Bulls Ascendant as Wagers Climb to Three-Month High: Commodities (Source: Bloomberg)
Speculators raised bullish wagers on commodities to a three-month high on mounting speculation that more stimulus measures will boost demand for everything from oil to metals and crop prices will keep rising as drought spreads. Money managers raised their net-long positions across 18 U.S. futures and options by 7.5 percent to 1.13 million contracts in the week ended July 17, U.S. Commodity Futures Trading Commission data show. Wheat holdings reached a record, and corn bets climbed to the highest since March. Almost $2.5 trillion was added to the value of global equities since June 4 as investors anticipated policy makers would step in to bolster growth. Federal Reserve Chairman Ben S. Bernanke told Congress during testimony on July 18 that he is prepared to act to boost the recovery and central banks from Europe to China cut interest rates in the past several weeks. The worst U.S. drought in 56 years is parching crops, and a lack of rain is also wilting fields from Australia to Russia.
“You could probably call it a miniature stampede back into commodities,” said Jeffrey Sica, the Morristown, New Jersey- based president of SICA Wealth Management who helps oversee more than $1 billion of assets. “A lot of investors at this point see that increased liquidity in the market will mean more appreciation in raw-materials prices.”
Crop Sowing Delayed in Some Parts of India Due to Weak Rains (Source: Bloomberg)
The weakest monsoon rainfall in three years is delaying sowing of rice, oilseeds and lentils in several parts of India, Agriculture Secretary Ashish Bahuguna told reporters in New Delhi today. The deficient rains may prompt growers to shift to corn from peanuts in some parts, he said. The worst affected by the below-average rainfall are Karnataka, Gujarat, Maharashtra and Rajasthan states, he said. The area under all the monsoon-sown crops fell 14 percent to 53.4 million hectares from a year earlier, the agriculture ministry said yesterday. Monsoon, which accounts for more than 70 percent of India’s annual rainfall, is the worst since 2009 when showers were 22 percent less than a 50-year average.
Crop Traders Extend Bullish Streak on U.S. Drought: Commodities (Source: Bloomberg)
Corn and soybean traders are bullish for a 13th consecutive week on mounting concern that yields will keep dropping amid the worst U.S. drought in a half century. Twenty analysts surveyed by Bloomberg expect soybeans to climb next week, after reaching a record yesterday. A further five were bearish and three neutral. Nineteen predicted gains in corn, five saw a decline and three anticipated little change. Hedge funds are holding the biggest bet on rising soybeans since the beginning of May and the largest wager on corn since April, U.S. Commodity Futures Trading Commission data show.
The drought may persist in the Midwest for the rest of the growing season, the U.S. government said this week. Above- average temperatures and below-normal rainfall will continue through next week, according to meteorologist Telvent DTN. The 56 percent jump in corn and 28 percent gain in soybeans since mid-June may spur another bout of global food-price inflation, after surges in 2008 and 2011 that sparked civil unrest in developing countries, Barclays Plc said in a report July 18. “There’s not much reason for us to see a slowdown in the price rally,” said Erin FitzPatrick, an analyst at Rabobank International in London, who predicted in April that soybeans would reach a record. “The size of the 2012-13 harvest is shrinking every day that we don’t get rain or a cooling off in the U.S. It’s fundamentally still bullish, even though we’re at these record prices.”
Argentina Wheat Export Cap Benefits Heineken, Pig Farmers (Source: Bloomberg)
Argentina’s policy of capping wheat exports to contain food inflation is having the “perverse effect” of benefiting brewers such as Heineken NV (HEIA) and cheapening feed for pig farmers in China, wheat growers said. Argentine farmers in an area known in the first half of last century as the world’s granary basket will boost barley planting by 17 percent this year at the expense of wheat, which will shrink to the second-lowest in a century, the Buenos Aires Cereals Exchange said yesterday. Barley isn’t part of President Cristina Fernandez de Kirchner’s export restrictions. The government is considering increasing taxes on grain exports, Lapoliticaonline reported today.
Breweries such as Heineken and Anheuser-Busch InBev NV (ABI), the maker of Budweiser, stand to gain as Argentina lowers one of their main costs, Raul Maestre, the treasurer of Argentina’s wheat growers association said in a telephone interview yesterday. Growers are also attracted to barley as rising corn prices are causing pig and chicken farmers in China to switch to barley as feed, he said. “Farmers are running away from wheat because of this government intervention,” Daniel Miro, president of agro- industrial consulting company Novitas SA said in a telephone interview yesterday from Buenos Aires. “Barley is an emerging cereal.”
Wheat Market Recap Report (Source: CME)
September Wheat finished up 8 1/4 at 943 1/4, 1 1/2 off the high and 26 1/2 up from the low. December Wheat closed up 13 3/4 at 948 1/4. This was 26 up from the low and 3 1/4 off the high. September Chicago wheat traded higher into the closing bell, posting another new high for the move. Kansas City and Minneapolis wheat also traded higher on the day. Wheat found support from sharply higher corn market after weather forecasts show temperatures are expected to reach 95-105 degrees in Kansas, Missouri, South Dakota, Iowa, and Nebraska into next week; increasing stress on crops. Wheat is also being supported on shrinking production estimates in the Black Sea as warm and dry weather continues to lower yield potential. Current trade estimates peg Russian wheat production for 2012/13 near 45 million tonnes vs. the current USDA estimate of 49 million tonnes. The market believes the small US corn crop will force importers to use more feed wheat in the coming year. Japan's usage of corn in May dropped to a 20 year low as the world's largest importer of corn continues to use wheat. This trend is likely to remain intact going forward. Grain markets are trading higher despite the negative outside markets and a sharply higher US Dollar. September Oats closed up 3 1/2 at 387. This was 5 up from the low and 1 3/4 off the high.
Pro Farmer: After the Bell Wheat (Source: CME)
Recap Wheat futures saw another choppy day of trade, but bulls again carried the market into the close. Chicago and Minneapolis wheat settled moderately higher, while Kansas City wheat saw lighter gains. Wheat surged sharply higher week-over-week. Wheat's action was tied to that of the corn market this week and more of the same can in the week ahead. The corn rally has shown signs of sputtering, then surged higher. This signals a top is likely near.
Pro Farmer: After the Bell Corn Recap (Source: CME)
To cap off a strong week of price gains, September corn posted an all-time high for a front-month contract as traders fear next week's extreme heat will further damage yield potential and there's not enough rain in the forecast to really make a difference. Many traders had an upside target of $8.00 as the drought was gaining momentum, as they recognize that price should (and has) slowed demand. That's not to say prices won't or can't continue to rally, as focus is turning to areas where traders had anticipated near-trendline yield potential, only to see a forecast for increased stress next week.
Corn Market Recap for 7/20/2012 (Source: CME)
September Corn finished up 16 3/4 at 824 1/2, 4 1/4 off the high and 25 up from the low. December Corn closed up 17 1/4 at 795 3/4. This was 16 3/4 up from the low and 1 1/4 off the high. September and December corn traded sharply higher into the close. September corn posted a new high for the move while the December contract once again failed to move above the 800 level, offering a slightly negative technical view. The trade believes crop conditions could lose another 3-5% on their good/excellent ratings on Monday's Crop Condition report. Weather forecasts continue to look abysmal for US row crops the next two weeks with below normal rainfall and above normal temperatures in the central Midwest. Temperatures are expected to reach 95-105 degrees in Kansas, Missouri, South Dakota, Iowa, and Nebraska this week; increasing stress on crops. The blistering temperatures are expected to last until the middle of next week. Iran bought 50,000 tonnes of Brazilian corn today and sluggish export sales reported yesterday suggest demand is slowly backing off. The bearish demand headlines are being offset by lower corn yield estimates. A closely followed commodity weather agency revised their new crop corn yield to 136.2 bushels/acre. This was down from 152.2 bushels per acre. Yield could fall further if current weather patterns persist into August. Grain markets are trading higher despite the negative outside markets and a sharply higher US Dollar. September Rice finished up 0.04 at 15.535, equal to the high and 0.025 up from the low.
Shoppers may be spared worst of corn price surge
NEW YORK, July 19 (Reuters) - U.S. grain prices are soaring as the Midwest corn belt suffers its worst drought since 1956, but that doesn't mean grocery bills are about to jump.
Easing costs of other commodities, hedging strategies aimed at keeping corn costs in line and fears of turning off consumers in a weak economy should all keep packaged food companies from hiking prices, at least in the short term.
GRAINS-US corn climbs, extends drought-fed rally to 55 pct in 5 wks
SYDNEY, July 20 (Reuters) - U.S. new-crop corn rose taking its drought-driven rally to more than 55 percent in five weeks, as crops continued to wilt under a searing Midwest heat, stoking fears of a food shortage.
"Funds were in buying all three grains last night, and I think that will continue on, though the book will be squared before the weekend."
Japan corn use in animal feed falls to two-decade low
TOKYO, July 20 (Reuters) - Japan's usage of corn in animal feed reached a 20-year low in May, maintaining a downtrend that began in 2010 when high prices spurred the world's biggest corn importer to use more wheat instead.
Preliminary government data, released on Friday, showed the ratio of corn in animal feed fell to 43.7 percent in May compared with 46 percent in the same month a year ago.
Rains too late for some drought-savaged US corn fields
CHICAGO, July 19 (Reuters) - Indiana farmer Brian Scott saw on Thursday the heaviest rains of the year soak his 2,300-acre farm in the throes of the worst drought in five decades, but they were a mixed blessing at best.
The downpour came too late for his corn crop, which was already past the critical stage of setting yields. His soybeans, though, could get better and set more pods.
Argentine exchange trims wheat view as prices soar
BUENOS AIRES, July 19 (Reuters) - Argentina will plant 22 percent less wheat this season than it did in the previous crop year, a key local exchange said on Thursday, feeding a world rally in grains prices sparked by dry and hot U.S. farm weather.
Argentina is the world's No. 6 wheat exporter and the top supplier to neighboring Brazil. With Chicago Board of Trade wheat futures already at four-year highs, a shortfall in global wheat seedings and output could boost prices further.
Crops suffer as drought intensifies in US breadbasket
July 19 (Reuters) - The most expansive U.S. drought in more than a half century intensified this week and stretched further into major farm areas of the western Midwest where crops had largely been shielded from the harsh conditions that decimated yields further east.
The moderate drought in parts of eastern Nebraska, northern Illinois and much of the top corn and soybean state Iowa was downgraded to a severe drought in the past week, climate experts said Thursday, and forecasts showed little relief in sight.
Argentine 2012/13 wheat area seen at 3.6 mln hectares
BUENOS AIRES, July 19 (Reuters) - Argentine farmers will plant wheat this year on 3.6 million hectares, the Buenos Aires Grains Exchange said on Thursday, cutting its previous estimate by 100,000 hectares.
If the forecast proves correct, it would mark a 22 percent reduction in wheat area from the 2011/12 season, the exchange said in its weekly crop report.
EU farmers struggle with barley harvest in rain
HAMBURG, July 19 (Reuters) - Europe's drenched summer which has ruined countless holidays has also made harvesting this season's barley crop immensely difficult for farmers, analysts and traders said on Thursday.
"We urgently need an end to the rain to get harvesting completed," one barley trader said. "The crop could be reduced if rain goes on."
Weak monsoon casts drought shadow over India
NEW DELHI, July 19 (Reuters) - India's monsoon rains lost momentum again last week, falling nearly a fifth short of averages and raising the risk of a drought year in one of the world's leading producers of grains and sugar just as global prices hit record highs.
Rainfall was 22 percent below average across the country in the week to July 18, even though the parched interior in the south received downpours up to 179 percent above average, data from the India Meteorological Department (IMD) on Thursday showed.
SOFTS-Cocoa slips after grindings data, sugar firm
LONDON, July 20 (Reuters) - Cocoa futures eased following mixed global grindings results, clouding the outlook for demand, while sugar firmed to a fresh 3-month high and arabica coffee edged lower. Cocoa futures were slightly lower following mixed grindings results with North America's grind falling sharply, while the Asian grind rose.
Asia's Q2 cocoa grindings rise 5.7 pct on yr -trade body
SINGAPORE, July 20 (Reuters) - Cocoa grindings in Asia rose 5.7 percent to 150,726 tonnes in the second quarter of 2012 from the same period last year, the Cocoa Association of Asia said on its website, outpacing grindings in North America and Europe.
The CAA gave no details, but dealers said the increase in grindings in Asia was driven by steady demand for cocoa powder, which is used to make chocolate-flavoured products including bakery good, beverages and ice cream.
N America Q2 cocoa grind sees biggest drop in 3+ years
NEW YORK, July 19 (Reuters) - North American cocoa grindings in the second quarter of 2012 made their biggest decline in more than three years, data from the National Confectioners Association (NCA) showed on Thursday.
The quarterly grindings reached 112,768 tonnes, down 9.76 percent from the second quarter of 2011. This is the biggest quarterly drop since the first quarter of 2009, when grindings dropped by nearly 13 percent at 99,962 tonnes.
Brazil sugar lineup grows under rains, strike
SAO PAULO, July 19 (Reuters) - The lineup of ships waiting to load sugar in Brazil rose to 87 from 81 a week earlier as rains and striking sanitary inspectors at the ports slowed loading, Williams shipping agents said in a report released late Wednesday.
The number of ships waiting at Brazilian port was also rising as the harvest of the 2012/13 crop in the important center-south region picked up steam. Wet weather in Santos and Paranagua over the past several days slowed loading of bulk raws into open holds.
Rain may strand Brazil cane in field till next yr-Datagro
SAO PAULO, July 19 (Reuters) - Abundant rainfall over Brazil's main center-south sugar cane crop during this dry season risks stranding some of the 2012/13 crop until the next season, leading sugar and ethanol consultancy Datagro said on Thursday.
Many of Brazil's cane mills have delayed the start of harvest this season, which officially started in April, to allow the crop to mature and yields to improve after a wet start to the crushing season.
Indonesia eyes investment plan for rubber industry
JAKARTA, July 19 (Reuters) - Indonesia, the world's second-largest rubber producer, is considering investing $526 million over three years to boost and improve output in its rubber trees.
Starting in 2013, if approved the money will be used to re-plant or revitalise about 350,000 hectares of old and unhealthy rubber plantation in Southeast Asia's largest economy, Rismansyah Danasaputra, director of perennial crops at the Agriculture Ministry said on Thursday.
Oil Drops a Second Day on China Slowdown, Europe Crisis (Source: Bloomberg)
Oil dropped for a second day amid speculation fuel demand will falter as China’s economy slows and Europe struggles to control its debt crisis. Futures slid as much as 0.9 percent after a Chinese central bank adviser said the nation’s economy may cool further. International creditors meet in Athens tomorrow amid concern Greece may not meet its bailout targets, and after an aid package for Spain failed to prevent the euro dropping to its lowest level in more than two years against the dollar. Iraq resumed oil exports to Turkey after an explosion shut a pipeline that carries as much as 350,000 barrels a day, Sumaria News reported July 21, citing an unidentified Iraqi official. “The Spanish or European story will result in repeated volatility in the market,” Jarmo Kotilaine, the chief economist at Jeddah-based National Commercial Bank, said by phone yesterday. “We are still not clear on what the policy options will be. Demand-erosion concerns keep coming back.”
Oil for September delivery fell as much as 81 cents to $91.02 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.03 at 12:08 p.m. Sydney time. The contract slid 1.2 percent to $91.83 on July 20. Prices are 7.9 percent lower this year. Brent crude for September settlement declined 80 cents, or 0.8 percent, to $106.03 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was unchanged at $15.
OIL-Brent dips toward $107, steep 4-wk rally spurs selling
SINGAPORE, July 20 (Reuters) - Brent crude slipped toward $107 per barrel after an almost 18 percent rally over four weeks rompted some selling as worries about a conflict in the Middle East eased slightly.
"Prices were getting stretched a little, getting a bit ahead of themselves," said Mark Pervan, senior commodities strategist at ANZ bank. "This rally is supply driven, and supply-driven rallies tend to be very volatile because when prices go up, they threaten to hurt demand."
China end-June commercial crude stocks up 4.8 pct on mth
SHANGHAI, July 20 (Reuters) - Commercial crude inventories in China, the world's second-largest oil consumer, rose 4.8 percent in June from a month earlier, while refined fuel stocks eased by 7.56 percent, the official Xinhua News Agency reported in a newsletter on Friday.
The increase in crude oil stocks was attributed to falling crude oil throughput, which declined for a third consecutive month in June on the back of slowing energy demand amid weaker economic growth.
Coal May Regain Market Share From Natural Gas, Barclays Says (Source: Bloomberg)
Coal may regain some market share for power generation from natural gas during the summer as deferred shipments pour in, according to analysts from Barclays Capital Inc. Cheap gas displaced coal for making electricity earlier in the year, leading to high stockpiles of the fuel and prompting utilities to postpone deliveries, Shiyang Wang, an analyst in New York at the bank, said today in an e-mailed research note. “Deferred coal shipments also create an additional headwind for natural gas consumption in the U.S. power sector through the summer,” Wang wrote. Coal producers allowed the deferred shipments in lieu of renegotiating legacy contracts and slashing prices, Barclays said. As the deliveries trickle into utilities and plants also take advantage of lower spot prices for coal, gas demand may wane, according to the investment bank.
Spot coal from Wyoming’s Powder River Basin, which holds the largest and least expensive reserves, has fallen 40 percent to $8.75 a ton from a year earlier, according to data compiled by Bloomberg.
Power Dearth Threatens Indonesia Smelter Bids: Southeast Asia (Source: Bloomberg)
A shortage of electricity in Indonesia may hamper President Susilo Bambang Yudhoyono’s plan to ban all raw-ore exports by 2014, as he seeks to increase revenue by forcing companies to refine locally. More than 1 gigawatt of additional capacity may be needed to power the smelters required for the world’s biggest nickel producer and largest exporter of tin to process its ore, according to Xavier Jean, the Singapore-based associate director of corporate ratings at Standard and Poor’s. It may take longer than three years to build a plant capable of producing that much power, according to Nur Pamudji, president director of state utility PT Perusahaan Listrik Negara.
Asia’s second-biggest copper producer after China banned shipments of some metals on May 6, and the prohibition takes effect on all raw ore in 2014. The curb, combined with an export tax, is aimed at increasing revenue from higher-value processing. Japan, the second-biggest global buyer of nickel, has threatened to complain to the World Trade Organization about the restrictions. “Project management complexity will increase substantially, as not only do companies need to manage the construction of large smelters but they also need to manage the construction of the associated power generation units,” Jean wrote in an e-mail to Bloomberg News this month. “The risk of delays is high, and that could force the government to pragmatically delay or tone down some of the recent regulations applied to the sector regarding the export of unprocessed ores.”
Monday, July 23, 2012
20120723 1206 Soy Oil & Palm Oil Related News.
Pro Farmer: After the Bell Soybean Recap (Source: CME)
Soybean futures added to the strong price surge today as traders continue to actively build premium into the market amid drought-induced supply concerns. Forecasts call for extreme heat across the country's midsection next week, which will likely take another big bite out of the crop. Timing for severe crop stress couldn't be much worse with the crop flowering and setting pods. As a result, there's incentive for traders to build more premium into prices.
