Asian Stocks Rise for Third Day on Global Outlook; Glitch Hits Tokyo Trade (Source: Bloomberg)
Asian stocks advanced for a third day, with the regional benchmark index heading for its highest close in three months, as manufacturing gained in the U.S. and Europe, boosting confidence the global economy is recovering. LG Electronics Inc. (066570), the world’s third-largest maker of mobile phones, climbed 5.9 percent in Seoul. James Hardie Industries SE, the building materials supplier that counts the U.S. as its top market, jumped 4.9 percent in Sydney as construction spending in America rose in December at the fastest pace in four months. Trading in 241 stocks including Sony Corp and Hitachi Ltd. was halted on the Tokyo Stock Exchange due to a technical glitch, bourse spokeswoman Yukari Hozumi said by phone.
“We got more confirmation that business confidence in the U.S. and Europe is improving” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. “The European debt crisis is in a temporary lull, so stocks sensitive to the economy will have a chance to gain.”
Japan Stocks Rise as Manufacturing Gains in U.S., Europe Boost Confidence (Source: Bloomberg)
Japanese stocks rose, pushing the Nikkei 225 Stock Average toward a three-day gain, as expanding manufacturing in the U.S. and Europe boosted confidence in the global economic recovery. Canon Inc. (7751), a camera maker that gets 80 percent of its sales overseas, rose 0.8 percent. Honda Motor Co., Japan’s second-largest carmaker by revenue, gained 2.9 percent after a jump in U.S. sales following an eight-month slump. Nomura Holdings Inc. (8604) soared 6.8 percent after the brokerage posted an unexpected quarterly profit on asset sales even as trading commissions fell. “We have more confirmation that business confidence in the U.S. and Europe is improving,” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. “The European debt crisis is in a temporary lull, so stocks sensitive to the global economy will have a chance to gain.”
U.S. Stocks Advance Amid Optimism About Global Manufacturing (Source: Bloomberg)
U.S. stocks advanced, snapping a four-day decline in the Standard & Poor’s 500 Index, amid signs that manufacturing across the world is strengthening. Financial (S5FINL) and industrial shares in the S&P 500 rose at least 1.1 percent to lead gains among 10 groups. Morgan Stanley and Bank of America Corp. added more than 3.2 percent. Whirlpool (WHR) Corp. surged 13 percent as the appliance maker projected earnings that beat forecasts. Technology companies in the benchmark index rallied to an 11 year-high. Broadcom (BRCM) Corp. jumped 8.1 percent as it forecast sales that may top estimates. The S&P 500 increased 0.9 percent to 1,324.09 at 4 p.m. New York time, following the biggest January advance in 15 years. The Dow Jones Industrial Average rallied 83.55 points, or 0.7 percent, to 12,716.46, trimming an earlier 152-point gain that sent it above its highest close since May. The Russell 2000 Index of small companies jumped 2.1 percent to 809.66.
European Stocks Rise to a Six-Month High as Manufacturing Gauges Increase (Source: Bloomberg)
European (SXXP) stocks advanced to a six- month high, with the Stoxx Europe 600 Index extending its best start to a year since 1998, as gauges of manufacturing increased from America to the euro area to China. Banks and carmakers led gains. ICAP Plc (IAP) jumped 7.7 percent after saying annual pretax profit will be at the “upper end” of the range of analysts’ estimates. RWE AG (RWE) climbed 4.9 percent after Morgan Stanley added the stock to its best ideas list. The Stoxx 600 rose 2 percent to 259.51 at the close in London, its highest level since August. The benchmark gauge rallied 4 percent last month, the biggest January gain since 1998, as the U.S. economy maintained its recovery and speculation grew that European (SXXP) policy makers will contain the region’s debt crisis.
Global Strategists Abandoning Bearish Views After Missing Rally (Source: Bloomberg)
Strategists at the biggest banks are capitulating on their bearish forecasts after the best start to a year for global stocks since 1994 and gains of more than 7 percent in emerging-market currencies. Just two weeks after saying that investors should “remain cautious,” Larry Hatheway, the chief economist at UBS AG (UBSN), raised his recommendations on global shares and high-yield bonds in a Jan. 23 note to customers entitled, “Wrong, but not too late.” Royal Bank of Scotland Group Plc (RBS), and Benoit Anne, the global head of emerging-markets strategy at Societe Generale (GLE) SA, said their estimates for developing nations were proven wrong.
The MSCI All-Country World Index (MXWD) climbed 5.7 percent in January, surprising strategists at Bank of America Corp. (BAC), Goldman Sachs Group Inc. (GS) and Barclays Plc (BARC) who had forecast first-half losses because of Europe’s debt crisis. JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C), which predicted the rally in stocks, say it will continue as the U.S. housing market rebounds and China eases lending restrictions to bolster economic growth.
Dollar at 3-mth lows on yen, euro under pressure
TOKYO, Feb 1 (Reuters) - The dollar hovered at three-month lows against the yen and looked poised to lose ground for a fifth straight day, pressured by the Federal Reserve's pledge last week that it would keep interest rates near zero at least until late 2014.
"The Fed's decision is being slowly priced in the market, and it seems the dollar may stay pressured around the current levels at least until Friday's U.S. jobs data," said Koji Fukaya, chief currency analyst at Credit Suisse in Tokyo.
Manufacturing Gains in U.S. Bolster Outlook for Global Expansion: Economy (Source: Bloomberg)
Manufacturing in the U.S. grew in January at the fastest pace in seven months, adding to signs of a global pickup from Germany to China. The Institute for Supply Management’s index climbed to 54.1, from 53.1 in December, the Tempe, Arizona-based group’s report showed today. Figures greater than 50 signal expansion. Other reports showed U.S. construction spending increased at the fastest pace in four months and companies added 170,000 workers to payrolls in January. Stocks rose on optimism the factory reports show the world economy is withstanding fallout from Europe’s debt crisis. Production, led by inventory rebuilding at the end of 2011, is poised to keep expanding in the U.S. as the need to update equipment drives orders at companies like Caterpillar Inc. (CAT) and demand for cars rises.
Fed Bank Presidents Reveal Assets From Ranchland to Inflation-Linked Bonds (Source: Bloomberg)
Federal Reserve regional bank presidents revealed unprecedented details about their personal wealth, disclosing Citigroup Inc. (C) shares bought by accident and ownership of a Missouri farm and Texas ranchland. The regional bank chiefs, who manage Fed operations across the country ranging from bank supervision to emergency lending, disclosed the documents yesterday in response to requests from Bloomberg News under the Freedom of Information Act. The Fed banks said they weren’t subject to the terms of the act, even as they responded to the requests. The 12 regional banks and their presidents aren’t held to the same level of public scrutiny as the Washington-based Federal Reserve Board and its governors. While Chairman Ben S. Bernanke and Fed governors disclose information about their finances and are subject to the FOIA, the regional banks don’t routinely make personal financial information public.
Companies in U.S. Added 170,000 Workers to Payrolls in January, ADP Says (Source: Bloomberg)
Companies added 170,000 workers in January, reflecting job gains in services and at small businesses, according to a private report based on payrolls. The increase was less than forecast and followed a revised 292,000 rise the prior month that was smaller than previously reported, the report from the Roseland, New Jersey-based ADP Employer Services showed today. The median estimate in a Bloomberg News survey of economists called for an advance of 182,000. “The job market continues to grow at a moderate pace,” Jonathan Basile, a senior economist at Credit Suisse in New York, said before the report. “We’re on a gradually improving path for the labor market.”
Negative Treasury Bill Auction Yields Would Avoid ‘Grab-a-Thon,’ CRT Says (Source: Bloomberg)
Letting investors buy short-term bills with negative yields at auction would make the market more efficient, according to CRT Capital Group LLC. The Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association unanimously recommended that the government allow for its auctions of bills to price at negative yields “as soon as logistically practical,” according to the group’s report yesterday to Treasury Secretary Timothy F. Geithner, released today. Investors bid a record 9.07 times the $30 billion in four-week bills sold by the Treasury Department on Dec. 20 at zero yield in one of 12 auctions since the beginning of September at which investors paid the full face value to own the shortest-maturity U.S. government debt. The average ratio of bids to debt sold, known as the bid-to-cover ratio, was 6.01 at the past 10 offerings, with the yield averaging 0.011 percent.
Treasuries Decline on Speculation U.S. Reports Will Show Jobs Improvement (Source: Bloomberg)
Treasuries fell for a second day before reports today and tomorrow that economist said will show U.S. employment grew in January. Government securities extended losses from yesterday in New York when industry figures showed manufacturing expanded in January at the fastest pace since June, crimping demand for the safety of sovereign debt. Ten-year yields rose two basis points to 1.85 percent as of 9:34 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2 percent security due in November 2021 fell 5/32, or $1.56 per $1,000 face amount, to 101 3/8. The yield increased three basis points, or 0.03 percentage point, yesterday. It is 18 basis points away from the record low set in September.
Obama Plans Assistance for Refinancing (Source: Bloomberg)
President Barack Obama announced a package of proposals designed to jolt the housing market, his latest effort to reignite the economy after four years of foreclosures and falling home prices. “This housing crisis struck right at the heart of what it means to be middle class in America: our homes,” Obama said in a speech in the Washington suburb of Falls Church, Virginia. “We need to do everything in our power to repair the damage and make responsible families whole.” The president said his plan would make it easier for homeowners to refinance their mortgages into current low interest rates, which are now below 4 percent. Borrowers, even those who owe more than their homes are worth, would be able to refinance into loans guaranteed by the Federal Housing Administration.
Construction Spending in U.S. Climbs Most in Four Months in Stability Sign (Source: Bloomberg)
Construction spending in the U.S. rose in December at the fastest pace in four months, reflecting broad- based gains that signal the industry is stabilizing. Building outlays increased 1.5 percent, the biggest gain since August, Commerce Department figures showed today in Washington. The median estimate of 51 economists in a Bloomberg survey called for a 0.5 percent rise. A housing market that is gaining some steam as builders begin apartment projects may breathe life into the industry that’s struggled since triggering the recession in 2007. At the same time, decreased spending by the government may temper progress in construction as a whole.
Dollar Falls for Second Day Versus Euro on Stocks Rally, Before Jobs Data (Source: Bloomberg)
The dollar fell against the euro the euro for a second day as Asian stocks extended a global rally, damping demand for haven currencies. The yen maintained a decline from yesterday versus the 17- nation currency before U.S. data that economists said will show fewer Americans filed for jobless benefits, adding to evidence that the world’s largest economy is picking up. A gauge of volatility for the yen climbed to the highest this year amid speculation Japan’s government will intervene in the foreign- exchange market. “Risk appetite is fairly positive at the moment, and this could continue for a couple of weeks,” said Derek Mumford, a director in Sydney at Rochford Capital, a currency-risk management company. “Typical safe-haven currencies have taken a step back now,” he said, referring to the dollar and yen.
Facebook Files to Raise $5B in Biggest Internet IPO (Source: Bloomberg)
Facebook Inc. (FB), the social-networking website that in eight years changed the way the world communicates, filed to raise $5 billion in the largest Internet initial public offering on record. Facebook, whose meteoric rise spawned an Oscar-winning film and captivated Wall Street, today named Morgan Stanley as the lead underwriter on the IPO, while reporting a 24-fold increase in sales over the past four years to $3.71 billion in 2011. The planned IPO dwarfs Google Inc. (GOOG)’s 2004 offering and tests whether social-networking providers deserve valuations that surpass such established companies as International Business Machines Corp. (IBM) and Procter & Gamble Co. The Menlo Park, California-based company is considering a valuation of $75 billion to $100 billion, two people with knowledge of the matter said last week.
China’s Manufacturing Industry Holds Up Against Global Slowdown: Economy (Source: Bloomberg)
Chinese manufacturing indexes rose in January as the world’s second-biggest economy withstood weaker exports driven by Europe’s debt crisis and a government-induced property slowdown. The official purchasing managers’ index increased to 50.5 from 50.3 in December, exceeding the median estimate in a Bloomberg News survey for a reading below the 50 level that divides expansion from contraction. The data may have been distorted by a weeklong holiday. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 48.8. India’s manufacturing grew at the fastest pace in eight months. Premier Wen Jiabao yesterday reiterated his government will “fine-tune” economic policies as needed after the central bank held off on a reduction in bank-reserve requirements that some analysts had forecast for January.
Indexes for export orders, imports and employment in the official PMI showed a deeper decline, underscoring an International Monetary Fund warning last week that the euro area’s crisis could trigger another global recession.
Hong Kong Homes Face 25% Drop in Year of the Dragon: Mortgages (Source: Bloomberg)
The Year of the Dragon, representing wealth and power in China, is shaping up to be the opposite for the world’s costliest housing market, Hong Kong. Mortgages (HKMGLEND) that need to be insured by the government because of risk experienced the steepest plunge in six years in 2011, a sign the biggest home price decline since the global credit crisis is accelerating. Property prices that have slid 6 percent since June may fall as much as 25 percent by 2013, estimates Andrew Lawrence of Barclays Capital, who predicted the initial slide in April. Asian real estate markets from Singapore to Beijing to Mumbai are stalling or have started declining as governments seek to curb the type of housing bubble that brought down the U.S. economy. In Hong Kong, rising borrowing costs, extra transaction taxes and higher down-payment requirements imposed by the government have fueled the slump.
ECB Plan for Loans as Collateral Said to Be Avoided by Some Euro Members (Source: Bloomberg)
The European Central Bank’s plan to accept more bank loans as collateral may not be used by all euro-region nations, threatening to fragment the rules applying to bank funding operations, said two euro-area officials with knowledge of the discussions. The initiative is likely to be implemented on a voluntary basis by national central banks and several of them may opt out, said the officials, who declined to be identified because the information is confidential. Germany’s Bundesbank has indicated it may be among those to shun the measure, arguing the country’s banks don’t need to borrow more from the ECB. An ECB spokesman declined to comment. “It contradicts the idea that all banks are treated equally in the euro area,” said Klaus Baader, co-head of economic research at Societe Generale SA in London. “It creates a two-class society. Central banks that take part are therefore identifying themselves as ones that are dealing with a weak banking system.”
Manufacturing Output in U.K. Unexpectedly Returns to Growth After Declines (Source: Bloomberg)
A U.K. manufacturing index jumped to an eight-month high in January and unexpectedly returned to growth after a quarter of contraction as production rebounded. The factory gauge, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, rose to 52.1 from a revised 49.7 in December, Markit said in a report on its website today. The median forecast of 28 economists in a Bloomberg News survey was for a reading of 50, the level that divides expansion from contraction. Separate reports today showed manufacturing indexes for Europe, China and India also rose in January. Still, the debt crisis in the euro area, the U.K.’s biggest export market, has dimmed the outlook for manufacturers, and Bank of England Governor Mervyn King said last week that policy makers can increase stimulus again if needed to aid the economy.
Spain Said to Plan to Buy CoCo Bonds From Banks as Part of Industry Revamp (Source: Bloomberg)
Spain will offer to inject funds into lenders that agree to merge as part of the government’s plan to overhaul the industry and shepherd weaker banks into tie-ups, said a person familiar with the process. The state will buy contingent convertible bonds, or CoCos, which convert to equity when banks’ capital ratio slips below a certain level, yielding 8 percent, said the person, who declined to be named because the plan hasn’t been made public. Spain, which pays about 5 percent to borrow for 10 years, will issue debt to buy the securities, even though the plan will have no impact on the budget deficit, the person said. Lenders that agree to merge will also have longer to apply new provisioning rules that the government will announce on Feb. 3 as part of the overhaul, the person said.
Fernandez Curbing Imports Leaves Argentines Searching in Vain for Fridges (Source: Bloomberg)
Retiree Teresa Teffer searched branches of Argentina’s leading appliance retailers for a fridge and oven she’d seen on display less than two months earlier. She gave up after finding neither. “They have nothing to offer me,” the 71-year-old said as she left an SACI Falabella (FALAB) store in Buenos Aires’s Alto Avellaneda shopping mall. “There are only a couple of lesser- known brands. The government is forcing me to buy what it wants and not what I want.” Consumers face fewer choices in everything from blenders to computer parts as President Cristina Fernandez de Kirchner curbs imports to shore up a dwindling trade surplus and protect manufacturers whose competitiveness is suffering from a peso that’s not weakening fast enough to offset inflation. The restrictions forced automaker Fiat SpA (F)’s local unit to suspend production this month and prompted Brazil’s Trade Minister Fernando Pimentel to say that neighboring Argentina is a “permanent problem.”
Thursday, February 2, 2012
20120202 1018 Global Commodities Related News.
Corn (Source CME)
US corn futures ended higher, buoyed by spillover support from wheat futures. Corn was also buoyed by broader based buying associated with weakness in the U.S. dollar, analysts say. Uncertainty surrounding the amount of damage South American crops incurred from hot, dry conditions are keeping prices underpinned with firm cash prices aiding the positive theme as well, analyst add. CBOT March corn ended up 3c at $6.42/bushel.
Wheat (Source CME)
US wheat futures ended higher, rallying to an over 4 month high for the second consecutive day on worries about freeze damage to European wheat and Russia curbing exports. Investors continued to favor buying wheat, as the uncertainty about lost production from winterkill in the Black Sea region and Europe as well the potential increased export demand from reduced Russian exports sparked buying, analyst say. Added support was drawn from weakness in the U.S. dollar, a feature generating broader based commodity gains. CBOT March wheat ended up 8 1/4c to $6.74 1/4/bushel, March KCBT wheat ended up 7c at $7.22 1/2, and March MGEX wheat ended up 9c at $8.36 3/4.
Rice (Source CME)
US rice futures tumbled for the second straight day, succumbing to speculative selling. The market is under pressure from lagging export demand, with chart based selling accelerating losses once futures dipped below recent lows, analysts say CBOT March rice ended down 26c at $13.74/hundredweight.
GRAINS-U.S. wheat at 4-1/2 month top on Russia export worries
NEW DELHI, Feb 1 (Reuters) - U.S. wheat climbed to a four-and-half month top rising for a second straight session on expectations that Russia, the world's third-largest supplier, was likely to curb exports.
