By Jeanette Rodrigues - Dec 30, 2011 7:05 PM GMT+0530
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India increased its record borrowing program for the year by 8.5 percent to narrow a budget shortfall as a slowing economy damps tax collections.
Prime Minister Manmohan Singh’s government will sell an additional 400 billion rupees ($7.5 billion) of bonds in the year ending March 31 raising an unprecedented total of 5.1 trillion rupees, the central bank said in a statement today.
Indian 10-year benchmark bond yields (GIND10YR) have jumped the most in Asia after Vietnam, as the government sold more debt to meet its target of keeping the budget gap to 4.6 percent of gross domestic product. The rate on the 8.79 percent note due November 2021 climbed two basis points today and 20 this week to 8.57 percent, according to the central bank’s trading system.
“The market is already burdened by supplies,” Debendra Kumar Dash, a fixed-income trader at Development Credit Bank Ltd. (DEVB) in Mumbai. “However this increase was expected, and so while we could see yields rising in early trades on Monday, they will settle down soon.”
The 10-year bond yield could rise as high as 8.70 percent, according to Development Credit Bank and IDBI Bank Ltd. (IDBI) following the increase in the bond-sale plan.
The Reserve Bank of India (RBI) has said the government must rein in borrowings to help check price gains and boost economic growth. The $1.7 trillion economy may miss the central bank’s growth estimate of 7.6 percent for the 12 months ending March 31, Governor Duvvuri Subbarao said Dec. 22.
The government increased its borrowing plan by 528.7 billion rupees in September.
Wider Spread
The nation’s indirect tax revenue rose 16.9 percent in the eight months through November from a year earlier, S.K. Goel, chairman of the Central Board of Excise and Customs, said Dec. 9. That compares with a target for a 17.3 percent increase this fiscal year.
The extra yield (GIND10YR) sought on the notes over similar maturity U.S. Treasuries surged 205 basis points in 2011 to 667 basis points. The spread reached a 12-year high of 697 basis points in November.
Rupee-denominated notes returned 5.9 percent this year compared with the region’s best performance of 22 percent for Indonesian securities, HSBC Holdings Plc indexes show. Overseas investors raised holdings (FIINDEBT) of Indian debt by $8.5 billion this year to a record $26.3 billion on Dec. 23, exchange data show.
“Government borrowing is pressuring the yields upward,” said Roy Paul, deputy general manager of treasury at Federal Bank Ltd. (FB) in Mumbai. “But the slowing economy will force an interest-rate cut next year and so yields should move downward in 2012.”
To contact the reporter on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
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Saturday, December 31, 2011
Friday, December 30, 2011
India to Boost Record Borrowing by 8.5% as Slowing Growth Cuts Tax Revenue By Jeanette Rodrigues - Dec 30, 2011
India increased its record borrowing program for the year by 8.5 percent to narrow a budget shortfall as a slowing economy damps tax collections.
Prime Minister Manmohan Singh’s government will sell an additional 400 billion rupees ($7.5 billion) of bonds in the year ending March 31 raising an unprecedented total of 5.1 trillion rupees, the central bank said in a statement today.
Indian 10-year benchmark bond yields (GIND10YR) have jumped the most in Asia after Vietnam, as the government sold more debt to meet its target of keeping the budget gap to 4.6 percent of gross domestic product. The rate on the 8.79 percent note due November 2021 climbed two basis points today and 20 this week to 8.57 percent, according to the central bank’s trading system.
“The market is already burdened by supplies,” Debendra Kumar Dash, a fixed-income trader at Development Credit Bank Ltd. (DEVB) in Mumbai. “However this increase was expected, and so while we could see yields rising in early trades on Monday, they will settle down soon.”
The 10-year bond yield could rise as high as 8.70 percent, according to Development Credit Bank and IDBI Bank Ltd. (IDBI) following the increase in the bond-sale plan.
The Reserve Bank of India (RBI) has said the government must rein in borrowings to help check price gains and boost economic growth. The $1.7 trillion economy may miss the central bank’s growth estimate of 7.6 percent for the 12 months ending March 31, Governor Duvvuri Subbarao said Dec. 22.
The government increased its borrowing plan by 528.7 billion rupees in September.