Soybean Complex Market Recap (Source: CME)
August Soybeans finished up 23 3/4 at 1757 1/2, 20 1/4 off the high and 28 1/2 up from the low. November Soybeans closed up 34 at 1686 1/4. This was 41 1/4 up from the low and 4 3/4 off the high. August Soymeal closed up 11 at 543.0. This was 11.5 up from the low and 9.0 off the high. August Soybean Oil finished down 0.05 at 54.35, 0.35 off the high and 0.22 up from the low. August soybeans traded sharply higher into the close today while the November contract led the complex higher and posted new highs for the move. August soybean meal traded limit higher early in the session but backed off midday. Soybean oil traded lower on the day. Midday session weakness offered bulls another chance to enter the market prior to next Monday's crop conditions report as the trade expects declines in the good/excellent category. While recent rainfall in the southeast and delta have been beneficial to soybean crops, conditions in the western Corn Belt have likely gotten worse. Temperatures are expected to reach 95-105 degrees in Kansas, Missouri, South Dakota, Iowa, and Nebraska this week; increasing stress on crops. The blistering temperatures are expected to last the middle of next week. Weather services reported a 30 day forecast calling for above normal temperatures and below normal rainfall, which could cause further deterioration in soybean yields. Analysts in Brazil expect the 2012/13 Brazilian soybean crop to produce 82.29 million tonnes, up 24% from the current soybean crop. The market shook off the bearish headline as traders focus on US crop conditions. Grain markets are trading higher despite the negative outside markets and a sharply higher US Dollar.
VEGOILS-Palm oil edges up, weak exports cap gains
SINGAPORE, July 20 (Reuters) - Malaysian crude palm oil futures edged up as crop-damaging weather in the U.S. Midwest raised prospects of a smaller supply of soybean oil shifting demand to the cheaper palm oil.
"From the inventory level alone, it is negative to prices. But the dry season in the United States is still very much in the picture," said Alan Lim, research analyst with Malaysia's Kenanga Investment Bank.
Soybean futures added to the strong price surge today as traders continue to actively build premium into the market amid drought-induced supply concerns. Forecasts call for extreme heat across the country's midsection next week, which will likely take another big bite out of the crop. Timing for severe crop stress couldn't be much worse with the crop flowering and setting pods. As a result, there's incentive for traders to build more premium into prices.
Soybean Complex Market Recap (Source: CME)
August Soybeans finished up 23 3/4 at 1757 1/2, 20 1/4 off the high and 28 1/2 up from the low. November Soybeans closed up 34 at 1686 1/4. This was 41 1/4 up from the low and 4 3/4 off the high. August Soymeal closed up 11 at 543.0. This was 11.5 up from the low and 9.0 off the high. August Soybean Oil finished down 0.05 at 54.35, 0.35 off the high and 0.22 up from the low. August soybeans traded sharply higher into the close today while the November contract led the complex higher and posted new highs for the move. August soybean meal traded limit higher early in the session but backed off midday. Soybean oil traded lower on the day. Midday session weakness offered bulls another chance to enter the market prior to next Monday's crop conditions report as the trade expects declines in the good/excellent category. While recent rainfall in the southeast and delta have been beneficial to soybean crops, conditions in the western Corn Belt have likely gotten worse. Temperatures are expected to reach 95-105 degrees in Kansas, Missouri, South Dakota, Iowa, and Nebraska this week; increasing stress on crops. The blistering temperatures are expected to last the middle of next week. Weather services reported a 30 day forecast calling for above normal temperatures and below normal rainfall, which could cause further deterioration in soybean yields. Analysts in Brazil expect the 2012/13 Brazilian soybean crop to produce 82.29 million tonnes, up 24% from the current soybean crop. The market shook off the bearish headline as traders focus on US crop conditions. Grain markets are trading higher despite the negative outside markets and a sharply higher US Dollar.
VEGOILS-Palm oil edges up, weak exports cap gains
SINGAPORE, July 20 (Reuters) - Malaysian crude palm oil futures edged up as crop-damaging weather in the U.S. Midwest raised prospects of a smaller supply of soybean oil shifting demand to the cheaper palm oil.
"From the inventory level alone, it is negative to prices. But the dry season in the United States is still very much in the picture," said Alan Lim, research analyst with Malaysia's Kenanga Investment Bank.
Friday, July 20, 2012
20120720 1809 FCPO EOD Daily Chart Study.
Bollinger band reading : side way range bound.
MACD Histogram : falling, seller taking small exposure.
Support : 3020, 2970, 2950, 2920 level.
Resistance : 3050, 3070, 3100, 3150 level.
Comment :
FCPO closed recorded marginal loss with lesser volume transacted. Soy oil currently trading firmer after overnight closed recorded gain while crude oil price currently pullback lower after overnight surged.
Remained slow export data released by 2 cargo surveyors kept price closed in negative territory today with traders watching closely on U.S. drought development.
Technical chart reading remained suggesting a side way range bound market development.
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.
20120720 1735 FKLI EOD Daily Chart Study.
Bollinger band reading : pullback correction upside biased.
MACD Histogram : turned downward, buyer taking profit.
Support : 1640, 1630, 1620, 1610 level.
Resistance : 1650, 1660, 1670, 1680 level.
Comment :
FKLI closed retreat slightly lower with little increased volume changed hand doing abount 4 points premium compare to cash market that also ended marginally lower. Overnight U.S. markets traded little higher and today Asia markets closed mostly lower while European markets currently trading little lower.
News on missed estimates U.S. existing home sales, contracted Philadelphia manufacturing for a third month and concern on China will keep property curbs in place resulted most regional market to trade lower however losses were limited as IBM and Ebay reported beat profit forecast.
Back home, FKLI daily chart adjusted to recommending a pullback correction upside biased market development.
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.
20120720 1657 Regional Markets EOD Daily Chart Study.
DJIA chart reading : little upside biased.
Hang Seng chart reading : side way range bound little upside biased.
KLCI chart reading : possible pullback upside biased.
20120720 1601 Global Markets & Commodities Related News.
GLOBAL MARKETS: Asian shares eased but were poised for their biggest weekly gain since January, as strong U.S. corporate earnings lifted the S&P 500 to a 2-1/2 month high while Spain's fiscal woes kept the euro under pressure. European shares were expected to open fractionally lower, taking their cue from losses in Asia and consolidating four month highs as a two-session rally runs out of catalysts. U.S. stocks rose on Thursday for a third straight day, with the S&P 500 at a 2-1/2 month high, as earnings from technology companies and expectations for more monetary stimulus outweighed weak economic data.
FOREX: The euro eased against the dollar and hovered near a record low versus the Australian dollar, undermined by worries about Spain's fiscal woes and recent falls in euro zone money-market rates.
FOREX-Euro held back by Spain's woes, near record low vs Aussie
SINGAPORE, July 20 (Reuters) - The euro eased against the dollar and hovered near a record low versus the Australian dollar on Friday, and was seen on shaky ground due to worries about Spain's fiscal woes and as investors hunt for higher yields.
Weak demand at a bond auction pushed Spain's 10-year bond yield above 7 percent on Thursday for the first time in more than a week, intensifying doubts over whether Madrid can avoid a full-blown bailout.
Merkel wins Spanish aid vote with big majority
German Chancellor Angela Merkel easily won a parliamentary vote on a euro zone rescue package for Spanish banks on Thursday despite growing unease in her centre-right coalition about the rising cost of Europe's debt crisis for German taxpayers.
Factory, jobs data show U.S. economy mired in weakness
The slowdown in the U.S. economy persisted early in the third quarter as factory activity in the U.S. Mid-Atlantic region contracted in July for a third straight month and new claims for jobless aid surged last week.
POLL-Global economy hobbled by Europe, 2013 promises more
The global economy will labour against a dismal tide from recession-hit Europe for the rest of this year, but 2013 should bring better growth, according to Reuters polls of hundreds of economists worldwide.
GRAINS: U.S. new-crop corn rose, taking its drought-driven rally to more than 55 percent in five weeks, as crops continued to wilt under a searing Midwest heat, stoking fears of a food shortage.
Brazil sugar lineup grows under rains, strike
The lineup of ships waiting to load sugar in Brazil rose to 87 from 81 a week earlier as rains and striking sanitary inspectors at the ports slowed loading, Williams shipping agents said in a report released late Wednesday.
After first-half surge, US drillers find respite in guar wars
U.S. oil and gas drillers are finally catching a break from the surging cost of a tiny seed at the heart of the nation's oil and gas bonanza.
OIL: Brent crude held above $107, edging lower after a surge of 20 percent in four weeks prompted some selling as Israel signalled it would not rush into any open conflict over a deadly attack on its citizens, easing geopolitical worries.
Euro Coal-Holds steady in thin trade
LONDON, July 19 (Reuters) - Physical prompt coal prices held steady on Thursday, supported by oil hitting a seven-week high but few trades were reported.
Prices have found a floor at roughly $85 a tonne and are unlikely to fall much further, although a slight drift lower through the remainder of the summer is possible, traders and end-users said.
China coal demand seen cooling further in H2 -assn
SHANGHAI, July 19 (Reuters) - Coal demand from China, the world's top consumer, is expected to slow further in the second-half, while rising supply from domestic mines and imports swells stocks, a media report on Thursday cited the China Coal Association as saying.
A slower pace of economic growth has already hit China's coal demand in the first half, with consumption up just 2.8 percent to 1.97 billion tonnes from the first half of 2011, the association's vice president Jiang Zhimin was quoted as saying at a briefing.
SEOUL/SHANGHAI, July 20(Reuters) - China's slowing demand for steel is driving Chinese exports of the metal to the highest level in more than three years, flooding the Asian market with supplies at a time when producers such as South Korea's POSCO are grappling with thinning profits.
Europe used to soak up most of China's steel exports, but the region's protracted debt woes have forced producers like Baoshan Iron & Steel to turn their shipments to destinations closer to home.
Japan Q2 crude steel output highest in 5 quarters
TOKYO, July 19 (Reuters) - Japan's crude steel output rose on an annual basis in the April-June quarter for the first time in five quarters, as robust car output bolstered the sagging sector, but a strong yen currency and slowing car sales cloud the outlook for the third quarter.
Crude steel output in the second quarter rose 4.3 percent on the year to 27.5 million tonnes, a level not seen since the January-March quarter of 2011, the Japan Iron and Steel Federation said on Thursday.
BASE METALS: London copper was down trading at $7,707 per tonne after touching a high of $7,813 per tonne on Thursday, its highest since July 3.
PRECIOUS METALS: Gold hovered near $1,580, an ounce as investors clung onto hopes for more monetary easing from the U.S. central bank after weak data in the previous session, but a dollar rebound would likely cap gains.
METALS-LME copper holds near 2-week top on China stimulus hope
SHANGHAI, July 20 (Reuters) - London copper prices edged up on Friday, holding near a two-week high hit in the previous session on hopes of more steps by top consumer China to boost its economy after Beijing's comments on jobs creation.
But gains are likely to be capped by China's warning against relaxing curbs on the property sector, favoured by many investors as a quick way to boost domestic consumption, and by weak U.S. data underscoring a fragile U.S. economic recovery.
PRECIOUS-Gold steady on weak US data; dollar weighs
SINGAPORE, July 20 (Reuters) - Gold hovered near $1,580 an ounce on Friday as investors clung onto hopes for more monetary easing from the U.S. central bank after weak data in the previous session, but a dollar rebound would likely cap gains.
The latest data showed factory activity in the U.S. Mid-Atlantic region contracted in July for a third straight month and new jobless claims surged last week.
Baltic's freight index slides on sluggish demand
July 19 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, fell on Thursday for the eighth straight day as the market continued to struggle with slower cargo trade and mounting fleet growth.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, fell 21 points or 1.96 percent to 1,053 points.
FOREX: The euro eased against the dollar and hovered near a record low versus the Australian dollar, undermined by worries about Spain's fiscal woes and recent falls in euro zone money-market rates.
FOREX-Euro held back by Spain's woes, near record low vs Aussie
SINGAPORE, July 20 (Reuters) - The euro eased against the dollar and hovered near a record low versus the Australian dollar on Friday, and was seen on shaky ground due to worries about Spain's fiscal woes and as investors hunt for higher yields.
Weak demand at a bond auction pushed Spain's 10-year bond yield above 7 percent on Thursday for the first time in more than a week, intensifying doubts over whether Madrid can avoid a full-blown bailout.
Merkel wins Spanish aid vote with big majority
German Chancellor Angela Merkel easily won a parliamentary vote on a euro zone rescue package for Spanish banks on Thursday despite growing unease in her centre-right coalition about the rising cost of Europe's debt crisis for German taxpayers.
Factory, jobs data show U.S. economy mired in weakness
The slowdown in the U.S. economy persisted early in the third quarter as factory activity in the U.S. Mid-Atlantic region contracted in July for a third straight month and new claims for jobless aid surged last week.
POLL-Global economy hobbled by Europe, 2013 promises more
The global economy will labour against a dismal tide from recession-hit Europe for the rest of this year, but 2013 should bring better growth, according to Reuters polls of hundreds of economists worldwide.
GRAINS: U.S. new-crop corn rose, taking its drought-driven rally to more than 55 percent in five weeks, as crops continued to wilt under a searing Midwest heat, stoking fears of a food shortage.
Brazil sugar lineup grows under rains, strike
The lineup of ships waiting to load sugar in Brazil rose to 87 from 81 a week earlier as rains and striking sanitary inspectors at the ports slowed loading, Williams shipping agents said in a report released late Wednesday.
After first-half surge, US drillers find respite in guar wars
U.S. oil and gas drillers are finally catching a break from the surging cost of a tiny seed at the heart of the nation's oil and gas bonanza.
OIL: Brent crude held above $107, edging lower after a surge of 20 percent in four weeks prompted some selling as Israel signalled it would not rush into any open conflict over a deadly attack on its citizens, easing geopolitical worries.
Euro Coal-Holds steady in thin trade
LONDON, July 19 (Reuters) - Physical prompt coal prices held steady on Thursday, supported by oil hitting a seven-week high but few trades were reported.
Prices have found a floor at roughly $85 a tonne and are unlikely to fall much further, although a slight drift lower through the remainder of the summer is possible, traders and end-users said.
China coal demand seen cooling further in H2 -assn
SHANGHAI, July 19 (Reuters) - Coal demand from China, the world's top consumer, is expected to slow further in the second-half, while rising supply from domestic mines and imports swells stocks, a media report on Thursday cited the China Coal Association as saying.
A slower pace of economic growth has already hit China's coal demand in the first half, with consumption up just 2.8 percent to 1.97 billion tonnes from the first half of 2011, the association's vice president Jiang Zhimin was quoted as saying at a briefing.
Iron Ore-Price slide extends, spot at 8-1/2-month low
SINGAPORE, July 20 (Reuters) - Shanghai rebar futures hit a contract low for the eighth time in nine sessions, and are set to post their worst week since October as weak Chinese demand kept the pressure on prices, pulling down iron ore to 8-1/2-month lows.
"It looks like the trend will continue next week. There is very limited trading in the open market. Sentiment is quite weak and no one is willing to buy," said a manager for an iron ore trading firm in Shanghai.
Vale Q2 iron ore production rises to 80.54 mln tonnes
RIO DE JANEIRO, July 18 (Reuters) - Brazilian miner Vale produced 80.54 million tonnes of iron ore in the second quarter, the company said in a securities filing Wednesday.
That marks a 0.35 percent increase from 80.26 million tonnes in the second quarter of 2011, the company said, but a 15.1 percent increase from 69.99 million tonnes of iron ore produced during the first quarter of this year.
PREVIEW-China's rising steel exports slam Asian producers
SEOUL/SHANGHAI, July 20(Reuters) - China's slowing demand for steel is driving Chinese exports of the metal to the highest level in more than three years, flooding the Asian market with supplies at a time when producers such as South Korea's POSCO are grappling with thinning profits.
Europe used to soak up most of China's steel exports, but the region's protracted debt woes have forced producers like Baoshan Iron & Steel to turn their shipments to destinations closer to home.
Japan Q2 crude steel output highest in 5 quarters
TOKYO, July 19 (Reuters) - Japan's crude steel output rose on an annual basis in the April-June quarter for the first time in five quarters, as robust car output bolstered the sagging sector, but a strong yen currency and slowing car sales cloud the outlook for the third quarter.
Crude steel output in the second quarter rose 4.3 percent on the year to 27.5 million tonnes, a level not seen since the January-March quarter of 2011, the Japan Iron and Steel Federation said on Thursday.
BASE METALS: London copper was down trading at $7,707 per tonne after touching a high of $7,813 per tonne on Thursday, its highest since July 3.
PRECIOUS METALS: Gold hovered near $1,580, an ounce as investors clung onto hopes for more monetary easing from the U.S. central bank after weak data in the previous session, but a dollar rebound would likely cap gains.
METALS-LME copper holds near 2-week top on China stimulus hope
SHANGHAI, July 20 (Reuters) - London copper prices edged up on Friday, holding near a two-week high hit in the previous session on hopes of more steps by top consumer China to boost its economy after Beijing's comments on jobs creation.
But gains are likely to be capped by China's warning against relaxing curbs on the property sector, favoured by many investors as a quick way to boost domestic consumption, and by weak U.S. data underscoring a fragile U.S. economic recovery.
PRECIOUS-Gold steady on weak US data; dollar weighs
SINGAPORE, July 20 (Reuters) - Gold hovered near $1,580 an ounce on Friday as investors clung onto hopes for more monetary easing from the U.S. central bank after weak data in the previous session, but a dollar rebound would likely cap gains.
The latest data showed factory activity in the U.S. Mid-Atlantic region contracted in July for a third straight month and new jobless claims surged last week.
Baltic's freight index slides on sluggish demand
July 19 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, fell on Thursday for the eighth straight day as the market continued to struggle with slower cargo trade and mounting fleet growth.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, fell 21 points or 1.96 percent to 1,053 points.
