July 8 (Bloomberg) -- Asian stocks fell for a sixth day, led by finance and mining companies, as an unexpected drop in Japanese machinery orders fanned concern a global economic recovery will falter.
Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by value, sank 2.9 percent after the nation’s bank lending slowed. BHP Billiton Ltd., the world’s largest mining company, lost 2.3 percent in Sydney on lower oil and copper prices. Honda Motor Co., which gets 45 percent of its sales in North America, slumped 4 percent in Tokyo as a stronger yen threatened the value of overseas revenue.
“The economic rebound won’t be rapid,” said Masaru Hamasaki, a Tokyo-based senior strategist at Toyota Asset Management Co., which oversees $14 billion. “It will take time, and share prices are beginning to reflect that.”
The MSCI Asia Pacific Index dropped 1.2 percent to 100.59 at 10:50 a.m. in Tokyo, taking its six-day decline to 2.5 percent. The index has fallen 4.4 percent since climbing to an eight-month high on June 12 as disappointing economic data damped demand for equities. The measure has gained 42 percent from a more than five-year low on March 9.
Japan’s Nikkei 225 Stock Average fell 1.8 percent. Australia’s S&P/ASX 200 Index declined 1.1 percent, erasing this year’s gains. Indonesia’s stock market is closed today for presidential elections.
South Korea’s Kospi lost 0.7 percent. Samsung Electronics Co., Asia’s largest maker of computer-memory chips, fell 0.9 percent in Seoul as researcher Gartner Inc. predicted spending on information technology will drop. Tokyo Electron Ltd., the world’s second-largest maker of semiconductor equipment, sank 5 percent on a Credit Suisse Group AG downgrade.
U.S. Earnings
Futures on the Standard & Poor’s 500 Index fell 0.2 percent. The gauge dropped 2 percent to the lowest level since May 1, amid concern second-quarter earnings will fail to justify a four-month rally in equities.
Alcoa Inc. will kick off the earnings season today as the first company in the Dow Jones Industrial Average to report results. Analysts estimate profits fell an average 34 percent at S&P 500 companies in the second quarter and will decrease 21 percent from July through September, according to data compiled by Bloomberg.
The MSCI Asia Pacific Index’s rally since March has been fueled by confidence stimulus policies worldwide will succeed in reviving global growth. Worse-than-expected U.S. unemployment data on July 2 fanned concern a recovery will falter. Japanese machinery orders declined 3 percent in May, the government said today. Economists had estimated a 2 percent increase.
Recovery Hopes
“The rally was built on recovery hopes, but a gap has developed between the level of the market and the real outlook for the economy,” said Hiroichi Nishi, general manager at Tokyo-based Nikko Cordial Securities Co. “All eyes are on the earnings about to kick off and the direction they will take.”
Mitsubishi UFJ slumped 2.9 percent to 572 yen as Japanese lending growth slowed in June for a sixth-straight month. Mizuho Financial Group Inc., Japan’s second-largest bank, sank 1.4 percent to 213 yen.
Loans, excluding those by credit associations, rose 2.5 percent last month from a year earlier, compared with 3.3 percent growth in May, the Bank of Japan said today.
Shares of financial companies also fell as the cost of protecting Asia-Pacific corporate and sovereign bonds from default jumped, according to traders of credit-default swaps.
BHP lost 2.3 percent to A$31.52 after a measure of six metals traded on the London Metal Exchange, including copper and zinc, slipped 1.2 percent. Rio Tinto Group, the world’s third- largest mining company, dropped 1.2 percent to A$46.80.
Overseas Revenue
Inpex Corp., Japan’s largest oil explorer, fell 0.8 percent to 706,000 yen. Woodside Petroleum Ltd., Australia’s No. 2 oil company, dropped 1 percent to A$40.08. Crude oil futures in New York lost 1.2 percent today, set for a sixth day of declines.
Honda lost 4 percent to 2,430 yen as the yen climbed to 94.50 per dollar, the strongest since June 1. A stronger yen reduces income when overseas revenue is converted into local currency. Toyota Motor Corp., the world’s largest automaker, lost 3.1 percent to 3,480 yen.
