Published: June 10 2009 03:00 | Last updated: June 10 2009 03:00
Sweeping emergency measures adopted by the Japanese authorities have helped to avert a feared credit crisis, recent developments show.
Earlier this year Japan was gripped by the fear that the global financial meltdown would lead to domestic crisis, with bankruptcies surging and weakened share markets plunging further. Companies hoarded cash.
But that grim scenario failed to materialise and a measure of calm has re-turned to the capital markets. The monthly count of bankruptcies fell in May for the first time in a year.
"The tsunami has passed," said Tatsuya Terazawa, director of the economic and industrial policy division at the ministry of economy. "When the market was just going in one direction - down - we had no idea what would happen," he said. "[But] I think the sense of panic is gone."
Masaaki Shirakawa, governor of the Bank of Japan, said yesterday: "Hopefully, the worst is behind us." While revised gross domestic product figures for the January-March quarter, to be unveiled tomorrow, are expected to show the economy remained anaemic, in the past few months the stock market has enjoyed a rally that has even seasoned investors scratching their heads. The Nikkei average has soared 38 per cent in the three months since March 10, when it hit a 26-year low of 7,054.98.
Policymakers moved more quickly than usual to put measures in place and send the message that the government would do whatever it needed to support the market. The government set aside Y30,000bn in loan guarantees to encourage banks to lend to cash-strapped companies. Just over a third of that amount has been used since the end of October and demand has eased since March, indicating the programme is having its desired effect.
Meanwhile, the Bank of Japan stepped in to ease the pressure on banks and encouraged them to in-crease lending by buying commercial paper and other assets on their books.
At the nadir of the Nikkei average's dip, the Financial Services Agency asked banks to be flexible on loan covenants and to consider using syndicated loans as a way to provide funding while minimising risk.
The consensus is that these measures are having a positive effect, particularly in averting large-scale bankruptcies. But a concern is whether the measures will provide lasting relief or will turn out to be merely a stop gap solution.
"There is a possibility that the positive impact of the policy measures will run out of steam," said Nobuo Tomoda, senior manager in the research department of Tokyo Shoko Research, a credit research group.
Tuesday, June 9, 2009
Monday, June 8, 2009
Australian Business Confidence Jumps Most Since 2001
June 9 (Bloomberg) -- Australian business confidence jumped in May by the most in almost eight years after the government said it will spend A$22 billion (A$17 billion) to build roads, railways and schools.
The sentiment index rose 12 points to minus 2, the highest level since February 2008, according to a National Australia Bank Ltd. survey of more than 560 companies conducted between May 25 and May 29, and released in Sydney today. A figure below zero shows pessimists outnumbered optimists.
Central bank Governor Glenn Stevens left the benchmark interest rate a 49-year low of 3 percent last week ahead of a report that showed Australia’s economy is one of only a few, including China and India, that grew in the first quarter. The government announced a record building program on May 12 to spur domestic demand.
“The stimulus from the federal budget has clearly raised hopes of a government investment-led recovery, with construction industry confidence leading the way,” said Alan Oster, chief economist at National Australia Bank in Melbourne.
“The survey reinforces the point that the Australian economy continues to outperform other” developed economies, Oster added.
The Australian dollar traded at 79.18 U.S. cents at 11:39 a.m. in Sydney from 79.20 cents just before the report was released. The two-year government bond yield gained 1 basis point to 3.89 percent. A basis point is 0.01 percentage point.
Job Advertisements
A separate report published today shows Australian advertisements for job vacancies were little changed in May, after tumbling to a record low in April. Jobs advertised in newspapers and on the Internet dropped 0.2 percent from April and 49.1 percent from a year earlier.
Borrowing costs have tumbled in Australia after Governor Stevens and his board slashed the benchmark lending rate by a record 4.25 percentage points between September and April.
The government also distributed more than A$12 billion in cash to low- and medium income households to stoke spending, driving up retail sales at companies such as Harvey Norman Holdings Ltd.. Treasurer Wayne Swan last month also unveiled a A$22 billion program of spending on roads, rails, ports, hospitals and schools.
“We are likely to see significant growth in public spending over the year ahead, reflecting fiscal policy decisions,” Stevens said in a speech on June 4.
Economic Growth
“Our expectation remains that the economy will be well placed for expansion toward the end of this year,” he added.
Gross domestic product unexpectedly rose 0.4 percent in the first quarter from the previous three months as consumer spending and exports helped Australia skirt a recession, a report showed on June 3.
Still, National Australia Bank’s gauge of forward orders fell 3 points in May to minus 14, “suggesting a still soggy outlook,” Oster said.