Wider Spread
The nation’s indirect tax revenue rose 16.9 percent in the eight months through November from a year earlier, S.K. Goel, chairman of the Central Board of Excise and Customs, said Dec. 9. That compares with a target for a 17.3 percent increase this fiscal year.
The extra yield (GIND10YR) sought on the notes over similar maturity U.S. Treasuries surged 205 basis points in 2011 to 667 basis points. The spread reached a 12-year high of 697 basis points in November.
Rupee-denominated notes returned 5.9 percent this year compared with the region’s best performance of 22 percent for Indonesian securities, HSBC Holdings Plc indexes show. Overseas investors raised holdings (FIINDEBT) of Indian debt by $8.5 billion this year to a record $26.3 billion on Dec. 23, exchange data show.
“Government borrowing is pressuring the yields upward,” said Roy Paul, deputy general manager of treasury at Federal Bank Ltd. (FB) in Mumbai. “But the slowing economy will force an interest-rate cut next year and so yields should move downward in 2012.”
To contact the reporter on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Prime Minister Manmohan Singh’s government will sell an additional 400 billion rupees ($7.5 billion) of bonds in the year ending March 31 raising an unprecedented total of 5.1 trillion rupees, the central bank said in a statement today.
Indian 10-year benchmark bond yields (GIND10YR) have jumped the most in Asia after Vietnam, as the government sold more debt to meet its target of keeping the budget gap to 4.6 percent of gross domestic product. The rate on the 8.79 percent note due November 2021 climbed two basis points today and 20 this week to 8.57 percent, according to the central bank’s trading system.
“The market is already burdened by supplies,” Debendra Kumar Dash, a fixed-income trader at Development Credit Bank Ltd. (DEVB) in Mumbai. “However this increase was expected, and so while we could see yields rising in early trades on Monday, they will settle down soon.”
The 10-year bond yield could rise as high as 8.70 percent, according to Development Credit Bank and IDBI Bank Ltd. (IDBI) following the increase in the bond-sale plan.
The Reserve Bank of India (RBI) has said the government must rein in borrowings to help check price gains and boost economic growth. The $1.7 trillion economy may miss the central bank’s growth estimate of 7.6 percent for the 12 months ending March 31, Governor Duvvuri Subbarao said Dec. 22.
The government increased its borrowing plan by 528.7 billion rupees in September.
Wider Spread
The nation’s indirect tax revenue rose 16.9 percent in the eight months through November from a year earlier, S.K. Goel, chairman of the Central Board of Excise and Customs, said Dec. 9. That compares with a target for a 17.3 percent increase this fiscal year.
The extra yield (GIND10YR) sought on the notes over similar maturity U.S. Treasuries surged 205 basis points in 2011 to 667 basis points. The spread reached a 12-year high of 697 basis points in November.
Rupee-denominated notes returned 5.9 percent this year compared with the region’s best performance of 22 percent for Indonesian securities, HSBC Holdings Plc indexes show. Overseas investors raised holdings (FIINDEBT) of Indian debt by $8.5 billion this year to a record $26.3 billion on Dec. 23, exchange data show.
“Government borrowing is pressuring the yields upward,” said Roy Paul, deputy general manager of treasury at Federal Bank Ltd. (FB) in Mumbai. “But the slowing economy will force an interest-rate cut next year and so yields should move downward in 2012.”
To contact the reporter on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Thursday, December 29, 2011
Food Inflation Rate in India Falls to Lowest Level in at Least Five Years By Tushar Dhara - Dec 29, 2011
India’s food inflation rate fell to the lowest level in at least five-and-a-half years, increasing the scope for the central bank to cut interest rates after it halted a record pace of monetary tightening.
An index measuring wholesale prices of agricultural products, including rice, wheat and vegetables, rose 0.42 percent in the week ended Dec. 17 from a year earlier, the commerce ministry said in a statement in New Delhi today. The increase compares with a 1.81 percent gain the previous week, and is the smallest gain since at least April 2006, according to the earliest available data compiled by Bloomberg.
The Reserve Bank of India refrained from raising rates this month for the first time in eight meetings as inflation eases and the fallout from Europe’s debt crisis threatens growth in Asia’s third-largest economy. Slowing expansion in the region has prompted policy makers to cut or hold borrowing costs in recent months to counter faltering global demand.
