May 5 (Bloomberg) -- Asian nations may resist dipping into their new $120 billion foreign-exchange reserve pool as the region is showing signs of emerging from the worst global recession since World War II, officials and economists said.
“It’s better if we do not take the funds,” Anggito Abimanyu, head of fiscal policy at Indonesia’s Finance Ministry, said in an interview yesterday. “If things are returning to normal, we don’t need to tap the funds. The fund is for contingencies.”
The Asian Development Bank expects regional growth to accelerate to 6 percent next year from 3.4 percent in 2009 as stimulus packages boost domestic demand. China’s 4 trillion yuan ($585 billion) spending plan is increasing consumption and supporting the region’s exports, while shipments from Taiwan, Singapore and Indonesia begin to rise on a monthly basis.
“Now that we are moving into the recovery phase, confidence is returning to the system and the risk of a funding crisis is dissipating quite quickly,” said Peter Redward, head of emerging Asia research at Barclays Capital in Singapore. “Adding another layer of funding through the initiative is not going to add anything.”
Indonesia’s rupiah has risen 11.7 percent in the past three months, making it the best performing among the 10 most-traded currencies in the Asia outside Japan, recovering from a 6.8 percent drop in the preceding three months. The South Korean won has gained 8.3 percent in the period from a 6.7 percent drop.
The Association of Southeast Asian Nations, together with Japan, China and South Korea, on May 3 agreed on terms for the so-called Chiang Mai Initiative and to use the funds in times of turmoil. The pool will be ready by year-end.
Swine Flu
“Even if we don’t need to use it, we want to be prepared,” South Korea’s Finance Minister Yoon Jeung Hyun said in an interview in Bali yesterday. “From Asia’s perspective, having another leg or another source to depend upon for liquidity is good.”
The preparation may be useful. The European Union yesterday cut its forecast for the euro-area economy to show a contraction twice as deep as it projected just three months ago. In the U.S., a report this week may show unemployment probably climbed in April to a 25-year high.
The export and tourism-dependent Asia may also be affected by swine flu, as Americans and Europeans curtail travel amid concern the World Health Organization may declare a pandemic.
“The spread of the new health threat of influenza H1N1 requires us to stay vigilant on the possible impact,” finance ministers from the 13 nations said in a statement on May 3 after announcing the terms for the reserve fund.
Fund Contributions
Japan will contribute $38.4 billion to the fund, while China and Hong Kong together will add another $38.4 billion to the pool. South Korea’s contribution will be $19.2 billion.
The Southeast Asian nations will contribute 20 percent of the total amount. Thailand, Indonesia, Malaysia and Singapore, the four biggest Southeast Asian economies, will contribute $4.77 billion each, and the Philippines will provide $3.68 billion.
The Asian financial crisis a decade ago, which forced Thailand, Indonesia and South Korea to borrow from the International Monetary Fund, helped nations including Indonesia take “proactive” steps, Indonesian President Susilo Bambang Yudhoyono said in Bali today.
The IMF arranged more than $100 billion of loans to the three Asian nations after their currencies collapsed during the 1997-1998 crisis. In return, governments were forced to cut spending, raise interest rates and sell state-owned companies.
Critics including former World Bank chief economist Joseph Stiglitz, a Nobel laureate, say IMF policies needlessly deepened the region’s recession.
International Community
Asian nations such as Indonesia choose to seek help from its neighbors instead of borrowing from the IMF during the latest crisis. Indonesia raised $5.5 billion of standby loans from the ADB, World Bank, Australia and Japan. Indonesia also increased the size of its currency swap arrangements with China and Japan to bolster access to foreign exchange.
“One of the most significant positive outcomes from this crisis has been the way the international community has rallied together,” Yudhoyono said in the speech.
Monday, May 4, 2009
Indian Rupee Rises to Two-Week High as Capital Inflows Increase
May 4 (Bloomberg) -- India’s rupee rose to the highest level in more than two weeks as overseas investors increased holdings of the nation’s shares and the currency on further signs the global recession may be drawing to an end.
The currency appreciated for a second day and Asian stocks rallied after a report showed China’s manufacturing expanded for the first time in nine months, boosting the outlook for regional exports. Foreign investors bought $1.3 billion more Indian shares than they sold in April, the biggest net monthly purchases since December 2007, according to data from the Securities & Exchange Board of India.