Australia’s economy will shrink 0.5 percent this year, before expanding 1 percent in 2010, Oster forecasts.
Australia’s “smaller downturn than most countries” reflects the nation’s limited exposure to “financial excesses that have been the problem in some other countries, as well as the good fortune of our position in relation to China,” Stevens said last week.
National Australia’s business conditions gauge, a measure of hiring, sales and profits, fell 4 points to minus 14.
Governor Stevens and his central bank board will keep the benchmark interest rate at 3 percent to gauge the impact of prior cuts to the overnight cash rate target, Oster said.
“We still see the Reserve Bank as keen to re-establish more normal policy settings once recovery becomes entrenched,” Oster added. The benchmark rate will be raised to 3.5 percent by the end of next year, he said.
The sentiment index rose 12 points to minus 2, the highest level since February 2008, according to a National Australia Bank Ltd. survey of more than 560 companies conducted between May 25 and May 29, and released in Sydney today. A figure below zero shows pessimists outnumbered optimists.
Central bank Governor Glenn Stevens left the benchmark interest rate a 49-year low of 3 percent last week ahead of a report that showed Australia’s economy is one of only a few, including China and India, that grew in the first quarter. The government announced a record building program on May 12 to spur domestic demand.
“The stimulus from the federal budget has clearly raised hopes of a government investment-led recovery, with construction industry confidence leading the way,” said Alan Oster, chief economist at National Australia Bank in Melbourne.
“The survey reinforces the point that the Australian economy continues to outperform other” developed economies, Oster added.
The Australian dollar traded at 79.18 U.S. cents at 11:39 a.m. in Sydney from 79.20 cents just before the report was released. The two-year government bond yield gained 1 basis point to 3.89 percent. A basis point is 0.01 percentage point.
Job Advertisements
A separate report published today shows Australian advertisements for job vacancies were little changed in May, after tumbling to a record low in April. Jobs advertised in newspapers and on the Internet dropped 0.2 percent from April and 49.1 percent from a year earlier.
Borrowing costs have tumbled in Australia after Governor Stevens and his board slashed the benchmark lending rate by a record 4.25 percentage points between September and April.
The government also distributed more than A$12 billion in cash to low- and medium income households to stoke spending, driving up retail sales at companies such as Harvey Norman Holdings Ltd.. Treasurer Wayne Swan last month also unveiled a A$22 billion program of spending on roads, rails, ports, hospitals and schools.
“We are likely to see significant growth in public spending over the year ahead, reflecting fiscal policy decisions,” Stevens said in a speech on June 4.
Economic Growth
“Our expectation remains that the economy will be well placed for expansion toward the end of this year,” he added.
Gross domestic product unexpectedly rose 0.4 percent in the first quarter from the previous three months as consumer spending and exports helped Australia skirt a recession, a report showed on June 3.
Still, National Australia Bank’s gauge of forward orders fell 3 points in May to minus 14, “suggesting a still soggy outlook,” Oster said.
Australia’s economy will shrink 0.5 percent this year, before expanding 1 percent in 2010, Oster forecasts.
Australia’s “smaller downturn than most countries” reflects the nation’s limited exposure to “financial excesses that have been the problem in some other countries, as well as the good fortune of our position in relation to China,” Stevens said last week.
National Australia’s business conditions gauge, a measure of hiring, sales and profits, fell 4 points to minus 14.
Governor Stevens and his central bank board will keep the benchmark interest rate at 3 percent to gauge the impact of prior cuts to the overnight cash rate target, Oster said.
“We still see the Reserve Bank as keen to re-establish more normal policy settings once recovery becomes entrenched,” Oster added. The benchmark rate will be raised to 3.5 percent by the end of next year, he said.
Asian Stocks Fall on Valuation Concern; BHP, Hutchison Decline
June 9 (Bloomberg) -- Asian stocks fell, led by commodity and finance companies, on concern a three-month rally had overvalued earnings prospects.
BHP Billiton Ltd., the world’s largest mining company, declined 3.1 percent from a more than eight-month high in Sydney. Cnooc Ltd. lost 3.3 percent in Hong Kong, pacing declines by energy companies, Asia’s best performers in the past month. Billionaire Li Ka-shing’s Hutchison Whampoa Ltd. slumped 4.7 percent as Fitch Ratings forecast a bigger contraction for Hong Kong’s economy.
“People are just buying and selling stocks for short-term returns,” said Naoki Fujiwara, who oversees about $6.1 billion at Shinkin Asset Management Co. in Tokyo. “There are concerns the market has risen too fast and will have a big drop, so investors don’t want to hold any stocks for a long time.”