"Prices have gone up because Russia has said that there could be restrictions on wheat exports," said Lynette Tan, analyst with Phillip Futures in Singapore.
Russia govt to determine grain export cap Feb 2
MOSCOW/TAMBOV, Russia, Jan 31 (Reuters) - Russia's government will determine on Thursday how much grain can be exported during this crop year before it considers imposing a protective duty to keep grain in the country, Deputy Prime Minister Viktor Zubkov told Reuters.
"The day after tomorrow I will hold a meeting. We will decide and I will give some signals," Zubkov said in response to a question about the level of export which could trigger the duty.
Mexico lowers corn harvest forecast due to drought
MEXICO CITY, Jan 31 (Reuters) - Mexico's corn harvest will likely be smaller than expected this year, after coming in below expectations last year, due to a devastating drought, Agriculture Minister Francisco Mayorga said on Tuesday.
The corn harvest is now expected to total 20 million tonnes of white corn and 1.8 million tonnes of yellow corn in 2012, compared with the 25 million tonnes estimated before the effects of the dry weather were fully known.
Tight Farmer Holding Pushes Cash Corn Basis (Source CME)
Farmer sales of U.S. corn are not keeping up with relative needs of the spot market, pushing basis levels to record levels for this time of year. Strong prices for corn futures are not loosening the tight grip farmers have on their stored supplies, as they remain reluctant sellers of inventories. "The spot cash market for corn is artificially tight, as we know there is plenty of corn out there in the middle of the marketing year in January," said Darrel Good, agricultural economist at the University of Illinois. Farmers believe the big break in price since August has left corn undervalued, and with a decent price available for storing corn, farmers are not motivated sellers at this point, Good said. Only a trickle is coming out of on-farm storage bins keeping available nearby supplies tight as farmers are optimistic prices have further to rise. Farmers are also disappointed with cash prices not improving since the harvest.
The average cash price for corn from Sept. 1 to the end of November in St. Louis was $6.61 1/4 a bushel. Current St. Louis prices are trading near $6.60, still cheaper than the average bid at harvest. "Farmers not pressed for cash are not inspired to sell at a price below what they passed up in the fall," said Dave Marshall, an independent marketing advisor for farmers in southern Illinois. Most producers have plenty of cash from lucrative sales last fall and during the early winter, so there is generally no urgent need for cash flow at this point. With the low interest returns available from bank deposits, its a better investment for farmers to hold onto supplies, said Kim Craig, a merchandiser for Bell Enterprises, a privately owned group of grain elevators in Illinois.
Indonesia To Review India Rice Contracts On Delivery Delay (Source CME)
Indonesia will review contracts with Indian rice exporters who are seeking more time to deliver cargoes citing congestion at ports and bottlenecks in procuring grain from millers, trading executives and a Jakarta-based official said. "We will be reviewing the delivery schedule for cargoes from India, to decide whether any additional time needs to be given or impose a penalty for delayed shipments," state-run procurement agency Bulog's chief executive Sutarto Alimoeso told Dow Jones Newswires. Indonesia, which was the top importer in 2011, traditionally buys from Thailand and Vietnam. For the first time in several years, Bulog locked in a deal for 250,000 metric tons of Indian rice on Nov. 15 for delivery by mid-February. However, with two weeks to go, less than 100,000 tons have been shipped out and around 31,000 tons delivered, according to estimates of traders, port officials and cargo surveyors. Another 36,700 tons are being loaded and ships for loading 35,000 tons are waiting for berth at Indian ports.
"Due to infrastructural bottlenecks, we have sought two more weeks to complete deliveries," said Prem Garg, managing director of Shri Lal Mahal Ltd., which has a 100,000-ton contract with Bulog. Indonesia has also bought 100,000 tons from Amira Foods and 50,000 tons from Emmsons International. "Apart from a small cargo of 5,000 tons, all our orders from Bulog have been shipped out or are under loading and will be completed soon," an Emmsons executive said. An executive at Amira Foods didn't give details of shipments but Bulog officials said they haven't received any cargo from the company and only a ship with 6,000 tons is on high seas. Many Indonesian ports are difficult to access and arrangements had to be made for smaller vessels to deliver cargoes to Bulog, an Indian trading executive involved in the deals said. He added that Indian millers have also hiked the prices of 15% brokens due to the large Indonesian order.
Alimoeso said the government had given Bulog licenses to complete all imports by end-February and the agency had asked Indian exporters to deliver shipments by Feb. 15. Some shipments from Thailand are also pending but they will likely be completed this month, he said. Bulog has signed a memorandum of understanding with Myanmar Rice Industry Association to import up to 200,000 tons annually, if needed. Alimoeso said so far there are no plans to offset delay in deliveries from India by buying Myanmarese rice.
Indonesia's Sulawesi Jan cocoa bean exports fall -industry
JAKARTA, Feb 1 (Reuters) - Indonesia's cocoa bean exports from its main growing island of Sulawesi slipped 23 percent in January from the same month a year ago, and was down 26 percent from the previous month, industry data showed on Wednesday.
Sulawesi cocoa exports were at 8,904.25 tonnes in January from 11,634.66 tonnes a year ago, data from the Indonesia Cocoa Association showed. December exports were at 12,051.72 tonnes.
India coffee exports fall 7.5 pct in Oct-Jan
MUMBAI, Feb 1 (Reuters) - Coffee exports from India fell 7.5 percent to 79,021 tonnes in October-January on lower stocks and rising local demand. Arrivals from the new crop in coming months are expected to stem the fall, though.
In value terms, the exports rose to $243.05 million from $218.91 million a year ago, the Coffee Board said in a statement.
India releases 1.4 mln T sugar for Feb-sources
MUMBAI, Feb 1 (Reuters) - India has allowed millers to sell 1.4 million tonnes of sugar in the open market in February, 100,000 tonnes less than in January, government and industry sources said on Wednesday.
The government sets the quantity of sugar that millers can sell each month to control sharp swings in prices and ensure adequate supplies for the country's 1.2 billion people.
Global rubber output seen up 3.2 pct in 2012 -ANRPC
SINGAPORE, Feb 1 (Reuters) - Global natural rubber output is forecast to rise 3.2 percent in 2012 because of higher production in Vietnam, the Association of Natural Rubber Producing Countries (ANRPC) said on Wednesday.
The ANRPC pegged 2012 production at 10.450 million tonnes, up from 10.127 million tonnes last year and slightly higher than an earlier estimate of 10.415 million tonnes.
Exporters say boycott landmark I.Coast cocoa auction
ABIDJAN, Jan 31 (Reuters) - Ivory Coast's reform of its cocoa sector, vital for the country to obtain further debt relief, began in confusion on Tuesday as the regulator hailed the first two forward-sales auctions as a success while exporters said they had boycotted them.
Ivory Coast held as scheduled two auctions of the 2012-13 crop which is the first step in a move by the top grower away from a decade of liberalisation back to a price-regulated sector aimed at guaranteeing its farmers a price floor.
Al Khaleej Dubai refinery buys Indian sugar
LONDON, Jan 31 (Reuters) - The Dubai Al Khaleej sugar refinery, typically supplied by raw sugar from top producer Brazil, has recently bought more than 100,000 tonnes of Indian sugar, general manager Cyrus Raja said on Tuesday.
"The Indian raw sugar is refined and sold to the regular customers of Al Khaleej Sugar in the Middle East and North Africa region and other parts of the world," Raja told Reuters in an emailed interview before the Feb. 4-7 Kingsman Dubai sugar conference.
Brent rises above $111, Iran supply worries support
SINGAPORE, Feb 1 (Reuters) - Brent crude rose above $111 a barrel, gaining for a second straight session on fears that tensions between Iran and the West may escalate with U.S. lawmakers mulling more sanctions on Tehran, while promising China data also supported sentiment.
"There's the positive factor of supply worries from Iran and South Sudan while on the other side, we have a bearish factor from a weaker economy in Europe that will reduce oil demand," Ken Hasegawa, a commodity sales manager at Newedge Japan, said.
Oil Futures Decline a Fifth Day as U.S. Stockpiles Rise, Fuel Demand Slips (Source: Bloomberg)
Oil declined for a fifth day in New York, matching the longest losing streak since August, as U.S. crude stockpiles increased more-than-estimated and gasoline consumption fell to a 10-year low. Futures were down as much as 0.6 percent after settling yesterday at the lowest close in six weeks. Crude supplies rose by 4.2 million barrels last week, figures from the Energy Department showed. They were projected to increase 2.6 million barrels, according to a Bloomberg News survey. Oil rose earlier yesterday after manufacturing indexes from Germany to the U.S. increased. “It appears to be driven by U.S. domestic factors, the larger-than-expected increase in crude stockpiles and fall in gasoline demand,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “In the short-term, it flies in the face of the run of reasonably positive data from the U.S.”
Indonesian Bourse Starts Trading Physical Tin Contract in Challenge to LME (Source: Bloomberg)
An exchange in Indonesia, the world’s largest tin exporter, started trading a physical contract today to create an alternative to the benchmark on the London Metal Exchange after twice delaying the initiative. The Indonesia Commodity & Derivatives Exchange, which offers palm oil and gold, had two lots of 5 metric tons each traded before the contract settled at $24,500 a ton. The introduction was delayed from Dec. 15 and Jan. 12 to allow potential users more time to prepare. Tin rallied 27 percent last month, the biggest gain since at least July 1989, as stockpiles fell. Indonesia represents about 40 percent of global exports, and the move to set up the new benchmark was supported by the government through the Commodity Futures Trading Regulatory Agency and PT Timah (TINS), the country’s biggest producer. At present, the LME, the world’s largest metals bourse, offers cash and futures trading in tin.
Steel Demand Slowing With Europe in Setback to ArcelorMittal: Commodities (Source: Bloomberg)
Steel demand worldwide is growing slower than forecast, eroding profit at producers including ArcelorMittal and Tata Steel Ltd. (TATA) and forcing investors to revise their 2012 outlook for the $430 billion industry. Global use of the alloy will rise 4.5 percent this year, less than the 5.4 percent forecast in October by the World Steel Association, according to the median estimate of 14 steelmakers, analysts and traders surveyed by Bloomberg. Growth may be as low as 1.2 percent, according to Bloomberg Industries analysts. The gain, the lowest in three years, is tempered by cooling economies in China and Europe, where orders for steel products for houses, cars and machinery are stagnating and will keep the alloy’s prices and overseas shipments muted, analysts said.
Iron Ore-Spot prices respond to China demand signals
BEIJING, Feb 1 (Reuters) - Chinese spot iron ore prices rose on Wednesday as traders drifted back to the market following the new year break amid signs that demand could start to pick up in the coming weeks.
Industry consultancy Umetal said Pilbara fines with 61.5 percent iron content were being offered at $141-143 per tonne cost and freight on Wednesday, up $2 from Tuesday.
US Steel offers improved outlook for 1st quarter
Jan 31 (Reuters) - U.S. Steel Corp posted a wider-than-expected quarterly loss on Tuesday but said it expects a better first quarter as it sold off its money-losing Serbian operations, European prices appear to have bottomed-out and end-user demand is ticking up.
The positive outlook in an industry that has been struggling to rebound from the recession sent the steelmaker's stock up nearly 5 percent to $30.19 on the New York Stock Exchange.
Gold Climbs to Eight-Week High as Dollar Drop, Europe Debt Fueling Demand (Source: Bloomberg)
Gold futures in New York climbed to the highest price in almost eight weeks as Europe’s lingering debt crisis and a weaker dollar spurred demand for the precious metal as an alternative asset. The dollar fell as much as 0.8 percent against a basket of six currencies. Gold jumped 11 percent last month, the biggest January gain since 1983, on mounting concern that Europe’s debt woes may lead to a recession, and after the Federal Reserve pledged to keep its benchmark U.S. interest rate low until at least late 2014 to spur growth. “Gold is trading like a hard currency,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in an e-mail. “People are worried about currency debasement because of the credit easing by several countries.”
METALS-Copper steady, supported by firmer China PMI
SHANGHAI, Feb 1 (Reuters) - London copper traded steady on Wednesday, underpinned by Chinese data that reinforced Beijing's commitment to economic growth, but gains were capped ahead of data expected to show European and U.S. economies got off to a slow start in 2012.
Two separate surveys of Chinese manufacturing activity showed stuttering growth in the world's second largest economy. A government survey indicated a slight upturn in production in January, but a private sector report suggested factory activity shrank for a third month.
PRECIOUS-Gold steady; U.S., Europe data eyed
SINGAPORE, Feb 1 (Reuters) - Gold was steady on Wednesday after ending January with its biggest monthly rise since August, while investors eyed more data from the world's key economies for trading cues after China released a better-than-expected manufacturing survey number.
China's official Purchasing Managers' Index showed the manufacturing sector expanded modestly in January, with the index reading inching up to 50.5 from 50.3 in December, above a 49.5 reading forecast.
Global Shipping Prices Face More Choppy Waters (Source CME)
Times are tough for the shipping market. Freight rates hit a record low on weak demand for iron ore, poor weather conditions in mining regions and a glut of shipping capacity. The Baltic Dry Index, a composite of commodity shipping costs around the world, fell for a 32nd consecutive session to 662. The previous low, of 663, came in December 2008, during the depths of the credit crunch. But unlike the one three years ago, this slump reflects more than a sluggish global economy. A conflation of seasonal, environmental and demand-side factors accelerated the index's decline in recent months and could tip it further into the red. The index has plunged 59% this year alone and is down 94% from the peak reached just before the crisis hit. More than anything, this collapse "is due to excessive supply of ships and shipping capacity," said Beethowen Nepomuceno, who is responsible for ocean transport at commodities-trading company Cargill Inc.'s Sao Paulo's office.
Analysts and industry players expect the glut in shipping capacity to last for several years given that vessels often operate for around 25 years. But increased scrapping and the possibility that unprofitable shipping firms could be forced out of business should eventually lend some stability to prices, they said. "If old ships exit, that could start to correct the market," Nepomuceno said. "It's an eternal game of push and shove." A big factor depressing rates is the delivery of vessels ordered when the global economy was booming in the early-to-mid-2000s and credit was freely flowing, said Mark Williams, research manager at global shipbroking firm Braemar Seascope. "Companies saw China as a never-ending story and wanted to invest their profits in new shipping capacity," he said. Now those vessels are being delivered, yet the need for all of them is no longer as obvious. The order book currently stretches to 2015, according to industry analysts, with the majority of vessels due for delivery this year.
Other, more-recent factors have aggravated the situation. Unusually heavy rains in Brazil prompted mining giant Vale SA (VALE, VALE5.BR), which produces around 25% of the world's iron ore, to invoke a clause known as "force majeure" on Jan. 11 in some contracts to free itself from penalties on delayed shipments of ore, which is primarily used to make steel. That was lifted on Jan. 23, and mining and transportation resumed. In addition, demand for iron ore in China, which consumes more than half the world's iron-ore output, has been waning in recent months; inventories at Chinese ports are near record levels. China's crude-steel output climbed 8.9% in 2011 to 695.5 million metric tons, but growth should slow to 5% this year as Beijing's efforts to cool the economy continue to bite, according to market estimates compiled by London-based The Steel Index. In addition, the Lunar New Year holiday, which essentially shut down the country for a week in January, was a temporary brake on demand.
"The shipping market has been hit by a triple whammy of bad weather, weaker Chinese iron-ore demand and public holidays," Williams of Braemar Seascope said. A longer-lasting source of pressure is Vale's order for a fleet of 35 so-called Valemax vessels that can carry 400,000 deadweight tons, making them more than twice as large as Capesizes, the next-largest carrier, which typically carry up to 180,000 deadweight tons. The super-sized ships will be used on the company's Brazil-Asia route to compete more efficiently with nearer Australia shippers. Vale docked the first of the fleet, the Berge Everest, at China's Port of Dalian in late December, with a delivery of 350,000 tons of iron ore. China's shipping industry has lobbied against such ships, fearing they may strengthen Vale's dominance on the dry bulk market and China's Ministry of Transport has restricted access of the vessels into its ports.
"The vessels have been built, so the tonnage will be there," said an analyst at a shipping firm who declined to be named. "It's going to be a tough couple of years for the shipping market."
China ministry says to bar giant ships from ports
SHANGHAI, Jan 31 (Reuters) - China will no longer allow large ships exceeding approved capacities to dock at its ports, the Ministry of Transport said, effectively snuffing Brazilian miner Vale SA's hopes of sending its mega-ships to China.
Ships exceeding approved capacities were previously assessed on a case-by-case basis, but the ministry said in a statement on its website on Tuesday that giant dry bulk vessels and oil tankers were prohibited with immediate effect.
US corn futures ended higher, buoyed by spillover support from wheat futures. Corn was also buoyed by broader based buying associated with weakness in the U.S. dollar, analysts say. Uncertainty surrounding the amount of damage South American crops incurred from hot, dry conditions are keeping prices underpinned with firm cash prices aiding the positive theme as well, analyst add. CBOT March corn ended up 3c at $6.42/bushel.
Wheat (Source CME)
US wheat futures ended higher, rallying to an over 4 month high for the second consecutive day on worries about freeze damage to European wheat and Russia curbing exports. Investors continued to favor buying wheat, as the uncertainty about lost production from winterkill in the Black Sea region and Europe as well the potential increased export demand from reduced Russian exports sparked buying, analyst say. Added support was drawn from weakness in the U.S. dollar, a feature generating broader based commodity gains. CBOT March wheat ended up 8 1/4c to $6.74 1/4/bushel, March KCBT wheat ended up 7c at $7.22 1/2, and March MGEX wheat ended up 9c at $8.36 3/4.
Rice (Source CME)
US rice futures tumbled for the second straight day, succumbing to speculative selling. The market is under pressure from lagging export demand, with chart based selling accelerating losses once futures dipped below recent lows, analysts say CBOT March rice ended down 26c at $13.74/hundredweight.
GRAINS-U.S. wheat at 4-1/2 month top on Russia export worries
NEW DELHI, Feb 1 (Reuters) - U.S. wheat climbed to a four-and-half month top rising for a second straight session on expectations that Russia, the world's third-largest supplier, was likely to curb exports.
"Prices have gone up because Russia has said that there could be restrictions on wheat exports," said Lynette Tan, analyst with Phillip Futures in Singapore.
