Oct. 25 (Bloomberg) -- The Philippines, which sold dollar- denominated debt three times this year, may turn to the domestic market to raise funds to help temper currency gains, Finance Secretary Gary Teves said.
“We are not ruling it out as one of the options” for future requirements, Teves told reporters in Manila. The central bank asked during a meeting “if we would consider” shifting to domestic borrowing if peso gains accelerate, he said late Oct 23.
The peso climbed to a nine-month high on Oct. 15, prompting the central bank to purchase dollars to slow the advance. The Philippines, which buys almost all its oil overseas and is the world’s biggest rice importer, has to balance requirements for a currency level that boosts exports and overseas remittances while curbing import costs.
The currency is “very volatile,” Teves said, after the peso last week posted its biggest weekly decline in four months.
The Philippines sold $1 billion of dollar-denominated bonds on Oct. 17, bringing total overseas sales this year to $3.25 billion to cover a record budget deficit.
The government could tap the domestic and overseas markets for future funding requirements, Governor Amando Tetangco said on Oct. 23.
“There is liquidity out there needing to find an appropriate home in terms of yield,” he said.
The Philippines plans next year to borrow about 475 billion pesos ($10 billion) from the domestic market while the remaining 28 percent of a 660 billion peso total debt plan may come in part from official development loans and $2 billion from overseas bond sales. The deficit is forecast to narrow to 233 billion pesos in 2010 from a projected 250 billion pesos in 2009.
The government may delay the sale of yen-denominated bonds to next year given its “comfortable” cash position, Teves said earlier on Oct. 23. The nation may sell more dollar bonds in the first quarter, Teves said Oct. 19.
Saturday, October 24, 2009
Japan, Australia ‘Test’ Asean With Competing Economic Visions
Oct. 25 (Bloomberg) -- Japan and Australia are set to elaborate on competing visions for building an East Asian bloc that may involve trade ties and a common currency during a summit of 16 Asian nations in Thailand.
Australian Prime Minister Kevin Rudd is scheduled to sell his plan in meetings today with leaders of the Association of Southeast Asian Nations, China, Japan, South Korea, India and New Zealand. His idea for an “Asia-Pacific Community” would include the United States and India.
Japan’s Prime Minister Yukio Hatoyama, who took power last month, will put forth his “long-term vision” of an “East Asian Community,” foreign ministry spokesman Kazuo Kodama told reporters yesterday. Japan will “closely discuss and coordinate” with the U.S. on the group’s formation, Kodama said. Southeast Asian countries would play a “pivotal role” in the plan, Kodama said.
The countries that are eventually included in the group will benefit from trade in a region approaching half of the world’s population and a quarter of global gross domestic product. Thai Prime Minister Abhisit Vejjajiva said today the Australian and Japanese plans amounted to a “test” for Asean, which is trying to raise its stature and attract global investment.
The U.S. signed a friendship pact with Asean in July to bolster ties with an area that contains sea lanes vital to world trade, as well as coal, oil and other commodities. China is “positive and open” to the establishment of an “East Asian community,” Assistant Foreign Minister Hu Zhengyue said on Oct. 21.
Australian Prime Minister Kevin Rudd is scheduled to sell his plan in meetings today with leaders of the Association of Southeast Asian Nations, China, Japan, South Korea, India and New Zealand. His idea for an “Asia-Pacific Community” would include the United States and India.
Japan’s Prime Minister Yukio Hatoyama, who took power last month, will put forth his “long-term vision” of an “East Asian Community,” foreign ministry spokesman Kazuo Kodama told reporters yesterday. Japan will “closely discuss and coordinate” with the U.S. on the group’s formation, Kodama said. Southeast Asian countries would play a “pivotal role” in the plan, Kodama said.
The countries that are eventually included in the group will benefit from trade in a region approaching half of the world’s population and a quarter of global gross domestic product. Thai Prime Minister Abhisit Vejjajiva said today the Australian and Japanese plans amounted to a “test” for Asean, which is trying to raise its stature and attract global investment.
The U.S. signed a friendship pact with Asean in July to bolster ties with an area that contains sea lanes vital to world trade, as well as coal, oil and other commodities. China is “positive and open” to the establishment of an “East Asian community,” Assistant Foreign Minister Hu Zhengyue said on Oct. 21.
Friday, October 23, 2009
Asia Currencies Post Weekly Decline on Intervention Speculation
Oct. 24 (Bloomberg) -- Asian currencies fell this week, with the Korean won and the Philippine peso both sliding the most in more than four months, on speculation policy makers will limit currency gains to support exports.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active regional currencies excluding the yen, declined for the first time since August. Brazil this week imposed a 2 percent levy on foreigners’ purchases of bonds and stocks to help curb the real’s appreciation, cooling demand for emerging- market assets.
“Generally, Asian policy makers have been intervening to resist the currency gains over the past few months,” said David Cohen, director of Asian forecasting at Action Economics in Singapore. “The yuan has been pegged for the past year so nobody wants to lose too much competitiveness to China.”
The won was at 1,181.25 per dollar yesterday, 1.5 percent lower than on Oct. 16. The currency rose in each of the previous eight weeks and reached 1,155.05 on Oct. 15, the strongest level in a year. The peso declined 0.8 percent this week to 46.995 and Indonesia’s rupiah slid 0.4 percent to 9,435, paring this year’s advance to 16 percent.
The yuan has dropped 8.6 percent from a record high on March 9 against the currencies of major trading partners including the euro and the Japanese yen, a Westpac Banking Corp. index shows. It’s weakened 16 percent versus the rupiah and 14 percent against the won during the past six months.
Expanding Economies
China’s economy grew 8.9 percent in the third quarter from a year earlier, the fastest pace in a year, according to data published Oct. 22. The People’s Bank of China has kept the yuan at about 6.83 per dollar since July 2008, following a 21 percent gain in the previous three years.
South Korea’s won strengthened yesterday, after touching its lowest level this month on Oct. 22, as the nation’s expanding economy and improving corporate earnings helped draw funds from abroad. An Oct. 26 report will show gross domestic product increased 1.9 percent in the third quarter from the previous three months, according to the median forecast of economists surveyed by Bloomberg News.
“The fundamentals remain supportive of the stock market and the won,” said Action’s Cohen. “It seems that the global economy is on the mend and South Korea has been leading the turnaround in the region.”
Finance Minister Yoon Jeung Hyun said yesterday the government will work with the central bank to stabilize the currency if needed, adding that policy makers “won’t sit idle” should moves prove one-sided.
Intervention Risk
Indonesia’s rupiah declined for the first week in seven as some investors judged excessive the rally that made the currency Asia’s best performer this year. It rose yesterday as the outlook on the nation’s credit rating was raised to positive from stable by Standard & Poor’s.
The Jakarta Composite Index, which has surged 82 percent in 2009, also had its steepest weekly slide since early September after foreign funds pulled $169 million from local stocks in the first four days of the week. Bank Indonesia will “guard” the pace of the rupiah’s appreciation, central bank Deputy Governor Hartadi Sarwono said Oct. 22.
“There’s been a lot of profit-taking this week in the Jakarta stock exchange leading to capital outflows,” said Lindawati Susanto, head of foreign-exchange trading at PT Bank Resona Perdania in Jakarta.
‘Smoothen’ Fluctuations
The Philippine peso fell on concern higher crude oil prices will boost the nation’s energy bill.
The nation imports almost all of the oil it uses and the price of the fuel has climbed more than 80 percent this year. The peso last week reached a nine-month high of 46.253 per dollar and central bank Governor Amando Tetangco said Oct. 21 that policy makers would “smoothen sharp fluctuations” in the currency while letting the market determine the exchange rate.