“Global risk aversion is consistently on the rise,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “The rupee should continue to draw benefit from that and extend the pace of increase.”
The rupee rose 0.9 percent to 49.655 per dollar as of 10:08 a.m. in Mumbai from April 29, according to data compiled by Bloomberg. It reached 49.555, the highest level since April 16. The currency may advance to 49 in a few days, Babu said. Markets in Mumbai were closed on April 30 for elections and on May 1 for a public holiday.
The MSCI Asia Pacific excluding Japan Index of stocks rose 4 percent today, headed for its highest close since October. The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 4.3 and has rebounded 45 percent from a three-year closing low reached on March 9.
Offshore contracts indicate traders are paring bets on a decline in the rupee, predicting a spot rate of 49.76 to the dollar in a month, compared with expectations for a rate of 50.49 a week ago. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.
The currency appreciated for a second day and Asian stocks rallied after a report showed China’s manufacturing expanded for the first time in nine months, boosting the outlook for regional exports. Foreign investors bought $1.3 billion more Indian shares than they sold in April, the biggest net monthly purchases since December 2007, according to data from the Securities & Exchange Board of India.
“Global risk aversion is consistently on the rise,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “The rupee should continue to draw benefit from that and extend the pace of increase.”
The rupee rose 0.9 percent to 49.655 per dollar as of 10:08 a.m. in Mumbai from April 29, according to data compiled by Bloomberg. It reached 49.555, the highest level since April 16. The currency may advance to 49 in a few days, Babu said. Markets in Mumbai were closed on April 30 for elections and on May 1 for a public holiday.
The MSCI Asia Pacific excluding Japan Index of stocks rose 4 percent today, headed for its highest close since October. The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 4.3 and has rebounded 45 percent from a three-year closing low reached on March 9.
Offshore contracts indicate traders are paring bets on a decline in the rupee, predicting a spot rate of 49.76 to the dollar in a month, compared with expectations for a rate of 50.49 a week ago. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.
Asian Stock Rally on ‘Final Leg,’ May Fall: Technical Analysis
May 4 (Bloomberg) -- Asian stocks are on the “final leg” of a rally from their March lows and face a “correction” by the middle of the month, Elliott Wave International Inc. said.
India is among markets that may give up some gains, with momentum and volumes slowing during the recent rally, Elliott Wave International said in its May Asian-Pacific Financial Forecast report. The decline is a correction within a longer stretch of advances, and prices are set to exceed their recent highs after the temporary drop, the researcher wrote.
The MSCI Asia-Pacific Index climbed 12 percent in April, the biggest monthly gain in more than a decade. That helped erase losses this year, though the measure’s still 47 percent lower than its 2007 peak.
“Corrections are due in most Asian-Pacific indexes by mid- May, and they should last through the end of the month and possibly into June,” Elliott Wave International said in this month’s report, which was released on May 1. “Thereafter, the multi-month rally should resume.”
Elliott Wave Theory, created by U.S. market analyst Ralph Elliott in 1938, attempts to predict future price moves by dividing past trends into sections, or waves, and calculating changes in value.
The principle states that fifth waves display “a slower maximum speed of price change” and that volumes in the fifth wave tends to be less than in the third, Elliott Wave International said.
Benchmark indexes in South Korea and China are among others that may decline as volumes and the rate of change slows, according to the report.
Elliott Wave International said in last month’s report that Asian stocks may gain at least 15 percent during a “multi- month” rally, citing chart formations that predicted this year’s rebound for Chinese shares.
The patterns formed by the rally in India’s Bombay Stock Exchange Sensitive Index between 2003 and 2008 also indicate that prices are poised for a “pullback,” Elliott Wave International said. The decline will be “a small second-wave correction within a much larger advance,” the researcher said.
India is among markets that may give up some gains, with momentum and volumes slowing during the recent rally, Elliott Wave International said in its May Asian-Pacific Financial Forecast report. The decline is a correction within a longer stretch of advances, and prices are set to exceed their recent highs after the temporary drop, the researcher wrote.
The MSCI Asia-Pacific Index climbed 12 percent in April, the biggest monthly gain in more than a decade. That helped erase losses this year, though the measure’s still 47 percent lower than its 2007 peak.
“Corrections are due in most Asian-Pacific indexes by mid- May, and they should last through the end of the month and possibly into June,” Elliott Wave International said in this month’s report, which was released on May 1. “Thereafter, the multi-month rally should resume.”
