May 3 (Bloomberg) -- Unemployment in the U.S. probably climbed in April to a 25-year high, showing the labor market will be one of the last areas to emerge from the worst recession in at least 50 years, economists said before reports this week.
The jobless rate jumped to 8.9 percent last month from 8.5 percent in March and employers cut at least 600,000 workers from payrolls for a fifth straight time, according to the median estimate in a Bloomberg News survey ahead of a May 8 Labor Department report. Other figures may show service industries shrank at a slower pace.
Companies may keep trimming staff and spending in a bid to shore up profits until sales show sustained gains, something economists say is unlikely to happen for months. Even when an economic rebound begins to take hold, the loss of jobs and smaller paychecks are likely to lead to a muted expansion.
“The recession will be officially over this year, but the recovery will be sluggish,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “Getting out of the jobs recession will take longer.”
An estimated 600,000 workers were cut from payrolls last month, according to the survey median, bringing total job losses since the recession began in December 2007 to 5.7 million, the most of any economic slump in the post-World War II era.
It’s “hard to fathom any sustained strength in consumer spending” until the “hefty” job losses ease, said BMO’s Gregory, who estimated the unemployment rate may rise to 9.5 percent by yearend and level off around 9.7 percent in 2010.
GDP Shrinks
Gross domestic product dropped at a 6.1 percent annual pace in the first three months of this year after contracting at a 6.3 percent rate in the last quarter of 2008, government figures showed last week. Consumer spending climbed, ending its biggest slide since 1980.
Still, economists surveyed by Bloomberg in early April projected spending, the biggest part of the economy, will falter again this quarter before showing more sustained gains in the second half of the year.
Automakers have been among the hardest hit industries as consumers boost savings and pay down debt. Vehicles sold at a 9.3 million annual pace in April, less than forecast and down from a 9.9 million pace a month earlier, industry figures showed last week.
A liquidation by Chrysler LLC, which the government pushed into bankruptcy on April 30, would result in the loss of 38,500 jobs should its proposed partnership with Italy’s Fiat SpA be rejected by the court, the company estimated.
Fewer Dealers
General Motors Corp., surviving on U.S. loans, is working to beat a June 1 bankruptcy deadline set by the government. GM’s plan to trim its retail franchises may eliminate as many as 137,330 dealership jobs, the National Automobile Dealers Association estimated.
Economists project the Labor report may show manufacturers cut payrolls by 157,000 workers in April after a decline of 161,000 a month earlier.
One bright spot last month may have been government staffing for the 2010 census. The U.S. Census Bureau began hiring 140,000 temporary employees in April to start conducting the population count that happens once every 10 years. They are the first of more than 1.4 million people it will hire over the next year.
Another report may show service providers, which account for almost 90 percent of the economy, are starting to improve. The Institute for Supply Management’s index of non-manufacturing businesses probably climbed to 42 in April, according to the Bloomberg survey. Readings below 50 signal contraction. The Tempe, Arizona-based group will release the figures on May 5.
Casinos Hurting
The deteriorating labor market is one reason service industries are still shrinking, albeit at a slower pace. Las Vegas-based Wynn Resorts Ltd.’s revenue is down as business at casinos slows, Chief Executive Officer Steve Wynn said last week.
“People who have lost their jobs and whose businesses are in trouble don’t have money for leisure and optional expenses,” Wynn said in an April 28 speech in Beverly Hills, California.
The ISM’s gauge of manufacturing climbed to 40.1 in April, signaling the worst of the factory slump may be over, figures showed last week.
Employers are trying to get more out of the staff they have left to give profits an added lift. Labor Department figures on May 7 may show productivity grew at a 0.8 percent annual pace in the first quarter as companies slashed payrolls and hours even faster than output slumped, according to the Bloomberg survey.
Tomorrow, the National Association of Realtors may report the number of Americans who signed contracts to buy previously owned homes was probably unchanged in March as lower prices attracted buyers, according to the Bloomberg survey median.
The same day, the Commerce Department may say spending on construction projects fell in March for the sixth consecutive month, economists in the Bloomberg survey forecast.
Sunday, May 3, 2009
Japan offers $100bn for Asian economies
Published: May 3 2009 14:55 | Last updated: May 3 2009 19:56
Japan has offered $100bn in financial assistance to Asian countries hit by the global financial crisis in a move that shores up its economic leadership in the region in spite of its own severe recession.
Tokyo announced at a meeting of the finance ministers of the 10 countries of the Association of South-East Asian Nations in Indonesia that it would set up a Y6,000bn ($61.5bn) bilateral currency swap scheme , on top of a $38.4bn commitment to the multilateral Chiang Mai initiative.
The Chiang Mai deal, a $120bn currency scheme that has been under discussion for years, was formally agreed on Sunday by the Asean countries, meeting with the finance ministers of Japan, China and South Korea. Japan also offered Y500bn in guarantees for potential Asian issuers of yen-denominated samurai bonds.
Kaoru Yosano, the Japanese finance minister, when asked if Japan could afford to deal with its own economic woes while helping fellow Asian strugglers, said the latest offers underlined Tokyo’s firm belief that the crisis required a more concerted international response.
“The financial crisis is not something hitting only a handful of countries ... That is why we believe it is an issue that can only be solved with international co-operation.”
Japan pledged $100bn in extra capital to the International Monetary Fund in November, and has been anxious to sustain its leadership in Asia in the face of China’s huge foreign reserves and rising economic muscle.
Rivalry between the two countries spilled over into the final stage of the Chiang Mai negotiations, with both agreeing to provide $38.4bn each. China’s share includes $4.2bn from Hong Kong. South Korea is providing $19.2bn, with the rest shared among the 10 south-east Asian nations.