20120720 1131 ASIA FX MARKETS OPEN by Reuters
ASIA FX MARKETS OPENMARKETS OPEN FRIDAY, JULY 20, 2012
EUR WEAKER VS. HIGH YIELDERS, LINGERS VS. USD
Market Briefs
• US Weekly Jobless Claims 375k, prev revised up to 377k
• US Continuing Claims 3.31mm, f/c 3.3mm prev rvsd to 3.31mm from 3.3mm
• US July Philly Fed -12.9, f/c -8.0 prev -16.6
• US June Leading Indicators -0.3%, f/c -0.1% prev revised to 0.4% from 0.3%
• MXN May Retail Sales m/m -0.2%, f/c -0.1% prev +0.9%
• MXN May Retail Sales y/y 5.2%, f/c 4.3% prev 2.5%
• CAD May Wholesale Trade 0.9%, f/c 0.3% prev rvsd down to 1.2% from 1.5%
• German FinMin Schaeuble: Spain liable for EU aid to Spanish banks
• S. Africa Reserve Bank unexpectedly cuts Prime Lending Rate 50 bps to 8.5%
• German Bundestag Lower House approves bailout for Spanish banks
• Fitch Ratings affirms Italy at A-, outlook negative
Looking Ahead - Data
• NZD 22:45 June Net migration, no f/c prev 0.10%
• AUD 01:30 Q2 Australian Export Prices, f/c 0.5% prev -7.0%
• AUD 01:30 Q2 Australian Import Prices, f/c 1.5%, prev -1.2%
• CNY 01:35 MNI July Flash Bus. Sentiment Survey
• NZD 03:00 June NZ Credit Card spending m/m, no f/c prev 0.4%
Looking Ahead – Events, Other Releases
• AUD 23:15 RBA Asst. Gov. Kent panel session AU Economic forum
Currency Summaries
EUR/USD Another choppy session with little to determine about overall direction. EUR/USD opened the NY session 1.2300/05 vs last night's 1.2283 close. O/N range 1.2263/1.2325; NY range 1.2229/90, last 1.2275. US equity marts were the central theme to our session, opened the day +0.50/0.73%, close the session by +0.25/1.20%, tech stocks leading the rally. Plenty of reserve manager & sovereign offers above 1.2300, heavy sales of EUR/AUD, EUR/CAD, EUR/GBP et al providing topside supply. Conversely soft US claims, existing home sales & Philly Fed took their toll on the USD also. Custodian bank flow reports reveal real money still selling EUR & USD & buying JPY.
USD/JPY USD/JPY never really recovered from its sell-off in Asia. Semi-official buyers put paid to early bearish ambitions to trip 79.40 stops. Spec profit taking in EUR/JPY was significant ahead of 97.40 in London, but NorAm traders ran stops below there for a 96.13 session low. US data were all worse than forecast, which is feeding into speculation Bernanke will rev up the QE3 rhetoric at the Jackson Hole CB gathering, if not at the FOMC end-July. The yen lost some ground to the commodity currencies again as the CRB breached its downtrend line off last year's highs today. Cross sales kept the USD/JPY damage limit to 78.42. Jun 6 & 15 lows by 78.58 were the last decent historical support ahead of the Jun 1 nadir at 77.65. Tenkan/Kijun/Cloud formations are rather bearish for USD/JPY and EUR/JPY, the latter primed to retest it 95.59 trend lows if intervention doesn't occur first. USD/JPY offers now at 78.70 & 78.90-79.10. AUD/JPY persists with its quest to retest the July high at 82.35. GBP/JPY remains trapped between its Tenkan and Kijun lines, though resistance is better defined in the 123.90-4.00 area for fade trades
GBP/USD GBP opened the session bid up by real money & sovereign buying interest and maintained that strength through the session. EUR/GBP got hammered alongside EUR vs commodity ccys & assorted other currency pairs. Fresh life time lows for EUR/AUD & EUR/CAD seeped into EUR/GBP which slumped to 0.7793 lows ( lowest since October 2008) cable paid at 1.5738, highest level in a month. Today's real money flow reports revealed GBP was #1 bought ccy 24-hrs NY open/NY open and has been the #2 most bought major currency over the past week. UK retail sales rose by a meager 0.1% last month compared to a forecast 0.6% increase, but soft US US claims, existing home sales & Philly Fed more than offset.
USD/CHF The standoff between USD/CHF buyers and sells (EUR/USD seller and buyers) went into a fifth session, with the dollar once again being sold before reaching the previous session high. A Dutch seller (linked to SNB diversification) sold EUR/USD sharply lower, forcing USD/CHF to fresh session highs, but it was not enough to break the string of lower highs. Downside in USD/CHF was limited to 0.9747, a mere 5-pip breach below Wed's lows. Surging commodities and rebounding equity prices fit the general risk-rebound/QE pattern; a pattern normally associate with a setback in the dollar, but US data were uniformly poor, though you could only tell it from slightly lower S-T Tsy yields & tanking bank stocks. 21-DMA's the main USD/CHF target. There's little to recommend the EUR, yet tail risk is being siphoned off and sellers are not being rewarded, which reinforces the summer-time position pruning that's under way. Swiss Trade surplus narrowed in June to 2.25b from 2.52b in May, with Exports and Imports down 2.6% and 3.1% m/m respectively. Year-on-year comparisons were flattered by base effects.
USD/CAD USD/CAD opened Noram marts 1.0075 vs last night's 1.0102 close, having traded a tight 1.0090/1.0106 O/N range (Matching) Noram session range 1.0067/88, last 1.0079 paid. Heavy selling of EUR/CAD drove that pair to lifetime lows, 1.2320 and close to the legacy currency low of 1.2234 (1989) Heavily oversold technicals forced a short squeeze and lifted that pair to 1.2375 rebound highs, closed nearby. Soft US claims, existing home sales & Philly Fed would normally drag stocks down but they closed +0.27/1.14%, lifted by tech stocks following strong results from IBM reported after the close last night. CA wholesale sales +0.9% handily beat (f/c +0.3%)
AUD/USD AUD/USD opened the NY session near its O/N highs. Trading for the session saw consolidation of O/N gains in the 1.0390/1.0455 range. Dips continue to be shallow as the scramble for yield continues. O/N mkt rumors of a China RRR cut aided in keeping the pair elevated. Adding to the bullish outlook were reports that the largest Chinese banks have double their loan amount for the first half of July from the previous month. Mkt talk also swirled of Australian exporters needing AUD for tax payments to the ATO. Talk suggests the exporters looked to buy dips but the opportunity hasn’t been there. Resistance sits 1.0255/75 as offers are reported. A break above could accelerate the rally as exporters may scramble to get their Oz. Not much in the way of resistance after 1.0475 though until 1.0555 which corresponds with the 76.4% Fib of 1.0857-0.9578 move and the March 27 high. Technically the bulls remain in charge. Daily Bollis continue to widen & the RSI indicates a positive bias with no divergence. Australian Export/Import prices are due today & any hints inflation is creeping in could see the rally gather pace. Oz rates mkts are paring back future cuts by the RBA. Should prices accelerate upwards AUD may shine further as yield plays are favored & mkt expectations of future rate cuts could diminish further.
NZD/USD Kiwi began the NY session just below the O/N highs near 0.8050/55 as O/N action saw the pair take out S-T resistance near 0.8020. Mkt talk that high NZD yields are attracting more investors as an alternative to negative yields in many parts of the EZ aided in keeping the pair elevated for the day. The pair consolidated gains during NY as the larger 0.7820/0.8075 range still prevails. A break above 0.8075 may see the trend off the June lows resume as yield hunters won’t want to miss getting long. From a technical viewpoint the bullish outlook is gaining ground. Daily RSI & Stoch had a chance to unwind previous O/B conditions, have turned up and are not O/B. The 21 day Bolli bands have started to widen indicating a breakout could be coming. A clean break above 0.8075/0.8100 could see the pair make a quick run up to the late April highs near 0.8240/50.
EUR WEAKER VS. HIGH YIELDERS, LINGERS VS. USD
Market Briefs
• US Weekly Jobless Claims 375k, prev revised up to 377k
• US Continuing Claims 3.31mm, f/c 3.3mm prev rvsd to 3.31mm from 3.3mm
• US July Philly Fed -12.9, f/c -8.0 prev -16.6
• US June Leading Indicators -0.3%, f/c -0.1% prev revised to 0.4% from 0.3%
• MXN May Retail Sales m/m -0.2%, f/c -0.1% prev +0.9%
• MXN May Retail Sales y/y 5.2%, f/c 4.3% prev 2.5%
• CAD May Wholesale Trade 0.9%, f/c 0.3% prev rvsd down to 1.2% from 1.5%
• German FinMin Schaeuble: Spain liable for EU aid to Spanish banks
• S. Africa Reserve Bank unexpectedly cuts Prime Lending Rate 50 bps to 8.5%
• German Bundestag Lower House approves bailout for Spanish banks
• Fitch Ratings affirms Italy at A-, outlook negative
Looking Ahead - Data
• NZD 22:45 June Net migration, no f/c prev 0.10%
• AUD 01:30 Q2 Australian Export Prices, f/c 0.5% prev -7.0%
• AUD 01:30 Q2 Australian Import Prices, f/c 1.5%, prev -1.2%
• CNY 01:35 MNI July Flash Bus. Sentiment Survey
• NZD 03:00 June NZ Credit Card spending m/m, no f/c prev 0.4%
Looking Ahead – Events, Other Releases
• AUD 23:15 RBA Asst. Gov. Kent panel session AU Economic forum
Currency Summaries
EUR/USD Another choppy session with little to determine about overall direction. EUR/USD opened the NY session 1.2300/05 vs last night's 1.2283 close. O/N range 1.2263/1.2325; NY range 1.2229/90, last 1.2275. US equity marts were the central theme to our session, opened the day +0.50/0.73%, close the session by +0.25/1.20%, tech stocks leading the rally. Plenty of reserve manager & sovereign offers above 1.2300, heavy sales of EUR/AUD, EUR/CAD, EUR/GBP et al providing topside supply. Conversely soft US claims, existing home sales & Philly Fed took their toll on the USD also. Custodian bank flow reports reveal real money still selling EUR & USD & buying JPY.
USD/JPY USD/JPY never really recovered from its sell-off in Asia. Semi-official buyers put paid to early bearish ambitions to trip 79.40 stops. Spec profit taking in EUR/JPY was significant ahead of 97.40 in London, but NorAm traders ran stops below there for a 96.13 session low. US data were all worse than forecast, which is feeding into speculation Bernanke will rev up the QE3 rhetoric at the Jackson Hole CB gathering, if not at the FOMC end-July. The yen lost some ground to the commodity currencies again as the CRB breached its downtrend line off last year's highs today. Cross sales kept the USD/JPY damage limit to 78.42. Jun 6 & 15 lows by 78.58 were the last decent historical support ahead of the Jun 1 nadir at 77.65. Tenkan/Kijun/Cloud formations are rather bearish for USD/JPY and EUR/JPY, the latter primed to retest it 95.59 trend lows if intervention doesn't occur first. USD/JPY offers now at 78.70 & 78.90-79.10. AUD/JPY persists with its quest to retest the July high at 82.35. GBP/JPY remains trapped between its Tenkan and Kijun lines, though resistance is better defined in the 123.90-4.00 area for fade trades
GBP/USD GBP opened the session bid up by real money & sovereign buying interest and maintained that strength through the session. EUR/GBP got hammered alongside EUR vs commodity ccys & assorted other currency pairs. Fresh life time lows for EUR/AUD & EUR/CAD seeped into EUR/GBP which slumped to 0.7793 lows ( lowest since October 2008) cable paid at 1.5738, highest level in a month. Today's real money flow reports revealed GBP was #1 bought ccy 24-hrs NY open/NY open and has been the #2 most bought major currency over the past week. UK retail sales rose by a meager 0.1% last month compared to a forecast 0.6% increase, but soft US US claims, existing home sales & Philly Fed more than offset.
USD/CHF The standoff between USD/CHF buyers and sells (EUR/USD seller and buyers) went into a fifth session, with the dollar once again being sold before reaching the previous session high. A Dutch seller (linked to SNB diversification) sold EUR/USD sharply lower, forcing USD/CHF to fresh session highs, but it was not enough to break the string of lower highs. Downside in USD/CHF was limited to 0.9747, a mere 5-pip breach below Wed's lows. Surging commodities and rebounding equity prices fit the general risk-rebound/QE pattern; a pattern normally associate with a setback in the dollar, but US data were uniformly poor, though you could only tell it from slightly lower S-T Tsy yields & tanking bank stocks. 21-DMA's the main USD/CHF target. There's little to recommend the EUR, yet tail risk is being siphoned off and sellers are not being rewarded, which reinforces the summer-time position pruning that's under way. Swiss Trade surplus narrowed in June to 2.25b from 2.52b in May, with Exports and Imports down 2.6% and 3.1% m/m respectively. Year-on-year comparisons were flattered by base effects.
USD/CAD USD/CAD opened Noram marts 1.0075 vs last night's 1.0102 close, having traded a tight 1.0090/1.0106 O/N range (Matching) Noram session range 1.0067/88, last 1.0079 paid. Heavy selling of EUR/CAD drove that pair to lifetime lows, 1.2320 and close to the legacy currency low of 1.2234 (1989) Heavily oversold technicals forced a short squeeze and lifted that pair to 1.2375 rebound highs, closed nearby. Soft US claims, existing home sales & Philly Fed would normally drag stocks down but they closed +0.27/1.14%, lifted by tech stocks following strong results from IBM reported after the close last night. CA wholesale sales +0.9% handily beat (f/c +0.3%)
AUD/USD AUD/USD opened the NY session near its O/N highs. Trading for the session saw consolidation of O/N gains in the 1.0390/1.0455 range. Dips continue to be shallow as the scramble for yield continues. O/N mkt rumors of a China RRR cut aided in keeping the pair elevated. Adding to the bullish outlook were reports that the largest Chinese banks have double their loan amount for the first half of July from the previous month. Mkt talk also swirled of Australian exporters needing AUD for tax payments to the ATO. Talk suggests the exporters looked to buy dips but the opportunity hasn’t been there. Resistance sits 1.0255/75 as offers are reported. A break above could accelerate the rally as exporters may scramble to get their Oz. Not much in the way of resistance after 1.0475 though until 1.0555 which corresponds with the 76.4% Fib of 1.0857-0.9578 move and the March 27 high. Technically the bulls remain in charge. Daily Bollis continue to widen & the RSI indicates a positive bias with no divergence. Australian Export/Import prices are due today & any hints inflation is creeping in could see the rally gather pace. Oz rates mkts are paring back future cuts by the RBA. Should prices accelerate upwards AUD may shine further as yield plays are favored & mkt expectations of future rate cuts could diminish further.
NZD/USD Kiwi began the NY session just below the O/N highs near 0.8050/55 as O/N action saw the pair take out S-T resistance near 0.8020. Mkt talk that high NZD yields are attracting more investors as an alternative to negative yields in many parts of the EZ aided in keeping the pair elevated for the day. The pair consolidated gains during NY as the larger 0.7820/0.8075 range still prevails. A break above 0.8075 may see the trend off the June lows resume as yield hunters won’t want to miss getting long. From a technical viewpoint the bullish outlook is gaining ground. Daily RSI & Stoch had a chance to unwind previous O/B conditions, have turned up and are not O/B. The 21 day Bolli bands have started to widen indicating a breakout could be coming. A clean break above 0.8075/0.8100 could see the pair make a quick run up to the late April highs near 0.8240/50.
20120720 1112 Global Markets & Commodities Related News.
GLOBAL MARKETS-Shares slightly lower, oil eases from 8-week high
HONG KONG, July 20 (Reuters) - Asian shares were a tad weaker but were poised for their biggest weekly gain since January as strong U.S. corporate earnings lifted the S&P 500 to a 2-1/2 month high, although a firm yen kept Japanese shares on the backfoot.
Oil prices eased after hitting an eight-week high overnight as Middle East tension stoked supply concern. While a rally in commodities has seen corn and soybean prices soar to record highs due to a worsening U.S. farm-belt drought.
COMMODITIES-Corn, soy hit record highs; oil jumps on Mideast worry
NEW YORK, July 19 (Reuters) - Corn and soybeans hit all-time highs on Thursday as the worsening drought in the U.S. farm belt stirred fears of a food crisis, while crude oil prices rose to eight-week peaks on worsening tensions in the Middle East.
"Bad data is good when it comes to stimulus hopes," said Phil Flynn, analyst at Price Futures Group in Chicago.
OIL-Oil jumps on Middle East worries, economic hopes
NEW YORK, July 19 (Reuters) - Oil prices rose a seventh straight session on Thursday, reaching an eight-week high, as Middle East tensions reinforced concern about potential supply disruptions while strong corporate earnings lifted investor optimism.
"The complex surged to the upside largely on geopolitical issues related to a renewed clash of rhetoric between Israel and Iran and civil unrest in Syria," Jim Ritterbusch, president at Ritterbusch & Associates, wrote in a note.
NATURAL GAS-US natgas futures end up after light EIA storage build
NEW YORK, July 19 (Reuters) - Front-month U.S. natural gas futures ended higher on Thursday for a second straight day, backed by a government report showing a weekly gas inventory build below market expectations.
"There was a lot of buying following the storage number, but it looks like there's a lot of psychological resistance above $3," said Eric Bickel, analyst at Summit Energy in Kentucky.
EURO COAL-Holds steady in thin trade
LONDON, July 19 (Reuters) - Physical prompt coal prices held steady on Thursday, supported by oil hitting a seven-week high but few trades were reported.
"U.S. and Russian miners have the highest costs and their competition for European market share will provide a price floor, which we think has already been reached, we don't expect an improvement in prices until later this year," said Rudi Vann, coal analyst with Wood Mackenzie.
HONG KONG, July 20 (Reuters) - Asian shares were a tad weaker but were poised for their biggest weekly gain since January as strong U.S. corporate earnings lifted the S&P 500 to a 2-1/2 month high, although a firm yen kept Japanese shares on the backfoot.
Oil prices eased after hitting an eight-week high overnight as Middle East tension stoked supply concern. While a rally in commodities has seen corn and soybean prices soar to record highs due to a worsening U.S. farm-belt drought.
COMMODITIES-Corn, soy hit record highs; oil jumps on Mideast worry
NEW YORK, July 19 (Reuters) - Corn and soybeans hit all-time highs on Thursday as the worsening drought in the U.S. farm belt stirred fears of a food crisis, while crude oil prices rose to eight-week peaks on worsening tensions in the Middle East.
"Bad data is good when it comes to stimulus hopes," said Phil Flynn, analyst at Price Futures Group in Chicago.
OIL-Oil jumps on Middle East worries, economic hopes
NEW YORK, July 19 (Reuters) - Oil prices rose a seventh straight session on Thursday, reaching an eight-week high, as Middle East tensions reinforced concern about potential supply disruptions while strong corporate earnings lifted investor optimism.
"The complex surged to the upside largely on geopolitical issues related to a renewed clash of rhetoric between Israel and Iran and civil unrest in Syria," Jim Ritterbusch, president at Ritterbusch & Associates, wrote in a note.
NATURAL GAS-US natgas futures end up after light EIA storage build
NEW YORK, July 19 (Reuters) - Front-month U.S. natural gas futures ended higher on Thursday for a second straight day, backed by a government report showing a weekly gas inventory build below market expectations.
"There was a lot of buying following the storage number, but it looks like there's a lot of psychological resistance above $3," said Eric Bickel, analyst at Summit Energy in Kentucky.
EURO COAL-Holds steady in thin trade
LONDON, July 19 (Reuters) - Physical prompt coal prices held steady on Thursday, supported by oil hitting a seven-week high but few trades were reported.
"U.S. and Russian miners have the highest costs and their competition for European market share will provide a price floor, which we think has already been reached, we don't expect an improvement in prices until later this year," said Rudi Vann, coal analyst with Wood Mackenzie.
20120720 1028 Local & Global Economy Related News.