Elliott Wave Theory, created by U.S. market analyst Ralph Elliott in 1938, attempts to predict future price moves by dividing past trends into sections, or waves, and calculating changes in value.
The principle states that fifth waves display “a slower maximum speed of price change” and that volumes in the fifth wave tends to be less than in the third, Elliott Wave International said.
Benchmark indexes in South Korea and China are among others that may decline as volumes and the rate of change slows, according to the report.
Elliott Wave International said in last month’s report that Asian stocks may gain at least 15 percent during a “multi- month” rally, citing chart formations that predicted this year’s rebound for Chinese shares.
The patterns formed by the rally in India’s Bombay Stock Exchange Sensitive Index between 2003 and 2008 also indicate that prices are poised for a “pullback,” Elliott Wave International said. The decline will be “a small second-wave correction within a much larger advance,” the researcher said.
Sunday, May 3, 2009
Asian Stocks Advance on Chinese Manufacturing, Currency Pool
May 4 (Bloomberg) -- Asian stocks advanced, led by finance and technology companies, as manufacturing in China expanded for the first time in nine months and regional leaders pledged to start a $120 billion foreign-currency reserve pool.
China Mobile Ltd. climbed 6.8 percent in Hong Kong, and KB Financial Group Inc., owner of South Korea’s largest bank, rose 15 percent after Goldman Sachs Group Inc. advised investors to buy both stocks. Taiwan Semiconductor Manufacturing Co. gained 6.9 percent on a better-than-estimated sales forecast. Stocks also gained as the U.S. said swine flu has milder symptoms than the world’s previous influenza outbreaks.
“Investors who have been on the sidelines are slowly plowing back funds into equities, fearing they might miss the rally,” said John Koh, who helps oversee $1.1 billion at MEAG Hong Kong Ltd. “The swine flu outbreak is a concern but everyone seems well-prepared to contain it.”
The MSCI Asia Pacific excluding Japan Index jumped 4.8 percent to 294.70 as of 2:52 p.m. in Hong Kong. The gauge has gained 19 percent this year amid speculation the worst of the global recession is over. Japan’s stock market is closed for a three-day holiday. It sank by a record 53 percent last year.
Australia’s S&P/ASX 200 Index gained 3 percent. Hong Kong’s Hang Seng Index climbed 4.9 percent even as a 25-year-old Mexican was confirmed as the city’s first swine flu patient. Taiwan’s Taiex index jumped 5.6 percent after Goldman Sachs raised its recommendation on the island’s equities to “overweight.” All markets in Asia advanced.
Raising Capital
China Airlines Ltd., Taiwan’s largest carrier, gained 3.9 percent after a report said that the island may seek additional flights to mainland China. Rio Tinto Group, the world’s third- biggest mining company, climbed 4.9 percent in Sydney after Aluminum Corp. of China said it’s pressing ahead with its investment in Rio. Doosan Infracore Co., South Korea’s biggest construction-equipment maker, climbed 6.4 percent after BNP Paribas SA advised investors to buy the stock.
U.S. Standard & Poor’s 500 Index futures added 0.6 percent. The gauge rose 0.5 percent on May 1 after better-than-expected reports on consumer confidence and manufacturing. Governments worldwide from the U.S. to Japan have been widening measures to ease the worst global recession since World War II.
The Association of Southeast Asian Nations, together with Japan, China and South Korea, said they will start a $120 billion foreign-currency reserve pool by the end of the year to help revive investor confidence. The pledge was agreed upon at a weekend meeting in Bali, Indonesia.
‘Very Positive’
“It’s not so much the amounts of money being put in, but the concept of these countries getting together and cooperating,” Mark Mobius, who helps oversee $20 billion in emerging-market assets at Templeton Asset Management Ltd., said in an interview yesterday. “That’s a very positive development.”
Indonesian Finance Minister Sri Mulyani Indrawati also said at the weekend that the region was equipped to “respond positively” to swine flu. The World Health Organization as of yesterday had confirmed 898 human cases of the virus. The fact that fewer people were being killed than previous flu outbreaks is “encouraging,” Richard Besser, acting chief of the U.S. Centers for Disease Control and Prevention, told ABC News.
