurer having failed to buy MAA Holdings Bhd's general insurance business arm after protracted negotiations. IAG sees a lot of potential in Malaysia and has intention to up its stake to 70% from 49% currently in AmG Insurance, the third largest motor insurer in the country. (BT)
BRDB eyes more govt jobs
Bandar Raya Developments (BRDB) is looking to participate in more government-linked property developments, as it looks to become a full-fledged property player, said its CEO Datuk Jagan Sabapathy. BRDB has put in a bid to participate in the Rubber Research Institute (RRI) land in Sungai Buloh as well as the Lever Brothers site in Bangsar. It is among parties that have been shortlisted to put in their proposals for the Lever Brothers land. BRDB also aims to deliver property developments worth RM1bn in gross development value (GDV) every year, starting from its year ending 31 Dec 2012. (StarBiz)
Formis gets RM54m job
Formis Resources’s unit has secured a RM53.75m contract from Fibrecomm Network SB for the next generation dense wavelength division multiplexing systems. In an announcement to Bursa, Formis said its unit, Formis Network Services SB, will supply engineering services, operation and maintenance of the NGDWDM systems, spares and accessories for the third route from Padang Besar to Menara Ansar in Johor Bahru for RM47.76m over five years starting 24 Aug 2011. (Financial Daily)
SapuraCrest and Kencana post healthy profits before merger under Integral Key
SapuraCrest and Kencana both posted healthy profit for their respective quarters. The two companies had earlier proposed to merge under a newco called Integral Key Bhd. Sapura posted a net profit of RM78.2m for the 2Q ended 31 July 2011, compared to RM53.3m y-o-y due to higher contribution from its business units in the country and abroad. Kencana on the other hand posted a net profit of RM223m compared to a net profit of RM136.2m y-o-y. Meanwhile, Sapuracrest Petroleum announced to Bursa yesterday to carry out a capital repayment exercise after the sale of all its assets and liabilities to Integral Key. (Malaysian Reserve)
New twist to E&O takeover
In a surprise move, ECM Libra Financial Group has proposed the nomination of two lawyers to Eastern & Oriental’s board. ECM Libra has emerged as a substantial shareholder of E&O in recent months. One of the two lawyers is a director of TA Enterprise. E&O said that on 14 Sept it received a notice of intention to nominate Mahadzir Azizan and Leong Kam Weng to its board. (Financial Daily)
Berjaya Sports Toto Bhd (BToto) posted a 44.0% increase in net profit for its 1QFY12 ending July 31 to RM92.1mil from RM64.0mil a year ago. Revenue increased marginally by 1.3% to RM845.8mil from RM835.4mil last year. Earnings per share for the quarter were 6.89 sen compared with 4.78 sen last year. In notes accompanying its financials, BToto said the increase in net profit was driven by higher pre-tax contributions from its foreign unit Berjaya Philippines Inc and principal subsidiary Sports Toto (M) Sdn Bhd. In terms of operational performance, Sports Toto, the group’s principal operating subsidiary, recorded a year-on-year increase in revenue and pre-tax profit of 0.3% and 14.1% respectively in 1Q, despite having fewer number draws in 1Q. BToto attributed the increase in pre-tax profit to a lower prize payout in 1Q. For 1Q, BToto declared its first interim single-tier exempt dividend of 8 sen per share. The entitlement date for the dividend has been fixed for Oct 10.
The first interim dividend amounts to about RM107.0mil, representing 116.2% of the group’s net profit. – The Edge
Malaysia Marine bids for jobs worth RM6bn
Malaysia Marine and Heavy Engineering (MHB), an indirect subsidiary of Petronas, has submitted bids worth between RM5 and RM6bn, says chairman Datuk Nasarudin Md Idris. "The bids are for engineering, procurement, construction, installation and commissioning and construction projects in the oil and gas industry, mostly in Malaysia," he said. MHB was listed on the Main Market of Bursa Malaysia in October last year. "They are now at various stages of being finalised. We have to replenish our order book and we are looking for more projects," he added. Nasarudin said the company's order book currently stood at about RM3.1bn, which would last until 2013. It is derived from upstream projects ranging from the central processing platform to the floating production system for both domestic and international markets. (Malaysian Reserve)
AZRB to build teaching hospital in Kuantan
Ahmad Zaki Resources (AZRB) has signed a 25-year concession agreement with the government to build a teaching hospital in Kuantan, Pahang. The deal marks the first hospital project to be developed under the government's private finance initiative programme. AZRB's unit Peninsular Medical SB inked the agreement with the Ministry of Higher Education (MOHE) and International Islamic University of Malaysia (IIUM) for the design, build, lease, maintenance and transfer of IIUM Teaching Hospital. "The project valued at RM412.6m will be built in Bandar Indera Mahkota, Kuantan, Pahang. The IIUM Teaching Hospital, with 300 beds for inpatients, has the capacity for 735 students," AZRB's chairman Raja Datuk Seri Aman Raja Haji Ahmad said. (BT)
Foreign suitors for Kurnia Insurans?
There were at least four foreign insurers, including two from the US, are among several parties believed to be close to making a bid for Kurnia Insurans (Malaysia) Bhd, according to industry sources. US-based Liberty International Holdings and Chartis Malaysia Insurance Bhd, whose parent AIG Inc was rescued by the US government in 2008, are believed to be vying for the stake owned by investment holding company, Kurnia Asia Bhd. Another potential suitor for the stake in the largest general insurer in the country is Insurance Australia Group Ltd (IAG), which holds a 49% stake in AmBank Group's general insurance arm, AmG Insurance. AmG Insurance is on the lookout for a sizeable insurer having failed to buy MAA Holdings Bhd's general insurance business arm after protracted negotiations. IAG sees a lot of potential in Malaysia and has intention to up its stake to 70% from 49% currently in AmG Insurance, the third largest motor insurer in the country. (BT)
BRDB eyes more govt jobs
Bandar Raya Developments (BRDB) is looking to participate in more government-linked property developments, as it looks to become a full-fledged property player, said its CEO Datuk Jagan Sabapathy. BRDB has put in a bid to participate in the Rubber Research Institute (RRI) land in Sungai Buloh as well as the Lever Brothers site in Bangsar. It is among parties that have been shortlisted to put in their proposals for the Lever Brothers land. BRDB also aims to deliver property developments worth RM1bn in gross development value (GDV) every year, starting from its year ending 31 Dec 2012. (StarBiz)
Formis gets RM54m job
Formis Resources’s unit has secured a RM53.75m contract from Fibrecomm Network SB for the next generation dense wavelength division multiplexing systems. In an announcement to Bursa, Formis said its unit, Formis Network Services SB, will supply engineering services, operation and maintenance of the NGDWDM systems, spares and accessories for the third route from Padang Besar to Menara Ansar in Johor Bahru for RM47.76m over five years starting 24 Aug 2011. (Financial Daily)
SapuraCrest and Kencana post healthy profits before merger under Integral Key
SapuraCrest and Kencana both posted healthy profit for their respective quarters. The two companies had earlier proposed to merge under a newco called Integral Key Bhd. Sapura posted a net profit of RM78.2m for the 2Q ended 31 July 2011, compared to RM53.3m y-o-y due to higher contribution from its business units in the country and abroad. Kencana on the other hand posted a net profit of RM223m compared to a net profit of RM136.2m y-o-y. Meanwhile, Sapuracrest Petroleum announced to Bursa yesterday to carry out a capital repayment exercise after the sale of all its assets and liabilities to Integral Key. (Malaysian Reserve)
New twist to E&O takeover
In a surprise move, ECM Libra Financial Group has proposed the nomination of two lawyers to Eastern & Oriental’s board. ECM Libra has emerged as a substantial shareholder of E&O in recent months. One of the two lawyers is a director of TA Enterprise. E&O said that on 14 Sept it received a notice of intention to nominate Mahadzir Azizan and Leong Kam Weng to its board. (Financial Daily)
20110922 0932 Renewable Energy Related News.