Russia govt to determine grain export cap Feb 2
MOSCOW/TAMBOV, Russia, Jan 31 (Reuters) - Russia's government will determine on Thursday how much grain can be exported during this crop year before it considers imposing a protective duty to keep grain in the country, Deputy Prime Minister Viktor Zubkov told Reuters.
"The day after tomorrow I will hold a meeting. We will decide and I will give some signals," Zubkov said in response to a question about the level of export which could trigger the duty.
Mexico lowers corn harvest forecast due to drought
MEXICO CITY, Jan 31 (Reuters) - Mexico's corn harvest will likely be smaller than expected this year, after coming in below expectations last year, due to a devastating drought, Agriculture Minister Francisco Mayorga said on Tuesday.
The corn harvest is now expected to total 20 million tonnes of white corn and 1.8 million tonnes of yellow corn in 2012, compared with the 25 million tonnes estimated before the effects of the dry weather were fully known.
Tight Farmer Holding Pushes Cash Corn Basis (Source CME)
Farmer sales of U.S. corn are not keeping up with relative needs of the spot market, pushing basis levels to record levels for this time of year. Strong prices for corn futures are not loosening the tight grip farmers have on their stored supplies, as they remain reluctant sellers of inventories. "The spot cash market for corn is artificially tight, as we know there is plenty of corn out there in the middle of the marketing year in January," said Darrel Good, agricultural economist at the University of Illinois. Farmers believe the big break in price since August has left corn undervalued, and with a decent price available for storing corn, farmers are not motivated sellers at this point, Good said. Only a trickle is coming out of on-farm storage bins keeping available nearby supplies tight as farmers are optimistic prices have further to rise. Farmers are also disappointed with cash prices not improving since the harvest.
The average cash price for corn from Sept. 1 to the end of November in St. Louis was $6.61 1/4 a bushel. Current St. Louis prices are trading near $6.60, still cheaper than the average bid at harvest. "Farmers not pressed for cash are not inspired to sell at a price below what they passed up in the fall," said Dave Marshall, an independent marketing advisor for farmers in southern Illinois. Most producers have plenty of cash from lucrative sales last fall and during the early winter, so there is generally no urgent need for cash flow at this point. With the low interest returns available from bank deposits, its a better investment for farmers to hold onto supplies, said Kim Craig, a merchandiser for Bell Enterprises, a privately owned group of grain elevators in Illinois.
Indonesia To Review India Rice Contracts On Delivery Delay (Source CME)
Indonesia will review contracts with Indian rice exporters who are seeking more time to deliver cargoes citing congestion at ports and bottlenecks in procuring grain from millers, trading executives and a Jakarta-based official said. "We will be reviewing the delivery schedule for cargoes from India, to decide whether any additional time needs to be given or impose a penalty for delayed shipments," state-run procurement agency Bulog's chief executive Sutarto Alimoeso told Dow Jones Newswires. Indonesia, which was the top importer in 2011, traditionally buys from Thailand and Vietnam. For the first time in several years, Bulog locked in a deal for 250,000 metric tons of Indian rice on Nov. 15 for delivery by mid-February. However, with two weeks to go, less than 100,000 tons have been shipped out and around 31,000 tons delivered, according to estimates of traders, port officials and cargo surveyors. Another 36,700 tons are being loaded and ships for loading 35,000 tons are waiting for berth at Indian ports.
"Due to infrastructural bottlenecks, we have sought two more weeks to complete deliveries," said Prem Garg, managing director of Shri Lal Mahal Ltd., which has a 100,000-ton contract with Bulog. Indonesia has also bought 100,000 tons from Amira Foods and 50,000 tons from Emmsons International. "Apart from a small cargo of 5,000 tons, all our orders from Bulog have been shipped out or are under loading and will be completed soon," an Emmsons executive said. An executive at Amira Foods didn't give details of shipments but Bulog officials said they haven't received any cargo from the company and only a ship with 6,000 tons is on high seas. Many Indonesian ports are difficult to access and arrangements had to be made for smaller vessels to deliver cargoes to Bulog, an Indian trading executive involved in the deals said. He added that Indian millers have also hiked the prices of 15% brokens due to the large Indonesian order.
Alimoeso said the government had given Bulog licenses to complete all imports by end-February and the agency had asked Indian exporters to deliver shipments by Feb. 15. Some shipments from Thailand are also pending but they will likely be completed this month, he said. Bulog has signed a memorandum of understanding with Myanmar Rice Industry Association to import up to 200,000 tons annually, if needed. Alimoeso said so far there are no plans to offset delay in deliveries from India by buying Myanmarese rice.
Indonesia's Sulawesi Jan cocoa bean exports fall -industry
JAKARTA, Feb 1 (Reuters) - Indonesia's cocoa bean exports from its main growing island of Sulawesi slipped 23 percent in January from the same month a year ago, and was down 26 percent from the previous month, industry data showed on Wednesday.
Sulawesi cocoa exports were at 8,904.25 tonnes in January from 11,634.66 tonnes a year ago, data from the Indonesia Cocoa Association showed. December exports were at 12,051.72 tonnes.
India coffee exports fall 7.5 pct in Oct-Jan
MUMBAI, Feb 1 (Reuters) - Coffee exports from India fell 7.5 percent to 79,021 tonnes in October-January on lower stocks and rising local demand. Arrivals from the new crop in coming months are expected to stem the fall, though.
In value terms, the exports rose to $243.05 million from $218.91 million a year ago, the Coffee Board said in a statement.
India releases 1.4 mln T sugar for Feb-sources
MUMBAI, Feb 1 (Reuters) - India has allowed millers to sell 1.4 million tonnes of sugar in the open market in February, 100,000 tonnes less than in January, government and industry sources said on Wednesday.
The government sets the quantity of sugar that millers can sell each month to control sharp swings in prices and ensure adequate supplies for the country's 1.2 billion people.
Global rubber output seen up 3.2 pct in 2012 -ANRPC
SINGAPORE, Feb 1 (Reuters) - Global natural rubber output is forecast to rise 3.2 percent in 2012 because of higher production in Vietnam, the Association of Natural Rubber Producing Countries (ANRPC) said on Wednesday.
The ANRPC pegged 2012 production at 10.450 million tonnes, up from 10.127 million tonnes last year and slightly higher than an earlier estimate of 10.415 million tonnes.
Exporters say boycott landmark I.Coast cocoa auction
ABIDJAN, Jan 31 (Reuters) - Ivory Coast's reform of its cocoa sector, vital for the country to obtain further debt relief, began in confusion on Tuesday as the regulator hailed the first two forward-sales auctions as a success while exporters said they had boycotted them.
Ivory Coast held as scheduled two auctions of the 2012-13 crop which is the first step in a move by the top grower away from a decade of liberalisation back to a price-regulated sector aimed at guaranteeing its farmers a price floor.
Al Khaleej Dubai refinery buys Indian sugar
LONDON, Jan 31 (Reuters) - The Dubai Al Khaleej sugar refinery, typically supplied by raw sugar from top producer Brazil, has recently bought more than 100,000 tonnes of Indian sugar, general manager Cyrus Raja said on Tuesday.
"The Indian raw sugar is refined and sold to the regular customers of Al Khaleej Sugar in the Middle East and North Africa region and other parts of the world," Raja told Reuters in an emailed interview before the Feb. 4-7 Kingsman Dubai sugar conference.
Brent rises above $111, Iran supply worries support
SINGAPORE, Feb 1 (Reuters) - Brent crude rose above $111 a barrel, gaining for a second straight session on fears that tensions between Iran and the West may escalate with U.S. lawmakers mulling more sanctions on Tehran, while promising China data also supported sentiment.
"There's the positive factor of supply worries from Iran and South Sudan while on the other side, we have a bearish factor from a weaker economy in Europe that will reduce oil demand," Ken Hasegawa, a commodity sales manager at Newedge Japan, said.
Oil Futures Decline a Fifth Day as U.S. Stockpiles Rise, Fuel Demand Slips (Source: Bloomberg)
Oil declined for a fifth day in New York, matching the longest losing streak since August, as U.S. crude stockpiles increased more-than-estimated and gasoline consumption fell to a 10-year low. Futures were down as much as 0.6 percent after settling yesterday at the lowest close in six weeks. Crude supplies rose by 4.2 million barrels last week, figures from the Energy Department showed. They were projected to increase 2.6 million barrels, according to a Bloomberg News survey. Oil rose earlier yesterday after manufacturing indexes from Germany to the U.S. increased. “It appears to be driven by U.S. domestic factors, the larger-than-expected increase in crude stockpiles and fall in gasoline demand,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “In the short-term, it flies in the face of the run of reasonably positive data from the U.S.”
Indonesian Bourse Starts Trading Physical Tin Contract in Challenge to LME (Source: Bloomberg)
An exchange in Indonesia, the world’s largest tin exporter, started trading a physical contract today to create an alternative to the benchmark on the London Metal Exchange after twice delaying the initiative. The Indonesia Commodity & Derivatives Exchange, which offers palm oil and gold, had two lots of 5 metric tons each traded before the contract settled at $24,500 a ton. The introduction was delayed from Dec. 15 and Jan. 12 to allow potential users more time to prepare. Tin rallied 27 percent last month, the biggest gain since at least July 1989, as stockpiles fell. Indonesia represents about 40 percent of global exports, and the move to set up the new benchmark was supported by the government through the Commodity Futures Trading Regulatory Agency and PT Timah (TINS), the country’s biggest producer. At present, the LME, the world’s largest metals bourse, offers cash and futures trading in tin.
Steel Demand Slowing With Europe in Setback to ArcelorMittal: Commodities (Source: Bloomberg)
Steel demand worldwide is growing slower than forecast, eroding profit at producers including ArcelorMittal and Tata Steel Ltd. (TATA) and forcing investors to revise their 2012 outlook for the $430 billion industry. Global use of the alloy will rise 4.5 percent this year, less than the 5.4 percent forecast in October by the World Steel Association, according to the median estimate of 14 steelmakers, analysts and traders surveyed by Bloomberg. Growth may be as low as 1.2 percent, according to Bloomberg Industries analysts. The gain, the lowest in three years, is tempered by cooling economies in China and Europe, where orders for steel products for houses, cars and machinery are stagnating and will keep the alloy’s prices and overseas shipments muted, analysts said.
Iron Ore-Spot prices respond to China demand signals
BEIJING, Feb 1 (Reuters) - Chinese spot iron ore prices rose on Wednesday as traders drifted back to the market following the new year break amid signs that demand could start to pick up in the coming weeks.
Industry consultancy Umetal said Pilbara fines with 61.5 percent iron content were being offered at $141-143 per tonne cost and freight on Wednesday, up $2 from Tuesday.
US Steel offers improved outlook for 1st quarter
Jan 31 (Reuters) - U.S. Steel Corp posted a wider-than-expected quarterly loss on Tuesday but said it expects a better first quarter as it sold off its money-losing Serbian operations, European prices appear to have bottomed-out and end-user demand is ticking up.
The positive outlook in an industry that has been struggling to rebound from the recession sent the steelmaker's stock up nearly 5 percent to $30.19 on the New York Stock Exchange.
Gold Climbs to Eight-Week High as Dollar Drop, Europe Debt Fueling Demand (Source: Bloomberg)
Gold futures in New York climbed to the highest price in almost eight weeks as Europe’s lingering debt crisis and a weaker dollar spurred demand for the precious metal as an alternative asset. The dollar fell as much as 0.8 percent against a basket of six currencies. Gold jumped 11 percent last month, the biggest January gain since 1983, on mounting concern that Europe’s debt woes may lead to a recession, and after the Federal Reserve pledged to keep its benchmark U.S. interest rate low until at least late 2014 to spur growth. “Gold is trading like a hard currency,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in an e-mail. “People are worried about currency debasement because of the credit easing by several countries.”
METALS-Copper steady, supported by firmer China PMI
SHANGHAI, Feb 1 (Reuters) - London copper traded steady on Wednesday, underpinned by Chinese data that reinforced Beijing's commitment to economic growth, but gains were capped ahead of data expected to show European and U.S. economies got off to a slow start in 2012.
Two separate surveys of Chinese manufacturing activity showed stuttering growth in the world's second largest economy. A government survey indicated a slight upturn in production in January, but a private sector report suggested factory activity shrank for a third month.
PRECIOUS-Gold steady; U.S., Europe data eyed
SINGAPORE, Feb 1 (Reuters) - Gold was steady on Wednesday after ending January with its biggest monthly rise since August, while investors eyed more data from the world's key economies for trading cues after China released a better-than-expected manufacturing survey number.
China's official Purchasing Managers' Index showed the manufacturing sector expanded modestly in January, with the index reading inching up to 50.5 from 50.3 in December, above a 49.5 reading forecast.
Global Shipping Prices Face More Choppy Waters (Source CME)
Times are tough for the shipping market. Freight rates hit a record low on weak demand for iron ore, poor weather conditions in mining regions and a glut of shipping capacity. The Baltic Dry Index, a composite of commodity shipping costs around the world, fell for a 32nd consecutive session to 662. The previous low, of 663, came in December 2008, during the depths of the credit crunch. But unlike the one three years ago, this slump reflects more than a sluggish global economy. A conflation of seasonal, environmental and demand-side factors accelerated the index's decline in recent months and could tip it further into the red. The index has plunged 59% this year alone and is down 94% from the peak reached just before the crisis hit. More than anything, this collapse "is due to excessive supply of ships and shipping capacity," said Beethowen Nepomuceno, who is responsible for ocean transport at commodities-trading company Cargill Inc.'s Sao Paulo's office.
Analysts and industry players expect the glut in shipping capacity to last for several years given that vessels often operate for around 25 years. But increased scrapping and the possibility that unprofitable shipping firms could be forced out of business should eventually lend some stability to prices, they said. "If old ships exit, that could start to correct the market," Nepomuceno said. "It's an eternal game of push and shove." A big factor depressing rates is the delivery of vessels ordered when the global economy was booming in the early-to-mid-2000s and credit was freely flowing, said Mark Williams, research manager at global shipbroking firm Braemar Seascope. "Companies saw China as a never-ending story and wanted to invest their profits in new shipping capacity," he said. Now those vessels are being delivered, yet the need for all of them is no longer as obvious. The order book currently stretches to 2015, according to industry analysts, with the majority of vessels due for delivery this year.
Other, more-recent factors have aggravated the situation. Unusually heavy rains in Brazil prompted mining giant Vale SA (VALE, VALE5.BR), which produces around 25% of the world's iron ore, to invoke a clause known as "force majeure" on Jan. 11 in some contracts to free itself from penalties on delayed shipments of ore, which is primarily used to make steel. That was lifted on Jan. 23, and mining and transportation resumed. In addition, demand for iron ore in China, which consumes more than half the world's iron-ore output, has been waning in recent months; inventories at Chinese ports are near record levels. China's crude-steel output climbed 8.9% in 2011 to 695.5 million metric tons, but growth should slow to 5% this year as Beijing's efforts to cool the economy continue to bite, according to market estimates compiled by London-based The Steel Index. In addition, the Lunar New Year holiday, which essentially shut down the country for a week in January, was a temporary brake on demand.
"The shipping market has been hit by a triple whammy of bad weather, weaker Chinese iron-ore demand and public holidays," Williams of Braemar Seascope said. A longer-lasting source of pressure is Vale's order for a fleet of 35 so-called Valemax vessels that can carry 400,000 deadweight tons, making them more than twice as large as Capesizes, the next-largest carrier, which typically carry up to 180,000 deadweight tons. The super-sized ships will be used on the company's Brazil-Asia route to compete more efficiently with nearer Australia shippers. Vale docked the first of the fleet, the Berge Everest, at China's Port of Dalian in late December, with a delivery of 350,000 tons of iron ore. China's shipping industry has lobbied against such ships, fearing they may strengthen Vale's dominance on the dry bulk market and China's Ministry of Transport has restricted access of the vessels into its ports.
"The vessels have been built, so the tonnage will be there," said an analyst at a shipping firm who declined to be named. "It's going to be a tough couple of years for the shipping market."
China ministry says to bar giant ships from ports
SHANGHAI, Jan 31 (Reuters) - China will no longer allow large ships exceeding approved capacities to dock at its ports, the Ministry of Transport said, effectively snuffing Brazilian miner Vale SA's hopes of sending its mega-ships to China.
Ships exceeding approved capacities were previously assessed on a case-by-case basis, but the ministry said in a statement on its website on Tuesday that giant dry bulk vessels and oil tankers were prohibited with immediate effect.
20120202 1018 Soy Oil & Palm Oil Related News.
Soybeans (Source CME)
US soybean futures rallied, continuing to retrace losses from earlier in the week. Commodity friendly external market influences and confirmation of fresh export business with China fueled the price gains, analysts say. Buyers were also encouraged by continued uncertainty about South American crop potential, as private forecasters continue to lower their crop estimates, analysts say. Soybeans remain firmly planted within a month long wide trading range, with traders awaiting lasting fundamental direction. CBOT March soy ended up 16 1/4c at $12.15 1/4 a bushel.
Soybean Meal/Oil (Source CME)
Soy product futures finished higher, rising in step with advances in soybeans. The combination of a weaker US dollar, fresh Chinese demand for soybeans and lingering uncertainty about South American crop damage, buoyed soymeal and soyoil futures, analysts say. CBOT March soymeal ended up $3.00 at $322.30/short ton, and March soyoil finished up 0.31c to 51.18 cents/pound.
China To Add More Than 12 Mln Tons Soybean Crushing Capacity In 2012 (Source CME)
China, the world's largest soybean importer and consumer, will likely add more than 12 million metric tons of soybean crushing capacity this year, the state-backed China National Grain & Oils Information Center said. The nation's rapeseed oil crushing capacity is expected to increase by 3 million tons in 2012, it said in an email. China added more than 15 million tons of oilseed crushing capacity in 2011, marking the biggest expansion since 2004, the CNGOIC said. China's oilseed crushing sector is facing serious overcapacity.