Three stocks declined for each one that advanced on the MSCI Asia Pacific Index, which dropped 0.8 percent to 101.50 as of 12:47 p.m. in Tokyo. The gauge has risen 44 percent from a five-year low on March 9 on optimism government stimulus measures worldwide are succeeding in reviving growth.
Hong Kong’s Hang Seng Index sank 2.3 percent, while Australia’s S&P/ASX 200 Index, which resumed trading today after a one-day holiday, fell 0.5 percent. Japan’s Nikkei 225 Stock Average declined 1.1 percent as Nipponkoa Insurance Co. slumped 3.7 percent on a newspaper report that former executives opposed a merger with a rival.
Limiting declines in Tokyo, Softbank Corp. jumped 4.2 percent after saying it will sell Apple Inc.’s new iPhone. CSL Ltd., a maker of blood plasma products, climbed 5.6 percent in Sydney on a plan to buy back shares after dropping a $3.1 billion acquisition.
Summer Recovery?
Futures on the U.S. Standard & Poor’s 500 Index lost 0.3 percent. The gauge dipped 0.1 percent yesterday as a drop in commodities shares countered gains among financial companies. Paul Krugman, a Princeton University economist, said he wouldn’t be surprised “if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer.”
BHP lost 3.1 percent to A$36.99, following an 8.7 percent surge on June 5 that took the stock to its highest close since Sept. 22. Those gains came after the company said it will pay Rio Tinto Group $5.8 billion to create an iron-ore venture.
Materials producers and energy stocks are the best performing of the MSCI Asia Pacific Index’s 10 industry groups in the past month on speculation a pick-up in global growth will boost demand for oil and metals. The rally has taken the average valuation of companies in the materials sub-index to 23 times reported profit, the highest since March 2004.
Cashing Out
Cnooc, China’s largest offshore oil producer, slumped 3.3 percent to HK$10.46. Sumitomo Metal Mining Co., Japan’s biggest copper smelter, lost 2.2 percent to 1,445 yen, its third day of declines since closing at an 11-month high. China Steel Corp. sank 3.4 percent to NT$27.35 in Taipei, paring its advance in the past three months to 30 percent.
“It’s no surprise to see people cash out to some degree after the huge run we’ve had in the last couple of weeks,” said Michiya Tomita, who helps manage $51 billion at Mitsubishi UFJ Asset Management Co. in Hong Kong.
Hutchison slumped 4.7 percent to HK$55.25. Hong Kong’s economy will probably contract 9.1 percent in 2009, according to Fitch Ratings. The ratings agency previously estimated that Hong Kong’s economy will shrink 6.4 percent this year, James McCormack, head of Asian sovereign ratings at Fitch said today.
Japanese Insurers
Nipponkoa lost 3.7 percent to 566 yen, leading Japanese insurers to the biggest slump among the Topix’s 33 industry groups. Former executives wrote in a letter to the company that a planned merger would benefit Sompo Japan Insurance Co. at the expense of Nipponkoa, the Asahi newspaper reported today.
The insurers said in March they planned to merge next year. Sompo slipped 1.3 percent to 712 yen.
Softbank, Japan’s No. 3 mobile-phone carrier, rose 4.2 percent to 1,874 yen. The company said today it will start offering the new model of the iPhone on June 26, which Apple said can run applications twice as fast as the current version.
Melbourne-based CSL climbed 5.6 percent to A$30.61 after saying it will repurchase up to 9 percent of its shares, costing about A$1.59 billion ($1.3 billion). The company dropped its proposed acquisition of Talecris Biotherapeutics Holdings Corp. after the plan was blocked by the U.S. Federal Trade Commission.
BHP Billiton Ltd., the world’s largest mining company, declined 3.1 percent from a more than eight-month high in Sydney. Cnooc Ltd. lost 3.3 percent in Hong Kong, pacing declines by energy companies, Asia’s best performers in the past month. Billionaire Li Ka-shing’s Hutchison Whampoa Ltd. slumped 4.7 percent as Fitch Ratings forecast a bigger contraction for Hong Kong’s economy.
“People are just buying and selling stocks for short-term returns,” said Naoki Fujiwara, who oversees about $6.1 billion at Shinkin Asset Management Co. in Tokyo. “There are concerns the market has risen too fast and will have a big drop, so investors don’t want to hold any stocks for a long time.”