“The Philippines needs to pay more for the importation of oil and that’s putting pressure on the peso,” said Marcelo Ayes, senior vice president at Rizal Commercial Banking Corp. in Manila. “Most central banks in Asia are also intervening in the foreign-exchange market to limit their currency’s appreciation instead of raising interest rates.”
Elsewhere, India’s rupee declined 0.5 percent this week to 46.52 versus the greenback and Taiwan’s dollar fell 0.3 percent to NT$32.398. Thailand’s baht and the Chinese yuan were little changed at 33.43 and 6.8286.
To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net;
Last Up
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active regional currencies excluding the yen, declined for the first time since August. Brazil this week imposed a 2 percent levy on foreigners’ purchases of bonds and stocks to help curb the real’s appreciation, cooling demand for emerging- market assets.
“Generally, Asian policy makers have been intervening to resist the currency gains over the past few months,” said David Cohen, director of Asian forecasting at Action Economics in Singapore. “The yuan has been pegged for the past year so nobody wants to lose too much competitiveness to China.”
The won was at 1,181.25 per dollar yesterday, 1.5 percent lower than on Oct. 16. The currency rose in each of the previous eight weeks and reached 1,155.05 on Oct. 15, the strongest level in a year. The peso declined 0.8 percent this week to 46.995 and Indonesia’s rupiah slid 0.4 percent to 9,435, paring this year’s advance to 16 percent.
The yuan has dropped 8.6 percent from a record high on March 9 against the currencies of major trading partners including the euro and the Japanese yen, a Westpac Banking Corp. index shows. It’s weakened 16 percent versus the rupiah and 14 percent against the won during the past six months.
Expanding Economies
China’s economy grew 8.9 percent in the third quarter from a year earlier, the fastest pace in a year, according to data published Oct. 22. The People’s Bank of China has kept the yuan at about 6.83 per dollar since July 2008, following a 21 percent gain in the previous three years.
South Korea’s won strengthened yesterday, after touching its lowest level this month on Oct. 22, as the nation’s expanding economy and improving corporate earnings helped draw funds from abroad. An Oct. 26 report will show gross domestic product increased 1.9 percent in the third quarter from the previous three months, according to the median forecast of economists surveyed by Bloomberg News.
“The fundamentals remain supportive of the stock market and the won,” said Action’s Cohen. “It seems that the global economy is on the mend and South Korea has been leading the turnaround in the region.”
Finance Minister Yoon Jeung Hyun said yesterday the government will work with the central bank to stabilize the currency if needed, adding that policy makers “won’t sit idle” should moves prove one-sided.
Intervention Risk
Indonesia’s rupiah declined for the first week in seven as some investors judged excessive the rally that made the currency Asia’s best performer this year. It rose yesterday as the outlook on the nation’s credit rating was raised to positive from stable by Standard & Poor’s.
The Jakarta Composite Index, which has surged 82 percent in 2009, also had its steepest weekly slide since early September after foreign funds pulled $169 million from local stocks in the first four days of the week. Bank Indonesia will “guard” the pace of the rupiah’s appreciation, central bank Deputy Governor Hartadi Sarwono said Oct. 22.
“There’s been a lot of profit-taking this week in the Jakarta stock exchange leading to capital outflows,” said Lindawati Susanto, head of foreign-exchange trading at PT Bank Resona Perdania in Jakarta.
‘Smoothen’ Fluctuations
The Philippine peso fell on concern higher crude oil prices will boost the nation’s energy bill.
The nation imports almost all of the oil it uses and the price of the fuel has climbed more than 80 percent this year. The peso last week reached a nine-month high of 46.253 per dollar and central bank Governor Amando Tetangco said Oct. 21 that policy makers would “smoothen sharp fluctuations” in the currency while letting the market determine the exchange rate.
“The Philippines needs to pay more for the importation of oil and that’s putting pressure on the peso,” said Marcelo Ayes, senior vice president at Rizal Commercial Banking Corp. in Manila. “Most central banks in Asia are also intervening in the foreign-exchange market to limit their currency’s appreciation instead of raising interest rates.”
Elsewhere, India’s rupee declined 0.5 percent this week to 46.52 versus the greenback and Taiwan’s dollar fell 0.3 percent to NT$32.398. Thailand’s baht and the Chinese yuan were little changed at 33.43 and 6.8286.
To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net;
Last Up
Asia Property Stocks Rise, Countering Drop in Technology Shares
Oct. 24 (Bloomberg) -- Asian property stocks were buoyed this week as Hong Kong developers advanced on speculation China will maintain stimulus spending, while technology-related companies declined.
Cheung Kong Holdings Ltd., Hong Kong’s second-largest developer by market value, added 6 percent. Wesfarmers Ltd., Australia’s No. 2 retailer, gained 8.5 percent on rising sales of food and liquor. China Telecom Corp., the nation’s biggest fixed-line phone carrier, lost 4 percent in Hong Kong as profit disappointed investors, while LG Display Co. dropped 1.6 percent in Seoul after AT&T Inc. sued liquid-crystal-display makers.
The MSCI Asia Pacific Index fell 2.6 percent to 121.62 this week. The gauge has climbed 69 percent from a five-year low on March 9 as better-than-estimated economic and earnings reports increase optimism that the global economy is recovering from the worst slowdown since World War II.
“Investors haven’t forgotten the nightmare we had last year and are quick to sell when they get anxious,” said Kiyoshi Ishigane, a strategist at Mitsubishi UFJ Asset Management Co., which oversees about $56 billion in Tokyo. “Company profits are gradually returning, but we need to discern whether the stock price already reflects the improvement or not.”
China’s Shanghai Composite Index climbed for the third straight week after central bank adviser Fan Gang said the government should maintain its stimulus spending for another year. Australia’s S&P/ASX 200 Index added 0.5 percent as the nation’s central bank signaled more interest-rate increases as the economy improves, and Rio Tinto Group gained 4 percent on rising metal prices.
Stimulus Spending
Japan’s Nikkei 225 Stock Average rose 0.3 percent, with Daiwa House Industry Co., the nation’s top homebuilder, and Nomura Real Estate Holdings Inc. advancing after reporting higher-than-forecast earnings. Hong Kong’s Hang Seng Index gained 3 percent.
The MSCI Asia Pacific Index has advanced 33 percent in 2009, on course for its strongest annual gain since 2003. Australian central bank policy makers said in minutes of their Oct. 6 meeting released this week that a “very expansionary” setting of policy was “no longer necessary, and possibly imprudent.”
“The pace of the economic recovery will continue,” said Gabriel Gondard, Shanghai-based deputy chief investment officer at Fortune SGAM Fund Management Co., which oversees about $7.2 billion. “Investors will look to the upcoming data for clues.”
Hong Kong Developers
Cheung Kong rose 6 percent to HK$105.50. Agile Property Holdings Ltd., a Hong Kong-listed developer of real estate in China, surged 20 percent.
Investment in Chinese real estate is starting to resume and some industries are beginning to utilize previously idled capacity, Fan said in an interview in Toronto. The government’s stimulus is needed to keep these trends intact, he said.
Reports from China this week also showed industrial production and retail sales grew at a faster pace in September. Still, the nation’s economy expanded 8.9 percent in the third quarter, less than the 9 percent expected by economists in a Bloomberg News survey.
“The Chinese data simply met the market’s consensus view and failed to offer any positive surprise,” said Tomohiro Nishida, a dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group.
China Telecom slipped 4 percent to HK$3.65 after its third- quarter net income tumbled 47 percent to 2.98 billion yuan ($436 million), missing the 3.16 billion yuan expected by analysts. China Mobile, the world’s biggest phone carrier by market value, dropped 2.5 percent to HK$76.80 after third-quarter net income rose 2.6 percent to 28.6 billion yuan, compared with the 29 billion yuan anticipated by analysts in a Bloomberg News survey.