US soybean futures rallied, continuing to retrace losses from earlier in the week. Commodity friendly external market influences and confirmation of fresh export business with China fueled the price gains, analysts say. Buyers were also encouraged by continued uncertainty about South American crop potential, as private forecasters continue to lower their crop estimates, analysts say. Soybeans remain firmly planted within a month long wide trading range, with traders awaiting lasting fundamental direction. CBOT March soy ended up 16 1/4c at $12.15 1/4 a bushel.
Soybean Meal/Oil (Source CME)
Soy product futures finished higher, rising in step with advances in soybeans. The combination of a weaker US dollar, fresh Chinese demand for soybeans and lingering uncertainty about South American crop damage, buoyed soymeal and soyoil futures, analysts say. CBOT March soymeal ended up $3.00 at $322.30/short ton, and March soyoil finished up 0.31c to 51.18 cents/pound.
China To Add More Than 12 Mln Tons Soybean Crushing Capacity In 2012 (Source CME)
China, the world's largest soybean importer and consumer, will likely add more than 12 million metric tons of soybean crushing capacity this year, the state-backed China National Grain & Oils Information Center said. The nation's rapeseed oil crushing capacity is expected to increase by 3 million tons in 2012, it said in an email. China added more than 15 million tons of oilseed crushing capacity in 2011, marking the biggest expansion since 2004, the CNGOIC said. China's oilseed crushing sector is facing serious overcapacity.
Tuesday, January 31, 2012
20120131 1815 FCPO EOD Daily Chart Study.
Bollinger band reading : little downside biased with possible pullback correction.
MACD Histrogram : falling, seller taking exposure.
Support : 3070, 3050, 3020, 2970 level.
Resistance : 3100, 3150, 3200, 3250 level.
Comment :
FCPO closed recorded tiny loss with rising volume participation. Soy oil price currently rebounding higher after overnight fall severely lower while crude oil price currently trading higher testing 100 resistance level.
Both ITS and SGS cargo surveyor reported improved but still declined month to month export data.
Daily chart reading remained suggesting a little downside biased market development with possible pullback correction.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.
20120131 1747 FKLI EOD Daily Chart Study.
Bollinger band reading : side way range bound.
MACD Histrogram : turned upward, buyer seller battling.
Support : 1505, 1500, 1494, 1485 level.
Resistance : 1515, 1530, 1540, 1550 level.
Comment :
FKLI closed rebounded higher after yesterday slump with lower volume changed hand with Feb 2012 contract doing 7.5 points discount compare to cash market that closed higher. Overnight U.S. market closed recorded marginal loss and today Asia markets traded higher while European markets current trading little higher.
Most European leader agreed on fiscal policy. progress over Greece debt deal and increased in Japan industrial production resulted global markets to rebound higher.
Technical reading suggesting a side way range bound market development testing support and resistance level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.
20120131 1717 Regional Markets EOD Daily Chart Study.
DJIA chart reading : pullback correction upside biased.
Hang Seng chart reading : pullback correction upside biased.
KLCI chart reading : side way range bound little downside biased.
20120131 1655 Global Market & Commodities Related News.
Shares, euro recover on Greek debt hope, Portugal weighs
TOKYO, Jan 31 (Reuters) - Asian shares and the euro recovered earlier losses after Greek Prime Minister Lucas Papademos raised hopes for a deal to be reached this week to avoid a default, but markets were starting to worry that Portugal might need a second rescue.
"After the rally, most Asian assets are undergoing some kind of consolidation, but there is still hope for some kind of an agreement reached and investors are delaying expectations about this talk," said Frances Cheung, senior strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.
FOREX-Euro firms on Greek debt hopes; dollar at 3-mth low vs yen
SINGAPORE, Jan 31 (Reuters) - The euro rose on Tuesday, supported by hopes for a Greek debt restructuring deal that would help the country avoid a disorderly default, possibly setting itself up for a test of a key chart level.
The dollar extended its recent losses versus the yen and hit a three-month low, remaining under pressure after the U.S. Federal Reserve said last week it was likely to keep interest rates near zero at least until late 2014.
Relief in US food prices seen as crop supplies grow
CHICAGO, Jan 30 (Reuters) - After being hammered by record high food prices in 2011, which helped ignite the Arab Spring uprisings, consumers worldwide may find some relief in 2012 if U.S. farmers, induced by last year's high crop prices, plant more fields to grain this year.
Analysts polled by Reuters expect prices of corn, soybeans and wheat to tumble as much as 15 percent from a year ago, which will benefit companies that produce meat like Pilgrim's Pride Corp , Sanderson Farms and Tyson Foods Inc in terms of lower feed costs.
U.S. grains steady, nursing falls on Latam rains
SYDNEY, Jan 31 (Reuters) - U.S. grain futures were steady to firmer in early Asian trade, stabilising after heavy losses in the previous session when soy fell nearly 3 percent as the dollar gained on the euro zone debt crisis and on better-than-expected South American rainfall.
Crop-friendly rainfall of 0.50 to 1.5 inches is expected this week through all areas of Argentina which will benefit the soy crop in its key pod-setting phase and CORN.
China ban on Indian meal to benefit Canadian canola
BEIJING, Jan 30 (Reuters) - China will boost imports of rapeseed and rapeseed meal from Canada, traders said on Monday, after Beijing banned Indian meal after tests showed it contained a toxic chemical.
If China buys more rapeseed, or canola, from Canada, the world's top exporter, it could firm ICE canola prices , which have been rising for the past two weeks in anticipation of larger imports.
Brazil to breathe life into faded Cuban sugar sector
SAO PAULO, Jan 30 (Reuters) - Brazilian builder Odebrecht plans to produce sugar in Cuba, the company said on Monday, as looser restrictions on foreign investment in the communist island raise hopes of a recovery in the once-booming sector after decades of decline.
News of the project came on the day Brazil's President Dilma Rousseff begins a mostly ceremonial official visit to the country, which has been under communist rule since the Fidel
Castro-led revolution and an ensuing U.S. trade embargo.
Brazil soy harvest to speedup as rains shift south
SAO PAULO, Jan 30 (Reuters) - The soybean harvest is due to pickup speed in the coming weeks in the early maturing center-west states of Brazil, the world's No. 2 producer of the oilseed, as rains shift to the parched south where moisture is still needed.
The center-west is forecast to harvest a near-record crop this season due to excellent rain over the past weeks. States in the region such as No. 1 soy grower Mato Grosso and No. 4 Goias, are typically earliest to plant and harvest in Brazil.
Argentine grains shipping normal after boat dislodged
BUENOS AIRES, Jan 30 (Reuters) - Port authorities in Argentina's Rosario grains hub have dislodged a vessel that ran aground earlier this month, and all delayed ships have been able to set sail, an industry official said on Monday.
Argentina is one of the world's top suppliers of corn, soybeans and byproducts, and most its grains are shipped from the constellation of terminals around the city of Rosario.
ICCO pegs rise in global cocoa stocks
LONDON, Jan 30 (Reuters) - World cocoa stocks rose to 1.723 million tonnes as of Sept. 30 after bumper crops in West Africa helped produce a record surplus, according to the International Cocoa Organization's annual assessment.
Stocks were up by 295,000 tonnes on the year, with the majority held in importing countries, ICCO statistician Laurent Pipitone told Reuters.
OPEC says EU ban on Iran oil to boost prices
LONDON, Jan 30 (Reuters) - The EU's embargo on Iranian oil exports will add upward pressure to oil prices, OPEC's secretary general said on Monday, even though there is no shortage of oil on the market.
Abdullah al-Badri also said he was not concerned about too much oil in the market, even though the Organization of the Petroleum Exporting Countries is pumping about 600,000 barrels per day (bpd) more than its new target of 30 million bpd.
Brent rises above $111/bbl as supply trumps economy
SINGAPORE, Jan 31 (Reuters) - Brent crude inched above $111 a barrel, on track for its first rise in two months, as concerns over supply from Iran and South Sudan trumped worries about a global economic slowdown that could hit oil demand.
"Iran will make sure we see more upside than downside," Jeremy Friesen, a commodity strategist at Societe Generale said, although strong downside forces from the deteriorating economy capped gains.
London copper gains on outlook for long-term demand
KUALA LUMPUR, Jan 31 (Reuters) - London copper inched up, heading for its biggest gain in three months, on cautious optimism that demand for the industrial metal will rebound this year with Asian economies generally resilient in the face of global financial turmoil.
Asian economies remain "generally resilient" in the face of global financial turmoil and a growing debt crisis in the euro zone, the IMF's top official for Asia and the Pacific said on Monday.
Chile December copper output up but 2011 total output falls
SANTIAGO, Jan 30 (Reuters) - Chile's copper output jumped in December from the same month a year earlier but clocked a 3.2 percent drop in 2011 from a year earlier as falling ore grades, labor woes and weather problems hammered the world's top producer, the government said on Monday.
Chile, which provides around one-third of the world's copper, produced 509,407 tonnes of the red metal in December , up 2.2 percent from the same month of 2010, the government statistics agency INE said. Chile produced 5.24 million tonnes of the red metal in 2011, down 3.2 percent from the previous year, according to the INE.
Japan Dec zinc exports up 44 pct yr/yr on China
TOKYO, Jan 30 (Reuters) - Japan's exports of refined zinc surged 44 percent from a year earlier to 12,273 tonnes in December as exports to China more than doubled, customs-cleared data showed on Monday.
Exports to China increased to 4,504 tonnes, up from 1,753 tonnes a year before, accounting for a third of Japan's total exports.
Italy's steel exports up, lag import volumes
MILAN, Jan 30 (Reuters) - Steel exports from Italy, the European Union's second-biggest producer after Germany, rose 12.5 percent year on year to 15.882 million tonnes in the first 11 months of 2011, but lagged behind import volumes, industry body Federacciai data showed on Monday.
Italy's export-focused steel industry has come under growing pressure from non-EU rivals in the past few years and, facing modest demand on core markets, needs to rethink its product range and consolidate, analysts say.
Silver coin sales hit record pace, outshine gold
NEW YORK, Jan 30 (Reuters) - Less than one year after silver's breathtaking collapse from its record-setting rally, investors are again snapping up coins at an unprecedented pace, suggesting the white metal could leave gold in the dust.
Even before the U.S. Federal Reserve's promise of further stimulus rejuvenated interest in precious metals last week, U.S. retail investors were already buying up freshly minted coins in droves, undaunted by last year's painful volatility. Gold coin sales, while rising, have been far less robust.
Gold edges up; heads for biggest monthly gain since Aug
SINGAPORE, Jan 31 (Reuters) - Gold ticked up after the euro recouped some losses, while bullion prices headed for their biggest monthly rise since August as lingering concerns about growth in the United States prompted buying from investors.
"Sentiment seems to have improved quite tremendously, I would say. We are now into more bullish territory, more than ever, with the Fed providing enough fundamental support," said Dominic Schnider, head of commodity research at UBS Wealth Management.
METALS-London copper gains on outlook for long-term demand
KUALA LUMPUR, Jan 31 (Reuters) - London copper inched up on Tuesday, heading for its biggest gain in three months, on cautious optimism that demand for the industrial metal will rebound this year with Asian economies generally resilient in the face of global financial turmoil.
Three-month copper on the London Metal Exchange climbed 0.22 percent to $8,447.75 a tonne by 0117 GMT, after its biggest decline in more than a week in the previous session.
PRECIOUS-Gold edges up; heads for biggest monthly gain since Aug
SINGAPORE, Jan 31 (Reuters) - Gold ticked up on Tuesday after the euro recouped some losses, while bullion prices headed for their biggest monthly rise since August as lingering concerns about growth in the United States prompted buying from investors.
Gold jumped nearly 5 percent last week, its fourth consecutive weekly gain, after the U.S. Federal Reserve pledged to keep interest rates near zero until at least late 2014, which could put pressure on the dollar.
TOKYO, Jan 31 (Reuters) - Asian shares and the euro recovered earlier losses after Greek Prime Minister Lucas Papademos raised hopes for a deal to be reached this week to avoid a default, but markets were starting to worry that Portugal might need a second rescue.
"After the rally, most Asian assets are undergoing some kind of consolidation, but there is still hope for some kind of an agreement reached and investors are delaying expectations about this talk," said Frances Cheung, senior strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.
FOREX-Euro firms on Greek debt hopes; dollar at 3-mth low vs yen
SINGAPORE, Jan 31 (Reuters) - The euro rose on Tuesday, supported by hopes for a Greek debt restructuring deal that would help the country avoid a disorderly default, possibly setting itself up for a test of a key chart level.
The dollar extended its recent losses versus the yen and hit a three-month low, remaining under pressure after the U.S. Federal Reserve said last week it was likely to keep interest rates near zero at least until late 2014.
Relief in US food prices seen as crop supplies grow
CHICAGO, Jan 30 (Reuters) - After being hammered by record high food prices in 2011, which helped ignite the Arab Spring uprisings, consumers worldwide may find some relief in 2012 if U.S. farmers, induced by last year's high crop prices, plant more fields to grain this year.
Analysts polled by Reuters expect prices of corn, soybeans and wheat to tumble as much as 15 percent from a year ago, which will benefit companies that produce meat like Pilgrim's Pride Corp , Sanderson Farms and Tyson Foods Inc in terms of lower feed costs.
U.S. grains steady, nursing falls on Latam rains
SYDNEY, Jan 31 (Reuters) - U.S. grain futures were steady to firmer in early Asian trade, stabilising after heavy losses in the previous session when soy fell nearly 3 percent as the dollar gained on the euro zone debt crisis and on better-than-expected South American rainfall.
Crop-friendly rainfall of 0.50 to 1.5 inches is expected this week through all areas of Argentina which will benefit the soy crop in its key pod-setting phase and CORN.
China ban on Indian meal to benefit Canadian canola
BEIJING, Jan 30 (Reuters) - China will boost imports of rapeseed and rapeseed meal from Canada, traders said on Monday, after Beijing banned Indian meal after tests showed it contained a toxic chemical.
If China buys more rapeseed, or canola, from Canada, the world's top exporter, it could firm ICE canola prices , which have been rising for the past two weeks in anticipation of larger imports.
Brazil to breathe life into faded Cuban sugar sector
SAO PAULO, Jan 30 (Reuters) - Brazilian builder Odebrecht plans to produce sugar in Cuba, the company said on Monday, as looser restrictions on foreign investment in the communist island raise hopes of a recovery in the once-booming sector after decades of decline.
News of the project came on the day Brazil's President Dilma Rousseff begins a mostly ceremonial official visit to the country, which has been under communist rule since the Fidel
Castro-led revolution and an ensuing U.S. trade embargo.
Brazil soy harvest to speedup as rains shift south
SAO PAULO, Jan 30 (Reuters) - The soybean harvest is due to pickup speed in the coming weeks in the early maturing center-west states of Brazil, the world's No. 2 producer of the oilseed, as rains shift to the parched south where moisture is still needed.
The center-west is forecast to harvest a near-record crop this season due to excellent rain over the past weeks. States in the region such as No. 1 soy grower Mato Grosso and No. 4 Goias, are typically earliest to plant and harvest in Brazil.
Argentine grains shipping normal after boat dislodged
BUENOS AIRES, Jan 30 (Reuters) - Port authorities in Argentina's Rosario grains hub have dislodged a vessel that ran aground earlier this month, and all delayed ships have been able to set sail, an industry official said on Monday.
Argentina is one of the world's top suppliers of corn, soybeans and byproducts, and most its grains are shipped from the constellation of terminals around the city of Rosario.
ICCO pegs rise in global cocoa stocks
LONDON, Jan 30 (Reuters) - World cocoa stocks rose to 1.723 million tonnes as of Sept. 30 after bumper crops in West Africa helped produce a record surplus, according to the International Cocoa Organization's annual assessment.
Stocks were up by 295,000 tonnes on the year, with the majority held in importing countries, ICCO statistician Laurent Pipitone told Reuters.
OPEC says EU ban on Iran oil to boost prices
LONDON, Jan 30 (Reuters) - The EU's embargo on Iranian oil exports will add upward pressure to oil prices, OPEC's secretary general said on Monday, even though there is no shortage of oil on the market.
Abdullah al-Badri also said he was not concerned about too much oil in the market, even though the Organization of the Petroleum Exporting Countries is pumping about 600,000 barrels per day (bpd) more than its new target of 30 million bpd.
Brent rises above $111/bbl as supply trumps economy
SINGAPORE, Jan 31 (Reuters) - Brent crude inched above $111 a barrel, on track for its first rise in two months, as concerns over supply from Iran and South Sudan trumped worries about a global economic slowdown that could hit oil demand.
"Iran will make sure we see more upside than downside," Jeremy Friesen, a commodity strategist at Societe Generale said, although strong downside forces from the deteriorating economy capped gains.
London copper gains on outlook for long-term demand
KUALA LUMPUR, Jan 31 (Reuters) - London copper inched up, heading for its biggest gain in three months, on cautious optimism that demand for the industrial metal will rebound this year with Asian economies generally resilient in the face of global financial turmoil.
Asian economies remain "generally resilient" in the face of global financial turmoil and a growing debt crisis in the euro zone, the IMF's top official for Asia and the Pacific said on Monday.
Chile December copper output up but 2011 total output falls
SANTIAGO, Jan 30 (Reuters) - Chile's copper output jumped in December from the same month a year earlier but clocked a 3.2 percent drop in 2011 from a year earlier as falling ore grades, labor woes and weather problems hammered the world's top producer, the government said on Monday.
Chile, which provides around one-third of the world's copper, produced 509,407 tonnes of the red metal in December , up 2.2 percent from the same month of 2010, the government statistics agency INE said. Chile produced 5.24 million tonnes of the red metal in 2011, down 3.2 percent from the previous year, according to the INE.
Japan Dec zinc exports up 44 pct yr/yr on China
TOKYO, Jan 30 (Reuters) - Japan's exports of refined zinc surged 44 percent from a year earlier to 12,273 tonnes in December as exports to China more than doubled, customs-cleared data showed on Monday.
Exports to China increased to 4,504 tonnes, up from 1,753 tonnes a year before, accounting for a third of Japan's total exports.
Italy's steel exports up, lag import volumes
MILAN, Jan 30 (Reuters) - Steel exports from Italy, the European Union's second-biggest producer after Germany, rose 12.5 percent year on year to 15.882 million tonnes in the first 11 months of 2011, but lagged behind import volumes, industry body Federacciai data showed on Monday.
