Feb. 6 (Bloomberg) -- National Australia Bank Ltd. and French insurer Axa SA are set to begin talks this weekend on a possible agreement to acquire and split up Axa Asia Pacific Holdings Ltd., the Sydney Morning Herald reported.
National Australia may have sent a negotiating team to Paris ahead of the expiry today of an exclusivity agreement between AMP Ltd. and Axa that prevented the French company from teaming up with a rival bidder, the newspaper reported, without saying where it got the information. National Australia declined to comment.
After increasing their share of Australia’s housing loan market throughout the global financial crisis, the nation’s banks are now snapping up asset managers in a country that dodged the global recession.
“The likeliest outcome is that National Australia’s offer will be accepted by Axa,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “It’s still not certain that regulators would accept the deal, but it’s clear that the ball is now firmly in AMP’s court.”
In December, National Australia Bank Ltd. bid A$13.3 billion ($11.5 billion) for Axa Asia Pacific, scuttling AMP Ltd.’s joint offer with Axa, and winning approval from the wealth manager’s independent directors.
Conditional Offer
The bank offered A$6.43 a share for Axa Asia Pacific, beating the A$6.22 bid by AMP and Axa, which owns 54 percent of Axa Asia Pacific. The deal is conditional on Axa’s agreement to buy Axa Asia Pacific’s units in eight Asian countries.
National Australia Bank is paying A$4.6 billion for Axa Asia Pacific operations in Australia and New Zealand, adding to assets acquired in its purchase of Aviva Plc’s local units in June. National Australia Bank’s managed assets in Australia and New Zealand would swell to A$144.3 billion if the deal is completed. Axa, France’s biggest insurer, would win full control of its business in Asia, where wealth is growing faster than in any other region.
National Australia Bank declined to comment on the speculation that talks with Axa will take place this weekend in Paris.
“We don’t comment on speculation of this nature,” said George Wright, a Melbourne-based spokesman for the lender.
Axa Asia Pacific said Feb. 3 that total funds grew 7 percent in the second half of 2009 from six months earlier amid a recovery from the financial crisis.
“We performed strongly in 2009 with growth in most of our businesses,” Chief Executive Officer Andrew Penn said in a statement. “This was against the background of a difficult year for our industry with the impact of the global financial crisis affecting investor confidence and reducing industry sales in many of the markets in which we operate.”
Friday, February 5, 2010
DBS Aims to Grow in China and India, Cut Reliance on Singapore
Feb. 6 (Bloomberg) -- DBS Group Holdings Ltd., Southeast Asia’s biggest bank, will focus on growing its operations in China and India without pursuing acquisitions as the lender seeks to reduce dependence on its Singapore home market.
DBS aims for Singapore to account for 40 percent of revenue in five years, from about two-thirds now, Chief Executive Officer Piyush Gupta said yesterday. Greater China and south and Southeast Asia would each account for 30 percent, he said.
Gupta, 50, speaking in his first media briefing since becoming CEO in November, said boosting earnings in Asia outside Singapore will be challenging. DBS yesterday posted quarterly profit that exceeded analysts’ estimates as investment-banking fees and lending income advanced.
“The strategy is largely unchanged over the last 10 years,” said Matthew Wilson, a Singapore-based analyst at Morgan Stanley. “Execution will be critical, and this will be interesting given we have essentially the same senior management team in place.” He rates DBS shares “underweight/in-line.”
DBS fell 1 percent to S$14.06 in Singapore yesterday. The stock has climbed 3.8 percent in the past 5 years, underperforming rivals United Overseas Bank Ltd. and Oversea- Chinese Banking Corp. UOB gained 30 percent in the period and OCBC rose 42 percent, according to data compiled by Bloomberg.
Fourth-quarter net income at DBS climbed 67 percent to S$493 million ($347 million), the biggest increase in quarterly profit in three years, beating the S$464 million average estimate of seven analysts surveyed by Bloomberg.
China, India
DBS plans to focus on corporate and affluent customers in China and India, Gupta said. Regulatory restrictions in those two countries make it difficult for the bank to grow through acquisitions, he said.
The Singapore-based lender has doubled Indian revenue since 2007, and grown its customer base in China more than fourfold since incorporating in the nation in 2007. Still, Singapore accounted for more than 60 percent of total income in 2009, DBS said yesterday.
“We really want to build an Asian franchise with an Asian footprint,” said Gupta. “We have enough to do in our backyard and that is where we hope to focus.”
Gupta also said he aims to expand the lender’s consumer banking operations in Taiwan and Indonesia.
In Hong Kong, where the bank bought Dao Heng Bank Group for $5.4 billion in 2001, DBS plans to invest in rebuilding its brand there to improve profitability, according to Gupta.
The bank has a market share in Hong Kong, its second- largest market after Singapore, of about between three and five percent, and operates more than 50 branches in the territory.
“Thinking through and developing a far better refined segmented strategy for our Hong Kong businesses will be a priority,” said Gupta.
DBS aims for Singapore to account for 40 percent of revenue in five years, from about two-thirds now, Chief Executive Officer Piyush Gupta said yesterday. Greater China and south and Southeast Asia would each account for 30 percent, he said.
Gupta, 50, speaking in his first media briefing since becoming CEO in November, said boosting earnings in Asia outside Singapore will be challenging. DBS yesterday posted quarterly profit that exceeded analysts’ estimates as investment-banking fees and lending income advanced.