Three stocks declined for each one that advanced on the MSCI Asia Pacific Index, which dropped 0.8 percent to 101.50 as of 12:47 p.m. in Tokyo. The gauge has risen 44 percent from a five-year low on March 9 on optimism government stimulus measures worldwide are succeeding in reviving growth.
Hong Kong’s Hang Seng Index sank 2.3 percent, while Australia’s S&P/ASX 200 Index, which resumed trading today after a one-day holiday, fell 0.5 percent. Japan’s Nikkei 225 Stock Average declined 1.1 percent as Nipponkoa Insurance Co. slumped 3.7 percent on a newspaper report that former executives opposed a merger with a rival.
Limiting declines in Tokyo, Softbank Corp. jumped 4.2 percent after saying it will sell Apple Inc.’s new iPhone. CSL Ltd., a maker of blood plasma products, climbed 5.6 percent in Sydney on a plan to buy back shares after dropping a $3.1 billion acquisition.
Summer Recovery?
Futures on the U.S. Standard & Poor’s 500 Index lost 0.3 percent. The gauge dipped 0.1 percent yesterday as a drop in commodities shares countered gains among financial companies. Paul Krugman, a Princeton University economist, said he wouldn’t be surprised “if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer.”
BHP lost 3.1 percent to A$36.99, following an 8.7 percent surge on June 5 that took the stock to its highest close since Sept. 22. Those gains came after the company said it will pay Rio Tinto Group $5.8 billion to create an iron-ore venture.
Materials producers and energy stocks are the best performing of the MSCI Asia Pacific Index’s 10 industry groups in the past month on speculation a pick-up in global growth will boost demand for oil and metals. The rally has taken the average valuation of companies in the materials sub-index to 23 times reported profit, the highest since March 2004.
Cashing Out
Cnooc, China’s largest offshore oil producer, slumped 3.3 percent to HK$10.46. Sumitomo Metal Mining Co., Japan’s biggest copper smelter, lost 2.2 percent to 1,445 yen, its third day of declines since closing at an 11-month high. China Steel Corp. sank 3.4 percent to NT$27.35 in Taipei, paring its advance in the past three months to 30 percent.
“It’s no surprise to see people cash out to some degree after the huge run we’ve had in the last couple of weeks,” said Michiya Tomita, who helps manage $51 billion at Mitsubishi UFJ Asset Management Co. in Hong Kong.
Hutchison slumped 4.7 percent to HK$55.25. Hong Kong’s economy will probably contract 9.1 percent in 2009, according to Fitch Ratings. The ratings agency previously estimated that Hong Kong’s economy will shrink 6.4 percent this year, James McCormack, head of Asian sovereign ratings at Fitch said today.
Japanese Insurers
Nipponkoa lost 3.7 percent to 566 yen, leading Japanese insurers to the biggest slump among the Topix’s 33 industry groups. Former executives wrote in a letter to the company that a planned merger would benefit Sompo Japan Insurance Co. at the expense of Nipponkoa, the Asahi newspaper reported today.
The insurers said in March they planned to merge next year. Sompo slipped 1.3 percent to 712 yen.
Softbank, Japan’s No. 3 mobile-phone carrier, rose 4.2 percent to 1,874 yen. The company said today it will start offering the new model of the iPhone on June 26, which Apple said can run applications twice as fast as the current version.
Melbourne-based CSL climbed 5.6 percent to A$30.61 after saying it will repurchase up to 9 percent of its shares, costing about A$1.59 billion ($1.3 billion). The company dropped its proposed acquisition of Talecris Biotherapeutics Holdings Corp. after the plan was blocked by the U.S. Federal Trade Commission.
Reliance May Give $600 Million Order to Alcatel, Standard Says
June 9 (Bloomberg) -- Reliance Communications Ltd. may give a contract worth as much as $600 million to Alcatel-Lucent SA, Business Standard reported, citing unidentified people familiar with the developments.
The order to operate and maintain Reliance’s global system for mobile communications and optical fiber networks may be awarded in a couple of weeks, the newspaper said.
Gaurav Wahi, a Mumbai-based spokesman at Reliance, declined to comment on the report when called by Bloomberg News.
Alcatel-Lucent and Reliance, India’s second-biggest wireless carrier, agreed in May last year to form a venture to manage mobile-phone networks in India.
The order to operate and maintain Reliance’s global system for mobile communications and optical fiber networks may be awarded in a couple of weeks, the newspaper said.
Gaurav Wahi, a Mumbai-based spokesman at Reliance, declined to comment on the report when called by Bloomberg News.
Alcatel-Lucent and Reliance, India’s second-biggest wireless carrier, agreed in May last year to form a venture to manage mobile-phone networks in India.