The 13 countries also agreed to put $500m as initial capital into a new trust fund to guarantee local currency bond issues by Asian companies, which have been facing high borrowing costs because of investors’ low risk appetite for emerging markets.
Rajat Nag, managing director of the Asian Development Bank, said the credit guarantee mechanism would be of substantial benefit to “companies that might not have that sterling track record on their own”.
The ADB confirmed it wanted to inject $3bn into struggling economies, pending board approval, on top of a broader expansion of project lending.
Additional reporting by Robin Harding in Tokyo
Japan has offered $100bn in financial assistance to Asian countries hit by the global financial crisis in a move that shores up its economic leadership in the region in spite of its own severe recession.
Tokyo announced at a meeting of the finance ministers of the 10 countries of the Association of South-East Asian Nations in Indonesia that it would set up a Y6,000bn ($61.5bn) bilateral currency swap scheme , on top of a $38.4bn commitment to the multilateral Chiang Mai initiative.
The Chiang Mai deal, a $120bn currency scheme that has been under discussion for years, was formally agreed on Sunday by the Asean countries, meeting with the finance ministers of Japan, China and South Korea. Japan also offered Y500bn in guarantees for potential Asian issuers of yen-denominated samurai bonds.
Kaoru Yosano, the Japanese finance minister, when asked if Japan could afford to deal with its own economic woes while helping fellow Asian strugglers, said the latest offers underlined Tokyo’s firm belief that the crisis required a more concerted international response.
“The financial crisis is not something hitting only a handful of countries ... That is why we believe it is an issue that can only be solved with international co-operation.”
Japan pledged $100bn in extra capital to the International Monetary Fund in November, and has been anxious to sustain its leadership in Asia in the face of China’s huge foreign reserves and rising economic muscle.
Rivalry between the two countries spilled over into the final stage of the Chiang Mai negotiations, with both agreeing to provide $38.4bn each. China’s share includes $4.2bn from Hong Kong. South Korea is providing $19.2bn, with the rest shared among the 10 south-east Asian nations.
The 13 countries also agreed to put $500m as initial capital into a new trust fund to guarantee local currency bond issues by Asian companies, which have been facing high borrowing costs because of investors’ low risk appetite for emerging markets.
Rajat Nag, managing director of the Asian Development Bank, said the credit guarantee mechanism would be of substantial benefit to “companies that might not have that sterling track record on their own”.
The ADB confirmed it wanted to inject $3bn into struggling economies, pending board approval, on top of a broader expansion of project lending.
Additional reporting by Robin Harding in Tokyo
Friday, May 1, 2009
Asian Currencies Gain, Led by Won, Rupiah, as Recession Eases
May 2 (Bloomberg) -- Asian currencies rose against the dollar for a third week as signs a global recession is easing prompt investors to favor riskier assets, helping emerging markets draw funds.
South Korea’s won and Indonesia’s rupiah led the advance on optimism the region’s exports will rebound after Japan reported industrial output grew for the first time in six months and a Chinese gauge of manufacturing climbed for a second month. Taiwan’s dollar jumped the most in six months on April 30 after Chinese companies were allowed to invest in the island for the first time since a civil war ended in 1949.
“All the Asian currencies are on a stronger footing,” said Rajeev Malik, a regional economist at Macquarie Group Ltd. in Singapore. “There’s obviously a better economic outcome anticipated. We’ve passed the eye of the storm and while it’s still bumpy and uncertain, the worst is probably behind us.”
The won surged 4.7 percent this week to close at 1,282.95 per dollar in Seoul, according to data compiled by Bloomberg. The rupiah climbed 2.1 percent to 10,610 and Taiwan’s dollar rose 1.3 percent to NT$33.233.
All regional markets except Indonesia were closed yesterday for the Labor Day holiday. There was no trading in Mumbai on April 30 as well for elections.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, gained for a third week and reached the highest in four months yesterday.
The MSCI Asia-Pacific Index of shares increased 0.1 percent yesterday, extending its gains in the last two months, as the Federal Reserve this week said a U.S. recession is abating.
China, Japan
The Fed’s Open Market Committee said on April 29 that the U.S. economy is contracting at a slower pace than before, while China’s Federation of Logistics and Purchasing in a statement yesterday said the Purchasing Manager’s Index rose to a seasonally adjusted 53.5 in April from 52.4 in March. A reading above 50 indicates an expansion.
Industrial production in Japan rose 1.6 percent in March from the previous month, a Trade Ministry report showed on April 30, double the increase forecast by economists in a Bloomberg survey. The U.S., Japan and China are the world’s top three economies.
The yen traded at 99.17 a dollar after dropping to a two- week low of 99.58 yesterday. It declined to 132.07 per euro yesterday, the lowest since April 14.
Shares Surge
The rupiah climbed to a six-month high against the dollar yesterday after the Jakarta Composite Index of local shares surged 20 percent in April, the best month in a decade. Equity purchases by foreigners exceeded sales by $238 million last month, according to exchange data.
“We’ve seen some good strengthening in the rupiah on the back of easing risk aversion that’s reflected in the stock markets,” said Apratim Chakravarty, head of global markets at HSBC Holdings Plc in Jakarta. “Foreign fund flows have been strong. We think this trend should continue next week.”
Taiwan’s dollar strengthened 1.4 percent this week as China ended a ban on investments in the island following an agreement to open cross-border operations for financial-services companies and more than double the number of direct flights.
The benchmark Taiex index of the island’s shares surged on April 30 by the most since 1991 on speculation money will pour in from the mainland as investment curbs are relaxed.
The currency appreciated 2.1 percent last month, following an advance of 3.1 percent in March.