“Food inflation is coming off rapidly,” Shubhada Rao, Mumbai-based chief economist at Yes Bank Ltd., said before the report. “We expect the RBI may cut the repurchase rate by 50 basis points in March to support growth.”
India’s benchmark inflation gauge, the wholesale-price index, rose 9.11 percent in November from a year earlier, the smallest gain in a year.
To contact the reporter on this story: Tushar Dhara in New Delhi at tdhara1@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
An index measuring wholesale prices of agricultural products, including rice, wheat and vegetables, rose 0.42 percent in the week ended Dec. 17 from a year earlier, the commerce ministry said in a statement in New Delhi today. The increase compares with a 1.81 percent gain the previous week, and is the smallest gain since at least April 2006, according to the earliest available data compiled by Bloomberg.
The Reserve Bank of India refrained from raising rates this month for the first time in eight meetings as inflation eases and the fallout from Europe’s debt crisis threatens growth in Asia’s third-largest economy. Slowing expansion in the region has prompted policy makers to cut or hold borrowing costs in recent months to counter faltering global demand.
“Food inflation is coming off rapidly,” Shubhada Rao, Mumbai-based chief economist at Yes Bank Ltd., said before the report. “We expect the RBI may cut the repurchase rate by 50 basis points in March to support growth.”
India’s benchmark inflation gauge, the wholesale-price index, rose 9.11 percent in November from a year earlier, the smallest gain in a year.
To contact the reporter on this story: Tushar Dhara in New Delhi at tdhara1@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Wednesday, December 28, 2011
Billionaire Ambanis Dance, Pray at Family Home, Signaling Thaw By Siddharth Philip, Ketaki Gokhale and Rakteem Katakey - Dec 28, 2011
Billionaires Mukesh and Anil Ambani danced and prayed in their ancestral village on the eve of their father’s 80th birth anniversary in the strongest display of bonhomie since ending a feud that split the Reliance empire.
The brothers, who have a combined wealth of $28.5 billion and control the world’s biggest oil refining complex and India’s second-largest phone company, were seen together on Dec. 27 for the first time since they pledged harmony in May 2010. Yesterday, they inaugurated a memorial to the late Dhirajlal Ambani in Chorwad in the western state of Gujarat.
Reliance Communications Ltd. (RCOM), controlled by 52 year-old Anil, climbed to a two-week high on Dec. 27 on speculation that improved sibling relations may help the company clinch a deal to lease mobile-phone towers to Reliance Industries Ltd. (RIL), run by Mukesh, 54. The elder Ambani operates India’s biggest natural gas field, while Anil needs the fuel for his power plants.
“It will matter to shareholders if it is a business reunion,” said Jagannadham Thunuguntla, strategist at SMC Global Securities Ltd. in New Delhi. “That would be a huge positive rerating opportunity for Anil Ambani group stocks. From Reliance Industries’ perspective, it would be an opportunity to expand their dream of entering into telecom.”
When India’s second-largest business group split in 2005, Mukesh got the Reliance group’s petrochemicals, oil and gas units, while Anil took the power, financial services, telecommunications, and entertainment businesses. Both retained rights to the Reliance name.
Last year the brothers scrapped agreements that prevented them from competing in similar businesses.
Dandiya Dance
Mukesh Ambani and Anil yesterday traveled in separate Mercedes-Benz cars to pray and have breakfast at the local Ambaji Mata temple after spending the previous evening performing the dandiya, a traditional Gujarati folk dance, along with their wives, mother and sister, Bloomberg UTV showed.
Anil flew in a Reliance Industries helicopter yesterday morning to offer prayers at the ancient Hindu temple of Somnath, Parimal Nathwani, group president for corporate affairs at Reliance Industries, said in an interview in Chorwad. Security arrangements in the village were managed by the officials from the company’s refinery complex at Jamnagar and 60 local volunteers, he said.
Daljeet Singh, a spokesman for Reliance ADA Group, declined to comment.