“The strategy is largely unchanged over the last 10 years,” said Matthew Wilson, a Singapore-based analyst at Morgan Stanley. “Execution will be critical, and this will be interesting given we have essentially the same senior management team in place.” He rates DBS shares “underweight/in-line.”
DBS fell 1 percent to S$14.06 in Singapore yesterday. The stock has climbed 3.8 percent in the past 5 years, underperforming rivals United Overseas Bank Ltd. and Oversea- Chinese Banking Corp. UOB gained 30 percent in the period and OCBC rose 42 percent, according to data compiled by Bloomberg.
Fourth-quarter net income at DBS climbed 67 percent to S$493 million ($347 million), the biggest increase in quarterly profit in three years, beating the S$464 million average estimate of seven analysts surveyed by Bloomberg.
China, India
DBS plans to focus on corporate and affluent customers in China and India, Gupta said. Regulatory restrictions in those two countries make it difficult for the bank to grow through acquisitions, he said.
The Singapore-based lender has doubled Indian revenue since 2007, and grown its customer base in China more than fourfold since incorporating in the nation in 2007. Still, Singapore accounted for more than 60 percent of total income in 2009, DBS said yesterday.
“We really want to build an Asian franchise with an Asian footprint,” said Gupta. “We have enough to do in our backyard and that is where we hope to focus.”
Gupta also said he aims to expand the lender’s consumer banking operations in Taiwan and Indonesia.
In Hong Kong, where the bank bought Dao Heng Bank Group for $5.4 billion in 2001, DBS plans to invest in rebuilding its brand there to improve profitability, according to Gupta.
The bank has a market share in Hong Kong, its second- largest market after Singapore, of about between three and five percent, and operates more than 50 branches in the territory.
“Thinking through and developing a far better refined segmented strategy for our Hong Kong businesses will be a priority,” said Gupta.
Thursday, February 4, 2010
RBA Says Economy to Accelerate Even as Rates Increase
Feb. 5 (Bloomberg) -- Australia’s central bank said economic growth will continue to accelerate this year even if policy makers are forced to raise the benchmark interest rate by another three-quarters of a percentage point.
The Sydney-based bank said today the economy will be growing at an annual pace of 3.25 percent in the three months through December, up from 2 percent last quarter. Officials based their prediction on an assumed increase in the overnight cash rate target to 4.5 percent at the end of 2010 from 3.75 percent.
Reserve Bank Governor Glenn Stevens unexpectedly kept borrowing costs unchanged this week for the first meeting in four, saying information about the impact of the bank’s record three increases last quarter “is still limited.” Core inflation is forecast to cool this year to an annual pace of 2.5 percent from 3.25 percent, before accelerating to 2.75 percent in 2011.
While interest rates are “no longer at exceptionally low levels,” it is “likely” that borrowing costs will be increased further over time to ensure inflation stays within Stevens’s target range of between 2 percent and 3 percent, the bank said in its quarterly monetary policy statement.
The Australian dollar traded at 86.73 U.S. cents at 11:42 a.m. in Sydney from 86.90 cents before the statement was released.
Global Rates
Stevens became the first central banker in the world to raise borrowing costs three times last year after Australia’s economy skirted the global recession, helped by A$20 billion ($17 billion) in cash handouts to consumers from Prime Minister Kevin Rudd and another A$22 billion in spending on roads, railways and schools.
By contrast, officials in the U.S., the U.K. and Europe have kept their benchmark lending rates at historic lows, partly on concern that recoveries in their economies will be hampered by high unemployment and weak consumer sentiment.
Australia’s economy will expand 2.5 percent in the June quarter of 2010 from a year earlier, and 3.5 percent in the year through June 30, 2011. Three months ago, the bank predicted growth rates of 2.25 percent and 3.25 percent respectively.
The bank said those forecasts are based on the “technical assumption” of an increase in the cash rate, “with the assumed path broadly consistent with market expectations as the statement was finalized.”
Rate Expectations
Money market yields continue to reflect expectations for “further tightening, though at a slightly slower pace” than anticipated three months ago. “The cash rate is expected to reach around 4.5 percent by the end of the year,” today’s statement said.
Traders are betting there is only a 20 percent chance of a quarter-point increase in the overnight cash rate target when policy makers meet on March 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 9:01 a.m.
Today’s forecasts “represent a modest upward revision” to figures released in November, “with recent data suggesting that the economy starts the current upswing in activity with somewhat less spare capacity than earlier thought likely,” today’s statement said.
“It now looks likely that the unemployment rate has peaked at around 5.75 percent, a much better outcome than thought likely early last year.”
Jobless Rate
Australia’s unemployment rate dropped in December to an eight-month low of 5.5 percent after employers added 135,700 jobs between September and the end of 2009, the biggest four- month surge in hiring in more than three years.
Increased demand for workers is being stoked by a surge in investment by companies such as Chevron Corp., which is expanding its Gorgon liquefied natural gas venture in Western Australia to meeting rising demand from Asia for energy.
“Mining investment is expected to increase further from its already very high level,” today’s statement said. Exports of resources will “grow strongly, reflecting capacity increases resulting from the high level of mining investment over recent years.
‘‘However, growth outside of the mining sector is expected to be only modest, reflecting the reallocation of productive resources within the economy.’’