China Mobile Ltd., the world’s biggest phone company by subscribers, this week said it will buy a 12 percent stake in Far EasTone Telecommunications Co., Taiwan’s third-largest phone company, for NT$17.8 billion ($541 million).
Overweight
Standard Chartered Plc raised the Korean won to “overweight” from “neutral,” suggesting investors should hold more of the currency than benchmarks suggest. The won will gain 12 percent to 1,150 per dollar by the end of the year, David Mann, a Hong Kong-based senior foreign-exchange strategist at the bank, forecast in a research note on April 30.
The won climbed 7.8 percent last month, Asia’s best performance after the rupiah. The nation’s industrial production increased 4.8 percent in March from the previous month, a third straight gain, according to a government report released on April 30. A separate report yesterday showed exports declined 19 percent in April from a year earlier, less than the 23 percent drop forecast by economists in a Bloomberg survey.
A central bank survey this week showed manufacturers were the least pessimistic in seven months.
Risk-Taking Returns
Malaysia’s ringgit completed a second weekly gain after the central bank on April 29 left interest rates unchanged and said economic stimulus will help revive growth in the second half of the year.
“There are reasons to be positive as the fiscal stimulus should start to produce results,” said Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd. in Kuala Lumpur. “The risk-taking culture should return and that’s positive for the ringgit as well as the regional currencies.”
The ringgit strengthened 0.8 percent this week to 3.5585 per dollar.
Elsewhere, the Philippine peso gained 0.1 percent this week to 48.360 versus the greenback and the Thai baht rose 0.3 percent to 35.30. China’s yuan was little changed at 6.8230 versus 6.8273 on April 24.
South Korea’s won and Indonesia’s rupiah led the advance on optimism the region’s exports will rebound after Japan reported industrial output grew for the first time in six months and a Chinese gauge of manufacturing climbed for a second month. Taiwan’s dollar jumped the most in six months on April 30 after Chinese companies were allowed to invest in the island for the first time since a civil war ended in 1949.
“All the Asian currencies are on a stronger footing,” said Rajeev Malik, a regional economist at Macquarie Group Ltd. in Singapore. “There’s obviously a better economic outcome anticipated. We’ve passed the eye of the storm and while it’s still bumpy and uncertain, the worst is probably behind us.”
The won surged 4.7 percent this week to close at 1,282.95 per dollar in Seoul, according to data compiled by Bloomberg. The rupiah climbed 2.1 percent to 10,610 and Taiwan’s dollar rose 1.3 percent to NT$33.233.
All regional markets except Indonesia were closed yesterday for the Labor Day holiday. There was no trading in Mumbai on April 30 as well for elections.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, gained for a third week and reached the highest in four months yesterday.
The MSCI Asia-Pacific Index of shares increased 0.1 percent yesterday, extending its gains in the last two months, as the Federal Reserve this week said a U.S. recession is abating.
China, Japan
The Fed’s Open Market Committee said on April 29 that the U.S. economy is contracting at a slower pace than before, while China’s Federation of Logistics and Purchasing in a statement yesterday said the Purchasing Manager’s Index rose to a seasonally adjusted 53.5 in April from 52.4 in March. A reading above 50 indicates an expansion.
Industrial production in Japan rose 1.6 percent in March from the previous month, a Trade Ministry report showed on April 30, double the increase forecast by economists in a Bloomberg survey. The U.S., Japan and China are the world’s top three economies.
The yen traded at 99.17 a dollar after dropping to a two- week low of 99.58 yesterday. It declined to 132.07 per euro yesterday, the lowest since April 14.
Shares Surge
The rupiah climbed to a six-month high against the dollar yesterday after the Jakarta Composite Index of local shares surged 20 percent in April, the best month in a decade. Equity purchases by foreigners exceeded sales by $238 million last month, according to exchange data.
“We’ve seen some good strengthening in the rupiah on the back of easing risk aversion that’s reflected in the stock markets,” said Apratim Chakravarty, head of global markets at HSBC Holdings Plc in Jakarta. “Foreign fund flows have been strong. We think this trend should continue next week.”
Taiwan’s dollar strengthened 1.4 percent this week as China ended a ban on investments in the island following an agreement to open cross-border operations for financial-services companies and more than double the number of direct flights.
The benchmark Taiex index of the island’s shares surged on April 30 by the most since 1991 on speculation money will pour in from the mainland as investment curbs are relaxed.
The currency appreciated 2.1 percent last month, following an advance of 3.1 percent in March.
China Mobile Ltd., the world’s biggest phone company by subscribers, this week said it will buy a 12 percent stake in Far EasTone Telecommunications Co., Taiwan’s third-largest phone company, for NT$17.8 billion ($541 million).
Overweight
Standard Chartered Plc raised the Korean won to “overweight” from “neutral,” suggesting investors should hold more of the currency than benchmarks suggest. The won will gain 12 percent to 1,150 per dollar by the end of the year, David Mann, a Hong Kong-based senior foreign-exchange strategist at the bank, forecast in a research note on April 30.
The won climbed 7.8 percent last month, Asia’s best performance after the rupiah. The nation’s industrial production increased 4.8 percent in March from the previous month, a third straight gain, according to a government report released on April 30. A separate report yesterday showed exports declined 19 percent in April from a year earlier, less than the 23 percent drop forecast by economists in a Bloomberg survey.
A central bank survey this week showed manufacturers were the least pessimistic in seven months.
Risk-Taking Returns
Malaysia’s ringgit completed a second weekly gain after the central bank on April 29 left interest rates unchanged and said economic stimulus will help revive growth in the second half of the year.
“There are reasons to be positive as the fiscal stimulus should start to produce results,” said Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd. in Kuala Lumpur. “The risk-taking culture should return and that’s positive for the ringgit as well as the regional currencies.”