Share Performance
Reliance Industries shares fell 1.9 percent to 739.05 rupees at close in Mumbai yesterday, compared with a 0.9 percent decline in the benchmark Sensitive Index. (SENSEX) Reliance Infrastructure Ltd., the Anil Ambani-controlled builder of a mass rapid transit system in Mumbai, dropped 2.9 percent to 358.6 rupees and Reliance Communications lost 1.4 percent to 71.9 rupees.
Shares of Reliance Industries have more than tripled in value since the brothers divided the family business in June 2005. Anil’s flagship Reliance Communications has slumped 76 percent since it started trading in 2006.
Chorwad, a coastal fishing village where Dhirajlal Ambani, known as Dhirubhai, grew up, lies 855 kilometers (530 miles) northwest by road from Mumbai, where Mukesh has built a skyscraper home. The building equipped with helipads and a movie theater cost $1 billion, according to Forbes.
Dhirubhai founded Reliance Commercial Corp. to trade spices and yarn in 1959, the year Anil was born, and built an empire with businesses ranging from textiles to petrochemicals. His two sons fought for control of the group after he died in 2002 without leaving a will. They split the family business three years later in a settlement brokered by their mother, Kokila Ambani.
‘Old Wounds’
In the following five years their battle over the price and supply of natural gas from Reliance Industries’ assets halted plans for a major north Indian power plant, while a merger between Anil’s Reliance Communications and South Africa’s MTN Group Ltd. was scuttled after Mukesh said he had the first right to buy shares in his brother’s company.
“It looks like they’ve reconciled to working together, and that could be the best thing for them individually,” said U.R. Bhat, managing director of Dalton Capital Advisors India Pvt. in Mumbai. “Old wounds can’t completely be healed, but they can be stitched. There’s a scar nevertheless.”
To contact the reporters on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net; Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net
To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net; Arijit Ghosh at aghosh@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
The brothers, who have a combined wealth of $28.5 billion and control the world’s biggest oil refining complex and India’s second-largest phone company, were seen together on Dec. 27 for the first time since they pledged harmony in May 2010. Yesterday, they inaugurated a memorial to the late Dhirajlal Ambani in Chorwad in the western state of Gujarat.
Reliance Communications Ltd. (RCOM), controlled by 52 year-old Anil, climbed to a two-week high on Dec. 27 on speculation that improved sibling relations may help the company clinch a deal to lease mobile-phone towers to Reliance Industries Ltd. (RIL), run by Mukesh, 54. The elder Ambani operates India’s biggest natural gas field, while Anil needs the fuel for his power plants.
“It will matter to shareholders if it is a business reunion,” said Jagannadham Thunuguntla, strategist at SMC Global Securities Ltd. in New Delhi. “That would be a huge positive rerating opportunity for Anil Ambani group stocks. From Reliance Industries’ perspective, it would be an opportunity to expand their dream of entering into telecom.”
When India’s second-largest business group split in 2005, Mukesh got the Reliance group’s petrochemicals, oil and gas units, while Anil took the power, financial services, telecommunications, and entertainment businesses. Both retained rights to the Reliance name.
Last year the brothers scrapped agreements that prevented them from competing in similar businesses.
Dandiya Dance
Mukesh Ambani and Anil yesterday traveled in separate Mercedes-Benz cars to pray and have breakfast at the local Ambaji Mata temple after spending the previous evening performing the dandiya, a traditional Gujarati folk dance, along with their wives, mother and sister, Bloomberg UTV showed.
Anil flew in a Reliance Industries helicopter yesterday morning to offer prayers at the ancient Hindu temple of Somnath, Parimal Nathwani, group president for corporate affairs at Reliance Industries, said in an interview in Chorwad. Security arrangements in the village were managed by the officials from the company’s refinery complex at Jamnagar and 60 local volunteers, he said.
Daljeet Singh, a spokesman for Reliance ADA Group, declined to comment.
Share Performance
Reliance Industries shares fell 1.9 percent to 739.05 rupees at close in Mumbai yesterday, compared with a 0.9 percent decline in the benchmark Sensitive Index. (SENSEX) Reliance Infrastructure Ltd., the Anil Ambani-controlled builder of a mass rapid transit system in Mumbai, dropped 2.9 percent to 358.6 rupees and Reliance Communications lost 1.4 percent to 71.9 rupees.