This is partly due to the surge in Australia’s currency, ‘‘which has reduced the international competitiveness of import- competing and exporting sectors, including the manufacturing and tourism sectors,’’ the bank said.
Household Spending
While increased hiring and an annual 13.6 percent surge in house prices last quarter have helped stoke consumer confidence, which jumped in January by the most in six months, ‘‘households are still taking a more cautious approach to their spending than was the case a few years ago,’’ today’s statement said.
One risk to today’s forecasts is whether the nation’s recent economic performance was prompted by a ‘‘bring-forward” of spending by consumers and businesses amid last year’s earlier interest-rate cuts and government spending.
“If so, underlying growth would be soft into 2010 as the effects of the temporary stimulus fade,” the bank said. This may be offset by “the improvement in the outlook in the resources sector” which is “clearly not due to temporary policy factors.”
The Sydney-based bank said today the economy will be growing at an annual pace of 3.25 percent in the three months through December, up from 2 percent last quarter. Officials based their prediction on an assumed increase in the overnight cash rate target to 4.5 percent at the end of 2010 from 3.75 percent.
Reserve Bank Governor Glenn Stevens unexpectedly kept borrowing costs unchanged this week for the first meeting in four, saying information about the impact of the bank’s record three increases last quarter “is still limited.” Core inflation is forecast to cool this year to an annual pace of 2.5 percent from 3.25 percent, before accelerating to 2.75 percent in 2011.
While interest rates are “no longer at exceptionally low levels,” it is “likely” that borrowing costs will be increased further over time to ensure inflation stays within Stevens’s target range of between 2 percent and 3 percent, the bank said in its quarterly monetary policy statement.
The Australian dollar traded at 86.73 U.S. cents at 11:42 a.m. in Sydney from 86.90 cents before the statement was released.
Global Rates
Stevens became the first central banker in the world to raise borrowing costs three times last year after Australia’s economy skirted the global recession, helped by A$20 billion ($17 billion) in cash handouts to consumers from Prime Minister Kevin Rudd and another A$22 billion in spending on roads, railways and schools.
By contrast, officials in the U.S., the U.K. and Europe have kept their benchmark lending rates at historic lows, partly on concern that recoveries in their economies will be hampered by high unemployment and weak consumer sentiment.
Australia’s economy will expand 2.5 percent in the June quarter of 2010 from a year earlier, and 3.5 percent in the year through June 30, 2011. Three months ago, the bank predicted growth rates of 2.25 percent and 3.25 percent respectively.
The bank said those forecasts are based on the “technical assumption” of an increase in the cash rate, “with the assumed path broadly consistent with market expectations as the statement was finalized.”
Rate Expectations
Money market yields continue to reflect expectations for “further tightening, though at a slightly slower pace” than anticipated three months ago. “The cash rate is expected to reach around 4.5 percent by the end of the year,” today’s statement said.
Traders are betting there is only a 20 percent chance of a quarter-point increase in the overnight cash rate target when policy makers meet on March 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 9:01 a.m.
Today’s forecasts “represent a modest upward revision” to figures released in November, “with recent data suggesting that the economy starts the current upswing in activity with somewhat less spare capacity than earlier thought likely,” today’s statement said.
“It now looks likely that the unemployment rate has peaked at around 5.75 percent, a much better outcome than thought likely early last year.”
Jobless Rate
Australia’s unemployment rate dropped in December to an eight-month low of 5.5 percent after employers added 135,700 jobs between September and the end of 2009, the biggest four- month surge in hiring in more than three years.
Increased demand for workers is being stoked by a surge in investment by companies such as Chevron Corp., which is expanding its Gorgon liquefied natural gas venture in Western Australia to meeting rising demand from Asia for energy.
“Mining investment is expected to increase further from its already very high level,” today’s statement said. Exports of resources will “grow strongly, reflecting capacity increases resulting from the high level of mining investment over recent years.
‘‘However, growth outside of the mining sector is expected to be only modest, reflecting the reallocation of productive resources within the economy.’’
This is partly due to the surge in Australia’s currency, ‘‘which has reduced the international competitiveness of import- competing and exporting sectors, including the manufacturing and tourism sectors,’’ the bank said.
Household Spending
While increased hiring and an annual 13.6 percent surge in house prices last quarter have helped stoke consumer confidence, which jumped in January by the most in six months, ‘‘households are still taking a more cautious approach to their spending than was the case a few years ago,’’ today’s statement said.
One risk to today’s forecasts is whether the nation’s recent economic performance was prompted by a ‘‘bring-forward” of spending by consumers and businesses amid last year’s earlier interest-rate cuts and government spending.
“If so, underlying growth would be soft into 2010 as the effects of the temporary stimulus fade,” the bank said. This may be offset by “the improvement in the outlook in the resources sector” which is “clearly not due to temporary policy factors.”
IMF Says India Can Raise Rates Gradually as ‘Conditions Ripe’
Feb. 5 (Bloomberg) -- India can gradually start raising interest rates as Asia’s third-largest economy is among the first to recover after the global financial crisis, the International Monetary Fund said.
“The conditions are ripe for a progressive normalization of the monetary stance,” the IMF said in a report on its Web site yesterday. “India’s economy is one of the first in the world to recover” and the central bank should take “a gradual approach to ensure the recovery reaches its full potential.”