JAPAN CHUBU LOSES 1,870 MW HYDRO POWER DUE TO TYPHOON
TOKYO, Sept 21 (Reuters) - Chubu Electric Power Co said on Wednesday it has lost about 1,870 megawatts of hydro power output as a very strong typhoon approaches central Japan, but added there are no worries of power shortages.
The company said the hydro plants currently shut due to a rise in water levels include two of its pumped hydro plants, the 780-MW Okuyahagi No.2 unit and the 315-MW Okuyahagi No.1 unit.
GAMESA TARGETS 12-15 PCT OFFSHORE WIND MARKET
SOUTHAMPTON, England, Sept 20 (Reuters) - Spanish wind turbine maker Gamesa plans to capture 12-15 percent of the global offshore wind market in 2020, chairman Jorge Calvet told Reuters on Tuesday.
Gamesa does not have any utility-scale offshore wind generation, but expects global demand for rugged sea-based turbines to be about 60 gigawatts (GW) in 2020, half of which will be in the North Sea, which it is targeting along with the U.S. and China.
SIEMENS HOPS ON RENEWABLES WAVE WITH POWER LINES
PALMA DE MAJORCA, Spain, Sept 20 (Reuters) - German industrial group Siemens AG aims to benefit from the global push into renewable energy by installing power lines to get electricity from sun-drenched and wind-swept sites to customers.
It also wants to deliver the natural gas-fired power stations that can fill the gap left when neither wind nor sun is powering the green facilities, the company told reporters on the Spanish island of Majorca.
GREEN ENERGY MEETS 23 PCT OF ITALY 2010 POWER DEMAND
MILAN, Sept 20 (Reuters) - Power produced from renewable sources covered 22.8 percent of total demand in Italy in 2010 compared with a 27 percent target set for 2020 under the European Union's efforts to fight climate change, Italy's energy management operator GSE said on Tuesday.
Renewable energy plants doubled in number over the last year to 160,000 with a total capacity of 30.3 gigawatt, up 14.2 percent from 2009, GSE said in a statement.
RENEWABLES STIR GROWTH, CREATE JOBS - EU ADVISER
BERLIN, Sept 19 (Reuters) - A major expansion of renewable energy could create millions of jobs worldwide, stir economic growth in heavily indebted countries and help fight climate change at the same time, an American adviser to the German leader Angela Merkel said on Monday.
Jeremy Rifkin, a best-selling author and an adviser to the European Union on climate change and energy security, said Germany has been leading the way by creating some 250,000 jobs in renewable energy in just a few years, but could do more.
CHINA QUELLS VILLAGE SOLAR POLLUTION PROTESTS
HAINING, China, Sept 18 (Reuters) - Residents of a village in east China accused riot police of heavy-handed tactics after a three-day protest against a solar panel factory accused of dumping toxic waste was brought to an end on Sunday.
"We are being silenced," said a protester who would only give his surname as Cao, at an industrial park on the outskirts of Haining in Zhejiang province as police in riot gear sealed off the site.
E.ON EYES CHINA WIND TURBINES IN GREEN PUSH
FRANKFURT, Sept 16 (Reuters) - E.ON is in talks with China's wind turbine makers, the chief financial officer of its renewable operations said, adding the German utility may in future source turbines produced in the world's largest wind market.
"We have been talking to half a dozen manufacturers and are looking in detail at costs and benefits," Cord Landsmann, chief financial officer of E.ON's climate and renewables unit, told Reuters in an interview.
SUZLON SEES STRONG DEMAND FOR WIND ENERGY IN CHINA
DALIAN, China, Sept 15 (Reuters) - Indian wind turbine maker Suzlon Energy could begin exporting Chinese-assembled turbines to third countries as early as next year, the chairman of the company said on Thursday.
With the company expecting about a 40-percent increase in global revenue this fiscal year, Suzlon is also seeking a Chinese joint-venture partner to produce large turbines in China for the Chinese market, Tulsi Tanti said in an interview at the World Economic Forum in Dalian.
TOKYO, Sept 21 (Reuters) - Chubu Electric Power Co said on Wednesday it has lost about 1,870 megawatts of hydro power output as a very strong typhoon approaches central Japan, but added there are no worries of power shortages.
The company said the hydro plants currently shut due to a rise in water levels include two of its pumped hydro plants, the 780-MW Okuyahagi No.2 unit and the 315-MW Okuyahagi No.1 unit.
GAMESA TARGETS 12-15 PCT OFFSHORE WIND MARKET
SOUTHAMPTON, England, Sept 20 (Reuters) - Spanish wind turbine maker Gamesa plans to capture 12-15 percent of the global offshore wind market in 2020, chairman Jorge Calvet told Reuters on Tuesday.
Gamesa does not have any utility-scale offshore wind generation, but expects global demand for rugged sea-based turbines to be about 60 gigawatts (GW) in 2020, half of which will be in the North Sea, which it is targeting along with the U.S. and China.
SIEMENS HOPS ON RENEWABLES WAVE WITH POWER LINES
PALMA DE MAJORCA, Spain, Sept 20 (Reuters) - German industrial group Siemens AG aims to benefit from the global push into renewable energy by installing power lines to get electricity from sun-drenched and wind-swept sites to customers.