Shares of Reliance Industries have more than tripled in value since the brothers divided the family business in June 2005. Anil’s flagship Reliance Communications has slumped 76 percent since it started trading in 2006.
Chorwad, a coastal fishing village where Dhirajlal Ambani, known as Dhirubhai, grew up, lies 855 kilometers (530 miles) northwest by road from Mumbai, where Mukesh has built a skyscraper home. The building equipped with helipads and a movie theater cost $1 billion, according to Forbes.
Dhirubhai founded Reliance Commercial Corp. to trade spices and yarn in 1959, the year Anil was born, and built an empire with businesses ranging from textiles to petrochemicals. His two sons fought for control of the group after he died in 2002 without leaving a will. They split the family business three years later in a settlement brokered by their mother, Kokila Ambani.
‘Old Wounds’
In the following five years their battle over the price and supply of natural gas from Reliance Industries’ assets halted plans for a major north Indian power plant, while a merger between Anil’s Reliance Communications and South Africa’s MTN Group Ltd. was scuttled after Mukesh said he had the first right to buy shares in his brother’s company.
“It looks like they’ve reconciled to working together, and that could be the best thing for them individually,” said U.R. Bhat, managing director of Dalton Capital Advisors India Pvt. in Mumbai. “Old wounds can’t completely be healed, but they can be stitched. There’s a scar nevertheless.”
To contact the reporters on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net; Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net
To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net; Arijit Ghosh at aghosh@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Tuesday, December 27, 2011
Asian Stocks Fall, Copper Snaps Four-Day Rally on Europe, Growth Concerns By Shiyin Chen and Wes Goodman - Dec 27, 2011
Asia stocks (MXAP) fell, extending the MSCI Asia Pacific Index’s annual loss, while copper snapped a four- day rally amid concern economic growth in the region is slowing and before Italy sells debt today and tomorrow.
The MSCI Asia Pacific Index declined 0.4 percent at 11:07 a.m. in Tokyo. Futures on the Standard & Poor’s 500 Index rose less than 0.1 percent. Copper lost 1.1 percent in London, soybeans slid for the first time in nine days and gold sank to a one-week low. The 17-nation euro was little changed against the dollar and yen. Treasury 30-year yields slipped two basis points to 3.01 percent.
Economic reports today showed Japan’s industrial production dropped and confidence among South Korean manufacturers sank to a 30-month low. U.S. home prices fell more than projected in October even as consumer confidence gained in December to an eight-month high, data showed yesterday. Italy is scheduled to sell 9 billion euros ($12 billion) of 179-day bills and as much as 2.5 billion euros of zero-coupon 2013 bonds today.
“We haven’t seen any resolution from the European area, and the situation is going to be the same next year,” said Chungkeun Oh, a debt trader in Seoul at Industrial Bank of Korea, South Korea’s largest lender to small- and medium-sized companies.
More than two shares slid for every one that rose on the MSCI Asia Pacific Index. The measure has fallen 18 percent this year, compared with a 12 percent drop on the Stoxx Europe 600 Index and a 0.6 percent gain in the Standard & Poor’s 500 Index.
Australia’s S&P/ASX 200 Index declined 1 percent and Hong Kong’s Hang Seng Index retreated 0.6 percent as the markets open after a two-day holiday. South Korea’s Kospi Index slipped 1 percent. SK Telecom Co. (017670) led losses among companies that trade without the right to the year’s final dividend payments.
U.S. Economy
The S&P 500 was little changed yesterday following last week’s 3.7 percent rally. The Conference Board’s index of consumer confidence rose to 64.5, exceeding all estimates in a Bloomberg News survey, and the highest reading since April, figures from the New York-based private research group showed.
The S&P/Case-Shiller index of home values in cities dropped 3.4 percent from October 2010 after decreasing 3.5 percent in the year ended September, the New York-based group said yesterday. The median forecast of 27 economists in a Bloomberg survey projected a 3.2 percent decline.
“The U.S. housing market has yet to get on a firm recovery path because we don’t know if prices will actually come back,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $29.6 billion. “Market participants are in vacation mode and aren’t doing much.”