The steepest interest-rate cuts in eight years between October 2008 and April 2009 and stimulus worth 12 percent of gross domestic product helped the $1.2 trillion economy weather last year’s global recession. Central bank Governor Duvvuri Subbarao on Jan. 29 told lenders to set aside more cash as reserves, signaling tighter credit, as growth accelerated and inflation raced to a 13-month high.
The IMF forecasts India’s GDP will increase 8 percent in the year starting April 1, from 6.75 percent, and cautioned a widening budget deficit “could put breaks on the recovery.” Fitch Ratings this week said it would be “encouraged” to downgrade should there be any further slippage in targets and maintained India’s foreign- and local-currency rating at BBB-, its lowest investment grade.
Rising Demand
India’s economy expanded 7.9 percent in the three months to Sept. 30, the fastest pace in 18 months and in line with China among the major emerging economies. Finance Minister Pranab Mukherjee in December forecast growth of about 8 percent for the current financial year.
“As growth picks up and becomes more broad-based, we do believe that it’s time to unwind” fiscal stimulus measures, Kalpana Kochhar, a Washington-based deputy director at the IMF, said in a conference call yesterday.
Recent data indicate that demand is gaining traction as companies including Bajaj Auto Ltd., the nation’s second-largest motorcycle maker, and Tata Motors Ltd., the country’s biggest maker of trucks and buses, reported sales growth of more than 70 percent in January.
India’s manufacturing output as measured by an index compiled by HSBC Holdings Plc and Markit Economics’ rose to 57.6 last month, the highest in 17 months and overseas sales of goods rose for the second straight month after a yearlong decline.
“Prompt fiscal and monetary easing, combined with the fiscal stimulus already in the pipeline and the return of risk appetite in financial markets, have brought growth close to pre- crisis-level,” the fund said in the report.
Bright Prospects
India’s medium-term growth prospects remain bright, mainly reliant on domestic drivers, the IMF said. “India’s rapid recovery has brought fiscal and monetary policy trade-offs to a head earlier than in other countries,” it said.
The Reserve Bank of India on Jan. 29 raised the cash reserve ratio, the proportion of deposits banks are required to set aside as reserves, by 0.75 percentage points to 5.75 and said the recent data confirms “the assessment that the economy is steadily gaining momentum.”
“Given the long transmission lags and the low policy rates,” the Reserve Bank should adopt a “timely start of the withdrawal of monetary stimulus, which would help anchor inflation expectations and soften the impact on long-term interest rates,” the IMF said.
Food inflation accelerated for a second week to a near 11- year high. An index measuring wholesale prices of lentils, rice, vegetables and other food articles compiled by the commerce ministry increased 17.56 percent in the week to Jan. 23 from a year earlier, a separate government report showed yesterday.
The rupee can be used “with caution” as a tool to stem inflation, the IMF said.
“We believe that the economy is in a fast recovery mode and that the RBI will need to start lifting policy rates toward normalized levels,” as inflation surges, said Chetan Ahya, a Singapore-based economist at Morgan Stanley, which yesterday revised its economic growth estimate for the year starting April 1 to 8.5 percent from an earlier forecast of 8 percent.
“The conditions are ripe for a progressive normalization of the monetary stance,” the IMF said in a report on its Web site yesterday. “India’s economy is one of the first in the world to recover” and the central bank should take “a gradual approach to ensure the recovery reaches its full potential.”
The steepest interest-rate cuts in eight years between October 2008 and April 2009 and stimulus worth 12 percent of gross domestic product helped the $1.2 trillion economy weather last year’s global recession. Central bank Governor Duvvuri Subbarao on Jan. 29 told lenders to set aside more cash as reserves, signaling tighter credit, as growth accelerated and inflation raced to a 13-month high.
The IMF forecasts India’s GDP will increase 8 percent in the year starting April 1, from 6.75 percent, and cautioned a widening budget deficit “could put breaks on the recovery.” Fitch Ratings this week said it would be “encouraged” to downgrade should there be any further slippage in targets and maintained India’s foreign- and local-currency rating at BBB-, its lowest investment grade.
Rising Demand
India’s economy expanded 7.9 percent in the three months to Sept. 30, the fastest pace in 18 months and in line with China among the major emerging economies. Finance Minister Pranab Mukherjee in December forecast growth of about 8 percent for the current financial year.
“As growth picks up and becomes more broad-based, we do believe that it’s time to unwind” fiscal stimulus measures, Kalpana Kochhar, a Washington-based deputy director at the IMF, said in a conference call yesterday.
Recent data indicate that demand is gaining traction as companies including Bajaj Auto Ltd., the nation’s second-largest motorcycle maker, and Tata Motors Ltd., the country’s biggest maker of trucks and buses, reported sales growth of more than 70 percent in January.
India’s manufacturing output as measured by an index compiled by HSBC Holdings Plc and Markit Economics’ rose to 57.6 last month, the highest in 17 months and overseas sales of goods rose for the second straight month after a yearlong decline.
“Prompt fiscal and monetary easing, combined with the fiscal stimulus already in the pipeline and the return of risk appetite in financial markets, have brought growth close to pre- crisis-level,” the fund said in the report.
Bright Prospects
India’s medium-term growth prospects remain bright, mainly reliant on domestic drivers, the IMF said. “India’s rapid recovery has brought fiscal and monetary policy trade-offs to a head earlier than in other countries,” it said.
The Reserve Bank of India on Jan. 29 raised the cash reserve ratio, the proportion of deposits banks are required to set aside as reserves, by 0.75 percentage points to 5.75 and said the recent data confirms “the assessment that the economy is steadily gaining momentum.”