Aviation Industry Outlook
Hong Kong’s Cathay Pacific Airways Ltd. fell 4.5 percent to HK$12.74 after Chief Executive Officer Tony Tyler said he was “cautious” about prospects for the aviation industry.
“People in some parts of the world are talking about the green shoots of recovery,” Tyler said in a speech to the Aviation Club in London, according to an e-mailed press release distributed by Cathay. “We’re not seeing much of that kind of plant life ourselves”
LG Display Co. dropped 1.6 percent to 31,350 won in Seoul, while Samsung Electronics Co. retreated 0.1 percent to 745,000 won and Taiwan’s AU Optronics Corp. slid 2.6 percent to NT$31.55. AT&T, the biggest U.S. phone carrier, filed a complaint in federal court, claiming the companies were among those that “formed an international cartel illegally to restrict competition” in the LCD market in the U.S.
Supermarket Redesign
Wesfarmers jumped 8.5 percent to A$28.26 in Sydney. First- quarter food and liquor sales rose 7.3 percent in the three months through Sept. 27 as it attracted customers to redesigned fresh-produce sections at its Coles supermarkets, the company said.
Challenger Financial Services Group Ltd. climbed 2.7 percent to AS$3.83 as assets under management jumped after sales of annuities and related products more than doubled in the third quarter, and assets under administration and advice rose 50 percent.
Rio Tinto advanced 4 percent to A$67.50 as a measure of metals traded in London rose 5.7 percent in the week. BHP Billiton Ltd., the world’s largest mining company, added 2.6 percent to A$40.20.
In Tokyo, Daiwa House rose 7.8 percent to 1,004 yen, while Nomura Real Estate gained 4.9 percent to 1,591 yen.
Cheung Kong Holdings Ltd., Hong Kong’s second-largest developer by market value, added 6 percent. Wesfarmers Ltd., Australia’s No. 2 retailer, gained 8.5 percent on rising sales of food and liquor. China Telecom Corp., the nation’s biggest fixed-line phone carrier, lost 4 percent in Hong Kong as profit disappointed investors, while LG Display Co. dropped 1.6 percent in Seoul after AT&T Inc. sued liquid-crystal-display makers.
The MSCI Asia Pacific Index fell 2.6 percent to 121.62 this week. The gauge has climbed 69 percent from a five-year low on March 9 as better-than-estimated economic and earnings reports increase optimism that the global economy is recovering from the worst slowdown since World War II.
“Investors haven’t forgotten the nightmare we had last year and are quick to sell when they get anxious,” said Kiyoshi Ishigane, a strategist at Mitsubishi UFJ Asset Management Co., which oversees about $56 billion in Tokyo. “Company profits are gradually returning, but we need to discern whether the stock price already reflects the improvement or not.”
China’s Shanghai Composite Index climbed for the third straight week after central bank adviser Fan Gang said the government should maintain its stimulus spending for another year. Australia’s S&P/ASX 200 Index added 0.5 percent as the nation’s central bank signaled more interest-rate increases as the economy improves, and Rio Tinto Group gained 4 percent on rising metal prices.
Stimulus Spending
Japan’s Nikkei 225 Stock Average rose 0.3 percent, with Daiwa House Industry Co., the nation’s top homebuilder, and Nomura Real Estate Holdings Inc. advancing after reporting higher-than-forecast earnings. Hong Kong’s Hang Seng Index gained 3 percent.
The MSCI Asia Pacific Index has advanced 33 percent in 2009, on course for its strongest annual gain since 2003. Australian central bank policy makers said in minutes of their Oct. 6 meeting released this week that a “very expansionary” setting of policy was “no longer necessary, and possibly imprudent.”
“The pace of the economic recovery will continue,” said Gabriel Gondard, Shanghai-based deputy chief investment officer at Fortune SGAM Fund Management Co., which oversees about $7.2 billion. “Investors will look to the upcoming data for clues.”
Hong Kong Developers
Cheung Kong rose 6 percent to HK$105.50. Agile Property Holdings Ltd., a Hong Kong-listed developer of real estate in China, surged 20 percent.
Investment in Chinese real estate is starting to resume and some industries are beginning to utilize previously idled capacity, Fan said in an interview in Toronto. The government’s stimulus is needed to keep these trends intact, he said.
Reports from China this week also showed industrial production and retail sales grew at a faster pace in September. Still, the nation’s economy expanded 8.9 percent in the third quarter, less than the 9 percent expected by economists in a Bloomberg News survey.
“The Chinese data simply met the market’s consensus view and failed to offer any positive surprise,” said Tomohiro Nishida, a dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group.
China Telecom slipped 4 percent to HK$3.65 after its third- quarter net income tumbled 47 percent to 2.98 billion yuan ($436 million), missing the 3.16 billion yuan expected by analysts. China Mobile, the world’s biggest phone carrier by market value, dropped 2.5 percent to HK$76.80 after third-quarter net income rose 2.6 percent to 28.6 billion yuan, compared with the 29 billion yuan anticipated by analysts in a Bloomberg News survey.
Aviation Industry Outlook
Hong Kong’s Cathay Pacific Airways Ltd. fell 4.5 percent to HK$12.74 after Chief Executive Officer Tony Tyler said he was “cautious” about prospects for the aviation industry.
“People in some parts of the world are talking about the green shoots of recovery,” Tyler said in a speech to the Aviation Club in London, according to an e-mailed press release distributed by Cathay. “We’re not seeing much of that kind of plant life ourselves”
LG Display Co. dropped 1.6 percent to 31,350 won in Seoul, while Samsung Electronics Co. retreated 0.1 percent to 745,000 won and Taiwan’s AU Optronics Corp. slid 2.6 percent to NT$31.55. AT&T, the biggest U.S. phone carrier, filed a complaint in federal court, claiming the companies were among those that “formed an international cartel illegally to restrict competition” in the LCD market in the U.S.
Supermarket Redesign
Wesfarmers jumped 8.5 percent to A$28.26 in Sydney. First- quarter food and liquor sales rose 7.3 percent in the three months through Sept. 27 as it attracted customers to redesigned fresh-produce sections at its Coles supermarkets, the company said.
Challenger Financial Services Group Ltd. climbed 2.7 percent to AS$3.83 as assets under management jumped after sales of annuities and related products more than doubled in the third quarter, and assets under administration and advice rose 50 percent.
Rio Tinto advanced 4 percent to A$67.50 as a measure of metals traded in London rose 5.7 percent in the week. BHP Billiton Ltd., the world’s largest mining company, added 2.6 percent to A$40.20.
In Tokyo, Daiwa House rose 7.8 percent to 1,004 yen, while Nomura Real Estate gained 4.9 percent to 1,591 yen.
Malaysia’s Najib Cuts Tax, Reduces Spending as Economy Recovers
Oct. 24 (Bloomberg) -- Malaysia cut income tax for a second straight year, aiming to spur consumer spending and private investment and help the economy recover from a recession.
The top personal tax rate will be reduced to 26 percent in 2010 from 27 percent, Prime Minister Najib Razak said in his budget speech in Kuala Lumpur yesterday. Southeast Asia’s third- largest economy is expected to expand 2 percent to 3 percent in 2010 after shrinking 3 percent this year, the government said.
“Private sector activity is anticipated to pick up following signs of recovery, enabling the government to consolidate its fiscal position for greater policy flexibility in times of crisis,” the Ministry of Finance said in its 2009/2010 economic report yesterday. “Emphasis will be on creating a conducive environment for businesses and entrepreneurship to thrive in a more liberalized environment.”
Najib, 56, has rolled back decades-old protectionist policies to spur investment since taking over as prime minister in April, opening up services industry to foreign investors and easing rules on ethnic-Malay ownership in companies. Najib told parliament that he wants to transform Malaysia into a “high- income economy.”