Sunday, June 7, 2009
India May Say Factory Output Fell for Third Month: Week Ahead
June 8 (Bloomberg) -- India’s industrial production may decline for the third straight month in April as the global recession curtails overseas sales of goods.
The government may say on June 12 that output at factories, utilities and mines fell from a year earlier after declining 2.3 percent in March and 0.7 percent in February, according to the median estimate in a Bloomberg News survey.
Exports fell 33.2 percent in April, the most in at least 14 years, as the worst global recession since the Great Depression slashed demand for the nation’s jewelry, clothing and other products. Falling overseas sales may cost India about 10 million jobs, the Federation of Indian Export Organisation, a lobby group, estimates.
The Society of Indian Automobile Manufacturers will release data for domestic car sales in May today after companies sold 4.2 percent more cars in April from a year earlier.
India’s rupee strengthened last week on optimism a rally in the benchmark share index will spur overseas investors to raise holdings of local stocks from a 10-month high.
The rupee climbed 0.1 percent to 47.1225 per dollar in the five days through June 5 in Mumbai, according to data compiled by Bloomberg. That took its gains this quarter to 7.6 percent, the third-best among the 10 most-used Asian currencies.
Bonds, Stocks
Government bonds gained last week after a report showed the inflation rate slowed. The yield on the 6.05 percent note due February 2019 fell 14 basis points to 6.56 percent in Mumbai, according to the central bank’s trading system. The price rose 1.01 per 100-rupee face amount, to 96.41. A basis point is 0.01 percentage point.
The Sensitive index rose 3.3 percent last week, extending its winning streak to 13 weeks. The index completed the longest weekly winning streak since August 2005 after President Pratibha Devisingh Patil told parliament on June 4 the government may allow greater overseas investment and inject capital into lenders to stoke economic growth. Fund inflows surged to a one- year high.
Grasim Industries Ltd., India’s third-biggest cement maker and producer of viscose-staple fiber, and Tata Motors Ltd., the largest truck maker, were the biggest gainers last week. Grasim added 19.5 percent and Tata Motors 15.5 percent.
The government may say on June 12 that output at factories, utilities and mines fell from a year earlier after declining 2.3 percent in March and 0.7 percent in February, according to the median estimate in a Bloomberg News survey.
Exports fell 33.2 percent in April, the most in at least 14 years, as the worst global recession since the Great Depression slashed demand for the nation’s jewelry, clothing and other products. Falling overseas sales may cost India about 10 million jobs, the Federation of Indian Export Organisation, a lobby group, estimates.
The Society of Indian Automobile Manufacturers will release data for domestic car sales in May today after companies sold 4.2 percent more cars in April from a year earlier.
India’s rupee strengthened last week on optimism a rally in the benchmark share index will spur overseas investors to raise holdings of local stocks from a 10-month high.
The rupee climbed 0.1 percent to 47.1225 per dollar in the five days through June 5 in Mumbai, according to data compiled by Bloomberg. That took its gains this quarter to 7.6 percent, the third-best among the 10 most-used Asian currencies.
Bonds, Stocks
Government bonds gained last week after a report showed the inflation rate slowed. The yield on the 6.05 percent note due February 2019 fell 14 basis points to 6.56 percent in Mumbai, according to the central bank’s trading system. The price rose 1.01 per 100-rupee face amount, to 96.41. A basis point is 0.01 percentage point.
The Sensitive index rose 3.3 percent last week, extending its winning streak to 13 weeks. The index completed the longest weekly winning streak since August 2005 after President Pratibha Devisingh Patil told parliament on June 4 the government may allow greater overseas investment and inject capital into lenders to stoke economic growth. Fund inflows surged to a one- year high.
Grasim Industries Ltd., India’s third-biggest cement maker and producer of viscose-staple fiber, and Tata Motors Ltd., the largest truck maker, were the biggest gainers last week. Grasim added 19.5 percent and Tata Motors 15.5 percent.
Asian Currencies Fall Led by Won, Rupiah as U.S. Slowdown Eases
June 8 (Bloomberg) -- South Korea’s won and the Indonesian rupiah led declines among Asian currencies as signs a U.S. recession is easing helped strengthen the dollar, damping demand for riskier emerging-market assets.
ICE’s Dollar Index, which tracks the greenback against six major currencies, rose on June 5 by the most since January after a government report showed the U.S. lost fewer jobs than economists had forecast in May. Taiwan’s dollar weakened for a fourth day on speculation officials will cap appreciation to bolster exports before data today that may show overseas sales shrank for a ninth month.