“Given the long transmission lags and the low policy rates,” the Reserve Bank should adopt a “timely start of the withdrawal of monetary stimulus, which would help anchor inflation expectations and soften the impact on long-term interest rates,” the IMF said.
Food inflation accelerated for a second week to a near 11- year high. An index measuring wholesale prices of lentils, rice, vegetables and other food articles compiled by the commerce ministry increased 17.56 percent in the week to Jan. 23 from a year earlier, a separate government report showed yesterday.
The rupee can be used “with caution” as a tool to stem inflation, the IMF said.
“We believe that the economy is in a fast recovery mode and that the RBI will need to start lifting policy rates toward normalized levels,” as inflation surges, said Chetan Ahya, a Singapore-based economist at Morgan Stanley, which yesterday revised its economic growth estimate for the year starting April 1 to 8.5 percent from an earlier forecast of 8 percent.
Wednesday, February 3, 2010
Asian Stocks Decline on Australian Retail Sales, Commodities
Feb. 4 (Bloomberg) -- Asian stocks dropped, dragging the MSCI Asia Pacific Index lower for the first time in three days, after Australian retail sales unexpectedly fell in December and commodity prices declined.
BHP Billiton Ltd., Australia’s biggest oil producer and the world’s biggest mining company, dropped 1.5 percent in Sydney after oil and metal prices declined. CSR Ltd., Australia’s second-largest building-products maker, tumbled 6 percent after the Federal Court of Australia blocked its plan to separate its sugar business. Honda Motor Co. rose 2.7 percent in Tokyo after boosting its profit forecast.
The MSCI Asia Pacific Index lost 0.4 percent to 118.06 as of 9:52 a.m. in Tokyo, snapping a two-day, 1.9 percent gain. The gauge sank 3 percent last month, the most since February last year, on concern central banks from China to India will tighten monetary policy to curb inflation.
Japan’s Nikkei 225 Stock Average dropped 0.3 percent to 10,370.65. Australia’s S&P/ASX 200 Index declined 0.9 percent as a government report showed the country’s retail sales fell in December for the first time in five months. A Bloomberg economist survey had projected an increase. South Korea’s Kospi advanced 0.1 percent.
Futures on the U.S. Standard & Poor’s 500 Index were little changed. The gauge sank 0.6 percent yesterday as a gauge of the country’s service industries expanded less than forecast and Pfizer Inc.’s profit trailed estimates.
The MSCI Asia Pacific Index climbed 34 percent last year, outpacing gains of 23 percent by the Standard & Poor’s 500 Index in the U.S. and 28 percent for Europe’s Dow Jones Stoxx 600 Index. Companies in the MSCI index trade at 18.9 times estimated earnings, compared with 14.1 times for the S&P 500 and 12.5 times for the Stoxx 600.
BHP Billiton Ltd., Australia’s biggest oil producer and the world’s biggest mining company, dropped 1.5 percent in Sydney after oil and metal prices declined. CSR Ltd., Australia’s second-largest building-products maker, tumbled 6 percent after the Federal Court of Australia blocked its plan to separate its sugar business. Honda Motor Co. rose 2.7 percent in Tokyo after boosting its profit forecast.
The MSCI Asia Pacific Index lost 0.4 percent to 118.06 as of 9:52 a.m. in Tokyo, snapping a two-day, 1.9 percent gain. The gauge sank 3 percent last month, the most since February last year, on concern central banks from China to India will tighten monetary policy to curb inflation.
Japan’s Nikkei 225 Stock Average dropped 0.3 percent to 10,370.65. Australia’s S&P/ASX 200 Index declined 0.9 percent as a government report showed the country’s retail sales fell in December for the first time in five months. A Bloomberg economist survey had projected an increase. South Korea’s Kospi advanced 0.1 percent.
Futures on the U.S. Standard & Poor’s 500 Index were little changed. The gauge sank 0.6 percent yesterday as a gauge of the country’s service industries expanded less than forecast and Pfizer Inc.’s profit trailed estimates.
The MSCI Asia Pacific Index climbed 34 percent last year, outpacing gains of 23 percent by the Standard & Poor’s 500 Index in the U.S. and 28 percent for Europe’s Dow Jones Stoxx 600 Index. Companies in the MSCI index trade at 18.9 times estimated earnings, compared with 14.1 times for the S&P 500 and 12.5 times for the Stoxx 600.
New Zealand Jobless Rate Rises to 10-Year-High 7.3%
Feb. 4 (Bloomberg) -- New Zealand’s unemployment soared to the highest level in more than 10 years as a surge of immigrants failed to find jobs. The currency fell as traders bet the central bank will have to delay a planned mid-year rate increase.
The jobless rate rose to 7.3 percent in the fourth quarter from 6.5 percent in the previous three months, Statistics New Zealand said in Wellington today. The median of 10 estimates in a Bloomberg News survey was for 6.8 percent.
Unemployment now exceeds the peak forecast by both Finance Minister Bill English and Reserve Bank Governor Alan Bollard as the economy battles to emerge from its worst recession in three decades. The currency dropped to the lowest in more than four months as investors bet Bollard may keep the official cash rate at a record-low of 2.5 percent until the second half of the year.
“The weakness in today’s data raises the real possibility that the Reserve Bank waits beyond June to begin hiking,” said Philip Borkin, an economist at Goldman Sachs JBWere Ltd. in Auckland.