The drought in US is hurting the livestock industry in Malaysia and may push up chicken and pork prices. The Federation of Livestock Farmers‟ Association said the cost of chicken feed had gone up by RM1.50, pushing the price of a 50kg bag of feed to RM91.50. The price of imported soybean meal, which cost between RM1,300 and RM1,400 a tonne at the beginning of the year, had risen to about RM1,800 at the end of May and up to RM2,300 in June. The feed prices usually accounted for at least 80% of production costs. One observer commented that there is not enough supply of alternatives for livestock feed such as palm oil kernel for the local industry, as it is not easy to substitute corn and soybean meals as they are still the cheapest ingredients. (The Star)
There is still upside potential for residential property prices in Iskandar Malaysia, Johor, as the infrastructure is being completed and catalytic projects to lure more investments are still coming in. (Starbiz)
The International Trade and Industry Ministry is ready to grant generous incentives to car manufacturers from both national and non-national assemblers to encourage the production of hybrid and cost-effective models for the ASEAN market. These incentives would include tax exemption apart from the current customised incentives that were already in place for such industry players of hybrid cars. (Starbiz)
Rentals for purpose-built offices in suburban areas outside KL are expected to rise with vibrant business activities, good information and communications technology (ICT) and government projects there, said the valuation and property services Department (JPPH) of the Finance Minsitry. According to the recently launched Purpose-Built Office Rent Index (PBO-RI), the KLCC-Golden Triangle region was the most sought after location in the city in 2010, with the highest average rentals among the four regions the index covers. (Starbiz)
Liberalisation of the country’s services sector is a key factor in attracting more foreign direct investments, especially Japanese investors, said Embassy of Japan counsellor and chief of its economic section Misako Takahashi. She said “Japanese companies are ready to invest, pending liberalisation.” She added if the process of acquiring a license was made more convenient, more service providers would be more willing to invest in Malaysia. She said that foreign equity limitation such as in the insurance sector where the limit is 30%, is a major impediment to investment. (Edge Financial Daily)
More foreign investors are expected to invest in Selangor this year, particularly in the services sector, Malaysian Investment Development Authority (Mida) Selangor Assistant Director Farez Amha Abdullah said. Selangor has been a key driver for the services sector in the country, contributing consistently between 22% and 23% to GDP. From Jan to Mar this year, Selangor has had about 200 approvals with more than RM4bn worth of proposed investments. (Malaysia Reserve)
Malaysia should look into further liberalizing the services sector, licensing issues and foreign equity limitation to ensure continuous influx of Japanese investments. There were crucial issues to address to stem Japanese investments from going to other Asean countries offering attractive investment packages, Embassy of Japan counselor and economic section chief Misako Takahashi said. (StarBiz)
The Federal Government has listed 107 projects capable of generating economic growth for Penang under the Ninth Malaysia Plan ((MP) and 26 projects under 10MP. According to information from the Implementation and Coordination Unit (ICU) in the Prime Minister‟s Department, among the projects are upgrading of the Prai Industrial Area at a cost of RM53m to retain the MNCs operating there and to attract new investments. Other projects include aRM64m upgrading of the hill railway in Bukit Bendera to boost tourism, RM250m expansion of the Penang International Airport and the construction of the second Penang Bridge connecting Batu Kawan on the mainland and Batu Maung on the island at a cost of RM4.5bn. (NST)
The US Conference Board’s index of leading indicators lost 0.3% mom in Jun (a revised +0.4% in May), worse than consensus of -0.1%, weighed down by the new orders index, consumer expectations, building permit, jobless claims, stock prices, and new orders for non-defense capital goods excluding aircraft. (Bloomberg)
US existing-home sales fell 5.4% mom in Jun to a 4.37m annual pace, the lowest of the year (a revised 4.62m pace in May), falling short of consensus of 4.65m. (Bloomberg)
US jobless claims rose 34,000 in the 14 Jul week to 386,000 (a revised 352,000 in the earlier week), overshooting consensus of 365,000. (Bloomberg)
China's yuan is increasingly being used to settle trade transactions in Asia, gradually cementing its way to becoming a regional 'anchor' currency to help “the region to integrate their economies, cooperate on monetary and finance issues as well as gradually open up the (Chinese) financial market,” the Asian Development Bank said. (AFP)
Chinese President Hu Jintao said China would offer US$20bn in new loans to Africa, double the amount Beijing agreed to lend to Africa at the last forum on co-operation with the resource-rich continent in 2009. (AFP)
China's big four state banks doubled their pace of lending in the first half of Jul from a month earlier, although Chinese banks' total new lending in the month is expected to fall by about a third to Rmb650bn, state-run Shanghai Securities News said, citing sources. (Reuters)
Japan’s composite index of coincident economic indicators for May dropped a revised 1.2 points from the previous month, unchanged from a preliminary reading, the Cabinet Office said. The leading index dropped 0.4 pt to 95.2, down from a rise of 0.3 pt in the preliminary report earlier. (The Daily Yomiuri)
Germany's parliament approved by a large majority a European aid package worth up to €100bn for crisis-wracked Spanish banks. (AFP)
Italy: Parliament gives final approval to bill ratifying ESM
The Italian Parliament gave final approval to the European Stability Mechanism (ESM), the euro-region’s permanent bailout fund. The Rome-based lower house, or Chamber of Deputies, voted 325-53 in favour of the bill ratifying the ESM. The Senate passed the bill on 12 July. The EUR500bn fund still requires German ratification before it can take effect. It needs countries representing 90% of the voting weight of the 17 euro nations to give their approval. Italy represents nearly 18% of that measure. (Bloomberg)
UK: Housing market confidence falls
Britons’ confidence in the housing market fell in June compared with three months earlier as the outlook for the economy worsened, according to the Halifax. A gauge of the outlook for property prices slipped to 15 from 19 in March, the mortgage unit of Lloyds Banking Group said. 34% of those surveyed expect prices to rise in the coming 12 months, while 19% forecast a decline. (Gulf News)
UK: Retail sales let down by weather and lack of jubilee bounce
The diamond jubilee failed to produce the promised "bunting boost" and retail sales flat-lined in June, fuelling fears the UK could remain mired in recession for a third quarter. Retail sales grew by just 0.1% in June, compared with expectations of a rise of 0.6%. Cancelled barbecues meant food sales dropped from June 2011 levels and the four-day jubilee weekend had no significant impact on sales. (The Guardian)
Spanish lawmakers approved tough austerity legislation, after the country's borrowing costs neared a new record high at a morning bond auction and its budget minister warned the government is running out of cash to pay its bills. (WSJ)
Fitch affirmed Italy's 'A-' ratings with a 'Negative' outlook, citing the struggling eurozone country's efforts to stabilise its strained public finances and get the economy growing. (AFP)
Australia: Business outlook dims
Australian businesses grew less optimistic about near-term prospects, signalling a slowdown in the fastest-growing developed economy that economists predict will force the central bank to cut interest rates again. The business conditions index for the next three months dropped to 5, the lowest reading since the second quarter of 2009, National Australia Bank said. The second-quarter confidence index slipped to minus 2, the lowest since the third quarter last year, it showed. (Gulf News)
India may offer tax relief to individual investors in equities, with a scheme likely to be launched by the end of this month, an official said, as the government seeks to deepen the country's capital market. (WSJ)
Free trade agreements cannot be credited for the increase in intra-Asian trade as they are often restrictive in scope and difficult to implement, the Asian Development Bank said. Indeed, only a fraction of the region's exporters and importers are using the agreements, despite there being 190 FTAs involving at least one Asian country at the last count in Jan. (AFP)
FDI in Vietnam’s textiles and garment sector has fallen from an annual average of US$460m during the peak period of 2000-08, to an annual average of US$450m for the last three years, and the number of FDI projects has also decreased during the past three years. (Vietnam News)
Vietnam's Foreign Minister Pham Binh Minh and his Indonesian counterpart Marty Natalegawa – have reaffirmed their nations' commitment on the centrality of the Association of Southeast Asian Nations (Asean) in all regional issues. (Asia News Net)
The Thai Industries Sentiment Index (TISI) dropped to 102.7 in Jun, down from 106 in May. The decrease in TISI is the result of the decline in the number of orders, sales, output and profits. (The Nation)
Thailand’s Jun car exports registered at 94,727 units, a 25-year high and marks a 25.2% yoy and 10.1% mom increase. The export value was at THB46.3bn, increasing by 38% yoy. (Thai Financial Post)
Indonesia expects that the increase in non-taxable income (PTKP) limit to be implemented no sooner than Sep 2012, which will see an increase in the amount of non-taxable income from Rp15.8m per year to Rp24m per year. (IFT)
Bank Indonesia data shows that the Financial Stability Index in Jun 2012, closed at above 1.7%, up 0.05% pts, compared to 1.65% in Dec 2011. Compared to the same period last year, the Index increased 0.02% pts. (IFT)
The Philippines’ balance of payments (BOP) surplus dropped to US$14m in Jun, bringing the first-semester surplus to US$1.316bn. However, foreign currency net inflows in Jun was just 6% of the US$222m recorded in the same month of 2011. (Philippine Daily Inquirer)
The World Bank raised its 2012 growth forecast for the Philippines upward to 4.6% from 4.2% for 2012. (AFP)
Japan’s all –industry activity index fell 0.3% mom in May (+0.1% in the Apr reading), matching consensus expectations. On a yoy basis, the measure slowed to 3.2% from 4.1% in Apr. (RTTNews)
The eurozone's current account surplus grew to €10.9bn in May from a revised €5.5bn the previous month, European Central Bank data showed. (WSJ)
Banking: Indonesia's new bank rules may not hit Maybank, CIMB
Indonesia's central bank has issued new rules limiting single ownership in domestic banks at 40% but allows exemptions that could let Malaysia's top two lenders hold on to their controlling stakes in banks there. Bank Indonesia, in a statement on Wednesday, said publiclisted financial institutions will be allowed to keep their current ownership structures in Indonesian banks, provided they maintain high levels of corporate governance and financial health, including a tier-1 capital ratio of over 6%. From December 2013, those that see their corporate governance and financial health ratings fall to unacceptable levels for three consecutive reporting periods will have to sell their stakes down to the new limit. Maybank, in a statement on Thursday, said it was "pleased" with the Bank Indonesia announcement. (Business Times)
Property: Medini gets boost with condo project
Medini Iskandar Malaysia Sdn Bhd on Thursday formalised its JV with China's Zhuoda Real Estate Group to build 2,600 units of high-end condominiums in Medini, Johor. The condominiums, with an estimated GDV of RM2.6bn, will be developed over two phases and completed in 5 year's time. The project is Zhuoda's maiden overseas venture. (Business Times)
Property: Setia Haruman RM20bn investment plan on track
Cyberjaya's flagship developer Setia Haruman Sdn Bhd's RM20bn investment plan is on track and now it wants to attract 10 high-impact companies to set up operations in the ICT hub of Malaysia. Under its RM20bn investment plan over the next 4 years, the developer said RM2bn had been invested in 1H 2012. Setia Haruman's strategy is to develop purpose-built projects that will fulfill the needs of foreign companies seeking a footing in Cyberjaya. Chairman Tan Sri Mustapha Kamal Abu Bakar said at a media conference on Thursday that Cyberjaya developments needed a paradigm shift from merely developing commercial buildings to creating a liveable environment for the companies' staff. He said they have come to a tipping point where they cannot get investors to come in if they do not provide facilities for the investors. (StarBiz)
Timber: Sarawak may opt for foreign participation in forest estates
The Sarawak government may opt for foreign participation in developing forest plantations to achieve its target of having 1m ha by 2020. The state Resource Planning and Environment Ministry’s Permanent Secretary, Datuk Sudarsono Osman said the foreign involvement would only happen if local companies were unavailable to achieve the target. He said the state aimed to have 15m cubic metres of raw material to be supplied from planted forests in 8 years. Based on last year’s figure, he said Sarawak produced 9.6m cubic metres of logs from natural forests, and this was insufficient in meeting the requirements of the domestic industry. (StarBiz)
Thai Beverage to pay S$2.78b for OCBC's stake in F&N
Thai Beverage pcl, Thailand's biggest beer maker, agreed to pay S$2.78 billion (RM6.9 billion) for Fraser & Neave Ltd's (F&N) shares held by Oversea-Chinese Banking Corp (OCBC) and its partners. The Thai company will buy 313 million F&N shares at S$8.88 each, or about 22 per cent of Singapore's biggest beverage maker from OCBC, its unit Great Eastern Holdings Ltd and Lee Rubber Co, according to a statement on Wednesday. (Source: Business Times)
BAT Q2 profit up on lower expenses
British American Tobacco (Malaysia) Bhd (BAT) posted a 20% increase in net profit to RM220.85mil for the second quarter ended June 30, 2012 (Q2’12), compared with RM184.14mil in the corresponding period last year. In its filing with Bursa Malaysia yesterday, BAT attributed the increase to lower operating expenses of 25%, comparable to the same period in the previous year. (Source: The Star)
There is still upside potential for residential property prices in Iskandar Malaysia, Johor, as the infrastructure is being completed and catalytic projects to lure more investments are still coming in. (Starbiz)
The International Trade and Industry Ministry is ready to grant generous incentives to car manufacturers from both national and non-national assemblers to encourage the production of hybrid and cost-effective models for the ASEAN market. These incentives would include tax exemption apart from the current customised incentives that were already in place for such industry players of hybrid cars. (Starbiz)
Rentals for purpose-built offices in suburban areas outside KL are expected to rise with vibrant business activities, good information and communications technology (ICT) and government projects there, said the valuation and property services Department (JPPH) of the Finance Minsitry. According to the recently launched Purpose-Built Office Rent Index (PBO-RI), the KLCC-Golden Triangle region was the most sought after location in the city in 2010, with the highest average rentals among the four regions the index covers. (Starbiz)
Liberalisation of the country’s services sector is a key factor in attracting more foreign direct investments, especially Japanese investors, said Embassy of Japan counsellor and chief of its economic section Misako Takahashi. She said “Japanese companies are ready to invest, pending liberalisation.” She added if the process of acquiring a license was made more convenient, more service providers would be more willing to invest in Malaysia. She said that foreign equity limitation such as in the insurance sector where the limit is 30%, is a major impediment to investment. (Edge Financial Daily)
More foreign investors are expected to invest in Selangor this year, particularly in the services sector, Malaysian Investment Development Authority (Mida) Selangor Assistant Director Farez Amha Abdullah said. Selangor has been a key driver for the services sector in the country, contributing consistently between 22% and 23% to GDP. From Jan to Mar this year, Selangor has had about 200 approvals with more than RM4bn worth of proposed investments. (Malaysia Reserve)
Malaysia should look into further liberalizing the services sector, licensing issues and foreign equity limitation to ensure continuous influx of Japanese investments. There were crucial issues to address to stem Japanese investments from going to other Asean countries offering attractive investment packages, Embassy of Japan counselor and economic section chief Misako Takahashi said. (StarBiz)
The Federal Government has listed 107 projects capable of generating economic growth for Penang under the Ninth Malaysia Plan ((MP) and 26 projects under 10MP. According to information from the Implementation and Coordination Unit (ICU) in the Prime Minister‟s Department, among the projects are upgrading of the Prai Industrial Area at a cost of RM53m to retain the MNCs operating there and to attract new investments. Other projects include aRM64m upgrading of the hill railway in Bukit Bendera to boost tourism, RM250m expansion of the Penang International Airport and the construction of the second Penang Bridge connecting Batu Kawan on the mainland and Batu Maung on the island at a cost of RM4.5bn. (NST)
The US Conference Board’s index of leading indicators lost 0.3% mom in Jun (a revised +0.4% in May), worse than consensus of -0.1%, weighed down by the new orders index, consumer expectations, building permit, jobless claims, stock prices, and new orders for non-defense capital goods excluding aircraft. (Bloomberg)
US existing-home sales fell 5.4% mom in Jun to a 4.37m annual pace, the lowest of the year (a revised 4.62m pace in May), falling short of consensus of 4.65m. (Bloomberg)
US jobless claims rose 34,000 in the 14 Jul week to 386,000 (a revised 352,000 in the earlier week), overshooting consensus of 365,000. (Bloomberg)
China's yuan is increasingly being used to settle trade transactions in Asia, gradually cementing its way to becoming a regional 'anchor' currency to help “the region to integrate their economies, cooperate on monetary and finance issues as well as gradually open up the (Chinese) financial market,” the Asian Development Bank said. (AFP)
Chinese President Hu Jintao said China would offer US$20bn in new loans to Africa, double the amount Beijing agreed to lend to Africa at the last forum on co-operation with the resource-rich continent in 2009. (AFP)
China's big four state banks doubled their pace of lending in the first half of Jul from a month earlier, although Chinese banks' total new lending in the month is expected to fall by about a third to Rmb650bn, state-run Shanghai Securities News said, citing sources. (Reuters)
Japan’s composite index of coincident economic indicators for May dropped a revised 1.2 points from the previous month, unchanged from a preliminary reading, the Cabinet Office said. The leading index dropped 0.4 pt to 95.2, down from a rise of 0.3 pt in the preliminary report earlier. (The Daily Yomiuri)
Germany's parliament approved by a large majority a European aid package worth up to €100bn for crisis-wracked Spanish banks. (AFP)
Italy: Parliament gives final approval to bill ratifying ESM
The Italian Parliament gave final approval to the European Stability Mechanism (ESM), the euro-region’s permanent bailout fund. The Rome-based lower house, or Chamber of Deputies, voted 325-53 in favour of the bill ratifying the ESM. The Senate passed the bill on 12 July. The EUR500bn fund still requires German ratification before it can take effect. It needs countries representing 90% of the voting weight of the 17 euro nations to give their approval. Italy represents nearly 18% of that measure. (Bloomberg)
UK: Housing market confidence falls
Britons’ confidence in the housing market fell in June compared with three months earlier as the outlook for the economy worsened, according to the Halifax. A gauge of the outlook for property prices slipped to 15 from 19 in March, the mortgage unit of Lloyds Banking Group said. 34% of those surveyed expect prices to rise in the coming 12 months, while 19% forecast a decline. (Gulf News)
UK: Retail sales let down by weather and lack of jubilee bounce
The diamond jubilee failed to produce the promised "bunting boost" and retail sales flat-lined in June, fuelling fears the UK could remain mired in recession for a third quarter. Retail sales grew by just 0.1% in June, compared with expectations of a rise of 0.6%. Cancelled barbecues meant food sales dropped from June 2011 levels and the four-day jubilee weekend had no significant impact on sales. (The Guardian)
Spanish lawmakers approved tough austerity legislation, after the country's borrowing costs neared a new record high at a morning bond auction and its budget minister warned the government is running out of cash to pay its bills. (WSJ)
Fitch affirmed Italy's 'A-' ratings with a 'Negative' outlook, citing the struggling eurozone country's efforts to stabilise its strained public finances and get the economy growing. (AFP)
Australia: Business outlook dims
Australian businesses grew less optimistic about near-term prospects, signalling a slowdown in the fastest-growing developed economy that economists predict will force the central bank to cut interest rates again. The business conditions index for the next three months dropped to 5, the lowest reading since the second quarter of 2009, National Australia Bank said. The second-quarter confidence index slipped to minus 2, the lowest since the third quarter last year, it showed. (Gulf News)
India may offer tax relief to individual investors in equities, with a scheme likely to be launched by the end of this month, an official said, as the government seeks to deepen the country's capital market. (WSJ)
Free trade agreements cannot be credited for the increase in intra-Asian trade as they are often restrictive in scope and difficult to implement, the Asian Development Bank said. Indeed, only a fraction of the region's exporters and importers are using the agreements, despite there being 190 FTAs involving at least one Asian country at the last count in Jan. (AFP)
FDI in Vietnam’s textiles and garment sector has fallen from an annual average of US$460m during the peak period of 2000-08, to an annual average of US$450m for the last three years, and the number of FDI projects has also decreased during the past three years. (Vietnam News)
Vietnam's Foreign Minister Pham Binh Minh and his Indonesian counterpart Marty Natalegawa – have reaffirmed their nations' commitment on the centrality of the Association of Southeast Asian Nations (Asean) in all regional issues. (Asia News Net)
The Thai Industries Sentiment Index (TISI) dropped to 102.7 in Jun, down from 106 in May. The decrease in TISI is the result of the decline in the number of orders, sales, output and profits. (The Nation)
Thailand’s Jun car exports registered at 94,727 units, a 25-year high and marks a 25.2% yoy and 10.1% mom increase. The export value was at THB46.3bn, increasing by 38% yoy. (Thai Financial Post)
Indonesia expects that the increase in non-taxable income (PTKP) limit to be implemented no sooner than Sep 2012, which will see an increase in the amount of non-taxable income from Rp15.8m per year to Rp24m per year. (IFT)
Bank Indonesia data shows that the Financial Stability Index in Jun 2012, closed at above 1.7%, up 0.05% pts, compared to 1.65% in Dec 2011. Compared to the same period last year, the Index increased 0.02% pts. (IFT)
The Philippines’ balance of payments (BOP) surplus dropped to US$14m in Jun, bringing the first-semester surplus to US$1.316bn. However, foreign currency net inflows in Jun was just 6% of the US$222m recorded in the same month of 2011. (Philippine Daily Inquirer)
The World Bank raised its 2012 growth forecast for the Philippines upward to 4.6% from 4.2% for 2012. (AFP)
Japan’s all –industry activity index fell 0.3% mom in May (+0.1% in the Apr reading), matching consensus expectations. On a yoy basis, the measure slowed to 3.2% from 4.1% in Apr. (RTTNews)
The eurozone's current account surplus grew to €10.9bn in May from a revised €5.5bn the previous month, European Central Bank data showed. (WSJ)
Banking: Indonesia's new bank rules may not hit Maybank, CIMB
Indonesia's central bank has issued new rules limiting single ownership in domestic banks at 40% but allows exemptions that could let Malaysia's top two lenders hold on to their controlling stakes in banks there. Bank Indonesia, in a statement on Wednesday, said publiclisted financial institutions will be allowed to keep their current ownership structures in Indonesian banks, provided they maintain high levels of corporate governance and financial health, including a tier-1 capital ratio of over 6%. From December 2013, those that see their corporate governance and financial health ratings fall to unacceptable levels for three consecutive reporting periods will have to sell their stakes down to the new limit. Maybank, in a statement on Thursday, said it was "pleased" with the Bank Indonesia announcement. (Business Times)
Property: Medini gets boost with condo project
Medini Iskandar Malaysia Sdn Bhd on Thursday formalised its JV with China's Zhuoda Real Estate Group to build 2,600 units of high-end condominiums in Medini, Johor. The condominiums, with an estimated GDV of RM2.6bn, will be developed over two phases and completed in 5 year's time. The project is Zhuoda's maiden overseas venture. (Business Times)
Property: Setia Haruman RM20bn investment plan on track
Cyberjaya's flagship developer Setia Haruman Sdn Bhd's RM20bn investment plan is on track and now it wants to attract 10 high-impact companies to set up operations in the ICT hub of Malaysia. Under its RM20bn investment plan over the next 4 years, the developer said RM2bn had been invested in 1H 2012. Setia Haruman's strategy is to develop purpose-built projects that will fulfill the needs of foreign companies seeking a footing in Cyberjaya. Chairman Tan Sri Mustapha Kamal Abu Bakar said at a media conference on Thursday that Cyberjaya developments needed a paradigm shift from merely developing commercial buildings to creating a liveable environment for the companies' staff. He said they have come to a tipping point where they cannot get investors to come in if they do not provide facilities for the investors. (StarBiz)
Timber: Sarawak may opt for foreign participation in forest estates
The Sarawak government may opt for foreign participation in developing forest plantations to achieve its target of having 1m ha by 2020. The state Resource Planning and Environment Ministry’s Permanent Secretary, Datuk Sudarsono Osman said the foreign involvement would only happen if local companies were unavailable to achieve the target. He said the state aimed to have 15m cubic metres of raw material to be supplied from planted forests in 8 years. Based on last year’s figure, he said Sarawak produced 9.6m cubic metres of logs from natural forests, and this was insufficient in meeting the requirements of the domestic industry. (StarBiz)
Thai Beverage to pay S$2.78b for OCBC's stake in F&N
Thai Beverage pcl, Thailand's biggest beer maker, agreed to pay S$2.78 billion (RM6.9 billion) for Fraser & Neave Ltd's (F&N) shares held by Oversea-Chinese Banking Corp (OCBC) and its partners. The Thai company will buy 313 million F&N shares at S$8.88 each, or about 22 per cent of Singapore's biggest beverage maker from OCBC, its unit Great Eastern Holdings Ltd and Lee Rubber Co, according to a statement on Wednesday. (Source: Business Times)
BAT Q2 profit up on lower expenses
British American Tobacco (Malaysia) Bhd (BAT) posted a 20% increase in net profit to RM220.85mil for the second quarter ended June 30, 2012 (Q2’12), compared with RM184.14mil in the corresponding period last year. In its filing with Bursa Malaysia yesterday, BAT attributed the increase to lower operating expenses of 25%, comparable to the same period in the previous year. (Source: The Star)
20120720 1028 Malaysia Corporate Related News.