Treasury 10-year yields fell one basis point to 2 percent today. Treasuries have returned 9 percent this year, according to Bank of America Merrill Lynch indexes.
Italian Sales
The euro was little changed at $1.3072 and weakened 0.1 percent to 101.71 yen. In addition to today’s sales, Italy is scheduled to sell bonds maturing in 2014, 2018, 2021 and 2022 tomorrow. The nation’s 10-year bond yields climbed two basis points yesterday to 7 percent, the level that spurred Greece, Ireland and Portugal to seek bailouts.
A report tomorrow may show Italian business confidence dipped to the lowest in almost two years.
The won traded at 1,158.60 per dollar, near a one-week low, after the Bank of Korea said an index of manufacturers’ expectations for January was 79, the least since July 2009.
Three-month copper fell to $7,544 a metric ton in London after gaining 4 percent last week. The metal is down 21 percent this year, set for the first annual fall since 2008. Soybean futures dropped 1.2 percent to $11.945 a bushel, halting an eight-day, 9 percent jump. Corn declined 0.4 percent to $6.305 a bushel after prices rose 9.4 percent in the previous seven days.
Gold Falls
Gold for immediate delivery slid as much as 0.5 percent to $1,586.13 an ounce, the lowest prices since Dec. 19, on concern that an escalation of Europe’s debt crisis may weigh on global growth amid slowing demand in India and China. Futures were on course for the longest losing streak since 2009.
The cost of insuring corporate bonds against non-payment fell in Australia and Japan. The Markit iTraxx Australia index decreased two basis points to 179 basis points, Westpac Banking Corp. prices show. The index is headed for its lowest close since Nov. 8 and at those levels would have risen 75.5 basis points this year, according to data provider CMA.
The Markit iTraxx Japan index declined 1 basis point to 186, Deutsche Bank AG prices show. The gauge is set for its lowest close since Dec. 27, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net
To contact the editor responsible for this story: Shiyin Chen in Singapore at schen37@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
The MSCI Asia Pacific Index declined 0.4 percent at 11:07 a.m. in Tokyo. Futures on the Standard & Poor’s 500 Index rose less than 0.1 percent. Copper lost 1.1 percent in London, soybeans slid for the first time in nine days and gold sank to a one-week low. The 17-nation euro was little changed against the dollar and yen. Treasury 30-year yields slipped two basis points to 3.01 percent.
Economic reports today showed Japan’s industrial production dropped and confidence among South Korean manufacturers sank to a 30-month low. U.S. home prices fell more than projected in October even as consumer confidence gained in December to an eight-month high, data showed yesterday. Italy is scheduled to sell 9 billion euros ($12 billion) of 179-day bills and as much as 2.5 billion euros of zero-coupon 2013 bonds today.
“We haven’t seen any resolution from the European area, and the situation is going to be the same next year,” said Chungkeun Oh, a debt trader in Seoul at Industrial Bank of Korea, South Korea’s largest lender to small- and medium-sized companies.
More than two shares slid for every one that rose on the MSCI Asia Pacific Index. The measure has fallen 18 percent this year, compared with a 12 percent drop on the Stoxx Europe 600 Index and a 0.6 percent gain in the Standard & Poor’s 500 Index.
Australia’s S&P/ASX 200 Index declined 1 percent and Hong Kong’s Hang Seng Index retreated 0.6 percent as the markets open after a two-day holiday. South Korea’s Kospi Index slipped 1 percent. SK Telecom Co. (017670) led losses among companies that trade without the right to the year’s final dividend payments.
U.S. Economy
The S&P 500 was little changed yesterday following last week’s 3.7 percent rally. The Conference Board’s index of consumer confidence rose to 64.5, exceeding all estimates in a Bloomberg News survey, and the highest reading since April, figures from the New York-based private research group showed.
The S&P/Case-Shiller index of home values in cities dropped 3.4 percent from October 2010 after decreasing 3.5 percent in the year ended September, the New York-based group said yesterday. The median forecast of 27 economists in a Bloomberg survey projected a 3.2 percent decline.
“The U.S. housing market has yet to get on a firm recovery path because we don’t know if prices will actually come back,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $29.6 billion. “Market participants are in vacation mode and aren’t doing much.”