“The global strength of the dollar is the key driving force,” said Seoul-based Ko Yun Jin, a currency dealer with Kookmin Bank. “Traders feel comfortable with pushing the dollar higher but will have to keep a tab on the performance of exporters and foreign investors.”
The won fell 0.7 percent to 1,252.20 per dollar as of 12:10 p.m. in Seoul, according to data compiled by Bloomberg. The currency reached 1,225.97 on May 11, the highest level since October. The rupiah dropped 0.6 percent to 9,993 and the Taiwan dollar lost 0.3 percent to NT$32.831.
Malaysia’s ringgit weakened for a fifth day before a government report on June 10 that may show factory output slumped for an eighth month in April. The currency declined 0.5 percent to 3.5125 per dollar.
Malaysia Production
Industrial production fell 13 percent from a year earlier after dropping 14 percent in March, according to the median estimate of economists surveyed by Bloomberg News. The nation’s exports tumbled 26 percent in April, the trade ministry reported on June 4.
The dollar traded near the strongest level in a month against the yen on speculation a U.S. recession is easing. The greenback traded at 98.44 yen from 98.64 on June 5 in New York, when it climbed to 98.89, the highest level since May 8.
The Asian financial crisis and the bursting of the Internet bubble in 2000 “warned us against underestimating the dollar finding a floor,” DBS Group Holdings Inc. said in a research report published today.
A U.S. Commerce Department report on June 11 will show consumers increased spending in May. Retail sales climbed 0.5 percent after two months of declines, according to economists in a Bloomberg survey. U.S. payrolls fell by 345,000 in May, the smallest decrease in eight months, after a revised 504,000 loss in April, the Labor Department said on June 5.
Jobs Data
“The strong job data was hard to ignore in terms of the impact on the greenback,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “There’s some covering of short-dollar positions.” A short position is a bet that a currency will decline.
Taiwan’s dollar weakened before a 4 p.m. report that will show overseas sales declined 34 percent in May from a year earlier, compared with a 34 percent drop the previous month and a 36 percent loss in March, according to a separate Bloomberg survey.
The currency has “maintained dynamic stability” with official action only taken when changes are “excessive,” Perng Fai-nan, the island’s central bank governor, said yesterday. Exchange rates must be flexible to prevent the currency from being attacked by speculators, Perng said.
Elsewhere, Thailand’s baht fell 0.4 percent to 34.33 per dollar. China’s yuan traded little changed at 6.8356 and the Philippine peso declined 0.5 percent to 47.470.
ICE’s Dollar Index, which tracks the greenback against six major currencies, rose on June 5 by the most since January after a government report showed the U.S. lost fewer jobs than economists had forecast in May. Taiwan’s dollar weakened for a fourth day on speculation officials will cap appreciation to bolster exports before data today that may show overseas sales shrank for a ninth month.
“The global strength of the dollar is the key driving force,” said Seoul-based Ko Yun Jin, a currency dealer with Kookmin Bank. “Traders feel comfortable with pushing the dollar higher but will have to keep a tab on the performance of exporters and foreign investors.”
The won fell 0.7 percent to 1,252.20 per dollar as of 12:10 p.m. in Seoul, according to data compiled by Bloomberg. The currency reached 1,225.97 on May 11, the highest level since October. The rupiah dropped 0.6 percent to 9,993 and the Taiwan dollar lost 0.3 percent to NT$32.831.
Malaysia’s ringgit weakened for a fifth day before a government report on June 10 that may show factory output slumped for an eighth month in April. The currency declined 0.5 percent to 3.5125 per dollar.
Malaysia Production
Industrial production fell 13 percent from a year earlier after dropping 14 percent in March, according to the median estimate of economists surveyed by Bloomberg News. The nation’s exports tumbled 26 percent in April, the trade ministry reported on June 4.
The dollar traded near the strongest level in a month against the yen on speculation a U.S. recession is easing. The greenback traded at 98.44 yen from 98.64 on June 5 in New York, when it climbed to 98.89, the highest level since May 8.
The Asian financial crisis and the bursting of the Internet bubble in 2000 “warned us against underestimating the dollar finding a floor,” DBS Group Holdings Inc. said in a research report published today.
A U.S. Commerce Department report on June 11 will show consumers increased spending in May. Retail sales climbed 0.5 percent after two months of declines, according to economists in a Bloomberg survey. U.S. payrolls fell by 345,000 in May, the smallest decrease in eight months, after a revised 504,000 loss in April, the Labor Department said on June 5.