China Mobile, the world’s largest cell-phone operator by users, climbed 6.8 percent to HK$71.90 after it was raised to “buy” from “neutral” at Goldman Sachs, which said valuations for the stock are attractive. Goldman Sachs added China Mobile to its Asia Pacific “conviction buy” list and raised its share-price estimate by 16 percent to HK$79.
Brokerage Upgrades
In Shanghai, Baoshan Iron & Steel Co., China’s biggest steelmaker, rose 4.3 percent to 6.03 yuan. Angang Steel Co., China’s second-largest steelmaker by market value, advanced 8.1 percent to 9.39 yuan.
A China purchasing manager’s index rose to a seasonally adjusted 53.5 in April from 52.4 in March, according to a May 1 statement from the Federation of Logistics and Purchasing. A reading above 50 indicates an expansion.
KB Financial surged 15 percent to 45,700 won in Seoul. Goldman Sachs raised its recommendation to “buy” from “neutral,” saying in a report that margins may start to improve. The brokerage lifted its share-price estimate by 67 percent to 50,200 won.
Taiwan Semiconductor, the world’s No. 1 made-to-order chipmaker, jumped 6.9 percent to NT$59. The company said sales this quarter would be NT$71 billion ($2.1 billion) to NT$74 billion, compared with the median of 15 analysts’ estimates for NT$52.4 billion.
Mining Companies Advance
China Airlines advanced 3.9 percent to NT$9.57. President Ma Ying-jeou said the number of direct flights between China and Taiwan should be increased to 540 a week from 270, the Taipei Times reported on May 2. Taiwan stocks also climbed on the upgrade from Goldman Sachs, which said the island may reap benefits from improving ties with China.
Rio Tinto climbed 4.9 percent to A$67.30. Aluminum Corp.’s Vice President Lu Youqing said the company is pressing ahead with its planned $19.5 billion investment in Rio, after the Financial Times said it may be offered less convertible debt.
BHP Billiton Ltd., the world’s biggest mining company, rose 2.5 percent to A$33.82. Crude oil for June delivery rose 4.1 percent to $53.20 a barrel in New York on May 1. In London, copper surged 3.8 percent, zinc 6.3 percent and nickel 1.9 percent.
‘Doomsday Scenario’
PT Bumi Resources, Asia’s biggest exporter of power-station coal, gained 6.6 percent to 1,620 rupiah after saying first- quarter profit rose 21 percent. Doosan climbed 6.4 percent to 19,150 won after BNP raised its recommendation to “buy” from “hold”, citing a positive outlook for excavator sales in China.
“The doomsday scenario is diminishing by the day,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. “The data has become more mixed, and day-by-day people are becoming more relaxed about the outlook. But it’s still too early to say we’ve reached a clearly defined turning point.”
China Mobile Ltd. climbed 6.8 percent in Hong Kong, and KB Financial Group Inc., owner of South Korea’s largest bank, rose 15 percent after Goldman Sachs Group Inc. advised investors to buy both stocks. Taiwan Semiconductor Manufacturing Co. gained 6.9 percent on a better-than-estimated sales forecast. Stocks also gained as the U.S. said swine flu has milder symptoms than the world’s previous influenza outbreaks.
“Investors who have been on the sidelines are slowly plowing back funds into equities, fearing they might miss the rally,” said John Koh, who helps oversee $1.1 billion at MEAG Hong Kong Ltd. “The swine flu outbreak is a concern but everyone seems well-prepared to contain it.”
The MSCI Asia Pacific excluding Japan Index jumped 4.8 percent to 294.70 as of 2:52 p.m. in Hong Kong. The gauge has gained 19 percent this year amid speculation the worst of the global recession is over. Japan’s stock market is closed for a three-day holiday. It sank by a record 53 percent last year.
Australia’s S&P/ASX 200 Index gained 3 percent. Hong Kong’s Hang Seng Index climbed 4.9 percent even as a 25-year-old Mexican was confirmed as the city’s first swine flu patient. Taiwan’s Taiex index jumped 5.6 percent after Goldman Sachs raised its recommendation on the island’s equities to “overweight.” All markets in Asia advanced.
Raising Capital
China Airlines Ltd., Taiwan’s largest carrier, gained 3.9 percent after a report said that the island may seek additional flights to mainland China. Rio Tinto Group, the world’s third- biggest mining company, climbed 4.9 percent in Sydney after Aluminum Corp. of China said it’s pressing ahead with its investment in Rio. Doosan Infracore Co., South Korea’s biggest construction-equipment maker, climbed 6.4 percent after BNP Paribas SA advised investors to buy the stock.