Treasury 10-year yields fell one basis point to 2 percent today. Treasuries have returned 9 percent this year, according to Bank of America Merrill Lynch indexes.
Italian Sales
The euro was little changed at $1.3072 and weakened 0.1 percent to 101.71 yen. In addition to today’s sales, Italy is scheduled to sell bonds maturing in 2014, 2018, 2021 and 2022 tomorrow. The nation’s 10-year bond yields climbed two basis points yesterday to 7 percent, the level that spurred Greece, Ireland and Portugal to seek bailouts.
A report tomorrow may show Italian business confidence dipped to the lowest in almost two years.
The won traded at 1,158.60 per dollar, near a one-week low, after the Bank of Korea said an index of manufacturers’ expectations for January was 79, the least since July 2009.
Three-month copper fell to $7,544 a metric ton in London after gaining 4 percent last week. The metal is down 21 percent this year, set for the first annual fall since 2008. Soybean futures dropped 1.2 percent to $11.945 a bushel, halting an eight-day, 9 percent jump. Corn declined 0.4 percent to $6.305 a bushel after prices rose 9.4 percent in the previous seven days.
Gold Falls
Gold for immediate delivery slid as much as 0.5 percent to $1,586.13 an ounce, the lowest prices since Dec. 19, on concern that an escalation of Europe’s debt crisis may weigh on global growth amid slowing demand in India and China. Futures were on course for the longest losing streak since 2009.
The cost of insuring corporate bonds against non-payment fell in Australia and Japan. The Markit iTraxx Australia index decreased two basis points to 179 basis points, Westpac Banking Corp. prices show. The index is headed for its lowest close since Nov. 8 and at those levels would have risen 75.5 basis points this year, according to data provider CMA.
The Markit iTraxx Japan index declined 1 basis point to 186, Deutsche Bank AG prices show. The gauge is set for its lowest close since Dec. 27, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net
To contact the editor responsible for this story: Shiyin Chen in Singapore at schen37@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Monday, December 26, 2011
Japan Set to Unveil India Currency Swap Deal By Kyoko Shimodoi - Dec 26, 2011
Japan is poised to unveil a currency-swap line with India in its second international financial agreement with top Asian powers this week.
Finance Minister Jun Azumi told reporters today in Tokyo that Japan is negotiating an agreement with India, the third- largest economy in Asia, after China and Japan. The deal is likely to be unveiled during a trip by Prime Minister Yoshihiko Noda to India that starts today, with the amount of the swap line about $10 billion, a Japanese government official said on condition of anonymity.
Japan two days ago agreed with China to promote direct trading of the yen and yuan without using dollars and start purchases of Chinese bonds for its foreign-exchange reserves. The nation has also deployed some of its reserves, the world’s second biggest, after China’s, for aiding Japanese companies in making overseas acquisitions.
For India, the deal expands the ability to respond to financial shocks as Prime Minister Manmohan Singh’s administration contends with a slump in the rupee that risks stoking inflation.
To contact the reporter on this story: Kyoko Shimodoi in Tokyo at kshimodoi@bloomberg.net
To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Finance Minister Jun Azumi told reporters today in Tokyo that Japan is negotiating an agreement with India, the third- largest economy in Asia, after China and Japan. The deal is likely to be unveiled during a trip by Prime Minister Yoshihiko Noda to India that starts today, with the amount of the swap line about $10 billion, a Japanese government official said on condition of anonymity.
Japan two days ago agreed with China to promote direct trading of the yen and yuan without using dollars and start purchases of Chinese bonds for its foreign-exchange reserves. The nation has also deployed some of its reserves, the world’s second biggest, after China’s, for aiding Japanese companies in making overseas acquisitions.
For India, the deal expands the ability to respond to financial shocks as Prime Minister Manmohan Singh’s administration contends with a slump in the rupee that risks stoking inflation.
To contact the reporter on this story: Kyoko Shimodoi in Tokyo at kshimodoi@bloomberg.net
To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Sunday, December 25, 2011
China, Japan to Back Direct Trade of Currencies By Toru Fujioka - Dec 25, 2011
Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for the exchange, to cut costs for companies, the Japanese government said.
Japan will also apply to buy Chinese bonds next year, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday.