Jobs Data
“The strong job data was hard to ignore in terms of the impact on the greenback,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “There’s some covering of short-dollar positions.” A short position is a bet that a currency will decline.
Taiwan’s dollar weakened before a 4 p.m. report that will show overseas sales declined 34 percent in May from a year earlier, compared with a 34 percent drop the previous month and a 36 percent loss in March, according to a separate Bloomberg survey.
The currency has “maintained dynamic stability” with official action only taken when changes are “excessive,” Perng Fai-nan, the island’s central bank governor, said yesterday. Exchange rates must be flexible to prevent the currency from being attacked by speculators, Perng said.
Elsewhere, Thailand’s baht fell 0.4 percent to 34.33 per dollar. China’s yuan traded little changed at 6.8356 and the Philippine peso declined 0.5 percent to 47.470.
Deans fight crisis fires with MBA overhaul
Published: June 8 2009 03:00 | Last updated: June 8 2009 03:00
What a difference a year makes. On April 8 2008 Harvard Business School trumpeted 100 triumphant years of the MBA. A year later it published an introspective case study questioning its role and the Harvard Business Review began an online debate - How to Fix Business Schools.
Harvard is not alone in this volte-face, tacitly acknowledging that something is broken in the world of management education. At a recent meeting of the AACSB, the US business school accreditation body, many US professors were heard to claim they had really been socialists all along. One participant described the meeting as "like a therapy session for US deans".
Views on the culpability of schools in the economic meltdown range from one extreme to another, as do the prescriptions for how to win back the trust of business and students.
Richard Cosier, chairman of the AACSB board and dean of the Krannert school at Purdue University, represents one end of the spectrum. He says personal greed and unethical lending practices were the cause of the problem, not business schools. Saying schools should not teach complex financial models is erroneous, he says. "That's like saying you can't teach chemistry because you can make things explode . . . People make their own decisions."
Others are more circumspect. Santiago Iñiguez, dean of IE Business Schoo l in Spain, voices the opinion of many when he says: "Not accepting part of the responsibility would be to say we are not part of the game."
While some believe schools can carry on regardless, other schools have introduced new and revised core courses and electives. Harvard, historically slow to act, has been one of the first out of the blocks, along with Insead, to launch non-degree executive programmes looking at the new issues business face. Most schools are re-addressing the issues of risk and financial modelling in their courses. But is this enough?
At Stanford business school , Garth Saloner, a long-time professor who has been appointed to the dean's job at Stanford from September, believes the pedagogy as well as the content has to change. He was the chief engineer of the new-look Stanford MBA, which requires all new students to work in small tutorial groups to discuss various business issues. The aim, he says, is to "equip students to think critically about the issues business face".
Others believe the problem is deeper and systemic. Dipak Jain, out-going dean of the Kellogg school at Northwestern University , says the last 10 to 15 years of economic growth have come with a cost. "Students have become more focused on earning rather than learning. There has to be a correction in the salaries of MBAs."
Prof Saloner is dismissive of the idea that the two-year Stanford MBA programme will prove too costly to attract the best students, but Prof Jain argues that cost will prove a real factor for many schools. "My view is that management education will be like a sandwich, with students going to the top schools and to state schools." Mid-market schools, will survive only if they specialise he says.
Cost will also fuel the growth in part-time or technology-driven programmes, he believes.
Even these changes do not go far enough for some. Henry Mintzberg, management professor at McGill in Canada and Insead in France and Singapore, and long-term critic of the traditional US MBA model is typically outspoken, saying the pedagogy and structure of US MBA programmes need to change. "US business schools just don't get it. They keep trying to fix what they have already got."
He argues that the case method, pioneered by Harvard and taught in most US schools, teaches decision-making that is inappropriate for younger students, who increasingly make up the population in the US MBA classroom. In the Harvard class of 2008, for example, more than two-thirds of the students had graduated from undergraduate programmes in the previous four years.
Peter Tufano, a Harvard finance professor, says the case study method and its role in "developing 'arrogant' students" was one of the concerns raised by faculty as Harvard began its months of soul-searching.
Philip Delves-Broughton, Harvard alumnus from the class of 2006, and a thorn in the side of his alma mater, believes dramatic change is needed. "They [Harvard] are trying to sell a Hummer when everyone wants a Fiat Cinquecento."
Prof Mintzberg goes further by arguing that innovation in management education is no longer being created in the US but in Europe. "They [US schools] don't create managers, they create hubris. And they will not willingly change. US business schools have been riding a wave . . . short of going bankrupt or their applications dropping to zero, they won't change."