Bollard said last week he expected to raise borrowing costs “around the middle of 2010.”
New Zealand’s dollar fell to 69.82 U.S. cents at 12:05 p.m. in Wellington from 70.61 cents immediately before the release. The currency is its lowest since Sep. 14.
Exporters Struggle
Exporters such as Cedenco Foods Ltd. and Winstone Pulp International Ltd. closed plants last year, citing increasing costs and the affect of the rising currency on returns. In July, Cedenco said it would shut a vegetable processing plant in Gisborne at a cost of 125 jobs. In October, Winstone said it couldn’t keep a South Island lumber mill open, leaving 110 workers out of jobs.
New Zealand’s immigration growth in 2009 was the highest in more than five years, Statistics New Zealand said in a second report today. The surge in net immigration has been boosted by fewer New Zealanders heading abroad. About 41,600 citizens left last year, the lowest calendar year tally since 2003.
The Reserve Bank on Dec. 10 forecast a peak jobless rate of 6.7 percent in the second quarter. Bollard said last week he didn’t expect to raise the benchmark interest rate until the middle of 2010 because business spending remained weak.
English, who expected the jobless rate would rise to about 7 percent, said this week any subsequent decline may be gradual because companies will give existing employees more hours rather than hire extra workers.
Hours Reduced
Total actual hours worked per week declined for a sixth quarter, dropping 0.4 percent to the lowest level in more than five years, today’s report showed.
Companies such as Fisher & Paykel Appliances Holdings Ltd., the nation’s largest maker of refrigerators and washing machines, last year took advantage of government subsidies to work a nine- day fortnight and save about 60 jobs.
The jobless rate has risen from 5 percent in the first quarter last year, which signaled the end of the nation’s worst recession in three decades.
“As most economists will tell you, employment almost always lags behind economic growth, but we’re not out of the woods yet,” Employment Minister Paula Bennett said in an e- mailed statement.
Companies are optimistic about the economy’s recovery in the next six months, although most expect profits will fall in the first quarter, according to a New Zealand Institute of Economic Research Inc. survey published last month.
The number of firms expecting to hire workers in the first quarter barely exceeded the number planning to reduce staff, the Wellington-based institute said.
Growth Forecast
The Reserve Bank expects the economy will grow 3.1 percent this year after contracting 1.4 percent in 2009. Employment may increase about 0.6 percent this year, it said.
Employment declined 0.1 percent or about 2,000 jobs in the fourth quarter, matching economists’ median expectation, today’s report showed. Employment shrank 2.4 percent from a year earlier.
The number of people out of work rose 18,000 from the third quarter to a 16-year high of 168,000. About 2.3 million of New Zealand’s 4.4 million people are in the workforce.
The surge in unemployment reflects more people looking for jobs but unable to find them, the statistics agency said.
The participation rate, which measures the proportion of the working age population employed or seeking employment, rose to 68.1 percent from 68 percent in the third quarter, matching analysts’ median expectation.
Full-time employment fell by 6,000 jobs, or 0.3 percent, in the fourth quarter after seasonal adjustment. Part-time employment was unchanged. Statistics New Zealand adjusts the full-time and part-time employment figures separately, which means they may not add up to the total change in employment.
The rising unemployment rate removes pressure on employers to pay higher wages and eases inflation. Wages for non- government workers rose 1.5 percent in the fourth quarter from a year earlier, the slowest pace in nine years, the statistics agency said this week.
The jobless rate rose to 7.3 percent in the fourth quarter from 6.5 percent in the previous three months, Statistics New Zealand said in Wellington today. The median of 10 estimates in a Bloomberg News survey was for 6.8 percent.
Unemployment now exceeds the peak forecast by both Finance Minister Bill English and Reserve Bank Governor Alan Bollard as the economy battles to emerge from its worst recession in three decades. The currency dropped to the lowest in more than four months as investors bet Bollard may keep the official cash rate at a record-low of 2.5 percent until the second half of the year.
“The weakness in today’s data raises the real possibility that the Reserve Bank waits beyond June to begin hiking,” said Philip Borkin, an economist at Goldman Sachs JBWere Ltd. in Auckland.
Bollard said last week he expected to raise borrowing costs “around the middle of 2010.”
New Zealand’s dollar fell to 69.82 U.S. cents at 12:05 p.m. in Wellington from 70.61 cents immediately before the release. The currency is its lowest since Sep. 14.
Exporters Struggle
Exporters such as Cedenco Foods Ltd. and Winstone Pulp International Ltd. closed plants last year, citing increasing costs and the affect of the rising currency on returns. In July, Cedenco said it would shut a vegetable processing plant in Gisborne at a cost of 125 jobs. In October, Winstone said it couldn’t keep a South Island lumber mill open, leaving 110 workers out of jobs.
New Zealand’s immigration growth in 2009 was the highest in more than five years, Statistics New Zealand said in a second report today. The surge in net immigration has been boosted by fewer New Zealanders heading abroad. About 41,600 citizens left last year, the lowest calendar year tally since 2003.
The Reserve Bank on Dec. 10 forecast a peak jobless rate of 6.7 percent in the second quarter. Bollard said last week he didn’t expect to raise the benchmark interest rate until the middle of 2010 because business spending remained weak.