Samsung Electronics fell 0.9 percent to 644,000 won. Gartner forecast technology spending to drop 6 percent this year, worse than the 3.8 percent decrease it predicted in March.
While the global recession shows signs of easing, Gartner said in an e-mail that “IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen their purse strings.”
Tokyo Electron retreated 5 percent to 4,350 yen after being cut to “underperform” from “neutral” at Credit Suisse Group AG. The brokerage cut its stance on Japan’s semiconductor production equipment industry to “market weight” from “overweight,” citing a weaker outlook for capital spending.
Tuesday, July 7, 2009
Monday, July 6, 2009
N.Z. Business Confidence Improves on Global Outlook
July 7 (Bloomberg) -- New Zealand businesses are less pessimistic about the economic outlook and their earnings amid signs a recovery in the world’s largest economies will buoy exports and investment.
A net 25 percent of companies surveyed last quarter expect the economy will worsen over the next six months, the New Zealand Institute of Economic Research said today in Wellington. That compares with 65 percent that forecast a deterioration in the first quarter. The net is calculated by subtracting the pessimists from optimists.
“The recession is not over yet,” said Jean-Pierre de Raad, chief executive at the institute. “What we see is a general improvement in sentiment. It’s still negative.”
New Zealand may emerge from its worst recession in more than three decades by the end of the year amid signs of a recovery in global markets, Reserve Bank Governor Alan Bollard said last month. The central banker said he will keep borrowing costs at a record low until late 2010 to help stimulate spending and investment.
The economy contracted 1 percent in the three months ended March 31, the fifth straight contraction, according to a government report last month. Gross domestic product will also decline in the second and third quarter, de Raad said today.
The Organization for Economic Cooperation and Development last month raised its forecast for the economies of its 30 member nations for the first time in two years as the U.S. slump shows signs of easing.
Interest Rates
“There have been pieces of good news in Australia and China, which shows these markets are holding up for exporters,” said de Raad.
New Zealand’s economy has been contracting since the first quarter of last year as a global recession curbed exports and prompted companies to fire workers.
Bollard has reduced the benchmark official cash rate by 5.75 percentage points to 2.5 percent since July last year. He will leave the rate unchanged on July 30, according to all 12 economists surveyed by Bloomberg News.
New Zealand businesses reported a decline in sales in the second quarter and expect profits will fall in the third quarter, according to today’s survey.
A net 36 percent of companies said trading fell in the three months ended June 30. The net figure, which is seasonally adjusted, is calculated by subtracting those reporting an increase in activity from those seeing a drop.
Profit Outlook
A net 10 percent say trading will slow in the third quarter, down from 38 percent expecting a decline in the previous survey.
A net 44 percent say profits will decline and 23 percent of firms expect to invest less in plant and machinery.
Companies are firing workers as consumers rein in spending and as the global recession curbs demand for exports. A net 19 percent of companies expect to fire workers in the next year, today’s survey showed.
“Households have not yet felt the full impact of this recession,” said de Raad, who expects the jobless rate will reach 7.8 percent next year it current rate of 5 percent.
Firms have reduced capacity, working hours and fired staff, which suggests they may have to raise prices when demand picks up, the institute said.
Capacity utilization, a measure of factory usage, increased to 90.7 percent in the second quarter from 86.3 percent in the previous three months. That’s the largest jump in the history of the series.
“That would translate to some price pressures,” said de Raad. A net 7 percent of firms expect to raise prices in the next three months, the survey showed. A net 42 percent of firms said it is easier to find skilled workers, the highest reading in more than 30 years.
A net 25 percent of companies surveyed last quarter expect the economy will worsen over the next six months, the New Zealand Institute of Economic Research said today in Wellington. That compares with 65 percent that forecast a deterioration in the first quarter. The net is calculated by subtracting the pessimists from optimists.
“The recession is not over yet,” said Jean-Pierre de Raad, chief executive at the institute. “What we see is a general improvement in sentiment. It’s still negative.”