The ringgit strengthened 0.8 percent this week to 3.5585 per dollar.
Elsewhere, the Philippine peso gained 0.1 percent this week to 48.360 versus the greenback and the Thai baht rose 0.3 percent to 35.30. China’s yuan was little changed at 6.8230 versus 6.8273 on April 24.
Asian Stocks Gain a Seventh Week in Eight on Economic Optimism
May 2 (Bloomberg) -- Asian stocks advanced for the seventh time in eight weeks, sending a regional index to the highest level in four months, as production and earnings figures lifted confidence the region’s economies have started to recover.
Canon Inc., the world’s largest seller of digital cameras, gained 8.1 percent after cost cuts helped the company boost its profit forecast and Japan’s production levels increased for the first time in six months. Li & Fung Ltd., the biggest supplier of toys and clothes to Wal-Mart Stores Inc., added 10 percent ahead of a report that Chinese manufacturing increased for a fifth month. Lion Nathan Ltd. soared 41 percent after receiving a takeover offer.
The MSCI Asia Pacific Index added 1.6 percent this week to 90.91, a level not seen since Jan. 7. Asian markets have rallied 29 percent since the MSCI benchmark dropped to an almost six- year low on March 9.
“All the things are in place for the bear market to have ended,” Anthony Bolton, London-based president of investments at Fidelity International, which oversees $157.3 billion, told Bloomberg Television in Hong Kong. “We’re going to see a slow economic upturn, but that’s enough for the stock market. If you wait for things to get better, you’ll miss the rally.”
Japan’s Nikkei 225 Stock Average surged 3.1 percent to 8,977.37. Indonesia’s Jakarta Composite Index posted the region’s largest gain with an 8.3 percent advance after companies including PT Bank Rakyat Indonesia, the country’s No. 2 financial services provider, reported rising profits.
Swine Flu, Chrysler
Markets shrugged off the outbreak of swine flu, a disease that has reached 11 countries since last week and pushed the World Health Organization to raise its six-tier alert system to 5, one notch below a pandemic. The bankruptcy of Chrysler LLC on April 30 also failed to derail market gains.
MSCI’s Asian index plunged by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to idle factories and lay off workers.
The gauge has rallied amid signs government measures to ease the financial crisis are working. Earnings estimates for companies included in the MSCI benchmark started to rise in April after a year of falling predictions, data compiled by Bloomberg show.
Canon gained 8.1 percent to 3,130 yen after boosting its earnings estimate for the year ending in December by 12 percent on April 30. Fujitsu Ltd., Japan’s largest business computer maker, extended gains by 21 percent to 496 after forecasting a return to profitability this year. Honda Motor Co., Japan’s second-largest automaker, rose 6.5 percent after predicting it will make a profit this year as demand recovers in the U.S.
BOJ: 2010 Recovery
A Japanese government report on April 30 showed that industrial output rose for the first time in six months and at twice the pace predicted by economists. The Bank of Japan said on April 30 it expects the economy to return to growth in 2010 after a 3.1 percent contraction this year.
Li & Fung gained 10 percent to HK$22. Shimao Property Holdings Ltd., the Chinese developer controlled by billionaire Xu Rongmao, jumped 19 percent to HK$8.73. Morgan Stanley analyst Derek Kwong boosted the stock to “overweight” from “equal- weight” on April 28, citing a strong sales outlook.
China’s manufacturing purchasing manager’s index rose for a fifth month, according to a May 1 report from the National Bureau of Statistics and Federation of Logistics and Purchasing.
Taiwan-China Thaw
“While a fifth monthly improvement in the PMI reinforces our confidence that the Chinese economy is starting to turn around, it appears sensible to guard against excessive optimism,” Jing Ulrich, Hong Kong-based chairwoman of China equities at JPMorgan Chase & Co., said in an e-mail.
Lion Nathan, Australia’s second-largest brewer, jumped 42 percent to A$11.74 after Kirin Holdings Co., Japan’s largest beverage maker, agreed to pay A$3.5 billion ($2.5 billion) for the 54 percent of Lion Nathan it doesn’t already own.
Taiwan’s Taiex index posted its steepest gain since 1991 on April 30 as the island allowed Chinese investments for the first time since a civil war ended six decades ago. Far EasTone Telecommunications Co., Taiwan’s third-largest phone company, surged by 7.6 percent to NT$37.65 after China Mobile Ltd. agreed to buy a 12 percent stake for NT$17.8 billion ($529 million).
Canon Inc., the world’s largest seller of digital cameras, gained 8.1 percent after cost cuts helped the company boost its profit forecast and Japan’s production levels increased for the first time in six months. Li & Fung Ltd., the biggest supplier of toys and clothes to Wal-Mart Stores Inc., added 10 percent ahead of a report that Chinese manufacturing increased for a fifth month. Lion Nathan Ltd. soared 41 percent after receiving a takeover offer.
The MSCI Asia Pacific Index added 1.6 percent this week to 90.91, a level not seen since Jan. 7. Asian markets have rallied 29 percent since the MSCI benchmark dropped to an almost six- year low on March 9.
“All the things are in place for the bear market to have ended,” Anthony Bolton, London-based president of investments at Fidelity International, which oversees $157.3 billion, told Bloomberg Television in Hong Kong. “We’re going to see a slow economic upturn, but that’s enough for the stock market. If you wait for things to get better, you’ll miss the rally.”
Japan’s Nikkei 225 Stock Average surged 3.1 percent to 8,977.37. Indonesia’s Jakarta Composite Index posted the region’s largest gain with an 8.3 percent advance after companies including PT Bank Rakyat Indonesia, the country’s No. 2 financial services provider, reported rising profits.