English, who expected the jobless rate would rise to about 7 percent, said this week any subsequent decline may be gradual because companies will give existing employees more hours rather than hire extra workers.
Hours Reduced
Total actual hours worked per week declined for a sixth quarter, dropping 0.4 percent to the lowest level in more than five years, today’s report showed.
Companies such as Fisher & Paykel Appliances Holdings Ltd., the nation’s largest maker of refrigerators and washing machines, last year took advantage of government subsidies to work a nine- day fortnight and save about 60 jobs.
The jobless rate has risen from 5 percent in the first quarter last year, which signaled the end of the nation’s worst recession in three decades.
“As most economists will tell you, employment almost always lags behind economic growth, but we’re not out of the woods yet,” Employment Minister Paula Bennett said in an e- mailed statement.
Companies are optimistic about the economy’s recovery in the next six months, although most expect profits will fall in the first quarter, according to a New Zealand Institute of Economic Research Inc. survey published last month.
The number of firms expecting to hire workers in the first quarter barely exceeded the number planning to reduce staff, the Wellington-based institute said.
Growth Forecast
The Reserve Bank expects the economy will grow 3.1 percent this year after contracting 1.4 percent in 2009. Employment may increase about 0.6 percent this year, it said.
Employment declined 0.1 percent or about 2,000 jobs in the fourth quarter, matching economists’ median expectation, today’s report showed. Employment shrank 2.4 percent from a year earlier.
The number of people out of work rose 18,000 from the third quarter to a 16-year high of 168,000. About 2.3 million of New Zealand’s 4.4 million people are in the workforce.
The surge in unemployment reflects more people looking for jobs but unable to find them, the statistics agency said.
The participation rate, which measures the proportion of the working age population employed or seeking employment, rose to 68.1 percent from 68 percent in the third quarter, matching analysts’ median expectation.
Full-time employment fell by 6,000 jobs, or 0.3 percent, in the fourth quarter after seasonal adjustment. Part-time employment was unchanged. Statistics New Zealand adjusts the full-time and part-time employment figures separately, which means they may not add up to the total change in employment.
The rising unemployment rate removes pressure on employers to pay higher wages and eases inflation. Wages for non- government workers rose 1.5 percent in the fourth quarter from a year earlier, the slowest pace in nine years, the statistics agency said this week.
New Zealand Jobless Rate Rises to 10-Year-High 7.3%
Feb. 4 (Bloomberg) -- New Zealand’s unemployment soared to the highest level in more than 10 years as a surge of immigrants failed to find jobs. The currency fell as traders bet the central bank will have to delay a planned mid-year rate increase.
The jobless rate rose to 7.3 percent in the fourth quarter from 6.5 percent in the previous three months, Statistics New Zealand said in Wellington today. The median of 10 estimates in a Bloomberg News survey was for 6.8 percent.
Unemployment now exceeds the peak forecast by both Finance Minister Bill English and Reserve Bank Governor Alan Bollard as the economy battles to emerge from its worst recession in three decades. The currency dropped to the lowest in more than four months as investors bet Bollard may keep the official cash rate at a record-low of 2.5 percent until the second half of the year.
“The weakness in today’s data raises the real possibility that the Reserve Bank waits beyond June to begin hiking,” said Philip Borkin, an economist at Goldman Sachs JBWere Ltd. in Auckland.
Bollard said last week he expected to raise borrowing costs “around the middle of 2010.”
New Zealand’s dollar fell to 69.82 U.S. cents at 12:05 p.m. in Wellington from 70.61 cents immediately before the release. The currency is its lowest since Sep. 14.
Exporters Struggle
Exporters such as Cedenco Foods Ltd. and Winstone Pulp International Ltd. closed plants last year, citing increasing costs and the affect of the rising currency on returns. In July, Cedenco said it would shut a vegetable processing plant in Gisborne at a cost of 125 jobs. In October, Winstone said it couldn’t keep a South Island lumber mill open, leaving 110 workers out of jobs.
New Zealand’s immigration growth in 2009 was the highest in more than five years, Statistics New Zealand said in a second report today. The surge in net immigration has been boosted by fewer New Zealanders heading abroad. About 41,600 citizens left last year, the lowest calendar year tally since 2003.
The Reserve Bank on Dec. 10 forecast a peak jobless rate of 6.7 percent in the second quarter. Bollard said last week he didn’t expect to raise the benchmark interest rate until the middle of 2010 because business spending remained weak.
English, who expected the jobless rate would rise to about 7 percent, said this week any subsequent decline may be gradual because companies will give existing employees more hours rather than hire extra workers.
Hours Reduced
Total actual hours worked per week declined for a sixth quarter, dropping 0.4 percent to the lowest level in more than five years, today’s report showed.
Companies such as Fisher & Paykel Appliances Holdings Ltd., the nation’s largest maker of refrigerators and washing machines, last year took advantage of government subsidies to work a nine- day fortnight and save about 60 jobs.
The jobless rate has risen from 5 percent in the first quarter last year, which signaled the end of the nation’s worst recession in three decades.
“As most economists will tell you, employment almost always lags behind economic growth, but we’re not out of the woods yet,” Employment Minister Paula Bennett said in an e- mailed statement.
Companies are optimistic about the economy’s recovery in the next six months, although most expect profits will fall in the first quarter, according to a New Zealand Institute of Economic Research Inc. survey published last month.
The number of firms expecting to hire workers in the first quarter barely exceeded the number planning to reduce staff, the Wellington-based institute said.