Italy's export-focused steel industry has come under growing pressure from non-EU rivals in the past few years and, facing modest demand on core markets, needs to rethink its product range and consolidate, analysts say.
Silver coin sales hit record pace, outshine gold
NEW YORK, Jan 30 (Reuters) - Less than one year after silver's breathtaking collapse from its record-setting rally, investors are again snapping up coins at an unprecedented pace, suggesting the white metal could leave gold in the dust.
Even before the U.S. Federal Reserve's promise of further stimulus rejuvenated interest in precious metals last week, U.S. retail investors were already buying up freshly minted coins in droves, undaunted by last year's painful volatility. Gold coin sales, while rising, have been far less robust.
Gold edges up; heads for biggest monthly gain since Aug
SINGAPORE, Jan 31 (Reuters) - Gold ticked up after the euro recouped some losses, while bullion prices headed for their biggest monthly rise since August as lingering concerns about growth in the United States prompted buying from investors.
"Sentiment seems to have improved quite tremendously, I would say. We are now into more bullish territory, more than ever, with the Fed providing enough fundamental support," said Dominic Schnider, head of commodity research at UBS Wealth Management.
METALS-London copper gains on outlook for long-term demand
KUALA LUMPUR, Jan 31 (Reuters) - London copper inched up on Tuesday, heading for its biggest gain in three months, on cautious optimism that demand for the industrial metal will rebound this year with Asian economies generally resilient in the face of global financial turmoil.
Three-month copper on the London Metal Exchange climbed 0.22 percent to $8,447.75 a tonne by 0117 GMT, after its biggest decline in more than a week in the previous session.
PRECIOUS-Gold edges up; heads for biggest monthly gain since Aug
SINGAPORE, Jan 31 (Reuters) - Gold ticked up on Tuesday after the euro recouped some losses, while bullion prices headed for their biggest monthly rise since August as lingering concerns about growth in the United States prompted buying from investors.
Gold jumped nearly 5 percent last week, its fourth consecutive weekly gain, after the U.S. Federal Reserve pledged to keep interest rates near zero until at least late 2014, which could put pressure on the dollar.
20120131 1050 Global Market & Commodities Related News.
GLOBAL MARKETS-Shares, euro capped by Greek deal, Portugal
TOKYO, Jan 31 (Reuters) - Asian shares and the euro struggled on Tuesday as stumbling talks on Greek debt restructuring reignited concerns over funding in other highly indebted countries, with markets starting to worry that Portugal might need a second bailout.
"Even if the Greece secures a Private Sector Initiative deal and meets its 14.5 billion euro payment on March 20, the fiscal and growth objectives of the austerity efforts in Athens and Rome have yet to be mulled by IMF monitors, not to mention the liquidity difficulties encountered by Portuguese sovereign bonds," he said.
Oil falls on euro zone worry, eyeing Iran
NEW YORK, Jan 30 (Reuters) - Oil prices fell on Monday as stalled negotiations on a deal to restructure Greece's debt revived concerns about the economy while the risk that Iran might quickly halt crude exports to Europe limited losses.
"Today's downdraft was largely explained by a renewed risk-off trade that saw both the euro and the equities slide," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
POLL-U.S. crude stocks seen up as imports rise
Jan 30 (Reuters) - U.S. crude oil inventories were expected to have risen last week for the second straight time due to a further recovery in imports, a preliminary Reuters poll of analysts showed on Monday.
Ahead of the weekly inventory reports, four of the six analysts polled expected a build in crude stockpiles for the week to Jan. 27, with the average forecast coming to 1.5 million barrels.
OPEC says EU ban on Iran oil to boost prices
LONDON, Jan 30 (Reuters) - The EU's embargo on Iranian oil exports will add upward pressure to oil prices, OPEC's secretary general said on Monday, even though there is no shortage of oil on the market.
Abdullah al-Badri also said he was not concerned about too much oil in the market, even though the Organization of the Petroleum Exporting Countries is pumping about 600,000 barrels per day (bpd) more than its new target of 30 million bpd.
China, Japan scramble for oil as Sudan shuts fields
SINGAPORE, Jan 30 (Reuters) - The shutdown in Sudanese oil supply could drive up already record premiums on spot crude markets as top Sudan customers China and Japan scramble for alternatives even as they weigh the impact on oil flows of international sanctions on Iran.
South Sudan has shut down its oil output, estimated at around 350,000 barrels per day (bpd), as it and neighbour Sudan row over how to disentangle their oil industries, borders and debt.
US natgas finishes lower on mild weather forecasts
NEW YORK, Jan 30 (Reuters) - U.S. natural gas futures reversed course and ended down slightly on Monday, as mild midweek weather forecasts offset some early follow-through buying and short covering after last week's strong gains.
"I think we saw a little short-covering after last week, but there's still a lot of doubt about how quickly producers will cut and how much of an impact that will have," said Steve Platt, analyst at Archer Financial in Chicago.
Euro Coal-Cold weather boosts coal, power, gas
LONDON, Jan 30 (Reuters) - Freezing weather across much of Europe boosted gas, coal and power futures prices on Monday while technical indicators suggest that the downtrend of the past few months may be over, utilities and traders said.
"It's all anticipation of what this cold weather could do to demand and prices across the markets, it's self-reinforcing," said Emmanuel Fages, analyst with Societe Generale in Paris.
COMMODITIES-Markets sink on dollar rally; soy, cocoa tumble
NEW YORK, Jan 30 (Reuters) - Most commodities closed lower on Monday as a strong dollar crushed raw materials priced in the currency, while crops such as soybeans and cocoa were further hurt by potential oversupplies and by demand concerns.
"It's difficult to see how this rally can continue," Jesper Dannesboe, a senior commodities strategist for Societe Generale, said, referring to copper.
TOKYO, Jan 31 (Reuters) - Asian shares and the euro struggled on Tuesday as stumbling talks on Greek debt restructuring reignited concerns over funding in other highly indebted countries, with markets starting to worry that Portugal might need a second bailout.
"Even if the Greece secures a Private Sector Initiative deal and meets its 14.5 billion euro payment on March 20, the fiscal and growth objectives of the austerity efforts in Athens and Rome have yet to be mulled by IMF monitors, not to mention the liquidity difficulties encountered by Portuguese sovereign bonds," he said.
Oil falls on euro zone worry, eyeing Iran
NEW YORK, Jan 30 (Reuters) - Oil prices fell on Monday as stalled negotiations on a deal to restructure Greece's debt revived concerns about the economy while the risk that Iran might quickly halt crude exports to Europe limited losses.
"Today's downdraft was largely explained by a renewed risk-off trade that saw both the euro and the equities slide," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
POLL-U.S. crude stocks seen up as imports rise
Jan 30 (Reuters) - U.S. crude oil inventories were expected to have risen last week for the second straight time due to a further recovery in imports, a preliminary Reuters poll of analysts showed on Monday.
Ahead of the weekly inventory reports, four of the six analysts polled expected a build in crude stockpiles for the week to Jan. 27, with the average forecast coming to 1.5 million barrels.
OPEC says EU ban on Iran oil to boost prices
LONDON, Jan 30 (Reuters) - The EU's embargo on Iranian oil exports will add upward pressure to oil prices, OPEC's secretary general said on Monday, even though there is no shortage of oil on the market.
Abdullah al-Badri also said he was not concerned about too much oil in the market, even though the Organization of the Petroleum Exporting Countries is pumping about 600,000 barrels per day (bpd) more than its new target of 30 million bpd.
China, Japan scramble for oil as Sudan shuts fields
SINGAPORE, Jan 30 (Reuters) - The shutdown in Sudanese oil supply could drive up already record premiums on spot crude markets as top Sudan customers China and Japan scramble for alternatives even as they weigh the impact on oil flows of international sanctions on Iran.
South Sudan has shut down its oil output, estimated at around 350,000 barrels per day (bpd), as it and neighbour Sudan row over how to disentangle their oil industries, borders and debt.
US natgas finishes lower on mild weather forecasts
NEW YORK, Jan 30 (Reuters) - U.S. natural gas futures reversed course and ended down slightly on Monday, as mild midweek weather forecasts offset some early follow-through buying and short covering after last week's strong gains.
"I think we saw a little short-covering after last week, but there's still a lot of doubt about how quickly producers will cut and how much of an impact that will have," said Steve Platt, analyst at Archer Financial in Chicago.
Euro Coal-Cold weather boosts coal, power, gas
LONDON, Jan 30 (Reuters) - Freezing weather across much of Europe boosted gas, coal and power futures prices on Monday while technical indicators suggest that the downtrend of the past few months may be over, utilities and traders said.
"It's all anticipation of what this cold weather could do to demand and prices across the markets, it's self-reinforcing," said Emmanuel Fages, analyst with Societe Generale in Paris.
COMMODITIES-Markets sink on dollar rally; soy, cocoa tumble
NEW YORK, Jan 30 (Reuters) - Most commodities closed lower on Monday as a strong dollar crushed raw materials priced in the currency, while crops such as soybeans and cocoa were further hurt by potential oversupplies and by demand concerns.
"It's difficult to see how this rally can continue," Jesper Dannesboe, a senior commodities strategist for Societe Generale, said, referring to copper.
20120131 1006 Global Economic Related News.
With effect from 31 Jan 2012, Bank Negara Malaysia (BNM) further liberalised its foreign exchange rules, in a move to develop the domestic financial markets. The liberalisation measures are: Licensed onshore banks are permitted to trade foreign currency against another foreign currency with a resident. A licensed onshore bank is allowed to offer ringgit-denominated interest rate derivatives to a non-bank non-resident. Flexibility is permitted for a resident to convert their existing ringgit or foreign currency debt obligation into a debt obligation of another foreign currency. (BNM)
Malaysia will remain the key destination for Singaporeans to spend their holidays due to its close geographical proximity and cordial bilateral ties with the country, said Tourism Malaysia director for Singapore, Zalizam Zakaria. In 2010, Malaysia received 24.6m tourists, who spent RM56.5bn. Of the total, Singaporeans accounted for RM28.4bn, with 13m arrivals, he said. (Bernama)
Japan’s industrial production increased more than analysts forecast in Dec, as manufacturers bolstered production to make up for disruptions caused by Thailand’s worst floods in 70 years. Factory output rose 4% from Nov, when production slid because of supply disruptions, the trade ministry said in Tokyo. Manufacturers from Honda Motor to Toyota Motor are optimistic about demand as they recover from a year of natural disasters at home and in Thailand. The report indicates companies are resilient to the stronger currency and a slowing global economy. [Bloomberg]
China's Premier Wen Jiabao said government debt is at an "overall safe and controllable" level, that funding for key projects would be ensured and that applying the brakes to the economy would be done in a way to avoid systemic risks. (Reuters)
Chinese banks extended a total of Rmb1.26tr (US$199.4bn) in new loans to property developers and home buyers in 2011, down 38% from 2010, the central bank said. (Reuters)
The International Monetary Fund is reviewing whether China's currency should still be considered "substantially undervalued," in light of its rapid rise in the past year. The IMF has called China's currency "substantially undervalued" for the past half-decade. (WSJ)
The People’s Bank of China postponed the much-anticipated cut in lenders’ reserve requirements, but instead injected Rmb353bn (US$55.9bn) into the financial system using 14-day reverse-repurchase contracts, the most since Bloomberg began collecting such data in 2008. (Bloomberg)
The State Bank of India said the Indian government has agreed to inject up to 79bn rupees (US$1.6bn) into it via preferential shares, but did not mention when that would take place. The government currently owns 59.4% of SBI, but is making this decision as rising bad loans and a surge in provisions weigh on the bank's profitability, and have raised concerns on whether the lender has sufficient capital. (WSJ)
South Korea: Output declines as Europe crisis saps demand
South Korea’s industrial production fell for a third month in December as Europe’s sovereign-debt crisis hurt exports and business confidence. Output declined 0.9% from Nov, when it dropped a revised 0.3%, Statistics Korea said. South Korea, which grew the least in two years in the fourth quarter, is facing increased uncertainty from Europe’s debt crisis, Finance Minister Bahk Jae Wan said. The Bank of Korea refrained from raising interest rates for a seventh month on 13 Jan to support growth amid faltering global expansion and signs of easing inflation. [Bloomberg]
S. Korean finance minister Bahk Jae-Wan called for early negotiations on a free trade pact with China so Seoul can compete against Taiwan in the lucrative Chinese market, saying that a sweeping China-Taiwan free trade agreement signed last year will put South Korean firms, which compete against Taiwanese firms in many sectors and most notably information technology, at "a great disadvantage." (AFP)
The Philippines grew 3.7% yoy in 4Q (3.6% in 3Q). GDP growth increased 0.9% qoq (0.8% in 3Q). The median estimates were for a 3.8% yoy and 0.1% qoq. For 2011, the Philippine economy expanded 3.7% compared with a 7.6% increase in 2010, missing the government‟s official 12-month target of 4.5-5.5%. (Bloomberg, Philippine Daily Inquirer)
Indonesia’s government clarified that the option of raising the subsidized fuel oil price is still being discussed. Armida S Alisjahbana, National Development Planning Minister, said that the government is studying the drafting of a more accurate subsidy policy. (Indonesia Finance Today)
Thailand is looking to assist companies in the seven industrial estates inundated late last year by revising the terms of THB15bn in soft loans, with two-thirds of the money given away and the rest offered as soft loans carrying interest of 0.01% and a maximum 15-year repayment period. (Bangkok Post)
The Thai government will work with the private sector on forging a four-year tourism strategy to restore confidence in Thailand and prepare the country for the Asean Economic Community in 2015. (The Nation)
Thailand’s growth should stand at -5% in 4Q11 and 1.1% for 2011, Fiscal Policy Office director general Somchai Sujjapongse said. (Bangkok Post)
A poll by Bangkok University found that the economic confidence level in Thailand stood at 28.41, pressured by uncertainties in exports, private investment and tourism in the aftermath of floods. Outlook for the next three and six months should increase, as the expectation confidence was 63.41 and 72.19, respectively. (The Nation)
EU: Sarkozy transaction tax may drive investors from French stocks
The French stock market, Europe’s second-biggest by value, may fall out of favor with investors after President Nicolas Sarkozy unveiled plans to unilaterally impose a 0.1% tax on financial transactions. Sarkozy, who faces elections in a two-round vote in Apr and May, wants to make good on a pledge he made to impose such a tax when France last year held the presidency of both the G-8 and G-20 group of countries. He said on 29 Jan that France will impose the levy starting in Aug in spite of opposition from banks. The tax will apply to share purchases, including high frequency trading, and credit default swap transactions. [Bloomberg]
EU: Stumbles on Greek plan as Merkel signals debt deal delay
European leaders sparred with Greece over a second rescue program, clouding progress toward a permanent aid fund and tougher budget rules designed to stabilize the Euro. Greece faced criticism that its economic makeover is faltering, and it fended off German-led calls for a European overseer to take command of its budget after its deficits surpassed targets for two years. Bargaining with Greece over a debt writedown and its economic management threatened to overshadow a summit meant to point the way out of the financial crisis by speeding the set-up of a full-time EUR500bn (USD654bn) rescue fund. [Bloomberg]
European leaders have agreed to back a fiscal discipline treaty, whereby Euro zone countries would be legally bound to balance national budgets over time. The treaty aims to force Euro zone countries with high debt levels to bring budget deficits down to 0.5% of GDP. The treaty, which will be formally signed in Mar, is the first move in a carefully orchestrated strategy to win back market confidence. The treaty will come into force on 1 Jan 2013 provided 12 countries have ratified it by then. The second step is likely to come in mid-Feb, when EU officials hope to resolve the gap in Greece‟s budget. (FT)
The EU Summit is expected to announce up to €20bn (US$26.4bn) of unused funds from the EU's 2007-2013 budget will be redirected toward job creation and free up bank lending to small- and medium-sized companies. (Reuters)
A draft of the EU summit communiqué calls for "growth-friendly" consolidation and job-friendly growth,‟‟ an indication that EU leaders have come to realize that austerity measures, like those being put in countries like Greece and Italy, risk stoking a recession and plunging fragile economies into a downward spiral. (NY Times)
The European Commission's economic sentiment indicator rose by 0.6 pts to 93.4, the first improvement in sentiment since Mar 2011 as some confidence returned to services, consumers and construction. (Reuters)
US: Consumer spending stalls as Americans lift savings
Consumer spending stalled in December as Americans took advantage of a jump in incomes to restore depleted savings, indicating households remain focused on repairing finances. Purchases were little changed after rising 0.1% the prior month, Commerce Department figures showed in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1% increase in sales. Incomes climbed by the most in almost a year, pushing the savings rate to a four-month high. [Bloomberg]
US: Treasury cuts quarterly borrowing estimate 18% to USD444bn
The US Treasury Department lowered its borrowing estimate for the current quarter by 18% to USD444bn, reflecting higher receipts and lower spending. The Treasury reduced its net borrowing estimate for January through March by USD97bn from a projection of USD541bn three months ago. US Treasury officials also see net borrowing of USD200bn in the second quarter. The estimates set the stage for the Treasury’s quarterly refunding announcement on 1 Feb. [Bloomberg]
The US Architecture Billings Index held at 52 last month, a sign of expansion. The commercial and industrial component, a proxy for private building activity, climbed to 54.1 in Dec. (Bloomberg)
More than two-thirds of US banks in a Federal Reserve survey of senior loan officers said they had tightened credit to European financial firms in Jan, underscoring the continent's severe banking crisis. Domestic lending standards were largely unchanged this month, while loan demand picked up somewhat. (Reuters)
Malaysia will remain the key destination for Singaporeans to spend their holidays due to its close geographical proximity and cordial bilateral ties with the country, said Tourism Malaysia director for Singapore, Zalizam Zakaria. In 2010, Malaysia received 24.6m tourists, who spent RM56.5bn. Of the total, Singaporeans accounted for RM28.4bn, with 13m arrivals, he said. (Bernama)
Japan: Industrial production increases more than expected