“The budget signals the government’s intention to reduce its direct involvement in the economy and encourage a greater role for the private sector,” said Robert Prior-Wandesforde, a Singapore-based senior economist at HSBC Holdings Plc. “The new prime minister is at least trying to take the economy in a different direction.”
Foreign Investment
Malaysia will review rules that may be barriers to investment and plans to attract foreign investors to take up stakes in local companies, the finance ministry said.
State-owned companies will be privatized, procedures for registering a business will be expedited and tax relief will be provided for a national broadband project, Najib told parliament yesterday. Tax incentives for Islamic finance products will be extended until 2015 and more funds will be allocated to promote tourism, he added.
The budget will help open up the Malaysian economy further and address a policy adopted in 1971 that gives advantages to the ethnic-Malay majority in business, housing and government contracts, Second Finance Minister Ahmad Husni Hanadzlah told reporters in Putrajaya on Oct. 22.
‘Paradigm Shift’
“We have to do things differently now,” Najib said in the economic report. “There has to be a paradigm shift and a change in mindset” as Malaysia is “committed” to enhance its competitiveness through market-driven policies, he said.
The budget shortfall is expected to narrow to 5.6 percent of gross domestic product next year from a 22-year high of 7.4 percent in 2009, according to yesterday’s finance ministry report. Spending in 2010 is expected to be 191.5 billion ringgit ($56 billion), 11.2 percent smaller than this year’s outlay.
“The government wants to manage its finances better to make sure that the deficit is not exorbitant,” said Pankaj Kumar, who manages about $540 million of assets as chief investment officer at Kurnia Insurans Bhd. in Kuala Lumpur. “For the first time in my memory, I’m seeing a budget that is lower than in previous years.”
Next year’s 5.6 percent deficit target was “realistic,” Deputy Prime Minister Muhyiddin Yassin told reporters in Kuala Lumpur yesterday. Malaysia aims to balance the budget in the next three to six years and the 2011 shortfall will be “much lower” than next year’s, Husni said in an interview with Bloomberg News last night.
Property Tax
Malaysia plans a 5 percent capital gains tax on property from January to help broaden the tax base and bolster government finances, Najib said. A study on the introduction of a goods and services tax is in its final stages, Najib said.
The government will review its fuel and other subsidies to ensure they benefit “target” groups and remain “lean,” the ministry said. Competitive bidding for government procurement will help reduce costs, it said.
The government will spend less on supplies and services as well as grants to state agencies next year, even as outlays for pensions, salaries and debt servicing increase.
Malaysians will be allowed to use more of their retirement funds for home purchases and personal tax relief for pension contributions and life insurance premiums will be increased, Najib said yesterday. Workers will be able to contribute 11 percent of their monthly salary to the state-run Employees Provident Fund, up from as little as 8 percent previously.
Stimulus Measures
Malaysia, which has unveiled 67 billion ringgit of stimulus initiatives under two packages in the past year, has spent 8.2 billion ringgit from the total as at the end of September, the finance ministry said. The impact from the stimulus will be felt more in the second half of 2009 and spill over into next year, it said.
Major construction projects expected by the government to boost growth next year include a light rail project in and around the capital Kuala Lumpur, a water transfer project and a new low-cost carrier terminal at the country’s main airport.
Total taxes are forecast to shrink 2.8 percent as a 28.3 percent plunge in oil income as well as lower investment, licensing and sales tax revenue counter rising collection from excise duties, company and individual taxes, the ministry said. Income taxes will be bolstered by a recovering economy, the government said.
Inflation will “rise modestly” in 2010 as global commodity prices gain, the ministry said. Malaysia’s monetary policy will “remain supportive of growth,” it said.
To contact the reporters on this story: Stephanie Phang in Singapore at sphang@bloomberg.netSoraya Permatasari in Kuala Lumpur at soraya@bloomberg.net
Last Updated: October 23, 2
The top personal tax rate will be reduced to 26 percent in 2010 from 27 percent, Prime Minister Najib Razak said in his budget speech in Kuala Lumpur yesterday. Southeast Asia’s third- largest economy is expected to expand 2 percent to 3 percent in 2010 after shrinking 3 percent this year, the government said.
“Private sector activity is anticipated to pick up following signs of recovery, enabling the government to consolidate its fiscal position for greater policy flexibility in times of crisis,” the Ministry of Finance said in its 2009/2010 economic report yesterday. “Emphasis will be on creating a conducive environment for businesses and entrepreneurship to thrive in a more liberalized environment.”
Najib, 56, has rolled back decades-old protectionist policies to spur investment since taking over as prime minister in April, opening up services industry to foreign investors and easing rules on ethnic-Malay ownership in companies. Najib told parliament that he wants to transform Malaysia into a “high- income economy.”
“The budget signals the government’s intention to reduce its direct involvement in the economy and encourage a greater role for the private sector,” said Robert Prior-Wandesforde, a Singapore-based senior economist at HSBC Holdings Plc. “The new prime minister is at least trying to take the economy in a different direction.”
Foreign Investment
Malaysia will review rules that may be barriers to investment and plans to attract foreign investors to take up stakes in local companies, the finance ministry said.
State-owned companies will be privatized, procedures for registering a business will be expedited and tax relief will be provided for a national broadband project, Najib told parliament yesterday. Tax incentives for Islamic finance products will be extended until 2015 and more funds will be allocated to promote tourism, he added.
The budget will help open up the Malaysian economy further and address a policy adopted in 1971 that gives advantages to the ethnic-Malay majority in business, housing and government contracts, Second Finance Minister Ahmad Husni Hanadzlah told reporters in Putrajaya on Oct. 22.
‘Paradigm Shift’
“We have to do things differently now,” Najib said in the economic report. “There has to be a paradigm shift and a change in mindset” as Malaysia is “committed” to enhance its competitiveness through market-driven policies, he said.
The budget shortfall is expected to narrow to 5.6 percent of gross domestic product next year from a 22-year high of 7.4 percent in 2009, according to yesterday’s finance ministry report. Spending in 2010 is expected to be 191.5 billion ringgit ($56 billion), 11.2 percent smaller than this year’s outlay.
“The government wants to manage its finances better to make sure that the deficit is not exorbitant,” said Pankaj Kumar, who manages about $540 million of assets as chief investment officer at Kurnia Insurans Bhd. in Kuala Lumpur. “For the first time in my memory, I’m seeing a budget that is lower than in previous years.”
Next year’s 5.6 percent deficit target was “realistic,” Deputy Prime Minister Muhyiddin Yassin told reporters in Kuala Lumpur yesterday. Malaysia aims to balance the budget in the next three to six years and the 2011 shortfall will be “much lower” than next year’s, Husni said in an interview with Bloomberg News last night.
Property Tax
Malaysia plans a 5 percent capital gains tax on property from January to help broaden the tax base and bolster government finances, Najib said. A study on the introduction of a goods and services tax is in its final stages, Najib said.
The government will review its fuel and other subsidies to ensure they benefit “target” groups and remain “lean,” the ministry said. Competitive bidding for government procurement will help reduce costs, it said.
The government will spend less on supplies and services as well as grants to state agencies next year, even as outlays for pensions, salaries and debt servicing increase.
Malaysians will be allowed to use more of their retirement funds for home purchases and personal tax relief for pension contributions and life insurance premiums will be increased, Najib said yesterday. Workers will be able to contribute 11 percent of their monthly salary to the state-run Employees Provident Fund, up from as little as 8 percent previously.
Stimulus Measures
Malaysia, which has unveiled 67 billion ringgit of stimulus initiatives under two packages in the past year, has spent 8.2 billion ringgit from the total as at the end of September, the finance ministry said. The impact from the stimulus will be felt more in the second half of 2009 and spill over into next year, it said.