I.Star Ideas Factory Sdn Bhd, a wholly-owned subsidiary of Star Publications (Malaysia) Berhad is buying CNM Events Marketing Sdn Bhd for RM45m. CNM Events Marketing Sdn Bhd owns the home and lifestyle exhibition „Perfect Living‟. The vendor CNM Events and warrantor Dato‟ Adriana Law Song Ting jointly and severally provide a guaranteed total profit before tax of not less than RM30m for three years from the completion date of the agreement. The purchase will be funded partially by borrowings and internally generated funds. The rationale for the acquisition is to expand the company‟s existing business in the event and exhibition space. (BMSB)
Tenaga Nasional Bhd (Tenaga) has received assurance from the government that any hike in future gas prices will be offset, or neutralized, in order to avoid past losses, where Tenaga was made to shoulder the effects of a gas shortage. The company said that it has an assurance by the government that whatever happens to the gas prices, Tenaga will remain neutral and it will be a pass-through. However, the company said that it has not been determined whether the pass-through will come in the form of a tariff hike or a fuel cost compensation mechanism. Tenaga also said that it hopes to receive compensation for the entire amount of additional fuel cost instead of only two thirds. An incentive based regulation will be in operation from 2015-2017 with trials in 2014 Tenaga said. The company‟s performance will be benchmarked against key performance indicators (KPIs). If the company performs according to or above the KPIs, it will receive a return based on its weighted average cost of capital. If the company‟s doesn‟t meet the KPIs, the company may have to absorb losses. (Malaysian Reserve, Sun Biz)
Petronas has signed an agreement with Italy-based Versalis SpA to jointly own, develop, construct and operate elastomer plants within its proposed RM60bn refinery and petrochemical integrated development (RAPID) complex in Pengerang, Johor. The JV will produce and market synthetic rubber. It is the fourth such arrangement secured by Petronas for RAPID and the engineering activities will commence immediately. Prior to this, Petronas inked similar agreements with BASF of Germany, Itochu of Japan and PTT Global Chemical of Thailand for various high value-added downstream chemicals. Petronas is currently pursuing the selection of other potential partners and licensors for various facilities to be developed within RAPID. (Bernama)
Syarikat Prasarana Negara Bhd said the government is not obliged to award the systems contract for the Ampang light rail transit (LRT) extension line project to the lowest bidder. Prasarana media manager Azhar Ghazali said the totality of the offer will be considered, which among others, include the life cycle cost that will bring about reducing operating expenditures over equipment lifespan. "Leaked information found in the media recently did not give a full picture. Dated selective excerpts have been superseded by new information resulting from the clarifications. "They did not do justice either by labelling certain activities as interference, when, what, were and are being done, are due diligence processes by the government," Azhar said. Tenders for the systems contract for the Ampang line extension closed on 16 June 16 2011. Eight groups had made the bids, with prices ranging from RM950m-RM1.45bon.They are George Kent-China Railway Construction-Tewet GmbH; Posco-Sojitz-Daewoo International-Thales; Invensys-Balfour Beatty Rail-Ingress; Colas-CMC Engineering-Thales; Samsung-LG-Thales; SNC Lavalin-WW Engineering-Bombardier; Siemens-Scomi Engineering and Ansaldo-Emrail-Leighton. (BT)
The main contractors of the Asian petroleum hub, ZAQ construction, faces a stumbling block in its bid to wind up project owner Asia Petroleum Hub (APH) as two parties are now seeing to throw out the winding-up petition. CIMB Bank and its appointed receiver and manager PricewaterhouseCoopers (PwC) will soon file their applications to strike out the winding-up petition by ZAQ. In January, ZAQ filed the winding-up petition after winning a judgment-in-default against APH last December for RM419.73m in services rendered. ZAQ itself is facing legal action alongside APH in a claim by ZAQ‟s main subcontractor Muhibbah Engineering which is suing for about RM381m owed. (Financial Daily)
Top Glove plans to spend RM3bn in the next 15 years to expand its rubber glove production capacity and acquire more rubber plantation land. This will see the company‟s annual glove output triple, and global market share double by then. Top Glove chairman Tan Sri Lim Wee Chai said the RM3bn investment will finance the construction of another 30 factories across Malaysia, Thailand and Indonesia, and raise the annual capacity to 120bn pieces of gloves. (Financial Daily)
The continuing spat between the federal and the Selangor state governments over the alleged water crisis affecting the state has a taken a new turn with a special Cabinet committee set up. However, it was reported that the Selangor state government had sent a formal letter to the federal government on its planned takeover of Syabas. The protracted water feud between the state government and Syabas percolated to a heightened level since Monday when the state declared its intention to takeover Syabas. (Malaysian Reserve)
Volkswagen AG reportedly renewed its interest to take on a stake in Proton Holdings. Manager Magazin, a German monthly magazine said Volkswagen might consider fully acquiring Proton in the long-term. Any stake sale in Proton would need to approval from the International Trade and Industry Ministry and National Economic Council. (Star Biz)
Perodua has emerged the top selling car maker with 92,923 units sold in the first half of this year vis-a-vis 79,467 cars sold in the same period last year. Proton is in second spot with fewer cars sold at 72,837 units for the period under review against 85,223 units in the first six months last year, says the Malaysian Automotive Association (MAA). Overall, the total automotive industry volume increased to 301,224 in the January-June period this year from 297,203 in the same period 2011. President Datuk Aishah Ahmad said Perodua, the second national car maker, has done very well, achieving the biggest 35% market share for the first half of this year, while Proton's market share was 27.4%. Foreign car manufacturer, Toyota, came in third with 51,567 units sold, against last year's 41,688, while Nissan and Honda sold 16,533 units and 10,165 units, respectively, in the same period compared with 17,306 and 19,246 units last year. (Bernama)
The Malaysia Automotive Association (MAA) is positive that car sales in 2H2012 will be better than the first half, despite some earlier drawbacks. Total industry volume of new vehicles in the first six months of 2012 was 301,224 units, a marginal increase of 1.4% from last year. The MAA forecasts 2012 TIV to be 615,000 units for the year. (Financial Daily)
Honda Malaysia is investing RM1bn over the next three years to build a new production line and improve its infrastructure and dealers network. Of the RM1bn, about RM350m will be spent on building a second production line at its plant here to double capacity to 100,000 units a year. The investment will also allow Honda Malaysia to manufacture hybrid vehicles, making it the first non-national automotive manufacturer to produce hybrid vehicles in the country. "This could potentially turn Malaysia into a regional hub for production of hybrid vehicles," Minister of International Trade and Industry Datuk Seri Mustapa Mohamed said. (BT)
Japan‟s Honda Motor said it is recalling more than 320,000 vehicles worldwide because of a door lock defect. The automaker said its recall was for the 2012 CR-V sports utility vehicle and 2013 Acura ILX sedan. The vast majority of the recall is for the CR-V model, sold mainly in Japan, North America, China and South America. (AFP, BT)
Honda Malaysia will produce locally assembled hybrid vehicles at its Pegoh plant in Alor Gajah. Hiroshi Kobayashi, president and CEO of Asian Honda Motor Co, said the plant will start local production of the Jazz hybrid model by the year-end. "When the first hybrid rolls out of the plant later this year, Honda will become the first non-national automotive manufacturer in Malaysia to locally produce hybrid vehicles," he said. (Financial Daily)
Naza Kia (M) Sdn Bhd sold 7,000 cars in the first half of the year, an increase of 11% over the 6,230 units in the same period last year, said its CEO Datuk Hafiz Syed Abu Bakar yesterday. "We expect to maintain the growth in the second half of the year," he said. Hafiz also said the B-segment 1.4-litre Rio, would be launched in November with a price tag of between RM70,000 and RM80,000. (BT)
Axiata Group announced yesterday that it and its wholly-owned subsidiary Axiata SPV2 Bhd had received approval from the Securities Commission to establish a US$1.5bn (RM4.73bn) sukuk programme. In addition, the two parties had on July 17 entered into a relevant transaction documents in relation to the sukuk programme. Standard and Poor‟s Rating Services have assigned a BBB- rating to the sukuk programme. Moody‟s Investors Service on the other had published a Baa2 rating for Axiata. The sukuk issued will be listed on Bursa Malaysia and the Singapore Exchange. The sukuk programme has been established in order to optimise Axiata‟s balance sheet and improve its capital efficiency. The net proceeds from the issuance will be used for the group‟s general corporate purposes. (StarBiz)
Telekom Malaysia has clarified that the figure of 399,000 UniFi subscribers as reported yesterday actually refers to the total number of UniFi subscribers nationwide currently, and not just for Johor. (BT)
Apex Equity Holdings Bhd expects to record a gain of RM14.9m from the disposal of 17m shares in Finbar Group Limited, which is listed on the Australian Stock Exchange.It said on Thursday that its Australian stockbroker, Investorfirst Securities Ltd, had disposed 17 million Finbar shares of A$1 each for A$17m (RM54.8m). Finbar, which is a property investment and development company in Perth, Australia, builds apartments, town houses, residential and specialised commercial buildings in the Perth metropolitan area.(Starbiz)
Ho Hup Construction Co Bhd has secured RM87m deal to build an integrated army complex in Johor Baru. The company said the contract was awarded by Johor Corp. Construction is targeted to be completed in Jan-2015. (BT)
Zecon Bhd’s unit, Zecon Land Sdn Bhd (ZLSB), has signed a sale and purchase (S&P) agreement with Lembaga Tabung Haji (LTH) to sell a retail mall for RM155.8m. Zecon said it will build an integrated mixed development known as the Vista Tunku Project on the project land. The project is expected to be completed within 24 months. (BT)
Jalur Lebar Nasional Sdn Bhd (Jalenas) is set to invest RM7bn in capital expenditure over the next 5 years to build and operate high-speed broadband infrastructure to penetrate 2.5m premises nationwide. Executive Director Heikal M. Ali said the company executed the five-year national plan late last year, and the capital expenditure was started during the same period. He said the company is now aggressively rolling out its services to over 30,000 premises in Kuantan targeted to be completed by 2013. "The RM7bn is from a combination of bankers and own funding," he told reporters after the signing of a RM850m technology partnership agreement with Metroverse Sdn Bhd. (Bernama)
The Stevedore Employers’ Association (SEA) welcomes the move to privatise Penang Port, hoping it can bring back the glory days of the port. SEA president Datuk Mohd Sobree Abdullah stressed that the privatisation should not be politicised, but the issue was all about the performance of the port and the future of its workers. (The Star)
Boilermech acquires RM20m land with office building
Boilermech Holdings will pay RM20.3m to SSK Logistics SB to acquire an industrial land with a three-storey building in Damansara, Selangor. It said the purchase will be funded via internal funds and bank borrowings. The purchase will help the company to expand its production capacity to meet growing demand for its boilers locally and abroad. (Malaysian Reserve)
Tenaga Nasional Bhd (Tenaga) has received assurance from the government that any hike in future gas prices will be offset, or neutralized, in order to avoid past losses, where Tenaga was made to shoulder the effects of a gas shortage. The company said that it has an assurance by the government that whatever happens to the gas prices, Tenaga will remain neutral and it will be a pass-through. However, the company said that it has not been determined whether the pass-through will come in the form of a tariff hike or a fuel cost compensation mechanism. Tenaga also said that it hopes to receive compensation for the entire amount of additional fuel cost instead of only two thirds. An incentive based regulation will be in operation from 2015-2017 with trials in 2014 Tenaga said. The company‟s performance will be benchmarked against key performance indicators (KPIs). If the company performs according to or above the KPIs, it will receive a return based on its weighted average cost of capital. If the company‟s doesn‟t meet the KPIs, the company may have to absorb losses. (Malaysian Reserve, Sun Biz)
Petronas has signed an agreement with Italy-based Versalis SpA to jointly own, develop, construct and operate elastomer plants within its proposed RM60bn refinery and petrochemical integrated development (RAPID) complex in Pengerang, Johor. The JV will produce and market synthetic rubber. It is the fourth such arrangement secured by Petronas for RAPID and the engineering activities will commence immediately. Prior to this, Petronas inked similar agreements with BASF of Germany, Itochu of Japan and PTT Global Chemical of Thailand for various high value-added downstream chemicals. Petronas is currently pursuing the selection of other potential partners and licensors for various facilities to be developed within RAPID. (Bernama)
Syarikat Prasarana Negara Bhd said the government is not obliged to award the systems contract for the Ampang light rail transit (LRT) extension line project to the lowest bidder. Prasarana media manager Azhar Ghazali said the totality of the offer will be considered, which among others, include the life cycle cost that will bring about reducing operating expenditures over equipment lifespan. "Leaked information found in the media recently did not give a full picture. Dated selective excerpts have been superseded by new information resulting from the clarifications. "They did not do justice either by labelling certain activities as interference, when, what, were and are being done, are due diligence processes by the government," Azhar said. Tenders for the systems contract for the Ampang line extension closed on 16 June 16 2011. Eight groups had made the bids, with prices ranging from RM950m-RM1.45bon.They are George Kent-China Railway Construction-Tewet GmbH; Posco-Sojitz-Daewoo International-Thales; Invensys-Balfour Beatty Rail-Ingress; Colas-CMC Engineering-Thales; Samsung-LG-Thales; SNC Lavalin-WW Engineering-Bombardier; Siemens-Scomi Engineering and Ansaldo-Emrail-Leighton. (BT)
The main contractors of the Asian petroleum hub, ZAQ construction, faces a stumbling block in its bid to wind up project owner Asia Petroleum Hub (APH) as two parties are now seeing to throw out the winding-up petition. CIMB Bank and its appointed receiver and manager PricewaterhouseCoopers (PwC) will soon file their applications to strike out the winding-up petition by ZAQ. In January, ZAQ filed the winding-up petition after winning a judgment-in-default against APH last December for RM419.73m in services rendered. ZAQ itself is facing legal action alongside APH in a claim by ZAQ‟s main subcontractor Muhibbah Engineering which is suing for about RM381m owed. (Financial Daily)
Top Glove plans to spend RM3bn in the next 15 years to expand its rubber glove production capacity and acquire more rubber plantation land. This will see the company‟s annual glove output triple, and global market share double by then. Top Glove chairman Tan Sri Lim Wee Chai said the RM3bn investment will finance the construction of another 30 factories across Malaysia, Thailand and Indonesia, and raise the annual capacity to 120bn pieces of gloves. (Financial Daily)
The continuing spat between the federal and the Selangor state governments over the alleged water crisis affecting the state has a taken a new turn with a special Cabinet committee set up. However, it was reported that the Selangor state government had sent a formal letter to the federal government on its planned takeover of Syabas. The protracted water feud between the state government and Syabas percolated to a heightened level since Monday when the state declared its intention to takeover Syabas. (Malaysian Reserve)
Volkswagen AG reportedly renewed its interest to take on a stake in Proton Holdings. Manager Magazin, a German monthly magazine said Volkswagen might consider fully acquiring Proton in the long-term. Any stake sale in Proton would need to approval from the International Trade and Industry Ministry and National Economic Council. (Star Biz)
Perodua has emerged the top selling car maker with 92,923 units sold in the first half of this year vis-a-vis 79,467 cars sold in the same period last year. Proton is in second spot with fewer cars sold at 72,837 units for the period under review against 85,223 units in the first six months last year, says the Malaysian Automotive Association (MAA). Overall, the total automotive industry volume increased to 301,224 in the January-June period this year from 297,203 in the same period 2011. President Datuk Aishah Ahmad said Perodua, the second national car maker, has done very well, achieving the biggest 35% market share for the first half of this year, while Proton's market share was 27.4%. Foreign car manufacturer, Toyota, came in third with 51,567 units sold, against last year's 41,688, while Nissan and Honda sold 16,533 units and 10,165 units, respectively, in the same period compared with 17,306 and 19,246 units last year. (Bernama)