It also wants to deliver the natural gas-fired power stations that can fill the gap left when neither wind nor sun is powering the green facilities, the company told reporters on the Spanish island of Majorca.
GREEN ENERGY MEETS 23 PCT OF ITALY 2010 POWER DEMAND
MILAN, Sept 20 (Reuters) - Power produced from renewable sources covered 22.8 percent of total demand in Italy in 2010 compared with a 27 percent target set for 2020 under the European Union's efforts to fight climate change, Italy's energy management operator GSE said on Tuesday.
Renewable energy plants doubled in number over the last year to 160,000 with a total capacity of 30.3 gigawatt, up 14.2 percent from 2009, GSE said in a statement.
RENEWABLES STIR GROWTH, CREATE JOBS - EU ADVISER
BERLIN, Sept 19 (Reuters) - A major expansion of renewable energy could create millions of jobs worldwide, stir economic growth in heavily indebted countries and help fight climate change at the same time, an American adviser to the German leader Angela Merkel said on Monday.
Jeremy Rifkin, a best-selling author and an adviser to the European Union on climate change and energy security, said Germany has been leading the way by creating some 250,000 jobs in renewable energy in just a few years, but could do more.
CHINA QUELLS VILLAGE SOLAR POLLUTION PROTESTS
HAINING, China, Sept 18 (Reuters) - Residents of a village in east China accused riot police of heavy-handed tactics after a three-day protest against a solar panel factory accused of dumping toxic waste was brought to an end on Sunday.
"We are being silenced," said a protester who would only give his surname as Cao, at an industrial park on the outskirts of Haining in Zhejiang province as police in riot gear sealed off the site.
E.ON EYES CHINA WIND TURBINES IN GREEN PUSH
FRANKFURT, Sept 16 (Reuters) - E.ON is in talks with China's wind turbine makers, the chief financial officer of its renewable operations said, adding the German utility may in future source turbines produced in the world's largest wind market.
"We have been talking to half a dozen manufacturers and are looking in detail at costs and benefits," Cord Landsmann, chief financial officer of E.ON's climate and renewables unit, told Reuters in an interview.
SUZLON SEES STRONG DEMAND FOR WIND ENERGY IN CHINA
DALIAN, China, Sept 15 (Reuters) - Indian wind turbine maker Suzlon Energy could begin exporting Chinese-assembled turbines to third countries as early as next year, the chairman of the company said on Thursday.
With the company expecting about a 40-percent increase in global revenue this fiscal year, Suzlon is also seeking a Chinese joint-venture partner to produce large turbines in China for the Chinese market, Tulsi Tanti said in an interview at the World Economic Forum in Dalian.
20110922 0931 Biofuel Related News.
CARGILL IN BRAZIL CANE CRUSHING JOINT VENTURE
SAO PAULO, Sept 19 (Reuters) - Cargill plans to expand cane crushing capacity in Brazil through a joint venture with local group Usina Sao Joao, to meet growing demand for ethanol, the U.S. agribusiness giant said on Monday .
The joint venture SJC Bioenergia has two mills in the center-western state of Goias.
SCIENTIFIC ADVISORS URGE RETHINK OF EU BIOFUEL POLICY
BRUSSELS, Sept 16 (Reuters) - A panel of 19 European scientists called for a review of European Union bioenergy legislation and warned the bloc on Friday against delay in addressing the indirect climate impact of biofuels.
The Scientific Committee of the European Environment Agency -- the 27-nation EU's environment watchdog -- warned of a "serious accounting error" in EU and global rules to promote the use of bioenergy, such as biofuels made from food crops.
UK APPROVES WELSH 299 MW BIOMASS PLANT
LONDON, Sept 16 (Reuters) - Britain's energy ministry on Friday approved a 299-megawatt (MW) biomass power plant in Anglesey, Wales, proposed by a subsidiary of Anglesey Aluminium Metal.
"Biomass power stations such as this one in Anglesey will provide us a reliable, secure, flexible and renewable source of power," said Energy Minister Charles Hendry.
ARGENTINE GRAINS EXPORTER BETS ON CORN ETHANOL
BUENOS AIRES, Sept 14 (Reuters) - Argentine grains exporter ACA is about to start work on one of the country's first corn-based ethanol plants, betting on increased domestic demand for the fuel, the association's president said on Wednesday.
Argentina is the world's No. 2 corn exporter after the United States and farmers are expected to dedicate about 10 percent more land to the crop this year, taking advantage of high global prices.
BP PLANS TO QUADRUPLE BRAZIL CANE OPS IN 5 YEARS
SAO PAULO, Sept 14 (Reuters) - Oil major BP said on Wednesday it plans to quadruple its cane crushing capacity in Brazil within five years, renewing its confidence in a sector that saw a lag in new investments over the past few years.
The increase should be through the expansion of its current units and the construction of new plants.
BIOENERGY TARGETS BASED ON FLAWED SCIENCE -DRAFT
BRUSSELS, Sept 14 (Reuters) - Existing targets for biofuels and other forms of bioenergy are based on flawed carbon accounting and should be revised downwards, a draft report by a panel of 19 top European scientists showed.
"It is widely assumed that bioenergy is inherently carbon-neutral -- however this assumption is flawed," said the Scientific Committee of the European Environment Agency, the EU's environment watchdog.
ETHANOL INDUSTRY TO STAY HUNGRY FOR U.S. CORN
KANSAS CITY, Mo., Sept 14 (Reuters) - The U.S. ethanol industry is keeping its foot on the gas pedal at production plants, and if the trend continues it could defy a government forecast that the industry will have its first drop in corn use since the turn of the century.
The government forecast, which was issued on Monday, was based on expected weaker gasoline use and higher corn prices. Ethanol is blended with gasoline. In addition, some analysts said the expiration of an industry tax credit at the end of the year could also eat into profits.
THAILAND TO EXPORT MORE ETHANOL, AIMS TO BE TRADE HUB
BANGKOK, Sept 14 (Reuters) - Thailand plans to become a Southeast Asian centre of ethanol trade, encouraging producers to increase production for exports as domestic demand declines with car users switching back to pure fossil fuels, the Energy Minister said on Wednesday.
The country has exported 60 million litres of ethanol so far this year, up from 45 million litres shipped for the whole of 2010, to major buyers such as South Korea, Japan, Singapore, the Philippines and China.
SAO PAULO, Sept 19 (Reuters) - Cargill plans to expand cane crushing capacity in Brazil through a joint venture with local group Usina Sao Joao, to meet growing demand for ethanol, the U.S. agribusiness giant said on Monday .