New Zealand may emerge from its worst recession in more than three decades by the end of the year amid signs of a recovery in global markets, Reserve Bank Governor Alan Bollard said last month. The central banker said he will keep borrowing costs at a record low until late 2010 to help stimulate spending and investment.
The economy contracted 1 percent in the three months ended March 31, the fifth straight contraction, according to a government report last month. Gross domestic product will also decline in the second and third quarter, de Raad said today.
The Organization for Economic Cooperation and Development last month raised its forecast for the economies of its 30 member nations for the first time in two years as the U.S. slump shows signs of easing.
Interest Rates
“There have been pieces of good news in Australia and China, which shows these markets are holding up for exporters,” said de Raad.
New Zealand’s economy has been contracting since the first quarter of last year as a global recession curbed exports and prompted companies to fire workers.
Bollard has reduced the benchmark official cash rate by 5.75 percentage points to 2.5 percent since July last year. He will leave the rate unchanged on July 30, according to all 12 economists surveyed by Bloomberg News.
New Zealand businesses reported a decline in sales in the second quarter and expect profits will fall in the third quarter, according to today’s survey.
A net 36 percent of companies said trading fell in the three months ended June 30. The net figure, which is seasonally adjusted, is calculated by subtracting those reporting an increase in activity from those seeing a drop.
Profit Outlook
A net 10 percent say trading will slow in the third quarter, down from 38 percent expecting a decline in the previous survey.
A net 44 percent say profits will decline and 23 percent of firms expect to invest less in plant and machinery.
Companies are firing workers as consumers rein in spending and as the global recession curbs demand for exports. A net 19 percent of companies expect to fire workers in the next year, today’s survey showed.
“Households have not yet felt the full impact of this recession,” said de Raad, who expects the jobless rate will reach 7.8 percent next year it current rate of 5 percent.
Firms have reduced capacity, working hours and fired staff, which suggests they may have to raise prices when demand picks up, the institute said.
Capacity utilization, a measure of factory usage, increased to 90.7 percent in the second quarter from 86.3 percent in the previous three months. That’s the largest jump in the history of the series.
“That would translate to some price pressures,” said de Raad. A net 7 percent of firms expect to raise prices in the next three months, the survey showed. A net 42 percent of firms said it is easier to find skilled workers, the highest reading in more than 30 years.
Most Asian Stocks Fall on Lower Commodity Prices; Samsung Gains
July 7 (Bloomberg) -- Most Asian stocks declined, led by commodity companies, on lower oil and metal prices. Utilities advanced on optimism energy costs will drop.
Rio Tinto Group Ltd., the world’s third-biggest mining company, declined 2.7 percent in Sydney, while Inpex Corp., Japan’s largest oil explorer, dropped 1.5 percent. Tokyo Electric Power Co., Asia’s largest utility, added 1.2 percent. Samsung Electronics Co., the world’s largest maker of computer- memory chips, gained 1.4 percent after BNP Paribas recommended investors buy the stock.
“Volumes are light and commodities are tumbling, which is encouraging investors to stay on the sidelines until they can get a fix on the direction of the economy,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co.
The MSCI Asia Pacific Index lost 0.5 percent to 101.66 at 10:51 a.m. in Tokyo, with four stocks declining for every three that rose. The measure has slipped 3.4 percent since climbing to an eight-month high on June 12 as disappointing economic data damped demand for equities. The measure has gained 44 percent from a more than five-year low on March 9.
Japan’s Nikkei 225 Stock Average fell 0.4 percent to 9,642.75. Mitsui O.S.K. Lines Ltd., the world’s largest operator of iron-ore vessels, fell 2.3 percent after shipping rates fell for a fourth day. Australia’s S&P/ASX 200 Index declined 0.5 percent, while China’s Shanghai Composite Index sank 1.1 percent.
Futures on the Standard & Poor’s 500 Index lost 0.3 percent. The measure gained 0.3 percent yesterday as Moody’s Investors Service said it may lift Brazil’s debt rating.