Japan’s industrial production increased more than analysts forecast in Dec, as manufacturers bolstered production to make up for disruptions caused by Thailand’s worst floods in 70 years. Factory output rose 4% from Nov, when production slid because of supply disruptions, the trade ministry said in Tokyo. Manufacturers from Honda Motor to Toyota Motor are optimistic about demand as they recover from a year of natural disasters at home and in Thailand. The report indicates companies are resilient to the stronger currency and a slowing global economy. [Bloomberg]
China's Premier Wen Jiabao said government debt is at an "overall safe and controllable" level, that funding for key projects would be ensured and that applying the brakes to the economy would be done in a way to avoid systemic risks. (Reuters)
Chinese banks extended a total of Rmb1.26tr (US$199.4bn) in new loans to property developers and home buyers in 2011, down 38% from 2010, the central bank said. (Reuters)
The International Monetary Fund is reviewing whether China's currency should still be considered "substantially undervalued," in light of its rapid rise in the past year. The IMF has called China's currency "substantially undervalued" for the past half-decade. (WSJ)
The People’s Bank of China postponed the much-anticipated cut in lenders’ reserve requirements, but instead injected Rmb353bn (US$55.9bn) into the financial system using 14-day reverse-repurchase contracts, the most since Bloomberg began collecting such data in 2008. (Bloomberg)
The State Bank of India said the Indian government has agreed to inject up to 79bn rupees (US$1.6bn) into it via preferential shares, but did not mention when that would take place. The government currently owns 59.4% of SBI, but is making this decision as rising bad loans and a surge in provisions weigh on the bank's profitability, and have raised concerns on whether the lender has sufficient capital. (WSJ)
South Korea: Output declines as Europe crisis saps demand
South Korea’s industrial production fell for a third month in December as Europe’s sovereign-debt crisis hurt exports and business confidence. Output declined 0.9% from Nov, when it dropped a revised 0.3%, Statistics Korea said. South Korea, which grew the least in two years in the fourth quarter, is facing increased uncertainty from Europe’s debt crisis, Finance Minister Bahk Jae Wan said. The Bank of Korea refrained from raising interest rates for a seventh month on 13 Jan to support growth amid faltering global expansion and signs of easing inflation. [Bloomberg]
S. Korean finance minister Bahk Jae-Wan called for early negotiations on a free trade pact with China so Seoul can compete against Taiwan in the lucrative Chinese market, saying that a sweeping China-Taiwan free trade agreement signed last year will put South Korean firms, which compete against Taiwanese firms in many sectors and most notably information technology, at "a great disadvantage." (AFP)
The Philippines grew 3.7% yoy in 4Q (3.6% in 3Q). GDP growth increased 0.9% qoq (0.8% in 3Q). The median estimates were for a 3.8% yoy and 0.1% qoq. For 2011, the Philippine economy expanded 3.7% compared with a 7.6% increase in 2010, missing the government‟s official 12-month target of 4.5-5.5%. (Bloomberg, Philippine Daily Inquirer)
Indonesia’s government clarified that the option of raising the subsidized fuel oil price is still being discussed. Armida S Alisjahbana, National Development Planning Minister, said that the government is studying the drafting of a more accurate subsidy policy. (Indonesia Finance Today)
Thailand is looking to assist companies in the seven industrial estates inundated late last year by revising the terms of THB15bn in soft loans, with two-thirds of the money given away and the rest offered as soft loans carrying interest of 0.01% and a maximum 15-year repayment period. (Bangkok Post)
The Thai government will work with the private sector on forging a four-year tourism strategy to restore confidence in Thailand and prepare the country for the Asean Economic Community in 2015. (The Nation)
Thailand’s growth should stand at -5% in 4Q11 and 1.1% for 2011, Fiscal Policy Office director general Somchai Sujjapongse said. (Bangkok Post)
A poll by Bangkok University found that the economic confidence level in Thailand stood at 28.41, pressured by uncertainties in exports, private investment and tourism in the aftermath of floods. Outlook for the next three and six months should increase, as the expectation confidence was 63.41 and 72.19, respectively. (The Nation)
EU: Sarkozy transaction tax may drive investors from French stocks
The French stock market, Europe’s second-biggest by value, may fall out of favor with investors after President Nicolas Sarkozy unveiled plans to unilaterally impose a 0.1% tax on financial transactions. Sarkozy, who faces elections in a two-round vote in Apr and May, wants to make good on a pledge he made to impose such a tax when France last year held the presidency of both the G-8 and G-20 group of countries. He said on 29 Jan that France will impose the levy starting in Aug in spite of opposition from banks. The tax will apply to share purchases, including high frequency trading, and credit default swap transactions. [Bloomberg]
EU: Stumbles on Greek plan as Merkel signals debt deal delay
European leaders sparred with Greece over a second rescue program, clouding progress toward a permanent aid fund and tougher budget rules designed to stabilize the Euro. Greece faced criticism that its economic makeover is faltering, and it fended off German-led calls for a European overseer to take command of its budget after its deficits surpassed targets for two years. Bargaining with Greece over a debt writedown and its economic management threatened to overshadow a summit meant to point the way out of the financial crisis by speeding the set-up of a full-time EUR500bn (USD654bn) rescue fund. [Bloomberg]
European leaders have agreed to back a fiscal discipline treaty, whereby Euro zone countries would be legally bound to balance national budgets over time. The treaty aims to force Euro zone countries with high debt levels to bring budget deficits down to 0.5% of GDP. The treaty, which will be formally signed in Mar, is the first move in a carefully orchestrated strategy to win back market confidence. The treaty will come into force on 1 Jan 2013 provided 12 countries have ratified it by then. The second step is likely to come in mid-Feb, when EU officials hope to resolve the gap in Greece‟s budget. (FT)
The EU Summit is expected to announce up to €20bn (US$26.4bn) of unused funds from the EU's 2007-2013 budget will be redirected toward job creation and free up bank lending to small- and medium-sized companies. (Reuters)
A draft of the EU summit communiqué calls for "growth-friendly" consolidation and job-friendly growth,‟‟ an indication that EU leaders have come to realize that austerity measures, like those being put in countries like Greece and Italy, risk stoking a recession and plunging fragile economies into a downward spiral. (NY Times)
The European Commission's economic sentiment indicator rose by 0.6 pts to 93.4, the first improvement in sentiment since Mar 2011 as some confidence returned to services, consumers and construction. (Reuters)
US: Consumer spending stalls as Americans lift savings
Consumer spending stalled in December as Americans took advantage of a jump in incomes to restore depleted savings, indicating households remain focused on repairing finances. Purchases were little changed after rising 0.1% the prior month, Commerce Department figures showed in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1% increase in sales. Incomes climbed by the most in almost a year, pushing the savings rate to a four-month high. [Bloomberg]
US: Treasury cuts quarterly borrowing estimate 18% to USD444bn
The US Treasury Department lowered its borrowing estimate for the current quarter by 18% to USD444bn, reflecting higher receipts and lower spending. The Treasury reduced its net borrowing estimate for January through March by USD97bn from a projection of USD541bn three months ago. US Treasury officials also see net borrowing of USD200bn in the second quarter. The estimates set the stage for the Treasury’s quarterly refunding announcement on 1 Feb. [Bloomberg]
The US Architecture Billings Index held at 52 last month, a sign of expansion. The commercial and industrial component, a proxy for private building activity, climbed to 54.1 in Dec. (Bloomberg)
More than two-thirds of US banks in a Federal Reserve survey of senior loan officers said they had tightened credit to European financial firms in Jan, underscoring the continent's severe banking crisis. Domestic lending standards were largely unchanged this month, while loan demand picked up somewhat. (Reuters)
20120131 1006 Malaysia Corporate Related News.
Tenaga Nasional Bhd (TNB) CEO Datuk Seri Che Khalib Mohd Noh will be calling it quits when his contract expires in June this year after heading the national utility for the past seven years. “In any organisation, you need new faces,” he told StarBiz. “I am recommending a new face ... the organisation needs a fresh face. It is like that in any organisation. If a person stays on for too long, people tend to get bored with him.” The board has accepted Che Khalib's request for his contract not to be renewed and has begun finding a replacement. “It is entirely up to the board to decide. It is getting consultants to identify the candidates; the process started last month (when Che Khalib indicated his request not to be renewed). “The priority would probably be internal candidates; naturally, the most suitable person would be the current chief operating officer/executive director Datuk Azman Mohd. But ultimately, it is up to the board whether it is an internal or external candidate,” he said. (Star Biz)
DRB-HICOM Bhd is understood to have hosted two Volkswagen AG Group directors last Thursday. Business Times understands that the two met key stakeholders of DRB-HICOM, including its top management. “They also reviewed all Proton Holdings Bhd‟s models,” said a source. It is understood that the Volkswagen directors were here to evaluate the possibility of having a collaborative technical agreement on technology transfer with Proton. “This is the first step and I think that there will be many more such meetings before a deal could be struck,” said the source. (BT)
Malaysia is prepared to submit comments to the US Environmental Protection Agency (EPA), criticising its recent actions which could lead to a trade war of commodities. EPA analysis shows that biodiesel and renewable diesel produced from palm oil from Malaysia and Indonesia do not meet the minimum 20% lifecycle Greenhouse-gases reduction threshold needed to qualify as renewable fuel under the Renewable Fuel Standard (RFS) programme. (BT)
CIMB Group Holdings Bhd is optimistic new regulations under consideration in Indonesia won't force it to dump its controlling stake in its Indonesian banking subsidiary. The group's chief executive Nazir Razak said CIMB is hoping it will be able to hold on to its 97% stake in Indonesia's fifth-largest bank, CIMB Niaga. (WSJ)
Transparency International Malaysia (TI-M) has expressed concern over the apparent lack of transparency and proper procedure in the awarding of the RM7.07bn West Coast Expressway concession project. Its president, Datuk Paul Low said this mega project would involve massive public financing of a soft loan of RM2.24bn and payment of RM980m for land acquisition, and an unprecedented 60-year toll concession. “TI-M views with concern the apparent lack of transparency and proper procedure in the award. Given the public funding and long concession period, there could have been proper governance and transparency in the award through an open, transparent and competitive procurement process and public disclosure of the terms and conditions of the contract,” he said in a statement. (Financial Daily)
AirAsia Bhd flew 29.86m passengers in 2011, up 16.27% from 25.68m the previous year. The carrier carried 7.93m passengers, a 12.3% increase in 4QFY11. Its capacity also rose 13.5% to 37.5m while load factor increased to 80%, up 2%. Reuters reported that Southeast Asian carriers are expected to cash in on the increasing interest from both business and leisure travelers in Myanmar, which in recent months has announced some democratic reforms. Thai AirAsia is looking to add new routes into Mandalay and Bagan, Myanmar‟s inland cultural centres. (Financial Daily)
Wah Seong is confident of securing at least RM1.5bn of its current tenderbook of RM4.9bn, mostly in international oil and gas service projects. Managing director Giancarlo Maccagno said based on its track record, the company has a 20%-30% success rate on tenders. The company‟s current order book stands at RM1.3bn. Maccagno said the company is keen on merger & acquisition (M&A) to grow the company and is always in the process of reviewing possible opportunities. He said Wah Seong is currently in discussion with a potential company for a M&A. (Malaysian Reserve)
Ekovest will soon add Duta-Ulu Kelang Expressway (Duke) into its books under a RM325m share swap deal. Ekovest will issue 126.7m new shares at an issue price of RM2.75 each in return for a 100% stake in Wira Kristal Sdn Bhd. Wira Kristal owns 70% of Nuzen Corp Sdn Bhd, which has a 34-year concession of Duke. The new Ekovest shares will be issued to Wira kristal owners Datuk Lim Kang Hoo and Datuk Haris Onn Tun Hussein. Currently, the Duke is revenuegenerating and cash flow-positive, Ekovest said. (BT)
Bank Muamalat Malaysia Bhd will focus on increasing the number of non-Muslim customers to enhance the market of various Islamic banking products and services. Chairman Tan Sri Dr Mohd Munir Abdul Majid said that presently, the percentage of non-Muslims using Bank Muamalat's services was 20% for the deposits segment and 40% for the financing segment. (Bernama)
Soon-to-be-listed Sentoria Group Bhd is in talks with state-owned investment fund Permodalan Nasional Bhd (PNB) to develop an integrated resort (IR) city in Morib, Selangor. Sentoria is the developer and operator of the Bukit Gambang Resort City (BGRC) in Kuantan, Pahang. The company is slated to be listed on the Main Market of Bursa Malaysia on Feb 23. A source familiar with the matter said an agreement between Sentoria and PNB is expected to be sealed soon. "The discussions are in an advanced stage to develop recreational and supporting elements such as theme parks and MICE (meeting, incentive, convention and exhibition) facilities there on a joint venture (JV) basis. The project will involve developing at least 80ha of land owned by PNB," the source told SunBiz. "Under the JV, Sentoria will emulate the integrated property development concept of BGRC and bring it to Morib." It is understood that the proposed project is part of Morib Beach Resort, a 320ha development project of which PNB Deve
lopment Sdn Bhd, a unit of PNB, is the master developer. (Sun)
MASkargo Sdn Bhd, which received its third Airbus A330-200F yesterday, is targeting RM2.4bn in revenue for the financial year ending Dec 31, 2012, driven by increased trade in intra-Asian markets, said its acting CEO Mohd Yunus Idris. For last year, MASkargo is expected to achieve a revenue of over RM2bn. "We are still in the closing period and will be announcing our results for financial year 2011 soon. We are expecting revenue to exceed RM2bn," he said, adding that in 2010, MASkargo posted RM2.4bn in revenue. (Sun)
Datuk Goh Tian Chuan‟s special purpose vehicle Temasek Formation Bhd (TFB) has received the Securities Commission‟s approval to merge Jotech Holdings Bhd, and AIC Corporation Bhd and AutoV Corporation Bhd. The proposed merger of the three companies for a total consideration of about RM696m would be satisfied via the issuance of new Temasek Formation shares. Goh, who is the group executive chairman of Jotech and AIC, described the SC approval as “an important milestone for the three PLCs and will leverage the groups plans to achieve greater heights”. When completed, the merger would create a larger group in terms of market capitalisation, streamline the multi-tiered shareholding structure and unlock potential intrinsic values. “The full value of the business potential of Jotech, AIC and AutoV is expected to be accurately reflected at TFB level,” he said. (Financial Daily)
QSR Brands Bhd has acquired 1.6m units of Al-Aqar Healthcare REIT from the open market for a total purchase consideration of RM1.9m. The purchase was funded by internally-generated funds. Rationale for the purchase was the opportunity for capital appreciation given Al-Aqar‟s future acquisition plans and its stable income stream from tenants. (BMSB)
Malaysia and Singapore are combining efforts and resources in a strategic entertainment and media industry alliance to penetrate the global market. To jumpstart the initiative, Singapore's Media Development Authority (MDA) will be leading 33 entertainment and media companies to Kuala Lumpur from Jan 30 to Feb 1, and they will be hosted and facilitated by Malaysia’s National Film Development Corporation (FINAS). In a statement, Global Creative and Media Agency (GCMA) said FINAS and MDA have been in talks towards concretising a co-production agreement since October last year. (BT)
IJM Corp to raise stake in KEuro
The potentially huge contracts spin-off from the RM7.07bn West Coast Expressway (WCE) project has spearheaded IJM Corp into the spotlight. But not to be forgotten is Kumpulan Europlus (KEuro), which could see more corporate exercises. “For a bigger exposure to the WCE concession, IJM Corp is likely to increase its stake in KEuro, which is now only 22.7%. It may not want to privatise KEuro, but certainly it may want to have a bigger shareholding in the company,” said a market observer. (Financial Daily)
New management team for Proton likely following takeover
Speculation over the future of the top management at Proton Holdings has surfaced with reports indicating that DRB-Hicom is keen to get its own people in the top posts of the national carmaker. News reports quoting sources said DRB-Hicom was keen to reshuffle Proton's management in the next two to three weeks. Current Proton chairman Datuk Seri Mohd Nadzmi Mohd Salleh and managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir are said to be on top of the list of those to be replaced. (StarBiz)
MAHB plans share placement to raise RM598.4m
Malaysia Airports Holdings (MAHB) plans to raise RM598.40m from a proposed share placement to finance the new low cost carrier terminal at Kuala Lumpur International Airport (KLIA2). MAHB said it planned to issue 110m new shares, which was up to 10% of its issued and paid-up share capital, to investors to be identified via a book building exercise. RM590m would be used to part finance the additional capex for KLIA2 while the remaining RM8.4m would be used to defray expenses relating to the proposed private placement. (Financial Daily) Please see accompanying report
SC committee shot down general offer for E&O
SC task force and its senior management had recommended that Sime Darby triggered the mandatory offer obligation for the remaining shares in E&O, but the recommendation was not agreed upon by the takeovers and mergers committee. The task force recommended that a new party acting in concert be formed between Sime Darby’s wholly-owned Sime Darby Nominees SB (SDN) and Datuk Terry Tham. Both collectively held more than 33% of the voting shares in E&O. (Financial Daily)
USD330m BDSN loan boosts Maybank's reach
The Maybank Group has concluded the syndication of a USD330.6m (RM1bn) term facility for Indonesia's PT Bajradaya Sentranusa (BDSN). The 10-year facility is segregated into dual-currency conventional tranches of USD187.5m (RM570m) and IDR400bn (RM126m) as well as USD100m (RM304m) in an Islamic tranche. Proceeds will be used to take over the entire existing project loans for the construction of the 2x90 megawatt Asahan 1 Hydroelectric Power Plant (Asahan 1 Hydroplant) located in North Sumatra, Indonesia, said Maybank in a statement. (BT)
DRB-HICOM Bhd is understood to have hosted two Volkswagen AG Group directors last Thursday. Business Times understands that the two met key stakeholders of DRB-HICOM, including its top management. “They also reviewed all Proton Holdings Bhd‟s models,” said a source. It is understood that the Volkswagen directors were here to evaluate the possibility of having a collaborative technical agreement on technology transfer with Proton. “This is the first step and I think that there will be many more such meetings before a deal could be struck,” said the source. (BT)