Swine Flu, Chrysler
Markets shrugged off the outbreak of swine flu, a disease that has reached 11 countries since last week and pushed the World Health Organization to raise its six-tier alert system to 5, one notch below a pandemic. The bankruptcy of Chrysler LLC on April 30 also failed to derail market gains.
MSCI’s Asian index plunged by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to idle factories and lay off workers.
The gauge has rallied amid signs government measures to ease the financial crisis are working. Earnings estimates for companies included in the MSCI benchmark started to rise in April after a year of falling predictions, data compiled by Bloomberg show.
Canon gained 8.1 percent to 3,130 yen after boosting its earnings estimate for the year ending in December by 12 percent on April 30. Fujitsu Ltd., Japan’s largest business computer maker, extended gains by 21 percent to 496 after forecasting a return to profitability this year. Honda Motor Co., Japan’s second-largest automaker, rose 6.5 percent after predicting it will make a profit this year as demand recovers in the U.S.
BOJ: 2010 Recovery
A Japanese government report on April 30 showed that industrial output rose for the first time in six months and at twice the pace predicted by economists. The Bank of Japan said on April 30 it expects the economy to return to growth in 2010 after a 3.1 percent contraction this year.
Li & Fung gained 10 percent to HK$22. Shimao Property Holdings Ltd., the Chinese developer controlled by billionaire Xu Rongmao, jumped 19 percent to HK$8.73. Morgan Stanley analyst Derek Kwong boosted the stock to “overweight” from “equal- weight” on April 28, citing a strong sales outlook.
China’s manufacturing purchasing manager’s index rose for a fifth month, according to a May 1 report from the National Bureau of Statistics and Federation of Logistics and Purchasing.
Taiwan-China Thaw
“While a fifth monthly improvement in the PMI reinforces our confidence that the Chinese economy is starting to turn around, it appears sensible to guard against excessive optimism,” Jing Ulrich, Hong Kong-based chairwoman of China equities at JPMorgan Chase & Co., said in an e-mail.
Lion Nathan, Australia’s second-largest brewer, jumped 42 percent to A$11.74 after Kirin Holdings Co., Japan’s largest beverage maker, agreed to pay A$3.5 billion ($2.5 billion) for the 54 percent of Lion Nathan it doesn’t already own.
Taiwan’s Taiex index posted its steepest gain since 1991 on April 30 as the island allowed Chinese investments for the first time since a civil war ended six decades ago. Far EasTone Telecommunications Co., Taiwan’s third-largest phone company, surged by 7.6 percent to NT$37.65 after China Mobile Ltd. agreed to buy a 12 percent stake for NT$17.8 billion ($529 million).
Japanese Bonds Rise, Yields Fall to 4-Week Low, on Deflation
May 2 (Bloomberg) -- Japan’s 10-year bonds advanced, pushing yields to a four-week low yesterday, after a government report signaled Japan may return to deflation, easing concern higher prices will erode the value of debt.
Ten-year securities yesterday completed a third weekly gain, outperforming U.S. Treasuries and U.K. gilts, after a separate report showed the nation’s unemployment rate surged to the highest level since August 2004. Demand for debt also increased on concern swine flu will spread, hurting economies globally. Japan’s financial markets will be closed between May 4 and May 6 for the so-called Golden Week holidays.
“Concerns of deflation are positive for the bond market, especially as we can expect a prolonged period of monetary easing,” said Takashi Nishimura, a Tokyo-based analyst at Mitsubishi UFJ Securities Co., a unit of Japan’s largest bank by assets. “It’s going to take time for economic recovery. Swine flu is still a concern because we haven’t got a clue about its economic implications.”
The yield on the 1.3 percent bond due March 2019 fell 2.5 basis points this week to 1.395 percent, the lowest since April 3, in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price added 0.217 yen to 99.176 yen. A basis point is 0.01 percentage point.
Ten-year bond futures for June delivery gained 0.32 this week to 137.47 at the Tokyo Stock Exchange.
Japan’s bonds handed investors a return of 0.4 percent in the past three weeks through April 30, compared with a loss of 1.2 percent for holders of Treasuries, according to indexes compiled by Merrill Lynch & Co. U.K. gilts lost 0.4 percent, the indexes show.
Jobless Rate
A government report yesterday showed Japan’s jobless rate climbed to 4.8 percent in February, higher than the 4.6 percent expected by economists.
“It’s not the time to sell bonds,” said Eiji Dohke, chief strategist in Tokyo at UBS Securities Japan Ltd., one of the 24 primary dealers required to bid at government debt sales.
Consumer prices excluding fresh food fell 0.1 percent in March from a year earlier, the first decline since September 2007, the statistics bureau said yesterday in Tokyo. Economists expected a 0.2 percent decline.
“The consumer price index turned negative,” which may support investors’ sentiment, said Akihiko Inoue, chief market analyst in Tokyo at Mizuho Investors Securities Co., a unit of Japan’s second-largest bank. “Purchasing bond futures may be preferred before the long holiday.”
Breakeven Rate
Ten-year inflation-linked bonds yesterday yielded 1.86 percent more than similar-dated conventional debt, signaling investors expect the world’s second-largest economy to reenter deflation. The securities typically yield less than regular bonds because their principal payment increases at the same rate as inflation.
Japan will experience a general drop in prices through the first quarter of next year, according to a Bloomberg survey of economists.
Demand for bonds was limited after the Nikkei 225 Stock Average advanced 1.7 percent, extending gains into a third month. Chrysler LLC, the automaker that survived a near-death experience in 1979, on April 30 began a bankruptcy process designed to revive its business using small-car technology from Fiat SpA, its new partner.