Under the spotlight
As the widely regarded leader of the business school world, Harvard is an easy target for those who feel the need to blame business schools and their MBA graduates for the financial meltdown.
But even the patricians at Harvard must have been concerned by the number of graduates who were key figures as the crisis unfolded, including Hank Paulson, former US Treasury secretary, Christopher Cox, former chairman of the Securities and Exchange Commission, Stan O'Neal and John Thain, the last two heads of Merrill Lynch. And in Europe Andy Hornby, former chief executive of HBOS.
What a difference a year makes. On April 8 2008 Harvard Business School trumpeted 100 triumphant years of the MBA. A year later it published an introspective case study questioning its role and the Harvard Business Review began an online debate - How to Fix Business Schools.
Harvard is not alone in this volte-face, tacitly acknowledging that something is broken in the world of management education. At a recent meeting of the AACSB, the US business school accreditation body, many US professors were heard to claim they had really been socialists all along. One participant described the meeting as "like a therapy session for US deans".
Views on the culpability of schools in the economic meltdown range from one extreme to another, as do the prescriptions for how to win back the trust of business and students.
Richard Cosier, chairman of the AACSB board and dean of the Krannert school at Purdue University, represents one end of the spectrum. He says personal greed and unethical lending practices were the cause of the problem, not business schools. Saying schools should not teach complex financial models is erroneous, he says. "That's like saying you can't teach chemistry because you can make things explode . . . People make their own decisions."
Others are more circumspect. Santiago Iñiguez, dean of IE Business Schoo l in Spain, voices the opinion of many when he says: "Not accepting part of the responsibility would be to say we are not part of the game."
While some believe schools can carry on regardless, other schools have introduced new and revised core courses and electives. Harvard, historically slow to act, has been one of the first out of the blocks, along with Insead, to launch non-degree executive programmes looking at the new issues business face. Most schools are re-addressing the issues of risk and financial modelling in their courses. But is this enough?
At Stanford business school , Garth Saloner, a long-time professor who has been appointed to the dean's job at Stanford from September, believes the pedagogy as well as the content has to change. He was the chief engineer of the new-look Stanford MBA, which requires all new students to work in small tutorial groups to discuss various business issues. The aim, he says, is to "equip students to think critically about the issues business face".
Others believe the problem is deeper and systemic. Dipak Jain, out-going dean of the Kellogg school at Northwestern University , says the last 10 to 15 years of economic growth have come with a cost. "Students have become more focused on earning rather than learning. There has to be a correction in the salaries of MBAs."
Prof Saloner is dismissive of the idea that the two-year Stanford MBA programme will prove too costly to attract the best students, but Prof Jain argues that cost will prove a real factor for many schools. "My view is that management education will be like a sandwich, with students going to the top schools and to state schools." Mid-market schools, will survive only if they specialise he says.
Cost will also fuel the growth in part-time or technology-driven programmes, he believes.
Even these changes do not go far enough for some. Henry Mintzberg, management professor at McGill in Canada and Insead in France and Singapore, and long-term critic of the traditional US MBA model is typically outspoken, saying the pedagogy and structure of US MBA programmes need to change. "US business schools just don't get it. They keep trying to fix what they have already got."
He argues that the case method, pioneered by Harvard and taught in most US schools, teaches decision-making that is inappropriate for younger students, who increasingly make up the population in the US MBA classroom. In the Harvard class of 2008, for example, more than two-thirds of the students had graduated from undergraduate programmes in the previous four years.
Peter Tufano, a Harvard finance professor, says the case study method and its role in "developing 'arrogant' students" was one of the concerns raised by faculty as Harvard began its months of soul-searching.
Philip Delves-Broughton, Harvard alumnus from the class of 2006, and a thorn in the side of his alma mater, believes dramatic change is needed. "They [Harvard] are trying to sell a Hummer when everyone wants a Fiat Cinquecento."
Prof Mintzberg goes further by arguing that innovation in management education is no longer being created in the US but in Europe. "They [US schools] don't create managers, they create hubris. And they will not willingly change. US business schools have been riding a wave . . . short of going bankrupt or their applications dropping to zero, they won't change."
Under the spotlight
As the widely regarded leader of the business school world, Harvard is an easy target for those who feel the need to blame business schools and their MBA graduates for the financial meltdown.
But even the patricians at Harvard must have been concerned by the number of graduates who were key figures as the crisis unfolded, including Hank Paulson, former US Treasury secretary, Christopher Cox, former chairman of the Securities and Exchange Commission, Stan O'Neal and John Thain, the last two heads of Merrill Lynch. And in Europe Andy Hornby, former chief executive of HBOS.
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