The joint venture SJC Bioenergia has two mills in the center-western state of Goias.
SCIENTIFIC ADVISORS URGE RETHINK OF EU BIOFUEL POLICY
BRUSSELS, Sept 16 (Reuters) - A panel of 19 European scientists called for a review of European Union bioenergy legislation and warned the bloc on Friday against delay in addressing the indirect climate impact of biofuels.
The Scientific Committee of the European Environment Agency -- the 27-nation EU's environment watchdog -- warned of a "serious accounting error" in EU and global rules to promote the use of bioenergy, such as biofuels made from food crops.
UK APPROVES WELSH 299 MW BIOMASS PLANT
LONDON, Sept 16 (Reuters) - Britain's energy ministry on Friday approved a 299-megawatt (MW) biomass power plant in Anglesey, Wales, proposed by a subsidiary of Anglesey Aluminium Metal.
"Biomass power stations such as this one in Anglesey will provide us a reliable, secure, flexible and renewable source of power," said Energy Minister Charles Hendry.
ARGENTINE GRAINS EXPORTER BETS ON CORN ETHANOL
BUENOS AIRES, Sept 14 (Reuters) - Argentine grains exporter ACA is about to start work on one of the country's first corn-based ethanol plants, betting on increased domestic demand for the fuel, the association's president said on Wednesday.
Argentina is the world's No. 2 corn exporter after the United States and farmers are expected to dedicate about 10 percent more land to the crop this year, taking advantage of high global prices.
BP PLANS TO QUADRUPLE BRAZIL CANE OPS IN 5 YEARS
SAO PAULO, Sept 14 (Reuters) - Oil major BP said on Wednesday it plans to quadruple its cane crushing capacity in Brazil within five years, renewing its confidence in a sector that saw a lag in new investments over the past few years.
The increase should be through the expansion of its current units and the construction of new plants.
BIOENERGY TARGETS BASED ON FLAWED SCIENCE -DRAFT
BRUSSELS, Sept 14 (Reuters) - Existing targets for biofuels and other forms of bioenergy are based on flawed carbon accounting and should be revised downwards, a draft report by a panel of 19 top European scientists showed.
"It is widely assumed that bioenergy is inherently carbon-neutral -- however this assumption is flawed," said the Scientific Committee of the European Environment Agency, the EU's environment watchdog.
ETHANOL INDUSTRY TO STAY HUNGRY FOR U.S. CORN
KANSAS CITY, Mo., Sept 14 (Reuters) - The U.S. ethanol industry is keeping its foot on the gas pedal at production plants, and if the trend continues it could defy a government forecast that the industry will have its first drop in corn use since the turn of the century.
The government forecast, which was issued on Monday, was based on expected weaker gasoline use and higher corn prices. Ethanol is blended with gasoline. In addition, some analysts said the expiration of an industry tax credit at the end of the year could also eat into profits.
THAILAND TO EXPORT MORE ETHANOL, AIMS TO BE TRADE HUB
BANGKOK, Sept 14 (Reuters) - Thailand plans to become a Southeast Asian centre of ethanol trade, encouraging producers to increase production for exports as domestic demand declines with car users switching back to pure fossil fuels, the Energy Minister said on Wednesday.
The country has exported 60 million litres of ethanol so far this year, up from 45 million litres shipped for the whole of 2010, to major buyers such as South Korea, Japan, Singapore, the Philippines and China.
20110922 0929 Global Market Related News.
Asian Equities Set for Lowest Close in a Year as Fed Cites Economic Risks (Source: Bloomberg)
Asian stocks fell, sending the regional benchmark index toward its lowest close in more than a year, after the U.S. Federal Open Market Committee pledged to buy $400 billion of long-term debt and cited risks to the economy, souring the earnings outlook for exporters and banks. BHP Billiton Ltd. (BHP), the world’s largest mining company, slumped 3.2 percent in Sydney and rival Rio Tinto Group sank 4.7 percent. Toyota Motor Corp., the world’s biggest carmaker, declined 1.9 percent in Tokyo, while South Korea’s Samsung Electronics Co. dropped 2.2 percent in Seoul. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 lender by market value, lost 2.4 percent. The MSCI Asia Pacific Index slumped 1.7 percent to 115.85 as of 9:33 a.m. in Tokyo. About eight stocks fell for each that advanced on the measure, which closed little changed yesterday. The gauge dropped in the previous two weeks amid concern Europe’s debt crisis is spreading and signs of slowing U.S. growth.
Japanese Stocks Decline as Fed Stimulus Plan Disappoints Investors (Source: Bloomberg)
Japanese stocks fell after the Federal Reserve’s plan to buy more long-term bonds failed to lift investor confidence amid what the central bank called “significant downside risks” to the economic growth outlook. Toyota Motor Corp. (7203), the world’s biggest carmaker, slid 2 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender by market value, fell 2.1 percent after Moody’s Investors Service cut the credit ratings on three major U.S. banks. The Nikkei 225 (NKY) Stock Average declined 1.2 percent to 8,635.18 as of 9:03 a.m. in Tokyo after the Federal Open Market Committee yesterday announced a plan to support the world’s biggest economy by buying $400 billion in long-term debt. The broader Topix index dropped 1.1 percent to 748.57. Japan’s stock market will be closed tomorrow for a public holiday.
Japanese, Australian Stock Futures Fall on Fed’s Bond Buying (Source: Bloomberg)
Japanese and Australian stock futures fell after the Federal Open Market Committee pledged to buy $400 billion of long-term debt and cited risks to the economic outlook, damping the earnings prospects for Asian exporters. American depositary receipts of Toyota Motor Corp. (7203), the world’s biggest carmaker that gets 28 percent of its sale in the U.S. and Canada, slid 2.1 percent from the closing share price in Tokyo. Those of Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender by market value, fell 3.9 percent after Moody’s Investors Service cut its ratings on three major U.S. banks. ADRs of Woodside Petroleum Ltd. (WPL), Australia’s No. 2 oil and gas producer, dropped 1.3 percent after crude prices fell. Futures on Japan’s Nikkei 225 (NKY) Stock Average expiring in December closed at 8,530 in Chicago yesterday, down from 8,680 in Osaka, Japan. They were bid in the pre-market at 8,580 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index declined 2.6 percent today.
New Zealand’s NZX 50 Index lost 0.6 percent in Wellington.