“Chrysler and Fiat have formed a partnership that has a strong chance of success,” U.S. President Barack Obama said on April 30. “It’s a partnership that will save more than 30,000 jobs at Chrysler and tens of thousands of jobs at suppliers, dealers, and other businesses that rely on this company.”
‘More Optimistic’
“The market is more optimistic about Chrysler’s bankruptcy and looking toward the re-engineering of the company,” said Satoru Ogasawara, a foreign-exchange analyst and economist in Tokyo at Credit Suisse Group AG, the second-largest Swiss bank. The feeling is that “the bad news is over now.”
Demand for bonds increased as swine flu reached 11 countries, heightening concerns of a global pandemic. More than 250 people have swine flu confirmed by genetic tests, according to the World Health Organization’s Web site.
Hundreds more cases are suspected in New York, Mexico and Australia. The health agency said thousands of samples from sick patients are backlogged for testing, and disease trackers are looking at whether an outbreak in Spain should trigger a declaration of a pandemic.
Ten-year securities yesterday completed a third weekly gain, outperforming U.S. Treasuries and U.K. gilts, after a separate report showed the nation’s unemployment rate surged to the highest level since August 2004. Demand for debt also increased on concern swine flu will spread, hurting economies globally. Japan’s financial markets will be closed between May 4 and May 6 for the so-called Golden Week holidays.
“Concerns of deflation are positive for the bond market, especially as we can expect a prolonged period of monetary easing,” said Takashi Nishimura, a Tokyo-based analyst at Mitsubishi UFJ Securities Co., a unit of Japan’s largest bank by assets. “It’s going to take time for economic recovery. Swine flu is still a concern because we haven’t got a clue about its economic implications.”
The yield on the 1.3 percent bond due March 2019 fell 2.5 basis points this week to 1.395 percent, the lowest since April 3, in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price added 0.217 yen to 99.176 yen. A basis point is 0.01 percentage point.
Ten-year bond futures for June delivery gained 0.32 this week to 137.47 at the Tokyo Stock Exchange.
Japan’s bonds handed investors a return of 0.4 percent in the past three weeks through April 30, compared with a loss of 1.2 percent for holders of Treasuries, according to indexes compiled by Merrill Lynch & Co. U.K. gilts lost 0.4 percent, the indexes show.
Jobless Rate
A government report yesterday showed Japan’s jobless rate climbed to 4.8 percent in February, higher than the 4.6 percent expected by economists.
“It’s not the time to sell bonds,” said Eiji Dohke, chief strategist in Tokyo at UBS Securities Japan Ltd., one of the 24 primary dealers required to bid at government debt sales.
Consumer prices excluding fresh food fell 0.1 percent in March from a year earlier, the first decline since September 2007, the statistics bureau said yesterday in Tokyo. Economists expected a 0.2 percent decline.
“The consumer price index turned negative,” which may support investors’ sentiment, said Akihiko Inoue, chief market analyst in Tokyo at Mizuho Investors Securities Co., a unit of Japan’s second-largest bank. “Purchasing bond futures may be preferred before the long holiday.”
Breakeven Rate
Ten-year inflation-linked bonds yesterday yielded 1.86 percent more than similar-dated conventional debt, signaling investors expect the world’s second-largest economy to reenter deflation. The securities typically yield less than regular bonds because their principal payment increases at the same rate as inflation.
Japan will experience a general drop in prices through the first quarter of next year, according to a Bloomberg survey of economists.
Demand for bonds was limited after the Nikkei 225 Stock Average advanced 1.7 percent, extending gains into a third month. Chrysler LLC, the automaker that survived a near-death experience in 1979, on April 30 began a bankruptcy process designed to revive its business using small-car technology from Fiat SpA, its new partner.
“Chrysler and Fiat have formed a partnership that has a strong chance of success,” U.S. President Barack Obama said on April 30. “It’s a partnership that will save more than 30,000 jobs at Chrysler and tens of thousands of jobs at suppliers, dealers, and other businesses that rely on this company.”
‘More Optimistic’
“The market is more optimistic about Chrysler’s bankruptcy and looking toward the re-engineering of the company,” said Satoru Ogasawara, a foreign-exchange analyst and economist in Tokyo at Credit Suisse Group AG, the second-largest Swiss bank. The feeling is that “the bad news is over now.”
Demand for bonds increased as swine flu reached 11 countries, heightening concerns of a global pandemic. More than 250 people have swine flu confirmed by genetic tests, according to the World Health Organization’s Web site.
Hundreds more cases are suspected in New York, Mexico and Australia. The health agency said thousands of samples from sick patients are backlogged for testing, and disease trackers are looking at whether an outbreak in Spain should trigger a declaration of a pandemic.
Tuesday, April 28, 2009
New Zealand Annual Trade Gap Narrows as Exports Rise
April 29 (Bloomberg) -- New Zealand’s annual trade deficit narrowed in March as rising commodity prices and the sale of an aircraft bolstered exports to a record.
The gap narrowed to NZ$4.8 billion ($2.7 billion) in the 12 months ended March 31 from NZ$5.16 billion in the year through February, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg News survey of 10 analysts was for a NZ$4.89 billion shortfall.
World prices of butter, meat and other commodities rose for the first time in eight months in March, buoying exports that make up 30 percent of the New Zealand economy. The annual deficit may narrow further as a domestic recession curbs demand for imports. Finance Minister Bill English said last week the economy is probably in its sixth quarter of contraction.
“There were some positive signs for agricultural exports,” said Philip Borkin, an economist at ANZ National Bank Ltd. in Wellington. “The economy is definitely rebalancing as imports come under pressure. We think we have seen the peak in the current-account deficit.”
New Zealand’s dollar bought 56.10 U.S. cents at 11:40 a.m. in Wellington from 55.82 cents immediately before the report was released.