Major construction projects expected by the government to boost growth next year include a light rail project in and around the capital Kuala Lumpur, a water transfer project and a new low-cost carrier terminal at the country’s main airport.
Total taxes are forecast to shrink 2.8 percent as a 28.3 percent plunge in oil income as well as lower investment, licensing and sales tax revenue counter rising collection from excise duties, company and individual taxes, the ministry said. Income taxes will be bolstered by a recovering economy, the government said.
Inflation will “rise modestly” in 2010 as global commodity prices gain, the ministry said. Malaysia’s monetary policy will “remain supportive of growth,” it said.
To contact the reporters on this story: Stephanie Phang in Singapore at sphang@bloomberg.netSoraya Permatasari in Kuala Lumpur at soraya@bloomberg.net
Last Updated: October 23, 2
Thursday, October 22, 2009
BNP Paribas Said to Weigh Management Changes, Pay Cuts in Japan
Oct. 23 (Bloomberg) -- BNP Paribas SA, France’s biggest bank, is considering management changes and salary cuts at its Japan unit after regulators accused it of breaching Japanese securities rules, two people with knowledge of the matter said.
BNP Paribas Securities (Japan) Ltd. will announce disciplinary measures as early as today, one of the people said, declining to be identified. Yusuke Yasuda, head of the firm’s Japanese unit, may resign, the people said.
Japan’s Securities and Exchange Surveillance Commission last week told the Financial Services Agency to penalize BNP Paribas. The bank made mistakes and omissions in documentation it was told to file during an inspection of its internal controls by the agency, the SESC said.
Regulators in November last year ordered BNP Paribas to improve compliance after selling shares of real-estate developer Urban Corp. while aware of a swap agreement that wasn’t public.
BNP Paribas may be informed about what penalty the FSA will impose as early as today, the people said. After that, the company will announce its own disciplinary actions, one of the people said.
The SESC also said buy orders placed by a BNP trader in Tokyo in November last year breached securities rules. The orders for the undisclosed stock constituted artificial market making, the agency said.
An FSA spokesman, who declined to be identified, said he had no comment. BNP Paribas’ Tokyo-based spokesman Daniel Boyd declined to comment. Yasuda didn’t respond to an e-mail seeking comment, and an official who answered the phone at the company’s Tokyo office said he’s out today.
BNP Paribas booked a 1.2 billion yen ($13 million) profit from transactions related to Urban, an outside panel appointed by the French bank to investigate the matter said in November. Urban filed for bankruptcy protection in August 2008.
Yasuda apologized for BNP Paribas’ actions at a press briefing in Tokyo on Nov. 11 last year after the outside panel appointed by the bank released its findings in a 70-page report.
Japan’s SESC is responsible for surveillance of financial companies while the FSA has the power to inspect and penalize.
BNP Paribas Securities (Japan) Ltd. will announce disciplinary measures as early as today, one of the people said, declining to be identified. Yusuke Yasuda, head of the firm’s Japanese unit, may resign, the people said.
Japan’s Securities and Exchange Surveillance Commission last week told the Financial Services Agency to penalize BNP Paribas. The bank made mistakes and omissions in documentation it was told to file during an inspection of its internal controls by the agency, the SESC said.
Regulators in November last year ordered BNP Paribas to improve compliance after selling shares of real-estate developer Urban Corp. while aware of a swap agreement that wasn’t public.
BNP Paribas may be informed about what penalty the FSA will impose as early as today, the people said. After that, the company will announce its own disciplinary actions, one of the people said.
The SESC also said buy orders placed by a BNP trader in Tokyo in November last year breached securities rules. The orders for the undisclosed stock constituted artificial market making, the agency said.
An FSA spokesman, who declined to be identified, said he had no comment. BNP Paribas’ Tokyo-based spokesman Daniel Boyd declined to comment. Yasuda didn’t respond to an e-mail seeking comment, and an official who answered the phone at the company’s Tokyo office said he’s out today.
BNP Paribas booked a 1.2 billion yen ($13 million) profit from transactions related to Urban, an outside panel appointed by the French bank to investigate the matter said in November. Urban filed for bankruptcy protection in August 2008.
Yasuda apologized for BNP Paribas’ actions at a press briefing in Tokyo on Nov. 11 last year after the outside panel appointed by the bank released its findings in a 70-page report.
Japan’s SESC is responsible for surveillance of financial companies while the FSA has the power to inspect and penalize.
RBI Faces ‘Major Challenge’ in Managing India Borrowing Program
Oct. 23 (Bloomberg) -- India’s central bank said it faces a “major challenge” in managing the government’s debt sales, which have fueled a record jump in bond yields this year and made it “difficult” to keep prices stable.
The surge in bond yields conflicts with the low-interest rate “regime” that the Reserve Bank of India is maintaining to revive economic growth, the bank said in an annual report published yesterday. The government predicts gross domestic product will increase 6 percent in the fiscal year through March, the weakest performance since 2003, and policy makers have kept benchmark rates at record lows since cutting them six times between October 2008 and April 2009.
“The bond market is already pricing into yields the odds of a reversal in the Reserve Bank’s easy monetary policy, with inflation and growth now rebounding,” said Baljinder Singh, a fixed-income trader at state-owned Andhra Bank in Mumbai. “The central bank will start raising rates in another three months.”
Benchmark 10-year government bond yields in India have risen 2.13 percentage points this year as the government stepped up issuance to fund stimulus needed to help the economy weather a global recession. India plans to raise a record 4.51 trillion rupees ($97 billion) via debt sales in the fiscal year through March to plug budget deficit estimated at 6.8 percent of gross domestic product, the most since 1994.
Prime Minister Manmohan Singh’s economic advisory council said Oct. 21 that India may “act earlier” than the U.S. and Europe in tightening monetary policy, forecasting inflation will accelerate to around 6 percent by the end of March. Governor Duvvuri Subbarao is likely to leave rates unchanged at the central bank’s Oct. 27 policy meeting, according to all 12 economists in a Bloomberg survey.
Inflation Accelerates
“Despite the Reserve Bank actively managing the liquidity in the system, the large increase in government borrowings has resulted in the hardening of yields,” the central bank said. “If governments continue to incur large fiscal deficits, it may be difficult for central banks to maintain price stability.”
India’s inflation accelerated more than expected in the week ended Oct. 10, a commerce ministry report showed yesterday. The wholesale-price index climbed 1.21 percent from a year earlier, after rising 0.92 percent the previous week. Economists forecast a 1.1 percent increase, a Bloomberg survey showed.
Faster “inflation could push the yield curve upwards,” the RBI said. “This could result in significant marked-to- market losses for fixed-income instruments, with potentially adverse implications for banks’ profitability.”
Banks are the biggest buyers of government debt in India, holding about 70 percent off outstanding securities.
The surge in bond yields conflicts with the low-interest rate “regime” that the Reserve Bank of India is maintaining to revive economic growth, the bank said in an annual report published yesterday. The government predicts gross domestic product will increase 6 percent in the fiscal year through March, the weakest performance since 2003, and policy makers have kept benchmark rates at record lows since cutting them six times between October 2008 and April 2009.
“The bond market is already pricing into yields the odds of a reversal in the Reserve Bank’s easy monetary policy, with inflation and growth now rebounding,” said Baljinder Singh, a fixed-income trader at state-owned Andhra Bank in Mumbai. “The central bank will start raising rates in another three months.”
Benchmark 10-year government bond yields in India have risen 2.13 percentage points this year as the government stepped up issuance to fund stimulus needed to help the economy weather a global recession. India plans to raise a record 4.51 trillion rupees ($97 billion) via debt sales in the fiscal year through March to plug budget deficit estimated at 6.8 percent of gross domestic product, the most since 1994.