European Stocks Retreat on Greek Talks; Peugeot, Volkswagen Lead Decline (Source: Bloomberg)
European stocks retreated as officials said they plan to return to Athens next week after three days of consultations failed to produce a solution to the country’s debt crisis. PSA Peugeot Citroen and Volkswagen AG (VOW) led a decline in automakers. BHP Billiton Ltd. (BHP) and Rio Tinto Group, the world’s largest mining companies, fell with metal prices. Deutsche Lufthansa AG (LHA) lost 5 percent as Deutsche Bank AG (DBK) downgraded Europe’s second-biggest airline. Stada Arzneimittel AG (SAZ) slumped 19 percent for the biggest drop in three years. The benchmark Stoxx Europe 600 Index sank 1.7 percent to 225.33 at the 4:30 p.m. close in London. The gauge rose for the fifth day in six yesterday as Greece described its debt talks with the European Union and the International Monetary Fund as “productive” and investors speculated the Federal Reserve will provide more stimulus at today’s meeting.
The Stoxx 600 has still fallen 23 percent from this year’s peak on Feb. 17 amid concern the global economic recovery is at risk.
Emerging-Market Stocks Decline to a 14-Month Low as Fed Sees Economic Risk (Source: Bloomberg)
Emerging-market stocks fell to a 14-month low after the Federal Reserve said there are “downside risks” to the economic outlook and planned to replace much of the short-term debt in their portfolio with longer-term Treasuries. The MSCI Emerging Markets Index slipped 1.2 percent to 940.02 at 5:06 p.m. New York time, the lowest closing level since July 2010. Equities benchmarks in Brazil, Mexico, Chile, and Argentina declined. Russia’s Micex Index retreated 0.8 percent. Indonesia’s Jakarta Composite index slid for a third day as the nation’s domestic vehicle sales slowed in August. Hungary’s BUX index declined 1.3 percent. The U.S. central bank will buy $400 billion of bonds with maturities of six to 30 years while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting. “There are significant downside risks to the economic outlook, including strains in global financial markets,” the Fed statement said.
Fed Will Shift Holdings to Longer-Term Securities (Source: Bloomberg)
The Federal Reserve will replace $400 billion of short-term debt in its portfolio with longer- term Treasuries in an effort to further reduce borrowing costs and counter rising risks of a recession. The central bank will buy bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting. The action “should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the FOMC said. Chairman Ben S. Bernanke expanded use of unconventional monetary tools for a second straight meeting after job gains stalled and the government lowered its estimate of second- quarter growth. Yields on 30-year Treasuries fell below 3 percent for the first time since 2009 and U.S. stocks had their biggest drop in a month on the Fed’s plan, dubbed “Operation Twist” after a similar Fed action in 1961.
Sales of U.S. Existing Homes Increased More Than Forecast (Source: Bloomberg)
Sales of previously owned U.S. homes rose more than anticipated in August as investors scooped up distressed properties with cash. The 7.7 percent increase left purchases at a five-month high 5.03 million annual rate, the National Association of Realtors said today in Washington. The August pace compares with a peak of 7.08 million in 2005, before the housing boom turned into a subprime-mortgage bust that dragged the economy into an 18-month recession. “Housing’s been down for so long, we should take whatever good news we can get,” said Brian Jones, an economist at Societe Generale in New York, whose forecast was among the highest in the Bloomberg survey. “Interest rates are low and pricing is attractive and people are responding.”
Bernanke Battling Housing Collapse Shows Fed Has Few Tools to Heal Economy (Source: Bloomberg)
U.S. mortgage rates are the lowest in at least four decades, with a 30-year fixed loan available at 4.09 percent. That didn’t help Alexis Wolf buy a townhome in Beaverton, Oregon. “Unless you have family help, you’re stuck renting,” said Wolf, 26, a real estate broker who turned to relatives for a loan because she didn’t have the credit and employment history needed to qualify for a mortgage. Wolf’s experience illustrates the predicament for Federal Reserve policy makers as they end a two-day meeting today to consider ways to boost economic growth. Low interest rates, the traditional medicine for a flagging economy, aren’t helping housing, which since 1982 has aided every recovery except the current one.
BofA, Wells Fargo Downgraded by Moody’s (Source: Bloomberg)
Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) had long-term credit ratings downgraded by Moody’s Investors Service, which said U.S. support has become less likely if lenders get into financial trouble. Citigroup Inc. (C)’s short-term rating also was cut by Moody’s, which said today “there is an increased possibility that the government might allow a large financial institution to fail, taking the view that contagion could be limited.” Citigroup’s stand-alone credit has improved, Moody’s said in a statement, leading the service to confirm the bank’s long-term rating. The downgrade questions whether the largest banks will always be “too big to fail,” a status conferred in 2008 when they received government rescues to keep the financial system from collapsing. Lawmakers have since overhauled regulations to head off a repeat of the bailouts and ordered regulators to set up a system for seizing and dismantling banks that founder.
U.S. Stocks Drop as Fed Announces Bond Purchase Plan, Sees Economic Risks (Source: Bloomberg)
U.S. stocks slumped, giving the Standard & Poor’s 500 Index its biggest decline in a month, as the Federal Reserve announced plans to buy $400 billion of long- term debt and cited risks to the economic outlook. Caterpillar Inc. and Dow Chemical Co. fell more than 5.1 percent, pacing losses among companies most-tied to the economy. Financial shares in the S&P 500 slid 4.9 percent as a group, to a two-year low, as Moody’s Investors Service cut its ratings on Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. The Dow Jones Transportation Average slid 5.3 percent as railroad shares tumbled after two coal companies cut their forecasts. The S&P 500 fell 2.9 percent to 1,166.76 at 4 p.m. New York time. The benchmark gauge for American equities has dropped 4.1 percent in three days. The Dow Jones Industrial Average lost 283.82 points, or 2.5 percent, to 11,124.84 today.
China Faces Surge in ‘Hot Money’ Inflows on Market Turmoil, PBOC Data Show (Source: Bloomberg)
Turmoil in global financial markets may be spurring a surge in flows of speculative capital into China as investors bet on the nation’s growth and prospects for gains in the yuan. Financial institutions’ yuan positions, accumulated from purchases of foreign exchange by the central bank, had a net gain of 376.94 billion yuan ($59 billion) in August, 72 percent more than in July and the biggest increase in five months, central bank data showed today. Economists watch the numbers for signs of inflows of so-called hot money. Inflows of capital may complicate central bank efforts to tame inflation and limit the risk of asset bubbles in the real- estate market. With lenders’ reserve requirements already at record levels, the People’s Bank of China may rely on selling bills to soak up cash.