The Malaysia Automotive Association (MAA) is positive that car sales in 2H2012 will be better than the first half, despite some earlier drawbacks. Total industry volume of new vehicles in the first six months of 2012 was 301,224 units, a marginal increase of 1.4% from last year. The MAA forecasts 2012 TIV to be 615,000 units for the year. (Financial Daily)
Honda Malaysia is investing RM1bn over the next three years to build a new production line and improve its infrastructure and dealers network. Of the RM1bn, about RM350m will be spent on building a second production line at its plant here to double capacity to 100,000 units a year. The investment will also allow Honda Malaysia to manufacture hybrid vehicles, making it the first non-national automotive manufacturer to produce hybrid vehicles in the country. "This could potentially turn Malaysia into a regional hub for production of hybrid vehicles," Minister of International Trade and Industry Datuk Seri Mustapa Mohamed said. (BT)
Japan‟s Honda Motor said it is recalling more than 320,000 vehicles worldwide because of a door lock defect. The automaker said its recall was for the 2012 CR-V sports utility vehicle and 2013 Acura ILX sedan. The vast majority of the recall is for the CR-V model, sold mainly in Japan, North America, China and South America. (AFP, BT)
Honda Malaysia will produce locally assembled hybrid vehicles at its Pegoh plant in Alor Gajah. Hiroshi Kobayashi, president and CEO of Asian Honda Motor Co, said the plant will start local production of the Jazz hybrid model by the year-end. "When the first hybrid rolls out of the plant later this year, Honda will become the first non-national automotive manufacturer in Malaysia to locally produce hybrid vehicles," he said. (Financial Daily)
Naza Kia (M) Sdn Bhd sold 7,000 cars in the first half of the year, an increase of 11% over the 6,230 units in the same period last year, said its CEO Datuk Hafiz Syed Abu Bakar yesterday. "We expect to maintain the growth in the second half of the year," he said. Hafiz also said the B-segment 1.4-litre Rio, would be launched in November with a price tag of between RM70,000 and RM80,000. (BT)
Axiata Group announced yesterday that it and its wholly-owned subsidiary Axiata SPV2 Bhd had received approval from the Securities Commission to establish a US$1.5bn (RM4.73bn) sukuk programme. In addition, the two parties had on July 17 entered into a relevant transaction documents in relation to the sukuk programme. Standard and Poor‟s Rating Services have assigned a BBB- rating to the sukuk programme. Moody‟s Investors Service on the other had published a Baa2 rating for Axiata. The sukuk issued will be listed on Bursa Malaysia and the Singapore Exchange. The sukuk programme has been established in order to optimise Axiata‟s balance sheet and improve its capital efficiency. The net proceeds from the issuance will be used for the group‟s general corporate purposes. (StarBiz)
Telekom Malaysia has clarified that the figure of 399,000 UniFi subscribers as reported yesterday actually refers to the total number of UniFi subscribers nationwide currently, and not just for Johor. (BT)
Apex Equity Holdings Bhd expects to record a gain of RM14.9m from the disposal of 17m shares in Finbar Group Limited, which is listed on the Australian Stock Exchange.It said on Thursday that its Australian stockbroker, Investorfirst Securities Ltd, had disposed 17 million Finbar shares of A$1 each for A$17m (RM54.8m). Finbar, which is a property investment and development company in Perth, Australia, builds apartments, town houses, residential and specialised commercial buildings in the Perth metropolitan area.(Starbiz)
Ho Hup Construction Co Bhd has secured RM87m deal to build an integrated army complex in Johor Baru. The company said the contract was awarded by Johor Corp. Construction is targeted to be completed in Jan-2015. (BT)
Zecon Bhd’s unit, Zecon Land Sdn Bhd (ZLSB), has signed a sale and purchase (S&P) agreement with Lembaga Tabung Haji (LTH) to sell a retail mall for RM155.8m. Zecon said it will build an integrated mixed development known as the Vista Tunku Project on the project land. The project is expected to be completed within 24 months. (BT)
Jalur Lebar Nasional Sdn Bhd (Jalenas) is set to invest RM7bn in capital expenditure over the next 5 years to build and operate high-speed broadband infrastructure to penetrate 2.5m premises nationwide. Executive Director Heikal M. Ali said the company executed the five-year national plan late last year, and the capital expenditure was started during the same period. He said the company is now aggressively rolling out its services to over 30,000 premises in Kuantan targeted to be completed by 2013. "The RM7bn is from a combination of bankers and own funding," he told reporters after the signing of a RM850m technology partnership agreement with Metroverse Sdn Bhd. (Bernama)
The Stevedore Employers’ Association (SEA) welcomes the move to privatise Penang Port, hoping it can bring back the glory days of the port. SEA president Datuk Mohd Sobree Abdullah stressed that the privatisation should not be politicised, but the issue was all about the performance of the port and the future of its workers. (The Star)
Boilermech acquires RM20m land with office building
Boilermech Holdings will pay RM20.3m to SSK Logistics SB to acquire an industrial land with a three-storey building in Damansara, Selangor. It said the purchase will be funded via internal funds and bank borrowings. The purchase will help the company to expand its production capacity to meet growing demand for its boilers locally and abroad. (Malaysian Reserve)
20120720 1018 Global Market Related News.
Asia FX By Cornelius Luca - Thu 19 Jul 2012 17:10:38 CT(Source:CME/www.lucafxta.com)
The appetite for risk remained relatively firm on Thursday on news that German Chancellor Angela Merkel easily won a parliamentary vote on a Eurozone rescue package for Spanish banks despite unease in her centre-right coalition about the rising cost of Europe's debt crisis for German taxpayers. The foreign currencies extended Wednesday's pattern, so some European currencies consolidated and the commodity currencies and yen marched higher. The US stock indexes advanced. Gold, oil and silver closed up. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is bearish. The LGR short-term model is short on the European currencies and yen. Good luck!
Overnight
US: The weekly jobless claims jumped to 386,000 from the previous week's revised figure of 352,000 (350,000 originally).
US: The Conference Board's leading economic index fell by 0.3% in June following a revised 0.4% increase in May.
US: The Philly Fed's diffusion index of current activity rose to -12.9 in July from -16.6 in June.
US: Existing home sales fell 5.4% to an annual rate of 4.37 million in June from an upwardly revised 4.62 million in May. The national median existing-home price rose 5% to $189,400 in June from $180,300 in May.
Asia Stocks Fall, Paring Weekly Gain, on U.S. Data, China (Source:Bloomberg)
Asian stocks fell, paring a weekly gain in the benchmark regional index, amid speculation China will keep property curbs in place and as U.S. economic reports missed estimates. Billabong International Ltd., a surfwear company that counts the Americas as its biggest market, fell 1.8 percent in Sydney. Fanuc Corp. (6954), a maker of industrial robots that gets almost half its sales from Asia outside Japan, declined 0.7 percent in Tokyo. Chinese cement makers may be active today in Hong Kong after Jefferies Group Inc. said growth in demand will slow “drastically” in 2012. The MSCI Asia Pacific Index (MXAP) slid 0.3 percent to 117.19 as of 10:07 a.m. in Tokyo, paring this week’s gains to 1.7 percent. About three shares fell for every two that rose. Markets in Hong Kong and China are yet to open.
“The shape of recovery is still uncertain,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Equity investors need to be patient in any case, but more so at the present time. Valuations are low, which means dividend yields are reasonable.” The MSCI Asia Pacific Index pared its loss from this year’s high on Feb. 29 through yesterday to 8.9 percent amid optimism central banks from China to the U.S. will ease monetary policy. The Asian benchmark, which contains some companies from emerging markets, trades at 11.9 times estimated earnings on average, compared with 13.3 times for the Standard & Poor’s 500 Index and 11 times for the Stoxx Europe 600 Index.
Japan Stocks Drop as U.S. Data Disappoints; Toshiba Gains (Source:Bloomberg)
July 20 (Bloomberg) -- Japanese stocks fell, trimming a weekly gain on the benchmark Nikkei 225 (NKY) Stock Average, after U.S. economic reports missed estimates, damping the earnings outlook for exporters. Toshiba Corp. rose after its chipmaking partner reported better-than-expected profits. Carmaker Toyota Motor Corp. (7203), which depends on North America for a quarter of its sales, dropped 1 percent. Yamato Holdings Co., which provides parcel delivery services, declined 2.9 percent on a report its operating profit slid. Toshiba added 3.2 percent after chipmaking partner SanDisk Corp. posted profits that topped analysts’ estimates. The Nikkei 225 fell 0.3 percent to 8,767.38 as of 9:52 a.m. in Tokyo, trimming weekly gain to 0.5 percent. The broader Topix Index dropped 0.7 percent to 741.90.
“The shape of recovery is still uncertain,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Equity investors need to be patient in any case, but more so at the present time. Valuations are low, which means dividend yields are reasonable.” The Topix rebounded 6.6 percent from a 29-year low reached on June 4 as concern eased about Europe’s debt crisis and central banks around the world cut rates to shore up growth. Shares on the index are valued at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index (SPXL1) and 1.4 for the Europe Stoxx 600 Index. A number below one means investors can buy companies for less than the value of their assets.
S&P 500 Rises to Two-Month High on Earnings Amid Fed Bets(Source:Bloomberg)
U.S. stocks rose, sending the Standard & Poor’s 500 Index to a two-month high, amid better- than-estimated earnings and bets that disappointing economic data will lead the Federal Reserve to add stimulus. International Business Machines Corp. (IBM), the biggest computer-services provider, and EBay Inc. (EBAY), the largest Internet marketplace, gained at least 3.7 percent as profits beat forecasts. Walgreen Co. (WAG) soared 12 percent after renewing a contract with Express Scripts Inc. (ESRX) Morgan Stanley (MS) slid 5.3 percent after missing estimates as trading revenue plunged. Google Inc. (GOOG), owner of the most popular search engine, rose 3.1 percent at 5:34 p.m. New York time as revenue surged 35 percent.
The S&P 500 (SPX) advanced 0.3 percent to 1,376.51 at 4 p.m. New York time, the highest since May 3. The Dow Jones Industrial Average added 34.66 points, or 0.3 percent, to 12,943.36. The Nasdaq Composite Index gained 0.8 percent to 2,965.90. Volume for exchange-listed stocks in the U.S. was 7 billion shares today, up 4.8 percent from the three-month average. “We’ve been watching very good earnings, but there were too many disappointing economic reports today,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a phone interview. “There’s some comfort based on the idea that if things get worse, the Fed will do something. We’ll have to wait and see.”
European Stocks Rise as Company Earnings Beat Forecasts(Source:Bloomberg)
European stocks rose to the highest level since early April as companies reported quarterly earnings that exceeded analysts’ estimates. Akzo Nobel NV (AKZA) jumped 6.3 percent after posting second- quarter results that beat forecasts. Remy Cointreau SA, France’s second-biggest distiller, increased 6.2 percent on higher revenue. Nokia Oyj (NOK1V) surged 12 percent after sales of its flagship smartphone beat analysts’ estimates. The Stoxx 600 climbed 1.1 percent to 261.86 at the close of trade. The gauge is heading for a seventh straight week of gains, which would be the longest winning streak in more than six years, as central banks cut interest rates and euro-area leaders eased repayment rules for Spanish banks.
“Markets are focusing on the fact that earnings are still strong,” said Theodore Krintas, managing director of Attica Wealth Management in Athens. “What I see is a kind of aversion to bonds generally. It seems that European markets are gaining from the fact that extra liquidity is moving towards equities.” The U.S. economy expanded at a “modest to moderate” pace in June and early July, the Federal Reserve said yesterday in its Beige Book business survey, which is based on reports from its 12 district banks.
Emerging Stocks Rise to Two-Week High on China Stimulus Outlook(Source:Bloomberg)
Emerging-market stocks climbed to a two-week high on prospects policy makers in China and the U.S. will take more steps to bolster economic growth. The MSCI Emerging Markets Index (MXEF) advanced 1.1 percent to 941.13 in New York, the highest close since July 6. Petroleo Brasileiro Sa (PETR4) gained in Sao Paulo after oil rose. Taiwan Semiconductor Manufacturing Co. (2330) gained the most in seven weeks before the company reported its highest profit in six quarters. Bank of Communications Co. led Chinese lenders higher on bets of further cut to the reserve-ratio requirement.
China’s Premier Wen Jiabao will probably decide to cut banks’ reserve requirements and encourage lending as the cabinet meets to discuss efforts to revive growth, the swap market indicates, injecting liquidity into the system as the absence of robust growth in the developed world weights on markets globally. More Americans than forecast filed first-time claims for unemployment last week while sales of previously owned U.S. homes unexpectedly fell in June to an eight-month low. “If there is a greater slowdown in the developed world, you have more room for policy action in the emerging market space,” Tim Hall, who manages about $700 million at Deltec Asset Management, said by phone from New York. “Central banks in these markets have a lot of firepower because of which you have a potential for pick up in the economies in the second half of the year.”
Euro Falls Versus Most Major Peers Before Confidence Data(Source:Bloomberg)
The euro slid versus most of its major peers before data that economists say will show consumer confidence remained weak and manufacturing continued to shrink in the 17-nation region. Europe’s common currency was 0.2 percent from the lowest level in more than three years versus the British pound after Spain’s borrowing costs surged at an auction yesterday, rekindling concern the region’s debt crisis is deepening. The dollar maintained a five-day slide against the Australian currency after stocks rose globally, sapping demand for lower- yielding assets. “There are a number of issues with the European economy. It is pretty clearly in quite an acute contraction,” said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “The euro is going to remain a weak currency.”
The euro declined 0.2 percent to $1.2255 as of 9:45 a.m. in Tokyo. It was little changed at 96.55 yen and set to complete a fourth weekly drop. The shared currency traded at 78.04 pence after touching 77.92 yesterday, the weakest since October 2008.
Aussie Near 11-Week High on Fed Stimulus Speculation(Source:Bloomberg)
Australia’s dollar traded 0.2 percent from the highest level in 11 weeks before U.S. data next week that may add to the case for more monetary stimulus from the Federal Reserve. The Australian and New Zealand dollars headed for weekly gains as raw material prices rose, boosting demand for the currencies of commodity exporting countries. Investor appetite for the so-called Aussie was limited before data which may show exports stalled last quarter. “The U.S. economy is losing momentum and there’s growing expectation that the Fed will do more stimulus,” said Peter Dragicevich, foreign exchange economist at Commonwealth Bank of Australia (CBA) in Sydney. “You also had a solid increase in commodity prices, and that’s also helping support both the Aussie and the kiwi.”
Australia’s dollar traded at $1.0422 as of 9:14 a.m. in Sydney from $1.0427 yesterday, when it rose as much as 0.8 percent to $1.0444, the highest since April 30. The Aussie is headed for 1.9 percent gain this week, the biggest since the five-day period ended June 8. New Zealand’s dollar was unchanged at 80.33 U.S. cents from yesterday, when it reached 80.55, the strongest since July 5. The so-called kiwi is set for a 0.9 percent weekly advance.
FOREX-Euro, Australian dollar lifted by equity gains
LONDON, July 19 (Reuters) - The euro gained against the dollar while the higher-yielding Australian dollar rose to a 2-1/2 month high, lifted by gains in equities which buoyed demand for riskier and higher-yielding currencies.
"The theme is one of carry plays because there is so much excess money out there that people are looking to get any sort of return on their investment, whether in bonds or in equities," said Ankita Dudani, currency strategist at RBS.
Treasuries Snap Decline on Outlook for Europe Debt Crisis(Source:Bloomberg)
Treasuries snapped a decline from yesterday on speculation Europe’s debt crisis and slowing U.S. economic growth will maintain investor appetite for the relative safety of America’s debt. Demand for Treasuries was supported before European data next week forecast to show consumer confidence remained weak and manufacturing shrank, adding to signs that the region’s debt crisis is hampering growth. U.S. debt has returned 2.5 percent in the three months ended yesterday, according to Bank of America Merrill Lynch data. The MSCI All-Country World Index (MXWD) of stocks handed investors a 2.1 percent loss including reinvested dividends, data compiled by Bloomberg show. “I’m keeping my bullish view on Treasuries,” said Masazumi Fukuoka, a senior dealer at Mitsubishi UFJ Trust & Banking Corp. in Singapore. “There’s ample money that has to find its way into U.S. debt as long as concerns over the European debt crisis and a slowdown in the U.S economy remain.”
Benchmark 10-year Treasury yields were little changed at 1.50 percent as of 10:20 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The price of the 1.75 percent security due in May 2022 was 102 1/4. The record low yield was 1.44 percent set June 1.