Prime Minister Manmohan Singh’s economic advisory council said Oct. 21 that India may “act earlier” than the U.S. and Europe in tightening monetary policy, forecasting inflation will accelerate to around 6 percent by the end of March. Governor Duvvuri Subbarao is likely to leave rates unchanged at the central bank’s Oct. 27 policy meeting, according to all 12 economists in a Bloomberg survey.
Inflation Accelerates
“Despite the Reserve Bank actively managing the liquidity in the system, the large increase in government borrowings has resulted in the hardening of yields,” the central bank said. “If governments continue to incur large fiscal deficits, it may be difficult for central banks to maintain price stability.”
India’s inflation accelerated more than expected in the week ended Oct. 10, a commerce ministry report showed yesterday. The wholesale-price index climbed 1.21 percent from a year earlier, after rising 0.92 percent the previous week. Economists forecast a 1.1 percent increase, a Bloomberg survey showed.
Faster “inflation could push the yield curve upwards,” the RBI said. “This could result in significant marked-to- market losses for fixed-income instruments, with potentially adverse implications for banks’ profitability.”
Banks are the biggest buyers of government debt in India, holding about 70 percent off outstanding securities.
Tuesday, October 20, 2009
U.K. Financial Bonuses May Soar 50 Percent in 2009, CEBR Says v
Oct. 21 (Bloomberg) -- Bonuses for financial services employees may rise by 50 percent to 6 billion pounds ($9.9 billion) this year as profit at U.K. banks, brokerages and hedge funds rebounds, according to a Centre for Economics & Business Research Ltd. report.
U.K. finance workers received about 4 billion pounds for 2008, according to CEBR findings released in London today. While the figures show a year-on-year rise, the report also estimates that 2009 bonuses will be 41 percent below 2007’s record figure of 10.24 billion pounds. Even in 2012, bonuses will still be 26 percent lower than in 2007, the report forecast.
“Bonuses are beginning to bounce back but will not reach the levels of 2007 anytime soon,” said Benjamin Williamson, a CEBR economist. “Profits of major financial-sector institutions have jumped sharply; therefore bonuses, which to some extent are a profit sharing scheme, have also risen.”
The British government has tried to assuage voter anger over bankers’ pay ahead of an election which has to be held within the next eight months. It backed Group of 20 initiatives to curb bonuses agreed last month and new rules on pay being implemented by the Financial Services Authority.
“These bonuses are coming from the fact that banks are earning money from substantial government borrowing and are able to earn bigger profits because there is less competition,” Vince Cable, financial spokesman for the opposition Liberal Democrats said in e-mailed comments. “What is particularly galling is that all their activities are in turn underwritten by the taxpayer.”
‘Yachts and Villas’
It is “monstrous that good businesses are going to the wall for lack of credit, while bankers are using their taxpayer-funded bonuses to pile back into the yachts and the villas,” London’s Conservative Mayor Boris Johnson wrote on Oct. 19. Chancellor of the Exchequer Alistair Darling attacked bankers’ “stupidity” at the ruling Labour party conference on Sept. 29. Bank employees took excessive risks in pursuit of bonuses, leaving their institutions “hours away” from closure, he said.
Royal Bank of Scotland Group Plc, Britain’s biggest government-controlled bank, is planning to pay some employees bonuses of as much as 5 million pounds each, the Sunday Times reported on Oct. 18.
Edinburgh-based RBS has been cutting jobs and reducing its presence or withdrawing from two thirds of the 54 countries in which it does business after posting the biggest loss in U.K. corporate history last year and receiving government funding.
‘Low-Hanging Fruit’
“Whilst 2009 has been a bumper year harvested from low- hanging fruit as a result of government-sponsored liquidity, 2010 is predicted to be better because of the global economic recovery,” Shaun Springer, chief executive officer of Square Mile Services Ltd., which advises London financial institutions on remuneration, said in an interview.
“However the issue of where to remunerate is becoming more important than how much to remunerate,” he said. “There is a lot of talk of expanding in the Middle and Far East at the expense of London because there are clearly fewer restrictions and politically driven agendas.”
The CEBR has said that the global financial crisis has seen the number of jobs in London’s financial services fall by 49,000 or 14 percent below its 2007 peak.
U.K. finance workers received about 4 billion pounds for 2008, according to CEBR findings released in London today. While the figures show a year-on-year rise, the report also estimates that 2009 bonuses will be 41 percent below 2007’s record figure of 10.24 billion pounds. Even in 2012, bonuses will still be 26 percent lower than in 2007, the report forecast.
“Bonuses are beginning to bounce back but will not reach the levels of 2007 anytime soon,” said Benjamin Williamson, a CEBR economist. “Profits of major financial-sector institutions have jumped sharply; therefore bonuses, which to some extent are a profit sharing scheme, have also risen.”
The British government has tried to assuage voter anger over bankers’ pay ahead of an election which has to be held within the next eight months. It backed Group of 20 initiatives to curb bonuses agreed last month and new rules on pay being implemented by the Financial Services Authority.
“These bonuses are coming from the fact that banks are earning money from substantial government borrowing and are able to earn bigger profits because there is less competition,” Vince Cable, financial spokesman for the opposition Liberal Democrats said in e-mailed comments. “What is particularly galling is that all their activities are in turn underwritten by the taxpayer.”
‘Yachts and Villas’
It is “monstrous that good businesses are going to the wall for lack of credit, while bankers are using their taxpayer-funded bonuses to pile back into the yachts and the villas,” London’s Conservative Mayor Boris Johnson wrote on Oct. 19. Chancellor of the Exchequer Alistair Darling attacked bankers’ “stupidity” at the ruling Labour party conference on Sept. 29. Bank employees took excessive risks in pursuit of bonuses, leaving their institutions “hours away” from closure, he said.
Royal Bank of Scotland Group Plc, Britain’s biggest government-controlled bank, is planning to pay some employees bonuses of as much as 5 million pounds each, the Sunday Times reported on Oct. 18.
Edinburgh-based RBS has been cutting jobs and reducing its presence or withdrawing from two thirds of the 54 countries in which it does business after posting the biggest loss in U.K. corporate history last year and receiving government funding.
‘Low-Hanging Fruit’
“Whilst 2009 has been a bumper year harvested from low- hanging fruit as a result of government-sponsored liquidity, 2010 is predicted to be better because of the global economic recovery,” Shaun Springer, chief executive officer of Square Mile Services Ltd., which advises London financial institutions on remuneration, said in an interview.
“However the issue of where to remunerate is becoming more important than how much to remunerate,” he said. “There is a lot of talk of expanding in the Middle and Far East at the expense of London because there are clearly fewer restrictions and politically driven agendas.”
The CEBR has said that the global financial crisis has seen the number of jobs in London’s financial services fall by 49,000 or 14 percent below its 2007 peak.
Japanese Stocks Fluctuate After Earnings, U.S. Housing Report
Oct. 21 (Bloomberg) -- Japanese stocks fluctuated as lower- than-estimated U.S. housing starts and a slump in raw-materials prices offset an improving outlook for technology companies.
Sumitomo Metal Mining Co., Japan’s biggest nickel and gold producer, lost 1.3 percent after metal prices dropped. Nissan Motor Co., Japan’s third-largest automaker, fell 0.7 percent. Nitto Denko Corp., the world’s largest maker of optical film for liquid-crystal displays, rose 3.7 percent after first-half earnings beat estimates.
The Nikkei 225 Stock Average dropped 0.2 percent to 10,313.47 as of 10:04 a.m. in Tokyo. The broader Topix index declined 0.3 percent to 912.21, with more than two stocks retreating for each that advanced. Both gauges closed yesterday at their highest this month.