Greece Accelerates Cuts to Wages, Pensions (Source: Bloomberg)
Greek Prime Minister George Papandreou’s government said it will accelerate budget cuts, targeting civil servants’ wages and pensioners to keep emergency loans flowing and avoid default. Measures announced yesterday following two rounds of talks with the European Union and the International Monetary Fund include: a 20 percent cut in pensions of more than 1,200 euros ($1,650) a month, according to a government statement; pensions paid to those younger than 55 will be shaved by 40 percent for the amount exceeding 1,000 euros and wages will be lowered for 30,000 state employees. The policies were demanded by international lenders to ensure Greece reach deficit-reduction targets in a 110 billion- euro ($151 billion) bailout and receive a payment due next month.
Papandreou Pushes for Accelerated Cuts to Ensure Next Month’s Aid Package (Source: Bloomberg)
Greek Prime Minister George Papandreou convenes his Cabinet to press for accelerating budget cuts to ensure the next tranche of an international rescue package is delivered next month to stave off default. Today’s 11:30 a.m. meeting in Athens follows two days of telephone consultations between Finance Minister Evangelos Venizelos and representatives from the European Union and International Monetary Fund, which made “good progress,” the EU said. The meetings were intended to damp concerns that Greece may miss deficit-reduction targets required to receive rescue loans. The EU statement said a “full mission” will return to Athens next week after Venizelos’s talks in coming days at the IMF annual meeting in Washington.
Euro Advances After Greece Accelerates Spending Cuts to Avoid Debt Default (Source: Bloomberg)
The euro rose after Greek Prime Minister George Papandreou’s government said it will accelerate budget cuts, targeting civil servants’ wages and pensioners to keep emergency loans flowing and avoid default. The measures announced yesterday followed two rounds of talks with the European Union and the International Monetary Fund. European leaders are squabbling over the terms of a July 21 agreement for a second Greek rescue and the prospect that they will be forced to channel more money to keep Greece in the currency union. “My current base assumption is all the stuff in Europe will eventually work itself out,” said Mike Burrowes, a strategist at Bank of New Zealand Ltd. in Wellington. “We’ll probably look for euro to initially recover back to $1.3650.
Bank of England Policy Makers See Greater Stimulus as Increasingly Likely (Source: Bloomberg)
Bank of England officials said they may need to buy more bonds to bolster a faltering recovery after holding off adding stimulus this month in a decision that was “finely balanced.” Most policy makers said it was “increasingly probable that further asset purchases to loosen monetary conditions would become warranted at some point,” the minutes of the Monetary Policy Committee’s Sept. 8 decision said. “For some members, a continuation of the conditions seen over the past month would probably be sufficient to justify an expansion of the asset purchase program at a subsequent meeting.” The nine-member MPC, led by Mervyn King, voted 8-1 to maintain the size of the bond plan at 200 billion pounds ($313 billion) and were unanimous in keeping the benchmark rate at a record low of 0.5 percent.
U.K. Government Must Bring Forward Spending to Boost Economy, Huhne Says (Source: Bloomberg)
U.K. Energy Secretary Chris Huhne said the government should speed up capital spending to help the economy, after the International Monetary Fund said ministers may need to consider delaying some of their fiscal squeeze. “We’ve got to be creative and imaginative about bringing forward more spending,” Huhne told a fringe event last night at his Liberal Democrat party’s annual conference in Birmingham, central England. He said the option of “pump-priming” the economy by increasing expenditure is “blocked off to us” because of “the scale of our budget deficit.” Deputy Prime Minister Nick Clegg, the Liberal Democrat leader, said Sept. 14 the government was going to “unblock” 40 infrastructure projects in an effort to spur growth. He said the government wanted to “put its foot on the accelerator.”
IMF Sees 300 Billion-Euro Credit Risk to Europe Banks (Source: Bloomberg)
The European debt crisis has generated as much as 300 billion euros ($410 billion) in credit risk for European banks, the International Monetary Fund said, calling for capital injections to reassure investors and support lending. Political squabbling in Europe over ways to fight contagion and delays in implementing agreed measures are raising concern about the risk of government defaults, the IMF said. Banks, in turn face “funding challenges” because investors are concerned financial institutions will potentially show losses on government bonds holdings, and reliance by some on the European Central Bank for liquidity, it said. “A number of banks must raise capital to help ensure the confidence of their creditors and depositors,” the IMF wrote in its Global Financial Stability Report released today. “Without additional capital buffers, problems in accessing funding are likely to create deleveraging pressures at banks, which will force them to cut credit to the real economy.”
Harper Running Out of Economic Drivers as Carney Warns About Canada Trade (Source: Bloomberg)
Canadian Prime Minister Stephen Harper, who has overseen one of the developed world’s most robust economies during the global downturn, may be running out of drivers to sustain its growth. The world’s 10th-largest economy shrank in the second quarter as exports plunged. Bank of Canada Governor Mark Carney said yesterday trade will remain a “major source of weakness” as the U.S. faces its slowest recovery since the Great Depression. The IMF cut its growth forecast for Canada. “The risks to our economy remain largely external and are skewed to the downside,” Carney, 46, said in a speech in Saint John, New Brunswick.
Asian stocks fell, sending the regional benchmark index toward its lowest close in more than a year, after the U.S. Federal Open Market Committee pledged to buy $400 billion of long-term debt and cited risks to the economy, souring the earnings outlook for exporters and banks. BHP Billiton Ltd. (BHP), the world’s largest mining company, slumped 3.2 percent in Sydney and rival Rio Tinto Group sank 4.7 percent. Toyota Motor Corp., the world’s biggest carmaker, declined 1.9 percent in Tokyo, while South Korea’s Samsung Electronics Co. dropped 2.2 percent in Seoul. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 lender by market value, lost 2.4 percent. The MSCI Asia Pacific Index slumped 1.7 percent to 115.85 as of 9:33 a.m. in Tokyo. About eight stocks fell for each that advanced on the measure, which closed little changed yesterday. The gauge dropped in the previous two weeks amid concern Europe’s debt crisis is spreading and signs of slowing U.S. growth.
Japanese Stocks Decline as Fed Stimulus Plan Disappoints Investors (Source: Bloomberg)
Japanese stocks fell after the Federal Reserve’s plan to buy more long-term bonds failed to lift investor confidence amid what the central bank called “significant downside risks” to the economic growth outlook. Toyota Motor Corp. (7203), the world’s biggest carmaker, slid 2 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender by market value, fell 2.1 percent after Moody’s Investors Service cut the credit ratings on three major U.S. banks. The Nikkei 225 (NKY) Stock Average declined 1.2 percent to 8,635.18 as of 9:03 a.m. in Tokyo after the Federal Open Market Committee yesterday announced a plan to support the world’s biggest economy by buying $400 billion in long-term debt. The broader Topix index dropped 1.1 percent to 748.57. Japan’s stock market will be closed tomorrow for a public holiday.