U.S. Standard & Poor’s 500 Index futures added 0.6 percent. The gauge rose 0.5 percent on May 1 after better-than-expected reports on consumer confidence and manufacturing. Governments worldwide from the U.S. to Japan have been widening measures to ease the worst global recession since World War II.
The Association of Southeast Asian Nations, together with Japan, China and South Korea, said they will start a $120 billion foreign-currency reserve pool by the end of the year to help revive investor confidence. The pledge was agreed upon at a weekend meeting in Bali, Indonesia.
‘Very Positive’
“It’s not so much the amounts of money being put in, but the concept of these countries getting together and cooperating,” Mark Mobius, who helps oversee $20 billion in emerging-market assets at Templeton Asset Management Ltd., said in an interview yesterday. “That’s a very positive development.”
Indonesian Finance Minister Sri Mulyani Indrawati also said at the weekend that the region was equipped to “respond positively” to swine flu. The World Health Organization as of yesterday had confirmed 898 human cases of the virus. The fact that fewer people were being killed than previous flu outbreaks is “encouraging,” Richard Besser, acting chief of the U.S. Centers for Disease Control and Prevention, told ABC News.
China Mobile, the world’s largest cell-phone operator by users, climbed 6.8 percent to HK$71.90 after it was raised to “buy” from “neutral” at Goldman Sachs, which said valuations for the stock are attractive. Goldman Sachs added China Mobile to its Asia Pacific “conviction buy” list and raised its share-price estimate by 16 percent to HK$79.
Brokerage Upgrades
In Shanghai, Baoshan Iron & Steel Co., China’s biggest steelmaker, rose 4.3 percent to 6.03 yuan. Angang Steel Co., China’s second-largest steelmaker by market value, advanced 8.1 percent to 9.39 yuan.
A China purchasing manager’s index rose to a seasonally adjusted 53.5 in April from 52.4 in March, according to a May 1 statement from the Federation of Logistics and Purchasing. A reading above 50 indicates an expansion.
KB Financial surged 15 percent to 45,700 won in Seoul. Goldman Sachs raised its recommendation to “buy” from “neutral,” saying in a report that margins may start to improve. The brokerage lifted its share-price estimate by 67 percent to 50,200 won.
Taiwan Semiconductor, the world’s No. 1 made-to-order chipmaker, jumped 6.9 percent to NT$59. The company said sales this quarter would be NT$71 billion ($2.1 billion) to NT$74 billion, compared with the median of 15 analysts’ estimates for NT$52.4 billion.
Mining Companies Advance
China Airlines advanced 3.9 percent to NT$9.57. President Ma Ying-jeou said the number of direct flights between China and Taiwan should be increased to 540 a week from 270, the Taipei Times reported on May 2. Taiwan stocks also climbed on the upgrade from Goldman Sachs, which said the island may reap benefits from improving ties with China.
Rio Tinto climbed 4.9 percent to A$67.30. Aluminum Corp.’s Vice President Lu Youqing said the company is pressing ahead with its planned $19.5 billion investment in Rio, after the Financial Times said it may be offered less convertible debt.
BHP Billiton Ltd., the world’s biggest mining company, rose 2.5 percent to A$33.82. Crude oil for June delivery rose 4.1 percent to $53.20 a barrel in New York on May 1. In London, copper surged 3.8 percent, zinc 6.3 percent and nickel 1.9 percent.
‘Doomsday Scenario’
PT Bumi Resources, Asia’s biggest exporter of power-station coal, gained 6.6 percent to 1,620 rupiah after saying first- quarter profit rose 21 percent. Doosan climbed 6.4 percent to 19,150 won after BNP raised its recommendation to “buy” from “hold”, citing a positive outlook for excavator sales in China.
“The doomsday scenario is diminishing by the day,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. “The data has become more mixed, and day-by-day people are becoming more relaxed about the outlook. But it’s still too early to say we’ve reached a clearly defined turning point.”
Aecom, Citigroup, Clorox, Simon Property: U.S. Equity Preview
May 3 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading tomorrow. Stock symbols are in parentheses.
Aecom Technology Corp. (ACM:US): The architectural and engineering company said it bought Savant, a project and cost management consultant with about 600 employees, to expand in Europe. The terms of the transaction weren’t disclosed.