“Stocks are set for a slight dip at the start of trading as U.S. investors were put off by the housing numbers and are starting to become cautious after the recent rally,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo. “The market will be focused on companies that are lifting their earnings outlooks.”
Toshiba Corp., the world’s second-biggest maker of flash memory chips, added 2.3 percent after CLSA Ltd. boosted its investment rating on the shares and SanDisk Corp. posted better- than-expected results.
In New York, the Standard & Poor’s 500 Index retreated from the highest in a year yesterday, losing 0.6 percent. Housing starts rose 0.5 percent to an annual rate of 590,000 in September, a Commerce Department report showed, missing economists’ estimates.
Commodities Fall
The Topix index has climbed 30 percent from a 25-year low on March 12 as global measures to increase money supply revived growth. Stocks in the gauge are valued at 5.7 times cash flow, compared with an average of 14 times during the past five years.
Sumitomo Metal Mining retreated 1.3 percent to 1,566 yen. Mitsubishi Corp., Japan’s largest trading company, declined 0.7 percent to 2,025 yen.
Crude oil for December delivery dropped for the first time in nine days yesterday, losing 0.5 percent to $79.09 a barrel in New York. The London Metals Index, a measure of six metals including copper and zinc, fell 1 percent yesterday, retreating from a two-month high.
Nissan lost 0.7 percent to 668 yen. Mitsubishi Estate Co., Japan’s biggest property developer by market value, slumped 2.2 percent to 1,466 yen.
Nitto Denko, Toshiba
Nitto Denko added 3.7 percent to 2,790 yen. The company said in a preliminary earnings statement yesterday that operating profit for the six months to Sept. 30 totaled 25.5 billion yen, as sales recovered and exceeded analysts’ estimates. Profit also beat estimates.
Toshiba climbed 2.3 percent to 537 yen. The shares were raised to “buy” from “underperform” at CLSA Ltd. on the view that rising use of so-called smart phones will boost demand for the company’s chips.
SanDisk, the biggest maker of flash-memory cards used in digital cameras and mobile phones, said fourth-quarter sales will probably be between $1.1 billion and $1.2 billion, compared with analysts’ estimates for 835.4 million. The shares surged 9.5 percent in late trading in New York.
Sanyo Electric Co. gained 1.9 percent to 212 yen. The world’s largest maker of rechargeable batteries will supply Toyota Motor Corp. with batteries for hybrid cars, the Asahi newspaper reported.
Sumitomo Metal Mining Co., Japan’s biggest nickel and gold producer, lost 1.3 percent after metal prices dropped. Nissan Motor Co., Japan’s third-largest automaker, fell 0.7 percent. Nitto Denko Corp., the world’s largest maker of optical film for liquid-crystal displays, rose 3.7 percent after first-half earnings beat estimates.
The Nikkei 225 Stock Average dropped 0.2 percent to 10,313.47 as of 10:04 a.m. in Tokyo. The broader Topix index declined 0.3 percent to 912.21, with more than two stocks retreating for each that advanced. Both gauges closed yesterday at their highest this month.
“Stocks are set for a slight dip at the start of trading as U.S. investors were put off by the housing numbers and are starting to become cautious after the recent rally,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo. “The market will be focused on companies that are lifting their earnings outlooks.”
Toshiba Corp., the world’s second-biggest maker of flash memory chips, added 2.3 percent after CLSA Ltd. boosted its investment rating on the shares and SanDisk Corp. posted better- than-expected results.
In New York, the Standard & Poor’s 500 Index retreated from the highest in a year yesterday, losing 0.6 percent. Housing starts rose 0.5 percent to an annual rate of 590,000 in September, a Commerce Department report showed, missing economists’ estimates.
Commodities Fall
The Topix index has climbed 30 percent from a 25-year low on March 12 as global measures to increase money supply revived growth. Stocks in the gauge are valued at 5.7 times cash flow, compared with an average of 14 times during the past five years.
Sumitomo Metal Mining retreated 1.3 percent to 1,566 yen. Mitsubishi Corp., Japan’s largest trading company, declined 0.7 percent to 2,025 yen.
Crude oil for December delivery dropped for the first time in nine days yesterday, losing 0.5 percent to $79.09 a barrel in New York. The London Metals Index, a measure of six metals including copper and zinc, fell 1 percent yesterday, retreating from a two-month high.
Nissan lost 0.7 percent to 668 yen. Mitsubishi Estate Co., Japan’s biggest property developer by market value, slumped 2.2 percent to 1,466 yen.
Nitto Denko, Toshiba
Nitto Denko added 3.7 percent to 2,790 yen. The company said in a preliminary earnings statement yesterday that operating profit for the six months to Sept. 30 totaled 25.5 billion yen, as sales recovered and exceeded analysts’ estimates. Profit also beat estimates.
Toshiba climbed 2.3 percent to 537 yen. The shares were raised to “buy” from “underperform” at CLSA Ltd. on the view that rising use of so-called smart phones will boost demand for the company’s chips.
SanDisk, the biggest maker of flash-memory cards used in digital cameras and mobile phones, said fourth-quarter sales will probably be between $1.1 billion and $1.2 billion, compared with analysts’ estimates for 835.4 million. The shares surged 9.5 percent in late trading in New York.
Sanyo Electric Co. gained 1.9 percent to 212 yen. The world’s largest maker of rechargeable batteries will supply Toyota Motor Corp. with batteries for hybrid cars, the Asahi newspaper reported.
Monday, October 19, 2009
Essar Pulls Out of Contest With Jindal for Rocklands
Oct. 20 (Bloomberg) -- Essar Group, the Indian company that runs telecom, energy, steel and real-estate businesses, withdrew from a bidding contest with Jindal Steel & Power Ltd. for Australian coal explorer Rocklands Richfield Ltd.
Rocklands has written to Essar asking why it’s dropping the A$144 Million ($134 million) bid, and to determine whether the Mumbai-based company may wish to continue the takeover on amended terms, the Sydney-based company said in a statement today. Its shares declined the most in eight weeks.
Rocklands, which controls three metallurgical coal projects in Queensland-state, has surged six fold in Sydney trading in the last six months, giving the company a market value of about A$107 million. The Jindal offer of 42 Australian cents a share remains “on track” with the New Delhi-based company continuing its due diligence, Rocklands said today.
The coal explorer dropped 21 percent to 33.5 Australian cents at 11:01 a.m. in Sydney, the biggest drop since Aug. 24. The benchmark S&P/ASX 200 Index rose 1.3 percent.
Jindal’s offer is preliminary, non-binding and conditional, Rocklands said today. Jindal owns 12.75 percent of the coal explorer, an Oct. 9 statement to the Australian stock exchange shows.
Rocklands has written to Essar asking why it’s dropping the A$144 Million ($134 million) bid, and to determine whether the Mumbai-based company may wish to continue the takeover on amended terms, the Sydney-based company said in a statement today. Its shares declined the most in eight weeks.
Rocklands, which controls three metallurgical coal projects in Queensland-state, has surged six fold in Sydney trading in the last six months, giving the company a market value of about A$107 million. The Jindal offer of 42 Australian cents a share remains “on track” with the New Delhi-based company continuing its due diligence, Rocklands said today.
The coal explorer dropped 21 percent to 33.5 Australian cents at 11:01 a.m. in Sydney, the biggest drop since Aug. 24. The benchmark S&P/ASX 200 Index rose 1.3 percent.
Jindal’s offer is preliminary, non-binding and conditional, Rocklands said today. Jindal owns 12.75 percent of the coal explorer, an Oct. 9 statement to the Australian stock exchange shows.
India to Release Key Wholesale-Inflation Index on Monthly Basis
Oct. 20 (Bloomberg) -- India will release its key wholesale inflation number on a monthly rather than weekly basis, moving toward the practice of most other economies around the world.