Malaysia is prepared to submit comments to the US Environmental Protection Agency (EPA), criticising its recent actions which could lead to a trade war of commodities. EPA analysis shows that biodiesel and renewable diesel produced from palm oil from Malaysia and Indonesia do not meet the minimum 20% lifecycle Greenhouse-gases reduction threshold needed to qualify as renewable fuel under the Renewable Fuel Standard (RFS) programme. (BT)
CIMB Group Holdings Bhd is optimistic new regulations under consideration in Indonesia won't force it to dump its controlling stake in its Indonesian banking subsidiary. The group's chief executive Nazir Razak said CIMB is hoping it will be able to hold on to its 97% stake in Indonesia's fifth-largest bank, CIMB Niaga. (WSJ)
Transparency International Malaysia (TI-M) has expressed concern over the apparent lack of transparency and proper procedure in the awarding of the RM7.07bn West Coast Expressway concession project. Its president, Datuk Paul Low said this mega project would involve massive public financing of a soft loan of RM2.24bn and payment of RM980m for land acquisition, and an unprecedented 60-year toll concession. “TI-M views with concern the apparent lack of transparency and proper procedure in the award. Given the public funding and long concession period, there could have been proper governance and transparency in the award through an open, transparent and competitive procurement process and public disclosure of the terms and conditions of the contract,” he said in a statement. (Financial Daily)
AirAsia Bhd flew 29.86m passengers in 2011, up 16.27% from 25.68m the previous year. The carrier carried 7.93m passengers, a 12.3% increase in 4QFY11. Its capacity also rose 13.5% to 37.5m while load factor increased to 80%, up 2%. Reuters reported that Southeast Asian carriers are expected to cash in on the increasing interest from both business and leisure travelers in Myanmar, which in recent months has announced some democratic reforms. Thai AirAsia is looking to add new routes into Mandalay and Bagan, Myanmar‟s inland cultural centres. (Financial Daily)
Wah Seong is confident of securing at least RM1.5bn of its current tenderbook of RM4.9bn, mostly in international oil and gas service projects. Managing director Giancarlo Maccagno said based on its track record, the company has a 20%-30% success rate on tenders. The company‟s current order book stands at RM1.3bn. Maccagno said the company is keen on merger & acquisition (M&A) to grow the company and is always in the process of reviewing possible opportunities. He said Wah Seong is currently in discussion with a potential company for a M&A. (Malaysian Reserve)
Ekovest will soon add Duta-Ulu Kelang Expressway (Duke) into its books under a RM325m share swap deal. Ekovest will issue 126.7m new shares at an issue price of RM2.75 each in return for a 100% stake in Wira Kristal Sdn Bhd. Wira Kristal owns 70% of Nuzen Corp Sdn Bhd, which has a 34-year concession of Duke. The new Ekovest shares will be issued to Wira kristal owners Datuk Lim Kang Hoo and Datuk Haris Onn Tun Hussein. Currently, the Duke is revenuegenerating and cash flow-positive, Ekovest said. (BT)
Bank Muamalat Malaysia Bhd will focus on increasing the number of non-Muslim customers to enhance the market of various Islamic banking products and services. Chairman Tan Sri Dr Mohd Munir Abdul Majid said that presently, the percentage of non-Muslims using Bank Muamalat's services was 20% for the deposits segment and 40% for the financing segment. (Bernama)
Soon-to-be-listed Sentoria Group Bhd is in talks with state-owned investment fund Permodalan Nasional Bhd (PNB) to develop an integrated resort (IR) city in Morib, Selangor. Sentoria is the developer and operator of the Bukit Gambang Resort City (BGRC) in Kuantan, Pahang. The company is slated to be listed on the Main Market of Bursa Malaysia on Feb 23. A source familiar with the matter said an agreement between Sentoria and PNB is expected to be sealed soon. "The discussions are in an advanced stage to develop recreational and supporting elements such as theme parks and MICE (meeting, incentive, convention and exhibition) facilities there on a joint venture (JV) basis. The project will involve developing at least 80ha of land owned by PNB," the source told SunBiz. "Under the JV, Sentoria will emulate the integrated property development concept of BGRC and bring it to Morib." It is understood that the proposed project is part of Morib Beach Resort, a 320ha development project of which PNB Deve
lopment Sdn Bhd, a unit of PNB, is the master developer. (Sun)
MASkargo Sdn Bhd, which received its third Airbus A330-200F yesterday, is targeting RM2.4bn in revenue for the financial year ending Dec 31, 2012, driven by increased trade in intra-Asian markets, said its acting CEO Mohd Yunus Idris. For last year, MASkargo is expected to achieve a revenue of over RM2bn. "We are still in the closing period and will be announcing our results for financial year 2011 soon. We are expecting revenue to exceed RM2bn," he said, adding that in 2010, MASkargo posted RM2.4bn in revenue. (Sun)
Datuk Goh Tian Chuan‟s special purpose vehicle Temasek Formation Bhd (TFB) has received the Securities Commission‟s approval to merge Jotech Holdings Bhd, and AIC Corporation Bhd and AutoV Corporation Bhd. The proposed merger of the three companies for a total consideration of about RM696m would be satisfied via the issuance of new Temasek Formation shares. Goh, who is the group executive chairman of Jotech and AIC, described the SC approval as “an important milestone for the three PLCs and will leverage the groups plans to achieve greater heights”. When completed, the merger would create a larger group in terms of market capitalisation, streamline the multi-tiered shareholding structure and unlock potential intrinsic values. “The full value of the business potential of Jotech, AIC and AutoV is expected to be accurately reflected at TFB level,” he said. (Financial Daily)
QSR Brands Bhd has acquired 1.6m units of Al-Aqar Healthcare REIT from the open market for a total purchase consideration of RM1.9m. The purchase was funded by internally-generated funds. Rationale for the purchase was the opportunity for capital appreciation given Al-Aqar‟s future acquisition plans and its stable income stream from tenants. (BMSB)
Malaysia and Singapore are combining efforts and resources in a strategic entertainment and media industry alliance to penetrate the global market. To jumpstart the initiative, Singapore's Media Development Authority (MDA) will be leading 33 entertainment and media companies to Kuala Lumpur from Jan 30 to Feb 1, and they will be hosted and facilitated by Malaysia’s National Film Development Corporation (FINAS). In a statement, Global Creative and Media Agency (GCMA) said FINAS and MDA have been in talks towards concretising a co-production agreement since October last year. (BT)
IJM Corp to raise stake in KEuro
The potentially huge contracts spin-off from the RM7.07bn West Coast Expressway (WCE) project has spearheaded IJM Corp into the spotlight. But not to be forgotten is Kumpulan Europlus (KEuro), which could see more corporate exercises. “For a bigger exposure to the WCE concession, IJM Corp is likely to increase its stake in KEuro, which is now only 22.7%. It may not want to privatise KEuro, but certainly it may want to have a bigger shareholding in the company,” said a market observer. (Financial Daily)
New management team for Proton likely following takeover
Speculation over the future of the top management at Proton Holdings has surfaced with reports indicating that DRB-Hicom is keen to get its own people in the top posts of the national carmaker. News reports quoting sources said DRB-Hicom was keen to reshuffle Proton's management in the next two to three weeks. Current Proton chairman Datuk Seri Mohd Nadzmi Mohd Salleh and managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir are said to be on top of the list of those to be replaced. (StarBiz)
MAHB plans share placement to raise RM598.4m
Malaysia Airports Holdings (MAHB) plans to raise RM598.40m from a proposed share placement to finance the new low cost carrier terminal at Kuala Lumpur International Airport (KLIA2). MAHB said it planned to issue 110m new shares, which was up to 10% of its issued and paid-up share capital, to investors to be identified via a book building exercise. RM590m would be used to part finance the additional capex for KLIA2 while the remaining RM8.4m would be used to defray expenses relating to the proposed private placement. (Financial Daily) Please see accompanying report
SC committee shot down general offer for E&O
SC task force and its senior management had recommended that Sime Darby triggered the mandatory offer obligation for the remaining shares in E&O, but the recommendation was not agreed upon by the takeovers and mergers committee. The task force recommended that a new party acting in concert be formed between Sime Darby’s wholly-owned Sime Darby Nominees SB (SDN) and Datuk Terry Tham. Both collectively held more than 33% of the voting shares in E&O. (Financial Daily)
USD330m BDSN loan boosts Maybank's reach
The Maybank Group has concluded the syndication of a USD330.6m (RM1bn) term facility for Indonesia's PT Bajradaya Sentranusa (BDSN). The 10-year facility is segregated into dual-currency conventional tranches of USD187.5m (RM570m) and IDR400bn (RM126m) as well as USD100m (RM304m) in an Islamic tranche. Proceeds will be used to take over the entire existing project loans for the construction of the 2x90 megawatt Asahan 1 Hydroelectric Power Plant (Asahan 1 Hydroplant) located in North Sumatra, Indonesia, said Maybank in a statement. (BT)
20120131 1002 Global Market Related News.
Asian Stocks Swing Between Gains, Losses on Europe, Japan Production Data (Source: Bloomberg)
Asian stocks swung between gains and losses as European leaders failed to complete a Greek rescue program, U.S. consumer spending stalled and Japan’s industrial production grew faster than estimated last month. Canon Inc., the world’s biggest camera maker, sank 4.5 percent after its president resigned amid forecasts for slowing net income growth to miss estimates. Daewoo Shipbuilding & Marine Engineering Co., a South Korean shipbuilder, gained 4.2 percent after winning a $556 million contract to supply tankers to Kuwait Oil Tanker Co. The MSCI Asia Pacific Index (MXAP) added 0.2 percent to 122.39 as of 9:41 a.m. in Tokyo, having swung between gains and losses at least eight times. The measure has risen the past six weeks, the longest streak since a seven-week stretch that ended Oct. 15, 2010, amid bets China will ease lending curb, the U.S. economy is improving and Europe is containing its debts crisis.
Japanese Stocks Snap Three-Day Drop as Greece Makes Progress in Debt Talks (Source: Bloomberg)
Japanese stocks rose, snapping a three-day losing streak, after Greece’s Prime Minister said major progress had been made in debt talks with bondholders. Mazda Motor Corp. (7261), a carmaker that gets almost a fifth of its sales from Europe, climbed 1.6 percent. Advantest Corp. (6857), the world’s biggest maker of memory-chip testers, jumped 5 percent after Daiwa Securities Group Inc. raised the stock’s rating. Fanuc Corp. (6954), Japan’s top manufacturer of factory robots, rose 1.4 percent after the nation’s industrial production increased more than expected. The Nikkei 225 Stock Average rose 0.3 percent to 8,820.29 as of 10:07 a.m. in Tokyo. The broader Topix Index added 0.1 percent to 757.80, after falling as much as 0.3 percent earlier as European leaders yesterday struggled to complete a Greek rescue package.
U.S. Stocks Decline Amid Concern About Greek Debt Negotiations (Source: Bloomberg)
U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as European leaders sparred with Greece over a second rescue program. Equities pared declines as some of the biggest technology companies rallied. Apple Inc. (AAPL) and Microsoft Corp. (MSFT) added at least 1.2 percent. Bank of America Corp. (BAC) fell 3 percent after Goldman Sachs Group Inc. cut its recommendation. Halliburton Co. (HAL) and Chesapeake Energy Corp. dropped more than 1.1 percent as oil slumped. Gannett Co. (GCI), the owner of 82 newspapers including USA Today, tumbled 6.9 percent as its profit plunged 33 percent. The S&P 500 decreased 0.3 percent to 1,313.01 at 4 p.m. New York time. The benchmark index for American equities trimmed a decline of as much as 1.2 percent. The Dow Jones Industrial Average retreated 6.74 points, or 0.1 percent, to 12,653.72.
European Stocks Fall Most in Six Weeks; BNP Paribas Tumbles on French Tax (Source: Bloomberg)
European stocks dropped the most in six weeks as Portuguese bonds sank amid concern a meeting of the region’s leaders will fail to draw a line under the sovereign- debt crisis. BNP Paribas SA (BNP) tumbled 7.1 percent, leading French banks lower, as President Nicolas Sarkozy said he will unilaterally impose a financial-transaction tax. Royal Philips Electronics NV (PHIA) fell 2.2 percent after reporting a larger-than-estimated loss. Hochtief AG (HOT) slid 5.8 percent after saying it will post a wider annual loss than previously anticipated. The Stoxx Europe 600 Index retreated 1.1 percent to 252.52 at the close of trading, the largest slide since Dec. 14. The benchmark gauge has still rallied 18 percent from its Sept. 22 low as the U.S. economy maintained its recovery and speculation grew that the euro area will contain the sovereign-debt crisis.
U.S. Lowers First-Quarter Borrowing Estimate (Source: Bloomberg)
The U.S. Treasury Department lowered its borrowing estimate for the current quarter by 18 percent to $444 billion, reflecting higher receipts and lower spending. The Treasury reduced its net borrowing estimate for January through March by $97 billion from a projection of $541 billion three months ago. U.S. Treasury officials also see net borrowing of $200 billion in the second quarter. The estimates set the stage for the Treasury’s quarterly refunding announcement on Feb. 1. An accelerating economy is boosting tax revenue, helping the administration of President Barack Obama control a budget deficit it forecasts will narrow to $956 billion this fiscal year. Gross domestic product expanded at a 2.8 percent annual pace in the fourth quarter of last year, the most since the second quarter of 2010.
U.S. Consumer Spending Stalls as Savings Rise (Source: Bloomberg)
Consumer spending stalled in December as Americans took advantage of a jump in incomes to restore depleted savings, indicating households remain focused on repairing finances. Purchases were little changed after rising 0.1 percent the prior month, Commerce Department figures showed today in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1 percent increase in sales. Incomes climbed by the most in almost a year, pushing the savings rate to a four-month high. The data illustrate the importance of sustained gains in jobs and wages to ensuring the growth of household purchases, the biggest part of the economy. The weak end to the quarter makes it more likely that consumer spending will cool early this year, underscoring the Federal Reserve’s decision to leave interest rates low until 2014.
Longest S&P 500 Valuation Slump Since Nixon Discounts Profit (Source: Bloomberg)
Valuations for U.S. equities have been stuck below the five-decade average for the longest period since Richard Nixon’s presidency, a sign investors don’t trust earnings even after a three-year bull market. Analysts estimate profits in the Standard & Poor’s 500 Index will reach a record $104.78 this year after increasing 125 percent since the end of 2009, the fastest expansion in a quarter century, according to data compiled by Bloomberg. American companies are boosting income so much that even after stocks doubled, the S&P 500 hasn’t traded above its 16.4 mean ratio for 446 days, the longest stretch since the 13 years beginning in 1973.
Battered by the 14 percent decline in the S&P 500 since 2000, the worst financial crisis since the Great Depression and the so-called flash crash 21 months ago, investors are staying away from stocks, even after record profits, 10 quarters of U.S. economic growth and promises by the Federal Reserve to keep interest rates near zero through 2014. Of the $37 trillion erased from global equities in the credit crisis, $24 trillion has been restored.
Fed Says Business-Loan Demand Climbed Last Quarter as Economy Accelerated (Source: Bloomberg)
Demand for business loans increased in the fourth quarter as economic growth accelerated, according to a Federal Reserve survey of senior loan officers at banks. Seventeen of 56 banks reported stronger demand among companies with $50 million in annual sales or more, according to the survey released today in Washington, while six reported weaker demand. Demand among small businesses for loans increased by the most in any quarter since 2005. Economic growth accelerated last quarter to a 2.8 percent annual rate, the fastest pace since the second quarter of 2010. The expansion still isn’t strong enough to push down an unemployment rate that has been at 8.5 percent or higher for 34 consecutive months, prompting the Fed last week to say its benchmark interest rate will be kept near zero until at least the end of 2014.
WTO Rejects Chinese Appeal of Ruling Against Mineral Curbs (Source: Bloomberg)
World Trade Organization judges rejected China’s appeal of a ruling that found restrictions on exports of nine raw materials break global rules and give the country’s manufacturers an unfair edge over competitors. The WTO concluded on July 5 that Chinese quotas, export duties and license requirements on overseas shipments of industrial ingredients including coke, zinc and bauxite are discriminatory. The restrictions have stoked tensions between China and its trading partners, which accuse the Chinese government of having unfair commerce and currency policies. U.S. Trade Representative Ron Kirk called the Appellate Body report a “tremendous victory,” particularly for manufacturers and workers. The decision “ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field,” Kirk said in an e-mailed statement from Washington.
South Korea’s Industrial Output Declines as Europe’s Crisis Saps Demand (Source: Bloomberg)
South Korea’s industrial production fell for a third month in December as Europe’s sovereign-debt crisis hurt exports and business confidence. Output (KOIPIMOM) declined 0.9 percent from November, when it dropped a revised 0.3 percent, Statistics Korea said today, missing all 11 economist forecasts in a Bloomberg News survey. The median estimate was a 1.1 percent gain. Production rose 2.8 percent from a year ago after gaining a revised 5.8 percent in November, compared with a 4.1 percent rise estimated by economists. South Korea, which grew the least in two years in the fourth quarter, is facing increased uncertainty from Europe’s debt crisis, Finance Minister Bahk Jae Wan said yesterday. The Bank of Korea refrained from raising interest rates for a seventh month on Jan. 13 to support growth amid faltering global expansion and signs of easing inflation.
Japan Jobless Rate Rises on Strong Yen (Source: Bloomberg)
Japan’s unemployment rate unexpectedly rose last month as the strong yen continues to squeeze manufacturers. The jobless rate was 4.6 percent in December, the statistics bureau said in Tokyo today. The median forecast of 30 economists surveyed by Bloomberg News was for the rate to remain at 4.5 percent. The government has approved four supplementary budgets worth about 20 trillion yen ($262 billion) to stoke demand and rebuild after the March 11 earthquake and tsunami. Those funds are helping support the labor market, offsetting planned job reductions at manufacturers including NEC Corp. (6701)
“Labor offers in the devastated areas have been quite strong, and this will continue to support the labor market.” Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo, said before the report. “Manufacturers have become cautious about hiring people in the context of global growth, the yen’s appreciation and uncertainty surrounding electricity supply” stemming from the shutdown of nuclear reactors since the disaster, he said.