The deals between the world’s second and third-largest economies come as the two-year-old European debt crisis keeps global financial markets volatile. Japan will start to buy “a small amount” of China’s bonds, a Japanese government official said on condition of anonymity because of the ministry’s policy, without elaborating on when and how much of the debt the nation plans to purchase.
“Given the huge size of the trade volume between the Asia’s two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations,” said Ren Xianfang, a Beijing-based economist with IHS Global Insight Ltd.
Finance Minister Jun Azumi said Dec. 20 buying of Chinese bonds would be beneficial for Japan because it would help reveal more information about financial markets in China, the world’s largest holder of foreign currency reserves.
Biggest Trading Partner
Encouraging direct yen-yuan trades will aim to reduce currency risks and trading costs, Japan’s government said. Currently, about 60 percent of trade transactions between the two nations are settled in dollars, according to Japan’s Finance Ministry. China is Japan’s biggest trading partner.
Then-finance minister Noda said in September 2010 that Japan should be able to invest in China’s market given that China buys Japanese debt. Japan holds $1.3 trillion of foreign- currency reserves, the world’s second largest.
Austria has already been granted the eligibility to buy Chinese bonds, according to the Japanese government official. Central banks from Thailand to Nigeria plan to start buying yuan assets as slowing global growth has capped interest rates in the U.S. and Europe.
Investing in Chinese debt has become easier for central banks as issuance of yuan-denominated bonds in Hong Kong more than tripled to 112 billion yuan ($18 billion) this year and institutions were granted quotas to invest onshore.
China sold the second-biggest net amount of Japanese debt on record in October as the yen headed for a postwar high against the dollar and benchmark yields approached their lowest levels in a year. It cut Japanese debt by 853 billion yen ($11 billion), Japan’s Ministry of Finance said on Dec. 8.
Separately, the Japan Bank for International Cooperation, JGC Corp., Mizuho Corporate Bank Ltd., the Export-Import Bank of China and other Chinese companies will establish a $154 million fund to invest in environment-related businesses such as recycling and energy, the Japanese government said.
To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Japan will also apply to buy Chinese bonds next year, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday.
The deals between the world’s second and third-largest economies come as the two-year-old European debt crisis keeps global financial markets volatile. Japan will start to buy “a small amount” of China’s bonds, a Japanese government official said on condition of anonymity because of the ministry’s policy, without elaborating on when and how much of the debt the nation plans to purchase.
“Given the huge size of the trade volume between the Asia’s two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations,” said Ren Xianfang, a Beijing-based economist with IHS Global Insight Ltd.
Finance Minister Jun Azumi said Dec. 20 buying of Chinese bonds would be beneficial for Japan because it would help reveal more information about financial markets in China, the world’s largest holder of foreign currency reserves.
Biggest Trading Partner
Encouraging direct yen-yuan trades will aim to reduce currency risks and trading costs, Japan’s government said. Currently, about 60 percent of trade transactions between the two nations are settled in dollars, according to Japan’s Finance Ministry. China is Japan’s biggest trading partner.
Then-finance minister Noda said in September 2010 that Japan should be able to invest in China’s market given that China buys Japanese debt. Japan holds $1.3 trillion of foreign- currency reserves, the world’s second largest.
Austria has already been granted the eligibility to buy Chinese bonds, according to the Japanese government official. Central banks from Thailand to Nigeria plan to start buying yuan assets as slowing global growth has capped interest rates in the U.S. and Europe.
Investing in Chinese debt has become easier for central banks as issuance of yuan-denominated bonds in Hong Kong more than tripled to 112 billion yuan ($18 billion) this year and institutions were granted quotas to invest onshore.
China sold the second-biggest net amount of Japanese debt on record in October as the yen headed for a postwar high against the dollar and benchmark yields approached their lowest levels in a year. It cut Japanese debt by 853 billion yen ($11 billion), Japan’s Ministry of Finance said on Dec. 8.
Separately, the Japan Bank for International Cooperation, JGC Corp., Mizuho Corporate Bank Ltd., the Export-Import Bank of China and other Chinese companies will establish a $154 million fund to invest in environment-related businesses such as recycling and energy, the Japanese government said.
To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
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