Citigroup Inc. (C:US): The U.S. bank may need to boost its capital reserves by as much as $10 billion, the Wall Street Journal reported, citing unidentified people familiar with the situation. The bank may need less capital if it convinces the Federal Reserve of its position, the newspaper said. Citigroup fell 8 cents, or 2.6 percent, to $2.97 on May 1.
Clorox Co. (CLX:US): The world’s largest maker of bleach may rise to $118 in five years as profit margins increase on cost cutting and stabilized commodity prices, Barron’s reported. Clorox shares fell 75 cents, or 1.3 percent, to $55.30.
Harley-Davidson Inc. (HOG:US): The biggest U.S. motorcycle manufacturer said Chief Financial Officer Tom Bergmann is leaving the company.
Mentor Graphics Corp. (MENT:US): The semiconductor design and testing software developer may rise 30 percent during the next 12 months as chipmakers renew contracts and increase spending, Barron’s reported, without citing anyone. Mentor Graphics stock rose 4 cents to $6.76.
News Corp. (NWSA:US): “X-Men Origins: Wolverine” opened as the top film during the weekend, kicking off the summer movie season with $87 million in ticket sales for News Corp.’s Fox studio. News Corp. rose 12 cents to $8.38 on May 1.
Plains Exploration & Production Co. (PXP:US): The Houston- based oil and gas producer said Soros Fund Management LLC has a 5.38 percent stake in the company.
Simon Property Group Inc. (SPG:US): The real estate investment trust along with Vornado Realty Trust (VNO:US) and Boston Properties Inc. (BXP:US) may be safe bets for investors as commercial real estate markets struggle, Barron’s reported. Optimism about REITs has been increasing as the economy shows signs of bottoming and more than a dozen property companies have raised $7 billion of common equity, the weekly newspaper said in its May 4 issue. Simon Property stock fell $4.14, or 8 percent, to $47.46 on May 1. Vornado slid $1.36, or 2.8 percent, to $47.53, and Boston Properties declined $2.89, or 5.9 percent, to $46.53.
Aecom Technology Corp. (ACM:US): The architectural and engineering company said it bought Savant, a project and cost management consultant with about 600 employees, to expand in Europe. The terms of the transaction weren’t disclosed.
Citigroup Inc. (C:US): The U.S. bank may need to boost its capital reserves by as much as $10 billion, the Wall Street Journal reported, citing unidentified people familiar with the situation. The bank may need less capital if it convinces the Federal Reserve of its position, the newspaper said. Citigroup fell 8 cents, or 2.6 percent, to $2.97 on May 1.
Clorox Co. (CLX:US): The world’s largest maker of bleach may rise to $118 in five years as profit margins increase on cost cutting and stabilized commodity prices, Barron’s reported. Clorox shares fell 75 cents, or 1.3 percent, to $55.30.
Harley-Davidson Inc. (HOG:US): The biggest U.S. motorcycle manufacturer said Chief Financial Officer Tom Bergmann is leaving the company.
Mentor Graphics Corp. (MENT:US): The semiconductor design and testing software developer may rise 30 percent during the next 12 months as chipmakers renew contracts and increase spending, Barron’s reported, without citing anyone. Mentor Graphics stock rose 4 cents to $6.76.
News Corp. (NWSA:US): “X-Men Origins: Wolverine” opened as the top film during the weekend, kicking off the summer movie season with $87 million in ticket sales for News Corp.’s Fox studio. News Corp. rose 12 cents to $8.38 on May 1.
Plains Exploration & Production Co. (PXP:US): The Houston- based oil and gas producer said Soros Fund Management LLC has a 5.38 percent stake in the company.
Simon Property Group Inc. (SPG:US): The real estate investment trust along with Vornado Realty Trust (VNO:US) and Boston Properties Inc. (BXP:US) may be safe bets for investors as commercial real estate markets struggle, Barron’s reported. Optimism about REITs has been increasing as the economy shows signs of bottoming and more than a dozen property companies have raised $7 billion of common equity, the weekly newspaper said in its May 4 issue. Simon Property stock fell $4.14, or 8 percent, to $47.46 on May 1. Vornado slid $1.36, or 2.8 percent, to $47.53, and Boston Properties declined $2.89, or 5.9 percent, to $46.53.
Joblessness Probably Rose to 25-Year High: U.S. Economy Preview
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.
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.
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
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