Japan Industrial Output Increases Most in 7 Months (Source: Bloomberg)
Japan’s industrial output increased the most in seven months in December as manufacturers made up for disruptions caused by Thailand’s worst floods in 70 years. Factory production rose 4 percent from November, when production slid because of supply disruptions, the trade ministry said in Tokyo today. The median estimate of 30 economists surveyed by Bloomberg News was for a 3 percent gain. Manufacturers from Honda Motor Co. to Toyota Motor Corp. are optimistic about demand as they recover from a year of natural disasters at home and in Thailand. A stronger currency and a slowing global economy weighed down by Europe’s fiscal woes are risks for growth in Japan.
Confidence in Euro Area Increases at Slower Pace Than Estimated: Economy (Source: Bloomberg)
Euro-area confidence in the economic outlook improved less than forecast in January as the region’s leaders struggled to stamp out a two-year-old financial crisis and revive growth. An index of executive and consumer sentiment in the 17- nation euro area rose to 93.4 from a revised 92.8 in December, the European Commission in Brussels said today. That’s the first increase since February 2011, though it’s less than the median prediction of 93.8 in a Bloomberg survey of 30 economists. European Union leaders convene for their first summit of 2012 in Brussels today as a deteriorating economy and the struggle to complete a Greek debt swap risk undermining their crisis-fighting efforts. European Central Bank (EURR002W) President Mario Draghi said on Jan. 19 that 2012 will be a “much better” year for the single-currency area, though the International Monetary Fund forecast a recession.
Sarkozy Transaction Tax May Drive Investors Away From French Stock Market (Source: Bloomberg)
The French stock market, Europe’s second-biggest by value, may fall out of favor with investors after President Nicolas Sarkozy unveiled plans to unilaterally impose a 0.1 percent tax on financial transactions. “Even if the tax isn’t high, market participants who have a choice of stocks trading in Paris or elsewhere will go elsewhere,” said Yves Maillot, the Paris-based head of investments at Robeco Gestions SA, which oversees $6.8 billion. “That’s what we can fear.” Sarkozy, 57, who faces elections in a two-round vote in April and May, wants to make good on a pledge he made to impose such a tax when France last year held the presidency of both the G-8 and G-20 group of countries. He said Jan. 29 that France will impose the levy starting in August in spite of opposition from banks. The tax will apply to share purchases, including high frequency trading, and credit default swap transactions.
Euro-Area Debt Sales Top $43 Billion in Week as Fitch Threatens Sentiment (Source: Bloomberg)
European nations including Italy, Belgium and Spain may sell more than 33 billion euros ($43.3 billion) of securities this week as credit-rating cuts risk upending optimism the region’s debt crisis is being contained. Italy sold 5.574 billion euros out of a target of 6 billion euros of five- and 10-year debt today, and issued 1.9 billion euros out of a maximum goal of 2 billion euros of securities due in April 2016 and March 2021. Belgium sells as much as 3 billion euros of bills tomorrow, with Spain, Portugal, Germany and France issuing 13 different maturities in the five days.
While Italian and Spanish 10-year yields have fallen more than 1 percentage point from November highs as the European Central Bank offered banks unlimited three-year loans and Greek debt-swap talks pressed on, Fitch Ratings joined Standard & Poor’s this month in downgrading the nations’ credit. European Union leaders are meeting today in Brussels in a bid to wrap up a deficit-control treaty aimed at stemming the crisis, now in its third year.
Merkel Signals Greece Debt Deal Delay (Source: Bloomberg)
European leaders sparred with Greece over a second rescue program, clouding progress toward a permanent aid fund and tougher budget rules designed to stabilize the euro. Greece faced criticism that its economic makeover is faltering, and it fended off German-led calls for a European overseer to take command of its budget after its deficits surpassed targets for two years. “What the Greeks have to do is show they are ready to implement the package,” Dutch Prime Minister Mark Rutte told reporters as he arrived for a European Union summit in Brussels today. “We can help Greece through this difficult phase, but then Greece has to execute all agreements they made with us.”
EU Nears Confrontation Over Greek Rescue (Source: Bloomberg)
European governments moved toward a confrontation over a second rescue package for Greece, just as a dimming fiscal outlook in Portugal opened a new front in the debt crisis. Euro leaders left a Brussels summit late yesterday with no accord over how to plug Greece’s widening budget hole and German Chancellor Angela Merkel voicing frustration with the Athens government’s failure to carry out an economic makeover. “Greece’s debt sustainability is especially bad,” Merkel told reporters. “You have to find a way through more action by the Greek government, more contributions by private creditors, for example, in order to close this gap.”
Asian stocks swung between gains and losses as European leaders failed to complete a Greek rescue program, U.S. consumer spending stalled and Japan’s industrial production grew faster than estimated last month. Canon Inc., the world’s biggest camera maker, sank 4.5 percent after its president resigned amid forecasts for slowing net income growth to miss estimates. Daewoo Shipbuilding & Marine Engineering Co., a South Korean shipbuilder, gained 4.2 percent after winning a $556 million contract to supply tankers to Kuwait Oil Tanker Co. The MSCI Asia Pacific Index (MXAP) added 0.2 percent to 122.39 as of 9:41 a.m. in Tokyo, having swung between gains and losses at least eight times. The measure has risen the past six weeks, the longest streak since a seven-week stretch that ended Oct. 15, 2010, amid bets China will ease lending curb, the U.S. economy is improving and Europe is containing its debts crisis.
Japanese Stocks Snap Three-Day Drop as Greece Makes Progress in Debt Talks (Source: Bloomberg)
Japanese stocks rose, snapping a three-day losing streak, after Greece’s Prime Minister said major progress had been made in debt talks with bondholders. Mazda Motor Corp. (7261), a carmaker that gets almost a fifth of its sales from Europe, climbed 1.6 percent. Advantest Corp. (6857), the world’s biggest maker of memory-chip testers, jumped 5 percent after Daiwa Securities Group Inc. raised the stock’s rating. Fanuc Corp. (6954), Japan’s top manufacturer of factory robots, rose 1.4 percent after the nation’s industrial production increased more than expected. The Nikkei 225 Stock Average rose 0.3 percent to 8,820.29 as of 10:07 a.m. in Tokyo. The broader Topix Index added 0.1 percent to 757.80, after falling as much as 0.3 percent earlier as European leaders yesterday struggled to complete a Greek rescue package.
U.S. Stocks Decline Amid Concern About Greek Debt Negotiations (Source: Bloomberg)
U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as European leaders sparred with Greece over a second rescue program. Equities pared declines as some of the biggest technology companies rallied. Apple Inc. (AAPL) and Microsoft Corp. (MSFT) added at least 1.2 percent. Bank of America Corp. (BAC) fell 3 percent after Goldman Sachs Group Inc. cut its recommendation. Halliburton Co. (HAL) and Chesapeake Energy Corp. dropped more than 1.1 percent as oil slumped. Gannett Co. (GCI), the owner of 82 newspapers including USA Today, tumbled 6.9 percent as its profit plunged 33 percent. The S&P 500 decreased 0.3 percent to 1,313.01 at 4 p.m. New York time. The benchmark index for American equities trimmed a decline of as much as 1.2 percent. The Dow Jones Industrial Average retreated 6.74 points, or 0.1 percent, to 12,653.72.
European Stocks Fall Most in Six Weeks; BNP Paribas Tumbles on French Tax (Source: Bloomberg)
European stocks dropped the most in six weeks as Portuguese bonds sank amid concern a meeting of the region’s leaders will fail to draw a line under the sovereign- debt crisis. BNP Paribas SA (BNP) tumbled 7.1 percent, leading French banks lower, as President Nicolas Sarkozy said he will unilaterally impose a financial-transaction tax. Royal Philips Electronics NV (PHIA) fell 2.2 percent after reporting a larger-than-estimated loss. Hochtief AG (HOT) slid 5.8 percent after saying it will post a wider annual loss than previously anticipated. The Stoxx Europe 600 Index retreated 1.1 percent to 252.52 at the close of trading, the largest slide since Dec. 14. The benchmark gauge has still rallied 18 percent from its Sept. 22 low as the U.S. economy maintained its recovery and speculation grew that the euro area will contain the sovereign-debt crisis.
U.S. Lowers First-Quarter Borrowing Estimate (Source: Bloomberg)
The U.S. Treasury Department lowered its borrowing estimate for the current quarter by 18 percent to $444 billion, reflecting higher receipts and lower spending. The Treasury reduced its net borrowing estimate for January through March by $97 billion from a projection of $541 billion three months ago. U.S. Treasury officials also see net borrowing of $200 billion in the second quarter. The estimates set the stage for the Treasury’s quarterly refunding announcement on Feb. 1. An accelerating economy is boosting tax revenue, helping the administration of President Barack Obama control a budget deficit it forecasts will narrow to $956 billion this fiscal year. Gross domestic product expanded at a 2.8 percent annual pace in the fourth quarter of last year, the most since the second quarter of 2010.
U.S. Consumer Spending Stalls as Savings Rise (Source: Bloomberg)
Consumer spending stalled in December as Americans took advantage of a jump in incomes to restore depleted savings, indicating households remain focused on repairing finances. Purchases were little changed after rising 0.1 percent the prior month, Commerce Department figures showed today in Washington. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1 percent increase in sales. Incomes climbed by the most in almost a year, pushing the savings rate to a four-month high. The data illustrate the importance of sustained gains in jobs and wages to ensuring the growth of household purchases, the biggest part of the economy. The weak end to the quarter makes it more likely that consumer spending will cool early this year, underscoring the Federal Reserve’s decision to leave interest rates low until 2014.
Longest S&P 500 Valuation Slump Since Nixon Discounts Profit (Source: Bloomberg)
Valuations for U.S. equities have been stuck below the five-decade average for the longest period since Richard Nixon’s presidency, a sign investors don’t trust earnings even after a three-year bull market. Analysts estimate profits in the Standard & Poor’s 500 Index will reach a record $104.78 this year after increasing 125 percent since the end of 2009, the fastest expansion in a quarter century, according to data compiled by Bloomberg. American companies are boosting income so much that even after stocks doubled, the S&P 500 hasn’t traded above its 16.4 mean ratio for 446 days, the longest stretch since the 13 years beginning in 1973.
Battered by the 14 percent decline in the S&P 500 since 2000, the worst financial crisis since the Great Depression and the so-called flash crash 21 months ago, investors are staying away from stocks, even after record profits, 10 quarters of U.S. economic growth and promises by the Federal Reserve to keep interest rates near zero through 2014. Of the $37 trillion erased from global equities in the credit crisis, $24 trillion has been restored.
Fed Says Business-Loan Demand Climbed Last Quarter as Economy Accelerated (Source: Bloomberg)
Demand for business loans increased in the fourth quarter as economic growth accelerated, according to a Federal Reserve survey of senior loan officers at banks. Seventeen of 56 banks reported stronger demand among companies with $50 million in annual sales or more, according to the survey released today in Washington, while six reported weaker demand. Demand among small businesses for loans increased by the most in any quarter since 2005. Economic growth accelerated last quarter to a 2.8 percent annual rate, the fastest pace since the second quarter of 2010. The expansion still isn’t strong enough to push down an unemployment rate that has been at 8.5 percent or higher for 34 consecutive months, prompting the Fed last week to say its benchmark interest rate will be kept near zero until at least the end of 2014.
WTO Rejects Chinese Appeal of Ruling Against Mineral Curbs (Source: Bloomberg)
World Trade Organization judges rejected China’s appeal of a ruling that found restrictions on exports of nine raw materials break global rules and give the country’s manufacturers an unfair edge over competitors. The WTO concluded on July 5 that Chinese quotas, export duties and license requirements on overseas shipments of industrial ingredients including coke, zinc and bauxite are discriminatory. The restrictions have stoked tensions between China and its trading partners, which accuse the Chinese government of having unfair commerce and currency policies. U.S. Trade Representative Ron Kirk called the Appellate Body report a “tremendous victory,” particularly for manufacturers and workers. The decision “ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field,” Kirk said in an e-mailed statement from Washington.
South Korea’s Industrial Output Declines as Europe’s Crisis Saps Demand (Source: Bloomberg)
South Korea’s industrial production fell for a third month in December as Europe’s sovereign-debt crisis hurt exports and business confidence. Output (KOIPIMOM) declined 0.9 percent from November, when it dropped a revised 0.3 percent, Statistics Korea said today, missing all 11 economist forecasts in a Bloomberg News survey. The median estimate was a 1.1 percent gain. Production rose 2.8 percent from a year ago after gaining a revised 5.8 percent in November, compared with a 4.1 percent rise estimated by economists. South Korea, which grew the least in two years in the fourth quarter, is facing increased uncertainty from Europe’s debt crisis, Finance Minister Bahk Jae Wan said yesterday. The Bank of Korea refrained from raising interest rates for a seventh month on Jan. 13 to support growth amid faltering global expansion and signs of easing inflation.
Japan Jobless Rate Rises on Strong Yen (Source: Bloomberg)
Japan’s unemployment rate unexpectedly rose last month as the strong yen continues to squeeze manufacturers. The jobless rate was 4.6 percent in December, the statistics bureau said in Tokyo today. The median forecast of 30 economists surveyed by Bloomberg News was for the rate to remain at 4.5 percent. The government has approved four supplementary budgets worth about 20 trillion yen ($262 billion) to stoke demand and rebuild after the March 11 earthquake and tsunami. Those funds are helping support the labor market, offsetting planned job reductions at manufacturers including NEC Corp. (6701)
“Labor offers in the devastated areas have been quite strong, and this will continue to support the labor market.” Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo, said before the report. “Manufacturers have become cautious about hiring people in the context of global growth, the yen’s appreciation and uncertainty surrounding electricity supply” stemming from the shutdown of nuclear reactors since the disaster, he said.
Japan Industrial Output Increases Most in 7 Months (Source: Bloomberg)
Japan’s industrial output increased the most in seven months in December as manufacturers made up for disruptions caused by Thailand’s worst floods in 70 years. Factory production rose 4 percent from November, when production slid because of supply disruptions, the trade ministry said in Tokyo today. The median estimate of 30 economists surveyed by Bloomberg News was for a 3 percent gain. Manufacturers from Honda Motor Co. to Toyota Motor Corp. are optimistic about demand as they recover from a year of natural disasters at home and in Thailand. A stronger currency and a slowing global economy weighed down by Europe’s fiscal woes are risks for growth in Japan.
Confidence in Euro Area Increases at Slower Pace Than Estimated: Economy (Source: Bloomberg)
Euro-area confidence in the economic outlook improved less than forecast in January as the region’s leaders struggled to stamp out a two-year-old financial crisis and revive growth. An index of executive and consumer sentiment in the 17- nation euro area rose to 93.4 from a revised 92.8 in December, the European Commission in Brussels said today. That’s the first increase since February 2011, though it’s less than the median prediction of 93.8 in a Bloomberg survey of 30 economists. European Union leaders convene for their first summit of 2012 in Brussels today as a deteriorating economy and the struggle to complete a Greek debt swap risk undermining their crisis-fighting efforts. European Central Bank (EURR002W) President Mario Draghi said on Jan. 19 that 2012 will be a “much better” year for the single-currency area, though the International Monetary Fund forecast a recession.
Sarkozy Transaction Tax May Drive Investors Away From French Stock Market (Source: Bloomberg)
The French stock market, Europe’s second-biggest by value, may fall out of favor with investors after President Nicolas Sarkozy unveiled plans to unilaterally impose a 0.1 percent tax on financial transactions. “Even if the tax isn’t high, market participants who have a choice of stocks trading in Paris or elsewhere will go elsewhere,” said Yves Maillot, the Paris-based head of investments at Robeco Gestions SA, which oversees $6.8 billion. “That’s what we can fear.” Sarkozy, 57, who faces elections in a two-round vote in April and May, wants to make good on a pledge he made to impose such a tax when France last year held the presidency of both the G-8 and G-20 group of countries. He said Jan. 29 that France will impose the levy starting in August in spite of opposition from banks. The tax will apply to share purchases, including high frequency trading, and credit default swap transactions.
Euro-Area Debt Sales Top $43 Billion in Week as Fitch Threatens Sentiment (Source: Bloomberg)
European nations including Italy, Belgium and Spain may sell more than 33 billion euros ($43.3 billion) of securities this week as credit-rating cuts risk upending optimism the region’s debt crisis is being contained. Italy sold 5.574 billion euros out of a target of 6 billion euros of five- and 10-year debt today, and issued 1.9 billion euros out of a maximum goal of 2 billion euros of securities due in April 2016 and March 2021. Belgium sells as much as 3 billion euros of bills tomorrow, with Spain, Portugal, Germany and France issuing 13 different maturities in the five days.
While Italian and Spanish 10-year yields have fallen more than 1 percentage point from November highs as the European Central Bank offered banks unlimited three-year loans and Greek debt-swap talks pressed on, Fitch Ratings joined Standard & Poor’s this month in downgrading the nations’ credit. European Union leaders are meeting today in Brussels in a bid to wrap up a deficit-control treaty aimed at stemming the crisis, now in its third year.
Merkel Signals Greece Debt Deal Delay (Source: Bloomberg)
European leaders sparred with Greece over a second rescue program, clouding progress toward a permanent aid fund and tougher budget rules designed to stabilize the euro. Greece faced criticism that its economic makeover is faltering, and it fended off German-led calls for a European overseer to take command of its budget after its deficits surpassed targets for two years. “What the Greeks have to do is show they are ready to implement the package,” Dutch Prime Minister Mark Rutte told reporters as he arrived for a European Union summit in Brussels today. “We can help Greece through this difficult phase, but then Greece has to execute all agreements they made with us.”
EU Nears Confrontation Over Greek Rescue (Source: Bloomberg)
European governments moved toward a confrontation over a second rescue package for Greece, just as a dimming fiscal outlook in Portugal opened a new front in the debt crisis. Euro leaders left a Brussels summit late yesterday with no accord over how to plug Greece’s widening budget hole and German Chancellor Angela Merkel voicing frustration with the Athens government’s failure to carry out an economic makeover. “Greece’s debt sustainability is especially bad,” Merkel told reporters. “You have to find a way through more action by the Greek government, more contributions by private creditors, for example, in order to close this gap.”
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