Investors Whipsawed by Hourly Price Swings in IBM, Coca-Cola(Source:Bloomberg)
Investors in three of the biggest Dow Jones Industrial Average (INDU) stocks were whipsawed by price swings that repeated every hour yesterday, fueling speculation the moves were a consequence of computerized trading. Shares of International Business Machines Corp. (IBM), McDonald’s Corp. (MCD) and Coca-Cola Co. (KO) swung between successive lows and highs in intervals that began near the top and bottom of each hour, data compiled by Bloomberg show. While only IBM finished more than 1 percent higher, the intraday patterns weren’t accompanied by any breaking news in the three companies where $3.42 billion worth of shares changed hands.
Regulators have increased scrutiny of computerized strategies that have risen to prominence in the U.S. after more than a decade of market structure reform. The Securities and Exchange Commission and Commodity Futures Trading Commission blamed a broker’s trading algorithm for setting into motion the events that caused the May 2010 market crash that briefly erased $862 billion from U.S. equities in less than 20 minutes. “Somebody probably has software that’s running an algorithm that’s either selling in 30-minute intervals or buying,” Bruce W. Weber, dean of the Alfred Lerner College of Business and Economics at the University of Delaware, said in a telephone interview. “For the market value of Coke to be going up and down in this way, oscillating every hour, is a pretty disconcerting observation. This is not going to raise investors’ confidence in the mechanics of our market.”
Home Sales to Factories Point to Second-Half Weakness: Economy(Source:Bloomberg)
Sales of existing U.S. homes unexpectedly dropped and manufacturing in the Philadelphia region contracted for a third month, showing economic weakness is extending into the second half of the year. Home purchases slid 5.4 percent in June to a 4.37 million annual rate, an eight-month low, figures from the National Association of Realtors showed today in Washington. The Federal Reserve Bank of Philadelphia’s general economic index was minus 12.9 in July after minus 16.6 the month before. Readings of less than zero signal contraction. The figures underscore Fed Chairman Ben S. Bernanke’s concerns that growth may be too feeble to reduce unemployment stuck above 8 percent since February 2009. Other reports today showed consumer confidence weakened, claims for unemployment benefits rose and an index of leading economic indicators declined more than forecast.
“We’ll have very slow growth,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York and the best forecaster of U.S. economic indicators in the two years through May, according to data compiled by Bloomberg News. “The excess supply of homes will weigh on housing for quite some time. Manufacturing is starting to suffer a bit. The labor market remains pretty soggy.”
Jobless Claims in U.S. Rise as Auto Layoff Effects Ease(Source:Bloomberg)
More Americans than forecast filed first-time claims for unemployment insurance payments last week, reflecting volatility induced by the annual auto-plant retooling period. Applications for jobless benefits increased by 34,000 to 386,000 in the week ended July 14, Labor Department figures showed today. Economists forecast 365,000 claims, according to the median estimate in a Bloomberg News survey. The volatility in the numbers was due to a change in the timing of annual automobile plant layoffs, a Labor Department official said as the data were released. Determining whether the labor market is improving or deteriorating has been more difficult in recent weeks because a reduction in the number of auto-plant layoffs typical at this point of the year has thrown the Labor Department’s seasonal adjustment process out of line. It may take weeks to judge the direction the labor market is taking.
“Seeing through the statistical noise, the labor market is pretty soggy, and the claims numbers will reflect that once they settle down,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York and the best forecaster of U.S. economic indicators in the two years through May, according to Bloomberg data. “I don’t think next week is going to be a clean read either, so you might have to wait a little while longer.” Stock futures climbed after the report. The contract on the Standard & Poor’s 500 Index maturing in September rose 0.3 percent to 1,372 at 8:39 a.m. in New York. The yield on the 10- year Treasury note rose to 1.51 percent from 1.5 percent late yesterday.
Americans Hold Dimmest View on Economic Outlook Since January(Source:Bloomberg)
The most Americans in six months said the economy in July was getting worse, indicating the slowdown in hiring is dimming moods as the third quarter begins. The share of households viewing the U.S. as heading in the wrong direction rose to 36 percent, the highest since January, from 33 percent in June. The Bloomberg monthly expectations gauge was minus 11, matching June as the lowest level since January. The weekly Bloomberg Consumer Comfort Index fell to minus 37.9 in the period ended July 15, the lowest in a month. Limited wage gains and unemployment stuck above 8 percent risk further slowing consumer spending and leaving the U.S. more vulnerable to a global slowdown. There is also growing pessimism little is being done in Washington to avoid the so-called fiscal cliff at the end of the year, when higher taxes and automatic spending cuts kick in, raising the risk of recession.
“A soft labor market and political tensions surrounding potential changes in tax policy are weighing on consumer sentiment,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Consumers are concerned about their incomes and have become much more cautious about spending. The economy is limping into the third quarter.”
Manufacturing in Philadelphia Area Falls for Third Month(Source:Bloomberg)
Manufacturing in the Philadelphia region shrank for the third consecutive month as new orders and employment declined. The Federal Reserve Bank of Philadelphia’s general economic index rose to minus 12.9 in July from minus 16.6 the month before. Economists forecast the gauge would improve to minus 8, according to the median estimate in a Bloomberg News survey. Readings of less than zero signal contraction in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware. The European debt crisis and slowing growth in China and Brazil are limiting demand for U.S. exports. In the U.S., elevated unemployment is restraining consumer spending, while a drought in the Midwest threatens sales of farm equipment made by companies such as Deere & Co. The report showed manufacturers’ outlook for future orders declined.
“You saw not only a continued contraction of activity, but a lessening of optimism,” said Steven Blitz, chief economist at ITG Investment Research Inc. in New York. “There’s nothing in their order books that’s getting them excited. For the economy, it means more of the same low-level growth.” Other data today showed that sales of existing homes unexpectedly dropped in June to an eight-month low, claims for unemployment benefits rose last week and an index of U.S. leading economic indicators fell more than forecast.
No Inflation With Record-Low Yields Boosting Emerging Bonds(Source:Bloomberg)
Bond yields in emerging markets are falling to record lows as inflation tumbles compared with benchmark interest rates, providing policy makers with more opportunities to lower borrowing costs. The GBI-EM Global Diversified Index on emerging-market bond yields declined 79 basis points, or 0.79 percentage point, this year to 5.79 percent, the lowest since JPMorgan Chase & Co. started to compile the data in 2003. Consumer price increases in 15 developing nations from Brazil to China slowed to an average 4 percent last month, even as central banks cut the mean policy rate to 5.5 percent. The 1.5 percentage-point gap was the widest since December 2009, according to data compiled by Bloomberg.
Slower inflation and weaker economic growth will prompt policy makers to reduce interest rates further, spurring gains in developing-nation bonds, according to GAM Investment and JPMorgan Chase & Co. That’s a turnaround from four years ago, when inflation exceeded benchmark borrowing costs and investors fled emerging markets as the global economy sank into a recession. “Rates are coming down and there are no signs of inflation, which is the classic bond bull market type of territory,” Paul McNamara, who oversees $6.5 billion in emerging-market debt as a money manager at GAM Investment, said in a telephone interview from London. “Emerging-market bonds still offer pretty good value.”
Buyers Bet Wen Can’t Keep Prices Down as Home Sales Gain(Source:Bloomberg)
Sales at Sunac West Chateau, a residential project in Beijing, surged almost 50 percent in June as the developer opened new buildings to attract buyers betting on a recovery even as the government pledges to keep a lid on the housing market. “In the first half of the year, it was like gazing at flowers in a fog,” said Lou Yanqing, deputy sales manager of the project, using a Chinese expression to describe the uncertainty over the government’s policies to curb house price gains. “We’re seeing some sunshine now, and going forward there’s a big chance that the clouds will clear,” she said. Premier Wen Jiabao said July 7 that citizens are worried prices will rise again, reiterating a pledge that his government will “unswervingly” continue property controls. Recent data suggest buyers aren’t listening: property sales and prices have rebounded as local governments relaxed some housing restrictions and the central bank cut interest rates.
“The possibility that history will repeat remains,” Credit Suisse Group AG analyst Vincent Chan said in a phone interview from Hong Kong, referring to past property surges that followed sales increases.
Hong Kong Jobless Rate May Rise on Europe Crisis, Graduates(Source:Bloomberg)
Hong Kong’s jobless rate may rise on weakness in the global economy and more graduates and school leavers seeking work, the government said, even as the latest data showed resilience in the labor market. “The Hong Kong economy can hardly stay unscathed,” the Financial Secretary’s Office said in an e-mailed response to questions from Bloomberg News, citing Europe’s debt crisis and the fragility of major advanced economies. The jobless rate for the three months through June was unchanged at a seasonally adjusted 3.2 percent, the government said on its website today. That was less than the 3.3 percent median forecast of six economists in a Bloomberg News survey and compares with a rate of as much as 5.5 percent during the global financial crisis. “As the economy is slowing this year, it is likely that the job market will follow suit,” said Joanne Yim, an economist at Hang Seng Bank Ltd. (11) in Hong Kong, forecasting an increase to a 4 percent jobless rate by year-end.
Hong Kong stocks rose on speculation China will take more action to boost growth and after U.S. housing starts jumped to the highest since 2008. The Hang Seng Index (HSI) advanced 1.7 percent.
Shipbuilders Lead Tripling in Korea Bond Sales This Week(Source:Bloomberg)
Sales of won-denominated bonds more than tripled this week as South Korean shipbuilders took advantage of record-low yields to raise funds amid slumping new orders and overseas deliveries. Hyundai Heavy Industries Co. (009540) and Daewoo Shipbuilding & Marine Engineering Co., which own two of the world’s three biggest shipyards, led issuance to 1.77 trillion won ($1.55 billion) from 560 billion won last week, according to data compiled by Bloomberg. Benchmark three-year corporate bond yields declined to 3.48 percent on July 18, the lowest since at least 1993, according to the Korea Financial Investment Association. “With a gloomy outlook for the shipbuilding industry, companies are dipping into the bond market to raise cash,” Lee Soo Jung, a credit analyst with SK Securities, said by telephone from Seoul on June 18. “At the same time, the market is conducive to borrowers with yields plummeting.”
Hyundai Heavy sold a record 700 billion won of securities as shipbuilders, which account for about 10 percent of total exports from Asia’s fourth-biggest economy, seek to boost capital through debt sales. South Korea’s central bank last week cut its outlook for 2012 growth, citing a protracted crisis in Europe for reducing the estimate to 3 percent from 3.5 percent. Borrowers are planning at least 720 billion won of sales next week, with Doosan Infracore Co., and Korea South-East Power Corp. poised to price notes, according to preliminary data compiled by Bloomberg.
Spain Struggles to Sell Debt as French Yields Fall to Record(Source:Bloomberg)
Spain’s five-year borrowing costs surged as the government pushed through spending cuts in the face of public protests, while France paid record-low yields of less than 1 percent to sell securities of the same maturity. Spanish five-year notes yielded an average 6.459 percent at auction today, up from 6.072 percent a month ago. French yields fell to 0.86 percent, almost half last month’s level. Prime Minister Mariano Rajoy, who didn’t turn up to defend his cuts in parliament, secured passage of the plan with 180 votes, indicating none of the opposition in the 350-seat chamber supported it. The premier, who asked other euro nations for as much as 100 billion euros ($123 billion) last month to bail out banks, is fighting to maintain access to capital markets. Lawmakers in Germany, where borrowing costs have turned negative as investors opt for the safest assets, are set to vote on the Spanish bailout agreement today.
“The danger to the financial sector in Spain can turn into danger for the financial stability of the euro area,” German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin today as they prepared to vote on aid to Spain.
U.K. Less-Than-Forecast Retail Sales Hit Recovery Hopes: Economy(Source:Bloomberg)
U.K. retail sales rose less than economists forecast last month, reducing expectations that Britain was able to exit a recession in the second quarter. Sales including auto fuel gained 0.1 percent from May, the Office for National Statistics said today in London. The median forecast of 18 economists in a Bloomberg News survey was for a 0.6 percent increase. Excluding fuel, sales were up 0.3 percent. Food sales dropped 0.7 percent. The U.K. had the most rain for a June since 1910 last month, curbing food sales, while an extra public holiday for the queen’s jubilee celebrations didn’t give a major boost to demand. The continued weakness in consumer spending is hindering Britain’s recovery after the economy shrank in the last quarter of 2011 and the first three months of this year.
It’s “another death knell for already low hopes that the economy avoided a third successive quarter of contraction,” said Howard Archer, an economist at IHS Global Insight in London. “Conditions remain tough for consumers with inflation still above earnings growth, the jobs outlook uncertain and tighter fiscal conditions affecting many people.”
South Africa Unexpectedly Cuts Benchmark Lending Rate(Source:Bloomberg)
South Africa’s central bank unexpectedly cut its benchmark interest rate by half a percentage point to help bolster the economy as inflation stayed within the bank’s target range. The repurchase rate was lowered to 5 percent, Governor Gill Marcus told reporters today in Pretoria, the capital. Only two of the 18 economists surveyed by Bloomberg predicted a reduction, with the rest expecting the rate will stay unchanged. The decision was unanimous after a “particularly robust” discussion, she said. Policy makers cut the repurchase rate for the first time since November 2010, joining central banks in India, Brazil, China and Europe in reducing borrowing costs this year to protect their economies from slower global growth. Marcus was provided the room to ease monetary policy after inflation eased to a 10-month low in June, slowing further from the top end of the 3 percent to 6 percent target range.
“They got so bearish so fast on the spill over of the euro zone economy,” Peter Attard Montalto, an economist at Nomura Plc in London, said in a telephone interview after the decision. “They have clearly been surprised by the downside of inflation and with the external growth worries, that has opened the door for cuts now.”
The appetite for risk remained relatively firm on Thursday on news that German Chancellor Angela Merkel easily won a parliamentary vote on a Eurozone rescue package for Spanish banks despite unease in her centre-right coalition about the rising cost of Europe's debt crisis for German taxpayers. The foreign currencies extended Wednesday's pattern, so some European currencies consolidated and the commodity currencies and yen marched higher. The US stock indexes advanced. Gold, oil and silver closed up. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is bearish. The LGR short-term model is short on the European currencies and yen. Good luck!
Overnight
US: The weekly jobless claims jumped to 386,000 from the previous week's revised figure of 352,000 (350,000 originally).
US: The Conference Board's leading economic index fell by 0.3% in June following a revised 0.4% increase in May.
US: The Philly Fed's diffusion index of current activity rose to -12.9 in July from -16.6 in June.
US: Existing home sales fell 5.4% to an annual rate of 4.37 million in June from an upwardly revised 4.62 million in May. The national median existing-home price rose 5% to $189,400 in June from $180,300 in May.
Asia Stocks Fall, Paring Weekly Gain, on U.S. Data, China (Source:Bloomberg)
Asian stocks fell, paring a weekly gain in the benchmark regional index, amid speculation China will keep property curbs in place and as U.S. economic reports missed estimates. Billabong International Ltd., a surfwear company that counts the Americas as its biggest market, fell 1.8 percent in Sydney. Fanuc Corp. (6954), a maker of industrial robots that gets almost half its sales from Asia outside Japan, declined 0.7 percent in Tokyo. Chinese cement makers may be active today in Hong Kong after Jefferies Group Inc. said growth in demand will slow “drastically” in 2012. The MSCI Asia Pacific Index (MXAP) slid 0.3 percent to 117.19 as of 10:07 a.m. in Tokyo, paring this week’s gains to 1.7 percent. About three shares fell for every two that rose. Markets in Hong Kong and China are yet to open.
“The shape of recovery is still uncertain,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Equity investors need to be patient in any case, but more so at the present time. Valuations are low, which means dividend yields are reasonable.” The MSCI Asia Pacific Index pared its loss from this year’s high on Feb. 29 through yesterday to 8.9 percent amid optimism central banks from China to the U.S. will ease monetary policy. The Asian benchmark, which contains some companies from emerging markets, trades at 11.9 times estimated earnings on average, compared with 13.3 times for the Standard & Poor’s 500 Index and 11 times for the Stoxx Europe 600 Index.
Japan Stocks Drop as U.S. Data Disappoints; Toshiba Gains (Source:Bloomberg)
July 20 (Bloomberg) -- Japanese stocks fell, trimming a weekly gain on the benchmark Nikkei 225 (NKY) Stock Average, after U.S. economic reports missed estimates, damping the earnings outlook for exporters. Toshiba Corp. rose after its chipmaking partner reported better-than-expected profits. Carmaker Toyota Motor Corp. (7203), which depends on North America for a quarter of its sales, dropped 1 percent. Yamato Holdings Co., which provides parcel delivery services, declined 2.9 percent on a report its operating profit slid. Toshiba added 3.2 percent after chipmaking partner SanDisk Corp. posted profits that topped analysts’ estimates. The Nikkei 225 fell 0.3 percent to 8,767.38 as of 9:52 a.m. in Tokyo, trimming weekly gain to 0.5 percent. The broader Topix Index dropped 0.7 percent to 741.90.
“The shape of recovery is still uncertain,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Equity investors need to be patient in any case, but more so at the present time. Valuations are low, which means dividend yields are reasonable.” The Topix rebounded 6.6 percent from a 29-year low reached on June 4 as concern eased about Europe’s debt crisis and central banks around the world cut rates to shore up growth. Shares on the index are valued at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index (SPXL1) and 1.4 for the Europe Stoxx 600 Index. A number below one means investors can buy companies for less than the value of their assets.
S&P 500 Rises to Two-Month High on Earnings Amid Fed Bets(Source:Bloomberg)
U.S. stocks rose, sending the Standard & Poor’s 500 Index to a two-month high, amid better- than-estimated earnings and bets that disappointing economic data will lead the Federal Reserve to add stimulus. International Business Machines Corp. (IBM), the biggest computer-services provider, and EBay Inc. (EBAY), the largest Internet marketplace, gained at least 3.7 percent as profits beat forecasts. Walgreen Co. (WAG) soared 12 percent after renewing a contract with Express Scripts Inc. (ESRX) Morgan Stanley (MS) slid 5.3 percent after missing estimates as trading revenue plunged. Google Inc. (GOOG), owner of the most popular search engine, rose 3.1 percent at 5:34 p.m. New York time as revenue surged 35 percent.
The S&P 500 (SPX) advanced 0.3 percent to 1,376.51 at 4 p.m. New York time, the highest since May 3. The Dow Jones Industrial Average added 34.66 points, or 0.3 percent, to 12,943.36. The Nasdaq Composite Index gained 0.8 percent to 2,965.90. Volume for exchange-listed stocks in the U.S. was 7 billion shares today, up 4.8 percent from the three-month average. “We’ve been watching very good earnings, but there were too many disappointing economic reports today,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a phone interview. “There’s some comfort based on the idea that if things get worse, the Fed will do something. We’ll have to wait and see.”
European Stocks Rise as Company Earnings Beat Forecasts(Source:Bloomberg)
European stocks rose to the highest level since early April as companies reported quarterly earnings that exceeded analysts’ estimates. Akzo Nobel NV (AKZA) jumped 6.3 percent after posting second- quarter results that beat forecasts. Remy Cointreau SA, France’s second-biggest distiller, increased 6.2 percent on higher revenue. Nokia Oyj (NOK1V) surged 12 percent after sales of its flagship smartphone beat analysts’ estimates. The Stoxx 600 climbed 1.1 percent to 261.86 at the close of trade. The gauge is heading for a seventh straight week of gains, which would be the longest winning streak in more than six years, as central banks cut interest rates and euro-area leaders eased repayment rules for Spanish banks.