Japanese, Australian Stock Futures Fall on Fed’s Bond Buying (Source: Bloomberg)
Japanese and Australian stock futures fell after the Federal Open Market Committee pledged to buy $400 billion of long-term debt and cited risks to the economic outlook, damping the earnings prospects for Asian exporters. American depositary receipts of Toyota Motor Corp. (7203), the world’s biggest carmaker that gets 28 percent of its sale in the U.S. and Canada, slid 2.1 percent from the closing share price in Tokyo. Those of Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender by market value, fell 3.9 percent after Moody’s Investors Service cut its ratings on three major U.S. banks. ADRs of Woodside Petroleum Ltd. (WPL), Australia’s No. 2 oil and gas producer, dropped 1.3 percent after crude prices fell. Futures on Japan’s Nikkei 225 (NKY) Stock Average expiring in December closed at 8,530 in Chicago yesterday, down from 8,680 in Osaka, Japan. They were bid in the pre-market at 8,580 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index declined 2.6 percent today.
New Zealand’s NZX 50 Index lost 0.6 percent in Wellington.
European Stocks Retreat on Greek Talks; Peugeot, Volkswagen Lead Decline (Source: Bloomberg)
European stocks retreated as officials said they plan to return to Athens next week after three days of consultations failed to produce a solution to the country’s debt crisis. PSA Peugeot Citroen and Volkswagen AG (VOW) led a decline in automakers. BHP Billiton Ltd. (BHP) and Rio Tinto Group, the world’s largest mining companies, fell with metal prices. Deutsche Lufthansa AG (LHA) lost 5 percent as Deutsche Bank AG (DBK) downgraded Europe’s second-biggest airline. Stada Arzneimittel AG (SAZ) slumped 19 percent for the biggest drop in three years. The benchmark Stoxx Europe 600 Index sank 1.7 percent to 225.33 at the 4:30 p.m. close in London. The gauge rose for the fifth day in six yesterday as Greece described its debt talks with the European Union and the International Monetary Fund as “productive” and investors speculated the Federal Reserve will provide more stimulus at today’s meeting.
The Stoxx 600 has still fallen 23 percent from this year’s peak on Feb. 17 amid concern the global economic recovery is at risk.
Emerging-Market Stocks Decline to a 14-Month Low as Fed Sees Economic Risk (Source: Bloomberg)
Emerging-market stocks fell to a 14-month low after the Federal Reserve said there are “downside risks” to the economic outlook and planned to replace much of the short-term debt in their portfolio with longer-term Treasuries. The MSCI Emerging Markets Index slipped 1.2 percent to 940.02 at 5:06 p.m. New York time, the lowest closing level since July 2010. Equities benchmarks in Brazil, Mexico, Chile, and Argentina declined. Russia’s Micex Index retreated 0.8 percent. Indonesia’s Jakarta Composite index slid for a third day as the nation’s domestic vehicle sales slowed in August. Hungary’s BUX index declined 1.3 percent. The U.S. central bank will buy $400 billion of bonds with maturities of six to 30 years while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting. “There are significant downside risks to the economic outlook, including strains in global financial markets,” the Fed statement said.
Fed Will Shift Holdings to Longer-Term Securities (Source: Bloomberg)
The Federal Reserve will replace $400 billion of short-term debt in its portfolio with longer- term Treasuries in an effort to further reduce borrowing costs and counter rising risks of a recession. The central bank will buy bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting. The action “should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the FOMC said. Chairman Ben S. Bernanke expanded use of unconventional monetary tools for a second straight meeting after job gains stalled and the government lowered its estimate of second- quarter growth. Yields on 30-year Treasuries fell below 3 percent for the first time since 2009 and U.S. stocks had their biggest drop in a month on the Fed’s plan, dubbed “Operation Twist” after a similar Fed action in 1961.
Sales of U.S. Existing Homes Increased More Than Forecast (Source: Bloomberg)
Sales of previously owned U.S. homes rose more than anticipated in August as investors scooped up distressed properties with cash. The 7.7 percent increase left purchases at a five-month high 5.03 million annual rate, the National Association of Realtors said today in Washington. The August pace compares with a peak of 7.08 million in 2005, before the housing boom turned into a subprime-mortgage bust that dragged the economy into an 18-month recession. “Housing’s been down for so long, we should take whatever good news we can get,” said Brian Jones, an economist at Societe Generale in New York, whose forecast was among the highest in the Bloomberg survey. “Interest rates are low and pricing is attractive and people are responding.”
Bernanke Battling Housing Collapse Shows Fed Has Few Tools to Heal Economy (Source: Bloomberg)
U.S. mortgage rates are the lowest in at least four decades, with a 30-year fixed loan available at 4.09 percent. That didn’t help Alexis Wolf buy a townhome in Beaverton, Oregon. “Unless you have family help, you’re stuck renting,” said Wolf, 26, a real estate broker who turned to relatives for a loan because she didn’t have the credit and employment history needed to qualify for a mortgage. Wolf’s experience illustrates the predicament for Federal Reserve policy makers as they end a two-day meeting today to consider ways to boost economic growth. Low interest rates, the traditional medicine for a flagging economy, aren’t helping housing, which since 1982 has aided every recovery except the current one.
BofA, Wells Fargo Downgraded by Moody’s (Source: Bloomberg)
Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) had long-term credit ratings downgraded by Moody’s Investors Service, which said U.S. support has become less likely if lenders get into financial trouble. Citigroup Inc. (C)’s short-term rating also was cut by Moody’s, which said today “there is an increased possibility that the government might allow a large financial institution to fail, taking the view that contagion could be limited.” Citigroup’s stand-alone credit has improved, Moody’s said in a statement, leading the service to confirm the bank’s long-term rating. The downgrade questions whether the largest banks will always be “too big to fail,” a status conferred in 2008 when they received government rescues to keep the financial system from collapsing. Lawmakers have since overhauled regulations to head off a repeat of the bailouts and ordered regulators to set up a system for seizing and dismantling banks that founder.