The new wholesale price index with 2004 as the base year will debut on Nov. 14, Commerce Minister Anand Sharma told reporters after a cabinet meeting approved the gauge in New Delhi yesterday. The base year used for the current weekly index is 1993.
The government plans to eventually move to a new consumer price index next year as policy makers say wholesale prices don’t show the true costs borne by people. For now, a weekly wholesale index for food and fuel commodities will continue to be released to facilitate monitoring of prices that are “sensitive in nature,” a government statement said.
“India needs to move toward making consumer price inflation its benchmark, which will give a clearer description of the cost scenario,” said Krish Ramkumar, who manages the equivalent of $1 billion in Indian debt at Sundaram BNP Paribas Asset Management Co. in Mumbai. “The development yesterday appears to be a step in that direction.”
Until now, India’s statistics department has released four consumer price indices for different groups such as farm and industrial workers. The central bank and the finance ministry use the wholesale price index as the benchmark because the other inflation measures don’t capture the aggregate price picture.
Consumer Prices
The wholesale-price index climbed 0.92 percent in the week to Oct. 3 from a year earlier, the Commerce Ministry said on Oct. 15. Gains in consumer prices were far higher. The consumer price index for farm workers jumped 12.89 percent in August from a year earlier, while that for rural workers increased 12.67 percent, according to government statistics.
India will adopt a new consumer price index next year, Pronab Sen, the top official in India’s statistics ministry, said in an interview on July 17.
Sen said the only “compelling” logic for a unified consumer price index is for monetary policy purposes, as there is nothing “intrinsically wrong” with the wholesale price gauge and the four consumer price measures.
The wholesale price index provides a snapshot of producer prices while the consumer price gauges show the final cost paid by consumers.
The new consumer index, with a base year of 2007-2008, will be compiled from a sample of 2,000 villages, Sen said. He said the statistics department has subcontracted the field work to the postal department, which has put 2,400 people on the job.
The new wholesale price index with 2004 as the base year will debut on Nov. 14, Commerce Minister Anand Sharma told reporters after a cabinet meeting approved the gauge in New Delhi yesterday. The base year used for the current weekly index is 1993.
The government plans to eventually move to a new consumer price index next year as policy makers say wholesale prices don’t show the true costs borne by people. For now, a weekly wholesale index for food and fuel commodities will continue to be released to facilitate monitoring of prices that are “sensitive in nature,” a government statement said.
“India needs to move toward making consumer price inflation its benchmark, which will give a clearer description of the cost scenario,” said Krish Ramkumar, who manages the equivalent of $1 billion in Indian debt at Sundaram BNP Paribas Asset Management Co. in Mumbai. “The development yesterday appears to be a step in that direction.”
Until now, India’s statistics department has released four consumer price indices for different groups such as farm and industrial workers. The central bank and the finance ministry use the wholesale price index as the benchmark because the other inflation measures don’t capture the aggregate price picture.
Consumer Prices
The wholesale-price index climbed 0.92 percent in the week to Oct. 3 from a year earlier, the Commerce Ministry said on Oct. 15. Gains in consumer prices were far higher. The consumer price index for farm workers jumped 12.89 percent in August from a year earlier, while that for rural workers increased 12.67 percent, according to government statistics.
India will adopt a new consumer price index next year, Pronab Sen, the top official in India’s statistics ministry, said in an interview on July 17.
Sen said the only “compelling” logic for a unified consumer price index is for monetary policy purposes, as there is nothing “intrinsically wrong” with the wholesale price gauge and the four consumer price measures.
The wholesale price index provides a snapshot of producer prices while the consumer price gauges show the final cost paid by consumers.
The new consumer index, with a base year of 2007-2008, will be compiled from a sample of 2,000 villages, Sen said. He said the statistics department has subcontracted the field work to the postal department, which has put 2,400 people on the job.
Derivatives Traders May Face Position Limits Under EU Proposal
Oct. 20 (Bloomberg) -- Traders may face limits on positions they can take in the over-the-counter derivatives market, valued at $592 trillion, under a draft European Union proposal.
The European Commission will propose rules giving regulators the authority to set limits “to counter excessive price movements or excessive concentration of speculative positions,” according to a draft proposal obtained by Bloomberg News. The proposal could be released as soon as today.
The Commodity Futures Trading Commission, which oversees U.S. derivatives, has pushed for position limits under proposals for regulatory change. European and U.S. regulators are concerned that derivatives could create systemic failure in the financial system, akin to that experienced after the collapse of Lehman Brothers Holdings Inc. last year.
“This will create waves,” said the Federation of European Securities Exchanges in an e-mail. “The background to this is that there were discussions on position limits that the CFTC wanted. The Commission wants a level playing field between the U.S. and Europe.”
Oliver Drewes, spokesman for the commission in Brussels, declined to comment. The EU in July called for the use of clearinghouses for some over-the-counter derivative trades to ensure financial stability.
Rules for central counterparties, which are regulated at a national level, should be harmonized across the 27 EU-member states, the draft says. Regulators may draft ruled to “ensure that CCP participants will benefit from the lowest possible regulatory capital charge” for contracts cleared centrally.
Ambitious Targets
Derivatives are used to hedge risks or for speculation. They’re derived from stocks, bonds, loans and commodities, or linked to specific events like changes in interest rates.
The commission said in the draft document that it would set ambitious European targets and strict deadlines “for legal and process standardization.”
“That, on balance, will be positive,” Richard Portes, founder of the Centre for Economic Policy Research, said in a telephone interview. “It is the excessive complexity that has got us into this mess in the first place”.
Companies are concerned that so-called “one-size-fits- all” regulation would raise their costs of hedging risk and deny them access to customized derivative contracts. Companies use OTC derivatives to reduce the impact of commodity price volatility, such as oil, on their earnings.
The commission has started to write the derivative legislation and expects to release it by mid-2010, according to the draft.
The European Commission will propose rules giving regulators the authority to set limits “to counter excessive price movements or excessive concentration of speculative positions,” according to a draft proposal obtained by Bloomberg News. The proposal could be released as soon as today.
The Commodity Futures Trading Commission, which oversees U.S. derivatives, has pushed for position limits under proposals for regulatory change. European and U.S. regulators are concerned that derivatives could create systemic failure in the financial system, akin to that experienced after the collapse of Lehman Brothers Holdings Inc. last year.
“This will create waves,” said the Federation of European Securities Exchanges in an e-mail. “The background to this is that there were discussions on position limits that the CFTC wanted. The Commission wants a level playing field between the U.S. and Europe.”
Oliver Drewes, spokesman for the commission in Brussels, declined to comment. The EU in July called for the use of clearinghouses for some over-the-counter derivative trades to ensure financial stability.
Rules for central counterparties, which are regulated at a national level, should be harmonized across the 27 EU-member states, the draft says. Regulators may draft ruled to “ensure that CCP participants will benefit from the lowest possible regulatory capital charge” for contracts cleared centrally.
Ambitious Targets
Derivatives are used to hedge risks or for speculation. They’re derived from stocks, bonds, loans and commodities, or linked to specific events like changes in interest rates.
The commission said in the draft document that it would set ambitious European targets and strict deadlines “for legal and process standardization.”
“That, on balance, will be positive,” Richard Portes, founder of the Centre for Economic Policy Research, said in a telephone interview. “It is the excessive complexity that has got us into this mess in the first place”.
Companies are concerned that so-called “one-size-fits- all” regulation would raise their costs of hedging risk and deny them access to customized derivative contracts. Companies use OTC derivatives to reduce the impact of commodity price volatility, such as oil, on their earnings.
The commission has started to write the derivative legislation and expects to release it by mid-2010, according to the draft.
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