The current-account deficit, the broadest measure of trade because it includes investment and tourism, was a record NZ$16.07 billion, or 8.9 percent of gross domestic product in the year ended Dec. 31. ANZ expects the gap will narrow to 5.8 percent of GDP by the end of 2009.
Monthly Gap
Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren’t seasonally adjusted. In March, there was a trade surplus of NZ$324 million compared with a NZ$43 million deficit a year earlier.
Exports rose 18 percent from a year earlier to NZ$4.04 billion, led by the NZ$128 million sale of an aircraft and gains in beef, lamb and apple prices, the statistics agency said. The kiwifruit export season also began earlier than usual.
Commodity prices rose 1 percent in March from February, according to an index compiled by ANZ National Bank Ltd.
Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, gained 4.5 percent. Crude oil and aluminum exports declined.
Imports jumped 6.9 percent to NZ$3.72 billion led by electrical machinery, particularly for wind farms, the agency said. Vehicle and fuel imports fell.
Crude oil imports dropped 49 percent from a year earlier. The import and export figures aren’t adjusted for inflation and reflect changing commodity prices as well as actual shipments. Crude oil imports fell by a third to 284,000 tons from a year earlier. Prices declined 20 percent.
Imports recovered from a three-year low in February. Still, first-quarter imports slumped 13 percent from the fourth quarter, the statistics agency said.
The gap narrowed to NZ$4.8 billion ($2.7 billion) in the 12 months ended March 31 from NZ$5.16 billion in the year through February, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg News survey of 10 analysts was for a NZ$4.89 billion shortfall.
World prices of butter, meat and other commodities rose for the first time in eight months in March, buoying exports that make up 30 percent of the New Zealand economy. The annual deficit may narrow further as a domestic recession curbs demand for imports. Finance Minister Bill English said last week the economy is probably in its sixth quarter of contraction.
“There were some positive signs for agricultural exports,” said Philip Borkin, an economist at ANZ National Bank Ltd. in Wellington. “The economy is definitely rebalancing as imports come under pressure. We think we have seen the peak in the current-account deficit.”
New Zealand’s dollar bought 56.10 U.S. cents at 11:40 a.m. in Wellington from 55.82 cents immediately before the report was released.
The current-account deficit, the broadest measure of trade because it includes investment and tourism, was a record NZ$16.07 billion, or 8.9 percent of gross domestic product in the year ended Dec. 31. ANZ expects the gap will narrow to 5.8 percent of GDP by the end of 2009.
Monthly Gap
Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren’t seasonally adjusted. In March, there was a trade surplus of NZ$324 million compared with a NZ$43 million deficit a year earlier.
Exports rose 18 percent from a year earlier to NZ$4.04 billion, led by the NZ$128 million sale of an aircraft and gains in beef, lamb and apple prices, the statistics agency said. The kiwifruit export season also began earlier than usual.
Commodity prices rose 1 percent in March from February, according to an index compiled by ANZ National Bank Ltd.
Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, gained 4.5 percent. Crude oil and aluminum exports declined.
Imports jumped 6.9 percent to NZ$3.72 billion led by electrical machinery, particularly for wind farms, the agency said. Vehicle and fuel imports fell.
Crude oil imports dropped 49 percent from a year earlier. The import and export figures aren’t adjusted for inflation and reflect changing commodity prices as well as actual shipments. Crude oil imports fell by a third to 284,000 tons from a year earlier. Prices declined 20 percent.
Imports recovered from a three-year low in February. Still, first-quarter imports slumped 13 percent from the fourth quarter, the statistics agency said.
ANZ Bank’s Profit Slumps as Bad-Debt Provisions Almost Double
April 29 (Bloomberg) -- Australia & New Zealand Banking Group Ltd., the nation’s fourth-largest lender, said profit fell 28 percent in the first half as bad debts almost doubled.
The stock slumped 4.7 percent, the most in more than two months, after the Melbourne-based bank reported that net income dropped to A$1.42 billion ($1 billion) in the six months ended March 31, from A$1.96 billion a year earlier. The bank’s credit impairment charge almost doubled to A$1.44 billion.
Chief Executive Officer Mike Smith, who joined ANZ after running HSBC Holdings Plc’s Asian operations, faces an Australian economy headed for its first recession in 18 years. Cameron Clyne, CEO of larger rival National Australia Bank Ltd., reported lower earnings yesterday and said bad debts would spread from businesses to consumers.
“Arrears across a lot of their markets are picking up, so you’re seeing the impact of Australia sliding into recession,” said Sean Fenton, who manages about $324 million at Tribeca Investment Partners in Sydney. “We’re seeing the other side of the coin with bad debts accelerating, so I think that’s enough to put a halt to the bank rally.”
ANZ shares, which have rallied 33 percent since a February low, declined 78 cents to A$15.85 at 11:09 a.m. in Sydney. National Australia Bank fell 3.6 percent to A$20.51.
ANZ cut its dividend for the first time since the 1991 recession as its credit impairment charge almost doubled to A$1.44 billion. It will pay 46 cents per share for the half year.
Rising Provisions
Credit provisions rose to A$247 million and are expected to double in the full year. Provisions for credit impairments increased 72 percent to A$626 million. Individual provisions occurred primarily in Australia, including one for its securities firm and others for property, financial, and service industry businesses.
“An uptick in provision levels in March, driven largely by stress being experienced by middle-market customers,” means the bank expects full-year provision levels will be “somewhat higher” than anticipated at a trading update in February, ANZ said in today’s statement.
Gross impaired loans total A$3.69 billion, or 1.03 percent of net advances, the bank said.
“Provisioning is probably higher than first thought, but offsetting that income is also higher,” said Paul Xiradis, who manages the equivalent of $8 billion as chief executive officer of Ausbil Dexia Ltd. in Sydney including ANZ shares.