U.S. Stocks Drop as Fed Announces Bond Purchase Plan, Sees Economic Risks (Source: Bloomberg)
U.S. stocks slumped, giving the Standard & Poor’s 500 Index its biggest decline in a month, as the Federal Reserve announced plans to buy $400 billion of long- term debt and cited risks to the economic outlook. Caterpillar Inc. and Dow Chemical Co. fell more than 5.1 percent, pacing losses among companies most-tied to the economy. Financial shares in the S&P 500 slid 4.9 percent as a group, to a two-year low, as Moody’s Investors Service cut its ratings on Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. The Dow Jones Transportation Average slid 5.3 percent as railroad shares tumbled after two coal companies cut their forecasts. The S&P 500 fell 2.9 percent to 1,166.76 at 4 p.m. New York time. The benchmark gauge for American equities has dropped 4.1 percent in three days. The Dow Jones Industrial Average lost 283.82 points, or 2.5 percent, to 11,124.84 today.
China Faces Surge in ‘Hot Money’ Inflows on Market Turmoil, PBOC Data Show (Source: Bloomberg)
Turmoil in global financial markets may be spurring a surge in flows of speculative capital into China as investors bet on the nation’s growth and prospects for gains in the yuan. Financial institutions’ yuan positions, accumulated from purchases of foreign exchange by the central bank, had a net gain of 376.94 billion yuan ($59 billion) in August, 72 percent more than in July and the biggest increase in five months, central bank data showed today. Economists watch the numbers for signs of inflows of so-called hot money. Inflows of capital may complicate central bank efforts to tame inflation and limit the risk of asset bubbles in the real- estate market. With lenders’ reserve requirements already at record levels, the People’s Bank of China may rely on selling bills to soak up cash.
Greece Accelerates Cuts to Wages, Pensions (Source: Bloomberg)
Greek Prime Minister George Papandreou’s government said it will accelerate budget cuts, targeting civil servants’ wages and pensioners to keep emergency loans flowing and avoid default. Measures announced yesterday following two rounds of talks with the European Union and the International Monetary Fund include: a 20 percent cut in pensions of more than 1,200 euros ($1,650) a month, according to a government statement; pensions paid to those younger than 55 will be shaved by 40 percent for the amount exceeding 1,000 euros and wages will be lowered for 30,000 state employees. The policies were demanded by international lenders to ensure Greece reach deficit-reduction targets in a 110 billion- euro ($151 billion) bailout and receive a payment due next month.
Papandreou Pushes for Accelerated Cuts to Ensure Next Month’s Aid Package (Source: Bloomberg)
Greek Prime Minister George Papandreou convenes his Cabinet to press for accelerating budget cuts to ensure the next tranche of an international rescue package is delivered next month to stave off default. Today’s 11:30 a.m. meeting in Athens follows two days of telephone consultations between Finance Minister Evangelos Venizelos and representatives from the European Union and International Monetary Fund, which made “good progress,” the EU said. The meetings were intended to damp concerns that Greece may miss deficit-reduction targets required to receive rescue loans. The EU statement said a “full mission” will return to Athens next week after Venizelos’s talks in coming days at the IMF annual meeting in Washington.
Euro Advances After Greece Accelerates Spending Cuts to Avoid Debt Default (Source: Bloomberg)
The euro rose after Greek Prime Minister George Papandreou’s government said it will accelerate budget cuts, targeting civil servants’ wages and pensioners to keep emergency loans flowing and avoid default. The measures announced yesterday followed two rounds of talks with the European Union and the International Monetary Fund. European leaders are squabbling over the terms of a July 21 agreement for a second Greek rescue and the prospect that they will be forced to channel more money to keep Greece in the currency union. “My current base assumption is all the stuff in Europe will eventually work itself out,” said Mike Burrowes, a strategist at Bank of New Zealand Ltd. in Wellington. “We’ll probably look for euro to initially recover back to $1.3650.
Bank of England Policy Makers See Greater Stimulus as Increasingly Likely (Source: Bloomberg)
Bank of England officials said they may need to buy more bonds to bolster a faltering recovery after holding off adding stimulus this month in a decision that was “finely balanced.” Most policy makers said it was “increasingly probable that further asset purchases to loosen monetary conditions would become warranted at some point,” the minutes of the Monetary Policy Committee’s Sept. 8 decision said. “For some members, a continuation of the conditions seen over the past month would probably be sufficient to justify an expansion of the asset purchase program at a subsequent meeting.” The nine-member MPC, led by Mervyn King, voted 8-1 to maintain the size of the bond plan at 200 billion pounds ($313 billion) and were unanimous in keeping the benchmark rate at a record low of 0.5 percent.
U.K. Government Must Bring Forward Spending to Boost Economy, Huhne Says (Source: Bloomberg)
U.K. Energy Secretary Chris Huhne said the government should speed up capital spending to help the economy, after the International Monetary Fund said ministers may need to consider delaying some of their fiscal squeeze. “We’ve got to be creative and imaginative about bringing forward more spending,” Huhne told a fringe event last night at his Liberal Democrat party’s annual conference in Birmingham, central England. He said the option of “pump-priming” the economy by increasing expenditure is “blocked off to us” because of “the scale of our budget deficit.” Deputy Prime Minister Nick Clegg, the Liberal Democrat leader, said Sept. 14 the government was going to “unblock” 40 infrastructure projects in an effort to spur growth. He said the government wanted to “put its foot on the accelerator.”
IMF Sees 300 Billion-Euro Credit Risk to Europe Banks (Source: Bloomberg)
The European debt crisis has generated as much as 300 billion euros ($410 billion) in credit risk for European banks, the International Monetary Fund said, calling for capital injections to reassure investors and support lending. Political squabbling in Europe over ways to fight contagion and delays in implementing agreed measures are raising concern about the risk of government defaults, the IMF said. Banks, in turn face “funding challenges” because investors are concerned financial institutions will potentially show losses on government bonds holdings, and reliance by some on the European Central Bank for liquidity, it said. “A number of banks must raise capital to help ensure the confidence of their creditors and depositors,” the IMF wrote in its Global Financial Stability Report released today. “Without additional capital buffers, problems in accessing funding are likely to create deleveraging pressures at banks, which will force them to cut credit to the real economy.”
Harper Running Out of Economic Drivers as Carney Warns About Canada Trade (Source: Bloomberg)
Canadian Prime Minister Stephen Harper, who has overseen one of the developed world’s most robust economies during the global downturn, may be running out of drivers to sustain its growth. The world’s 10th-largest economy shrank in the second quarter as exports plunged. Bank of Canada Governor Mark Carney said yesterday trade will remain a “major source of weakness” as the U.S. faces its slowest recovery since the Great Depression. The IMF cut its growth forecast for Canada. “The risks to our economy remain largely external and are skewed to the downside,” Carney, 46, said in a speech in Saint John, New Brunswick.
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