“Markets are focusing on the fact that earnings are still strong,” said Theodore Krintas, managing director of Attica Wealth Management in Athens. “What I see is a kind of aversion to bonds generally. It seems that European markets are gaining from the fact that extra liquidity is moving towards equities.” The U.S. economy expanded at a “modest to moderate” pace in June and early July, the Federal Reserve said yesterday in its Beige Book business survey, which is based on reports from its 12 district banks.
Emerging Stocks Rise to Two-Week High on China Stimulus Outlook(Source:Bloomberg)
Emerging-market stocks climbed to a two-week high on prospects policy makers in China and the U.S. will take more steps to bolster economic growth. The MSCI Emerging Markets Index (MXEF) advanced 1.1 percent to 941.13 in New York, the highest close since July 6. Petroleo Brasileiro Sa (PETR4) gained in Sao Paulo after oil rose. Taiwan Semiconductor Manufacturing Co. (2330) gained the most in seven weeks before the company reported its highest profit in six quarters. Bank of Communications Co. led Chinese lenders higher on bets of further cut to the reserve-ratio requirement.
China’s Premier Wen Jiabao will probably decide to cut banks’ reserve requirements and encourage lending as the cabinet meets to discuss efforts to revive growth, the swap market indicates, injecting liquidity into the system as the absence of robust growth in the developed world weights on markets globally. More Americans than forecast filed first-time claims for unemployment last week while sales of previously owned U.S. homes unexpectedly fell in June to an eight-month low. “If there is a greater slowdown in the developed world, you have more room for policy action in the emerging market space,” Tim Hall, who manages about $700 million at Deltec Asset Management, said by phone from New York. “Central banks in these markets have a lot of firepower because of which you have a potential for pick up in the economies in the second half of the year.”
Euro Falls Versus Most Major Peers Before Confidence Data(Source:Bloomberg)
The euro slid versus most of its major peers before data that economists say will show consumer confidence remained weak and manufacturing continued to shrink in the 17-nation region. Europe’s common currency was 0.2 percent from the lowest level in more than three years versus the British pound after Spain’s borrowing costs surged at an auction yesterday, rekindling concern the region’s debt crisis is deepening. The dollar maintained a five-day slide against the Australian currency after stocks rose globally, sapping demand for lower- yielding assets. “There are a number of issues with the European economy. It is pretty clearly in quite an acute contraction,” said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “The euro is going to remain a weak currency.”
The euro declined 0.2 percent to $1.2255 as of 9:45 a.m. in Tokyo. It was little changed at 96.55 yen and set to complete a fourth weekly drop. The shared currency traded at 78.04 pence after touching 77.92 yesterday, the weakest since October 2008.
Aussie Near 11-Week High on Fed Stimulus Speculation(Source:Bloomberg)
Australia’s dollar traded 0.2 percent from the highest level in 11 weeks before U.S. data next week that may add to the case for more monetary stimulus from the Federal Reserve. The Australian and New Zealand dollars headed for weekly gains as raw material prices rose, boosting demand for the currencies of commodity exporting countries. Investor appetite for the so-called Aussie was limited before data which may show exports stalled last quarter. “The U.S. economy is losing momentum and there’s growing expectation that the Fed will do more stimulus,” said Peter Dragicevich, foreign exchange economist at Commonwealth Bank of Australia (CBA) in Sydney. “You also had a solid increase in commodity prices, and that’s also helping support both the Aussie and the kiwi.”
Australia’s dollar traded at $1.0422 as of 9:14 a.m. in Sydney from $1.0427 yesterday, when it rose as much as 0.8 percent to $1.0444, the highest since April 30. The Aussie is headed for 1.9 percent gain this week, the biggest since the five-day period ended June 8. New Zealand’s dollar was unchanged at 80.33 U.S. cents from yesterday, when it reached 80.55, the strongest since July 5. The so-called kiwi is set for a 0.9 percent weekly advance.
FOREX-Euro, Australian dollar lifted by equity gains
LONDON, July 19 (Reuters) - The euro gained against the dollar while the higher-yielding Australian dollar rose to a 2-1/2 month high, lifted by gains in equities which buoyed demand for riskier and higher-yielding currencies.
"The theme is one of carry plays because there is so much excess money out there that people are looking to get any sort of return on their investment, whether in bonds or in equities," said Ankita Dudani, currency strategist at RBS.
Treasuries Snap Decline on Outlook for Europe Debt Crisis(Source:Bloomberg)
Treasuries snapped a decline from yesterday on speculation Europe’s debt crisis and slowing U.S. economic growth will maintain investor appetite for the relative safety of America’s debt. Demand for Treasuries was supported before European data next week forecast to show consumer confidence remained weak and manufacturing shrank, adding to signs that the region’s debt crisis is hampering growth. U.S. debt has returned 2.5 percent in the three months ended yesterday, according to Bank of America Merrill Lynch data. The MSCI All-Country World Index (MXWD) of stocks handed investors a 2.1 percent loss including reinvested dividends, data compiled by Bloomberg show. “I’m keeping my bullish view on Treasuries,” said Masazumi Fukuoka, a senior dealer at Mitsubishi UFJ Trust & Banking Corp. in Singapore. “There’s ample money that has to find its way into U.S. debt as long as concerns over the European debt crisis and a slowdown in the U.S economy remain.”
Benchmark 10-year Treasury yields were little changed at 1.50 percent as of 10:20 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The price of the 1.75 percent security due in May 2022 was 102 1/4. The record low yield was 1.44 percent set June 1.
Investors Whipsawed by Hourly Price Swings in IBM, Coca-Cola(Source:Bloomberg)
Investors in three of the biggest Dow Jones Industrial Average (INDU) stocks were whipsawed by price swings that repeated every hour yesterday, fueling speculation the moves were a consequence of computerized trading. Shares of International Business Machines Corp. (IBM), McDonald’s Corp. (MCD) and Coca-Cola Co. (KO) swung between successive lows and highs in intervals that began near the top and bottom of each hour, data compiled by Bloomberg show. While only IBM finished more than 1 percent higher, the intraday patterns weren’t accompanied by any breaking news in the three companies where $3.42 billion worth of shares changed hands.
Regulators have increased scrutiny of computerized strategies that have risen to prominence in the U.S. after more than a decade of market structure reform. The Securities and Exchange Commission and Commodity Futures Trading Commission blamed a broker’s trading algorithm for setting into motion the events that caused the May 2010 market crash that briefly erased $862 billion from U.S. equities in less than 20 minutes. “Somebody probably has software that’s running an algorithm that’s either selling in 30-minute intervals or buying,” Bruce W. Weber, dean of the Alfred Lerner College of Business and Economics at the University of Delaware, said in a telephone interview. “For the market value of Coke to be going up and down in this way, oscillating every hour, is a pretty disconcerting observation. This is not going to raise investors’ confidence in the mechanics of our market.”
Home Sales to Factories Point to Second-Half Weakness: Economy(Source:Bloomberg)
Sales of existing U.S. homes unexpectedly dropped and manufacturing in the Philadelphia region contracted for a third month, showing economic weakness is extending into the second half of the year. Home purchases slid 5.4 percent in June to a 4.37 million annual rate, an eight-month low, figures from the National Association of Realtors showed today in Washington. The Federal Reserve Bank of Philadelphia’s general economic index was minus 12.9 in July after minus 16.6 the month before. Readings of less than zero signal contraction. The figures underscore Fed Chairman Ben S. Bernanke’s concerns that growth may be too feeble to reduce unemployment stuck above 8 percent since February 2009. Other reports today showed consumer confidence weakened, claims for unemployment benefits rose and an index of leading economic indicators declined more than forecast.
“We’ll have very slow growth,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York and the best forecaster of U.S. economic indicators in the two years through May, according to data compiled by Bloomberg News. “The excess supply of homes will weigh on housing for quite some time. Manufacturing is starting to suffer a bit. The labor market remains pretty soggy.”
Jobless Claims in U.S. Rise as Auto Layoff Effects Ease(Source:Bloomberg)
More Americans than forecast filed first-time claims for unemployment insurance payments last week, reflecting volatility induced by the annual auto-plant retooling period. Applications for jobless benefits increased by 34,000 to 386,000 in the week ended July 14, Labor Department figures showed today. Economists forecast 365,000 claims, according to the median estimate in a Bloomberg News survey. The volatility in the numbers was due to a change in the timing of annual automobile plant layoffs, a Labor Department official said as the data were released. Determining whether the labor market is improving or deteriorating has been more difficult in recent weeks because a reduction in the number of auto-plant layoffs typical at this point of the year has thrown the Labor Department’s seasonal adjustment process out of line. It may take weeks to judge the direction the labor market is taking.
“Seeing through the statistical noise, the labor market is pretty soggy, and the claims numbers will reflect that once they settle down,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York and the best forecaster of U.S. economic indicators in the two years through May, according to Bloomberg data. “I don’t think next week is going to be a clean read either, so you might have to wait a little while longer.” Stock futures climbed after the report. The contract on the Standard & Poor’s 500 Index maturing in September rose 0.3 percent to 1,372 at 8:39 a.m. in New York. The yield on the 10- year Treasury note rose to 1.51 percent from 1.5 percent late yesterday.
Americans Hold Dimmest View on Economic Outlook Since January(Source:Bloomberg)
The most Americans in six months said the economy in July was getting worse, indicating the slowdown in hiring is dimming moods as the third quarter begins. The share of households viewing the U.S. as heading in the wrong direction rose to 36 percent, the highest since January, from 33 percent in June. The Bloomberg monthly expectations gauge was minus 11, matching June as the lowest level since January. The weekly Bloomberg Consumer Comfort Index fell to minus 37.9 in the period ended July 15, the lowest in a month. Limited wage gains and unemployment stuck above 8 percent risk further slowing consumer spending and leaving the U.S. more vulnerable to a global slowdown. There is also growing pessimism little is being done in Washington to avoid the so-called fiscal cliff at the end of the year, when higher taxes and automatic spending cuts kick in, raising the risk of recession.
“A soft labor market and political tensions surrounding potential changes in tax policy are weighing on consumer sentiment,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Consumers are concerned about their incomes and have become much more cautious about spending. The economy is limping into the third quarter.”
Manufacturing in Philadelphia Area Falls for Third Month(Source:Bloomberg)
Manufacturing in the Philadelphia region shrank for the third consecutive month as new orders and employment declined. The Federal Reserve Bank of Philadelphia’s general economic index rose to minus 12.9 in July from minus 16.6 the month before. Economists forecast the gauge would improve to minus 8, according to the median estimate in a Bloomberg News survey. Readings of less than zero signal contraction in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware. The European debt crisis and slowing growth in China and Brazil are limiting demand for U.S. exports. In the U.S., elevated unemployment is restraining consumer spending, while a drought in the Midwest threatens sales of farm equipment made by companies such as Deere & Co. The report showed manufacturers’ outlook for future orders declined.
“You saw not only a continued contraction of activity, but a lessening of optimism,” said Steven Blitz, chief economist at ITG Investment Research Inc. in New York. “There’s nothing in their order books that’s getting them excited. For the economy, it means more of the same low-level growth.” Other data today showed that sales of existing homes unexpectedly dropped in June to an eight-month low, claims for unemployment benefits rose last week and an index of U.S. leading economic indicators fell more than forecast.
No Inflation With Record-Low Yields Boosting Emerging Bonds(Source:Bloomberg)
Bond yields in emerging markets are falling to record lows as inflation tumbles compared with benchmark interest rates, providing policy makers with more opportunities to lower borrowing costs. The GBI-EM Global Diversified Index on emerging-market bond yields declined 79 basis points, or 0.79 percentage point, this year to 5.79 percent, the lowest since JPMorgan Chase & Co. started to compile the data in 2003. Consumer price increases in 15 developing nations from Brazil to China slowed to an average 4 percent last month, even as central banks cut the mean policy rate to 5.5 percent. The 1.5 percentage-point gap was the widest since December 2009, according to data compiled by Bloomberg.
Slower inflation and weaker economic growth will prompt policy makers to reduce interest rates further, spurring gains in developing-nation bonds, according to GAM Investment and JPMorgan Chase & Co. That’s a turnaround from four years ago, when inflation exceeded benchmark borrowing costs and investors fled emerging markets as the global economy sank into a recession. “Rates are coming down and there are no signs of inflation, which is the classic bond bull market type of territory,” Paul McNamara, who oversees $6.5 billion in emerging-market debt as a money manager at GAM Investment, said in a telephone interview from London. “Emerging-market bonds still offer pretty good value.”
Buyers Bet Wen Can’t Keep Prices Down as Home Sales Gain(Source:Bloomberg)
Sales at Sunac West Chateau, a residential project in Beijing, surged almost 50 percent in June as the developer opened new buildings to attract buyers betting on a recovery even as the government pledges to keep a lid on the housing market. “In the first half of the year, it was like gazing at flowers in a fog,” said Lou Yanqing, deputy sales manager of the project, using a Chinese expression to describe the uncertainty over the government’s policies to curb house price gains. “We’re seeing some sunshine now, and going forward there’s a big chance that the clouds will clear,” she said. Premier Wen Jiabao said July 7 that citizens are worried prices will rise again, reiterating a pledge that his government will “unswervingly” continue property controls. Recent data suggest buyers aren’t listening: property sales and prices have rebounded as local governments relaxed some housing restrictions and the central bank cut interest rates.
“The possibility that history will repeat remains,” Credit Suisse Group AG analyst Vincent Chan said in a phone interview from Hong Kong, referring to past property surges that followed sales increases.
Hong Kong Jobless Rate May Rise on Europe Crisis, Graduates(Source:Bloomberg)
Hong Kong’s jobless rate may rise on weakness in the global economy and more graduates and school leavers seeking work, the government said, even as the latest data showed resilience in the labor market. “The Hong Kong economy can hardly stay unscathed,” the Financial Secretary’s Office said in an e-mailed response to questions from Bloomberg News, citing Europe’s debt crisis and the fragility of major advanced economies. The jobless rate for the three months through June was unchanged at a seasonally adjusted 3.2 percent, the government said on its website today. That was less than the 3.3 percent median forecast of six economists in a Bloomberg News survey and compares with a rate of as much as 5.5 percent during the global financial crisis. “As the economy is slowing this year, it is likely that the job market will follow suit,” said Joanne Yim, an economist at Hang Seng Bank Ltd. (11) in Hong Kong, forecasting an increase to a 4 percent jobless rate by year-end.
Hong Kong stocks rose on speculation China will take more action to boost growth and after U.S. housing starts jumped to the highest since 2008. The Hang Seng Index (HSI) advanced 1.7 percent.
Shipbuilders Lead Tripling in Korea Bond Sales This Week(Source:Bloomberg)
Sales of won-denominated bonds more than tripled this week as South Korean shipbuilders took advantage of record-low yields to raise funds amid slumping new orders and overseas deliveries. Hyundai Heavy Industries Co. (009540) and Daewoo Shipbuilding & Marine Engineering Co., which own two of the world’s three biggest shipyards, led issuance to 1.77 trillion won ($1.55 billion) from 560 billion won last week, according to data compiled by Bloomberg. Benchmark three-year corporate bond yields declined to 3.48 percent on July 18, the lowest since at least 1993, according to the Korea Financial Investment Association. “With a gloomy outlook for the shipbuilding industry, companies are dipping into the bond market to raise cash,” Lee Soo Jung, a credit analyst with SK Securities, said by telephone from Seoul on June 18. “At the same time, the market is conducive to borrowers with yields plummeting.”
Hyundai Heavy sold a record 700 billion won of securities as shipbuilders, which account for about 10 percent of total exports from Asia’s fourth-biggest economy, seek to boost capital through debt sales. South Korea’s central bank last week cut its outlook for 2012 growth, citing a protracted crisis in Europe for reducing the estimate to 3 percent from 3.5 percent. Borrowers are planning at least 720 billion won of sales next week, with Doosan Infracore Co., and Korea South-East Power Corp. poised to price notes, according to preliminary data compiled by Bloomberg.
Spain Struggles to Sell Debt as French Yields Fall to Record(Source:Bloomberg)
Spain’s five-year borrowing costs surged as the government pushed through spending cuts in the face of public protests, while France paid record-low yields of less than 1 percent to sell securities of the same maturity. Spanish five-year notes yielded an average 6.459 percent at auction today, up from 6.072 percent a month ago. French yields fell to 0.86 percent, almost half last month’s level. Prime Minister Mariano Rajoy, who didn’t turn up to defend his cuts in parliament, secured passage of the plan with 180 votes, indicating none of the opposition in the 350-seat chamber supported it. The premier, who asked other euro nations for as much as 100 billion euros ($123 billion) last month to bail out banks, is fighting to maintain access to capital markets. Lawmakers in Germany, where borrowing costs have turned negative as investors opt for the safest assets, are set to vote on the Spanish bailout agreement today.
“The danger to the financial sector in Spain can turn into danger for the financial stability of the euro area,” German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin today as they prepared to vote on aid to Spain.
U.K. Less-Than-Forecast Retail Sales Hit Recovery Hopes: Economy(Source:Bloomberg)
U.K. retail sales rose less than economists forecast last month, reducing expectations that Britain was able to exit a recession in the second quarter. Sales including auto fuel gained 0.1 percent from May, the Office for National Statistics said today in London. The median forecast of 18 economists in a Bloomberg News survey was for a 0.6 percent increase. Excluding fuel, sales were up 0.3 percent. Food sales dropped 0.7 percent. The U.K. had the most rain for a June since 1910 last month, curbing food sales, while an extra public holiday for the queen’s jubilee celebrations didn’t give a major boost to demand. The continued weakness in consumer spending is hindering Britain’s recovery after the economy shrank in the last quarter of 2011 and the first three months of this year.
It’s “another death knell for already low hopes that the economy avoided a third successive quarter of contraction,” said Howard Archer, an economist at IHS Global Insight in London. “Conditions remain tough for consumers with inflation still above earnings growth, the jobs outlook uncertain and tighter fiscal conditions affecting many people.”
South Africa Unexpectedly Cuts Benchmark Lending Rate(Source:Bloomberg)
South Africa’s central bank unexpectedly cut its benchmark interest rate by half a percentage point to help bolster the economy as inflation stayed within the bank’s target range. The repurchase rate was lowered to 5 percent, Governor Gill Marcus told reporters today in Pretoria, the capital. Only two of the 18 economists surveyed by Bloomberg predicted a reduction, with the rest expecting the rate will stay unchanged. The decision was unanimous after a “particularly robust” discussion, she said. Policy makers cut the repurchase rate for the first time since November 2010, joining central banks in India, Brazil, China and Europe in reducing borrowing costs this year to protect their economies from slower global growth. Marcus was provided the room to ease monetary policy after inflation eased to a 10-month low in June, slowing further from the top end of the 3 percent to 6 percent target range.
“They got so bearish so fast on the spill over of the euro zone economy,” Peter Attard Montalto, an economist at Nomura Plc in London, said in a telephone interview after the decision. “They have clearly been surprised by the downside of inflation and with the external growth worries, that has opened the door for cuts now.”
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