National Australia Bank said yesterday that first-half profit fell 0.9 percent to A$2.66 billion as bad debts rose. Cash earnings, which exclude gains from currency and interest rate movements on the bank’s debt, fell 9.4 percent.
Government-Backed Debt
Problems in ANZ’s markets at home have diverted Smith’s attention from Asia, where he plans to increase the bank’s business. The bank confirmed interest in Royal Bank of Scotland Plc’s Asian assets this month and plans to open 20 branches in China by 2012.
Smith has sold government-backed debt to protect the bank’s balance sheet and maintain profitability as the economy slows.
Australia may have followed the U.S., U.K., Japan and Europe into its first recession since 1991 after gross domestic product fell 0.5 percent in the fourth quarter.
“The expected slowdown in Australia and New Zealand is now playing out with the outlook for provisions in the second half likely to be somewhat more difficult than the first half and we expect that situation to continue through to early 2010,” said Smith in today’s statement.
ANZ has completed raising 87 percent of funds it plans to source in bond markets for the year through Sept. 30, it said.
Capital Ratios
Australia’s biggest lenders have sold more than $85 billion of state-backed notes since Nov. 28, when the AAA-rated government first guaranteed their funding in a bid to thaw credit markets frozen after Lehman Brothers Holdings Inc.’s bankruptcy, according to the central bank.
“The Australian banking system is considerably better placed to weather the current challenges than many other systems around the world,” the Reserve Bank of Australia said in its half-yearly Financial Stability Review published March 26.
ANZ Bank’s Tier 1 ratio, a key measure of financial health, was 8.2 percent. The cost-to-income ratio at its Australian business, a measure of profitability, dropped 162 basis points to 36.1 percent. Net interest margin, the difference between what the bank earns from loans and pays to depositors, increased 22 basis points to 2.22 percent.
The stock slumped 4.7 percent, the most in more than two months, after the Melbourne-based bank reported that net income dropped to A$1.42 billion ($1 billion) in the six months ended March 31, from A$1.96 billion a year earlier. The bank’s credit impairment charge almost doubled to A$1.44 billion.
Chief Executive Officer Mike Smith, who joined ANZ after running HSBC Holdings Plc’s Asian operations, faces an Australian economy headed for its first recession in 18 years. Cameron Clyne, CEO of larger rival National Australia Bank Ltd., reported lower earnings yesterday and said bad debts would spread from businesses to consumers.
“Arrears across a lot of their markets are picking up, so you’re seeing the impact of Australia sliding into recession,” said Sean Fenton, who manages about $324 million at Tribeca Investment Partners in Sydney. “We’re seeing the other side of the coin with bad debts accelerating, so I think that’s enough to put a halt to the bank rally.”
ANZ shares, which have rallied 33 percent since a February low, declined 78 cents to A$15.85 at 11:09 a.m. in Sydney. National Australia Bank fell 3.6 percent to A$20.51.
ANZ cut its dividend for the first time since the 1991 recession as its credit impairment charge almost doubled to A$1.44 billion. It will pay 46 cents per share for the half year.
Rising Provisions
Credit provisions rose to A$247 million and are expected to double in the full year. Provisions for credit impairments increased 72 percent to A$626 million. Individual provisions occurred primarily in Australia, including one for its securities firm and others for property, financial, and service industry businesses.
“An uptick in provision levels in March, driven largely by stress being experienced by middle-market customers,” means the bank expects full-year provision levels will be “somewhat higher” than anticipated at a trading update in February, ANZ said in today’s statement.
Gross impaired loans total A$3.69 billion, or 1.03 percent of net advances, the bank said.
“Provisioning is probably higher than first thought, but offsetting that income is also higher,” said Paul Xiradis, who manages the equivalent of $8 billion as chief executive officer of Ausbil Dexia Ltd. in Sydney including ANZ shares.
National Australia Bank said yesterday that first-half profit fell 0.9 percent to A$2.66 billion as bad debts rose. Cash earnings, which exclude gains from currency and interest rate movements on the bank’s debt, fell 9.4 percent.
Government-Backed Debt
Problems in ANZ’s markets at home have diverted Smith’s attention from Asia, where he plans to increase the bank’s business. The bank confirmed interest in Royal Bank of Scotland Plc’s Asian assets this month and plans to open 20 branches in China by 2012.
Smith has sold government-backed debt to protect the bank’s balance sheet and maintain profitability as the economy slows.
Australia may have followed the U.S., U.K., Japan and Europe into its first recession since 1991 after gross domestic product fell 0.5 percent in the fourth quarter.
“The expected slowdown in Australia and New Zealand is now playing out with the outlook for provisions in the second half likely to be somewhat more difficult than the first half and we expect that situation to continue through to early 2010,” said Smith in today’s statement.
ANZ has completed raising 87 percent of funds it plans to source in bond markets for the year through Sept. 30, it said.
Capital Ratios
Australia’s biggest lenders have sold more than $85 billion of state-backed notes since Nov. 28, when the AAA-rated government first guaranteed their funding in a bid to thaw credit markets frozen after Lehman Brothers Holdings Inc.’s bankruptcy, according to the central bank.
“The Australian banking system is considerably better placed to weather the current challenges than many other systems around the world,” the Reserve Bank of Australia said in its half-yearly Financial Stability Review published March 26.
ANZ Bank’s Tier 1 ratio, a key measure of financial health, was 8.2 percent. The cost-to-income ratio at its Australian business, a measure of profitability, dropped 162 basis points to 36.1 percent. Net interest margin, the difference between what the bank earns from loans and pays to depositors, increased 22 basis points to 2.22 percent.
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