Growth Forecast
The Reserve Bank expects the economy will grow 3.1 percent this year after contracting 1.4 percent in 2009. Employment may increase about 0.6 percent this year, it said.
Employment declined 0.1 percent or about 2,000 jobs in the fourth quarter, matching economists’ median expectation, today’s report showed. Employment shrank 2.4 percent from a year earlier.
The number of people out of work rose 18,000 from the third quarter to a 16-year high of 168,000. About 2.3 million of New Zealand’s 4.4 million people are in the workforce.
The surge in unemployment reflects more people looking for jobs but unable to find them, the statistics agency said.
The participation rate, which measures the proportion of the working age population employed or seeking employment, rose to 68.1 percent from 68 percent in the third quarter, matching analysts’ median expectation.
Full-time employment fell by 6,000 jobs, or 0.3 percent, in the fourth quarter after seasonal adjustment. Part-time employment was unchanged. Statistics New Zealand adjusts the full-time and part-time employment figures separately, which means they may not add up to the total change in employment.
The rising unemployment rate removes pressure on employers to pay higher wages and eases inflation. Wages for non- government workers rose 1.5 percent in the fourth quarter from a year earlier, the slowest pace in nine years, the statistics agency said this week.
The jobless rate rose to 7.3 percent in the fourth quarter from 6.5 percent in the previous three months, Statistics New Zealand said in Wellington today. The median of 10 estimates in a Bloomberg News survey was for 6.8 percent.
Unemployment now exceeds the peak forecast by both Finance Minister Bill English and Reserve Bank Governor Alan Bollard as the economy battles to emerge from its worst recession in three decades. The currency dropped to the lowest in more than four months as investors bet Bollard may keep the official cash rate at a record-low of 2.5 percent until the second half of the year.
“The weakness in today’s data raises the real possibility that the Reserve Bank waits beyond June to begin hiking,” said Philip Borkin, an economist at Goldman Sachs JBWere Ltd. in Auckland.
Bollard said last week he expected to raise borrowing costs “around the middle of 2010.”
New Zealand’s dollar fell to 69.82 U.S. cents at 12:05 p.m. in Wellington from 70.61 cents immediately before the release. The currency is its lowest since Sep. 14.
Exporters Struggle
Exporters such as Cedenco Foods Ltd. and Winstone Pulp International Ltd. closed plants last year, citing increasing costs and the affect of the rising currency on returns. In July, Cedenco said it would shut a vegetable processing plant in Gisborne at a cost of 125 jobs. In October, Winstone said it couldn’t keep a South Island lumber mill open, leaving 110 workers out of jobs.
New Zealand’s immigration growth in 2009 was the highest in more than five years, Statistics New Zealand said in a second report today. The surge in net immigration has been boosted by fewer New Zealanders heading abroad. About 41,600 citizens left last year, the lowest calendar year tally since 2003.
The Reserve Bank on Dec. 10 forecast a peak jobless rate of 6.7 percent in the second quarter. Bollard said last week he didn’t expect to raise the benchmark interest rate until the middle of 2010 because business spending remained weak.
English, who expected the jobless rate would rise to about 7 percent, said this week any subsequent decline may be gradual because companies will give existing employees more hours rather than hire extra workers.
Hours Reduced
Total actual hours worked per week declined for a sixth quarter, dropping 0.4 percent to the lowest level in more than five years, today’s report showed.
Companies such as Fisher & Paykel Appliances Holdings Ltd., the nation’s largest maker of refrigerators and washing machines, last year took advantage of government subsidies to work a nine- day fortnight and save about 60 jobs.
The jobless rate has risen from 5 percent in the first quarter last year, which signaled the end of the nation’s worst recession in three decades.
“As most economists will tell you, employment almost always lags behind economic growth, but we’re not out of the woods yet,” Employment Minister Paula Bennett said in an e- mailed statement.
Companies are optimistic about the economy’s recovery in the next six months, although most expect profits will fall in the first quarter, according to a New Zealand Institute of Economic Research Inc. survey published last month.
The number of firms expecting to hire workers in the first quarter barely exceeded the number planning to reduce staff, the Wellington-based institute said.
Growth Forecast
The Reserve Bank expects the economy will grow 3.1 percent this year after contracting 1.4 percent in 2009. Employment may increase about 0.6 percent this year, it said.
Employment declined 0.1 percent or about 2,000 jobs in the fourth quarter, matching economists’ median expectation, today’s report showed. Employment shrank 2.4 percent from a year earlier.
The number of people out of work rose 18,000 from the third quarter to a 16-year high of 168,000. About 2.3 million of New Zealand’s 4.4 million people are in the workforce.
The surge in unemployment reflects more people looking for jobs but unable to find them, the statistics agency said.
The participation rate, which measures the proportion of the working age population employed or seeking employment, rose to 68.1 percent from 68 percent in the third quarter, matching analysts’ median expectation.
Full-time employment fell by 6,000 jobs, or 0.3 percent, in the fourth quarter after seasonal adjustment. Part-time employment was unchanged. Statistics New Zealand adjusts the full-time and part-time employment figures separately, which means they may not add up to the total change in employment.
The rising unemployment rate removes pressure on employers to pay higher wages and eases inflation. Wages for non- government workers rose 1.5 percent in the fourth quarter from a year earlier, the slowest pace in nine years, the statistics agency said this week.
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