Commodities Slide
Rio Tinto declined 2.7 percent to A$47.18. BHP Billiton Ltd., the world’s largest mining company, lost 1.7 percent to A$32.06. Mitsubishi Corp., which gets almost half of sales from commodities, dipped 1.4 percent to 1,671 yen. Copper futures in New York fell 0.5 percent in after-hours trading, taking declines in the past three days to 3.5 percent.
Inpex Corp., Japan’s largest oil explorer, lost 1.5 percent to 702,000 yen. Woodside Petroleum Ltd., Australia’s second- largest oil producer, slid 1.3 percent to A$40.32. Crude oil slid 4 percent to $64.05 a barrel yesterday in New York, the lowest settlement since May 27.
Tokyo Electric gained 1.2 percent to 2,480 yen on optimism lower oil prices will cut its fuel bill. The company slashed its use of crude oil and fuel oil to generate power after it restarted a nuclear reactor on May 19.
Sumco, LG Electronics
Samsung Electronics gained 1.4 percent to 643,000 won. The company had its rating upgraded to “buy” from “hold” at BNP Paribas, which said the company’s second-quarter earnings guidance was “significantly” higher than analysts’ expectations. The brokerage lifted its share-price estimate to 740,000 won from 630,000 won in a report today. Sumco Corp., the world’s second-largest maker of silicon wafers, jumped 4.8 percent to 1,450 yen. The stock was lifted to “overweight” from “underweight” at Morgan Stanley, which said wafer prices are unlikely to fall further.
LG Electronics Co., the world’s third-largest maker of liquid-crystal display televisions, climbed 2 percent to 125,500 won. The company said it will invest $100 million in its Mexican manufacturing plants over the next three years.
Mitsui O.S.K. Lines sank 2.3 percent to 554 yen. STX Pan Ocean Co., South Korea’s biggest bulk-commodity shipping line, fell 2.6 percent to 11,150 won. The Baltic Dry Index, a measure of shipping costs for commodities, retreated 4.1 percent, taking losses since June 3 to 21 percent.
Daihatsu Motor Co. advanced 6.6 percent to 990 yen. Japan’s largest minicar maker was rated “buy” in new coverage at Deutsche Bank AG and was raised to “buy” from “underperform” at Bank of America Co.’s Merrill Lynch unit.
Rio Tinto Group Ltd., the world’s third-biggest mining company, declined 2.7 percent in Sydney, while Inpex Corp., Japan’s largest oil explorer, dropped 1.5 percent. Tokyo Electric Power Co., Asia’s largest utility, added 1.2 percent. Samsung Electronics Co., the world’s largest maker of computer- memory chips, gained 1.4 percent after BNP Paribas recommended investors buy the stock.
“Volumes are light and commodities are tumbling, which is encouraging investors to stay on the sidelines until they can get a fix on the direction of the economy,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co.
The MSCI Asia Pacific Index lost 0.5 percent to 101.66 at 10:51 a.m. in Tokyo, with four stocks declining for every three that rose. The measure has slipped 3.4 percent since climbing to an eight-month high on June 12 as disappointing economic data damped demand for equities. The measure has gained 44 percent from a more than five-year low on March 9.
Japan’s Nikkei 225 Stock Average fell 0.4 percent to 9,642.75. Mitsui O.S.K. Lines Ltd., the world’s largest operator of iron-ore vessels, fell 2.3 percent after shipping rates fell for a fourth day. Australia’s S&P/ASX 200 Index declined 0.5 percent, while China’s Shanghai Composite Index sank 1.1 percent.
Futures on the Standard & Poor’s 500 Index lost 0.3 percent. The measure gained 0.3 percent yesterday as Moody’s Investors Service said it may lift Brazil’s debt rating.
Commodities Slide
Rio Tinto declined 2.7 percent to A$47.18. BHP Billiton Ltd., the world’s largest mining company, lost 1.7 percent to A$32.06. Mitsubishi Corp., which gets almost half of sales from commodities, dipped 1.4 percent to 1,671 yen. Copper futures in New York fell 0.5 percent in after-hours trading, taking declines in the past three days to 3.5 percent.
Inpex Corp., Japan’s largest oil explorer, lost 1.5 percent to 702,000 yen. Woodside Petroleum Ltd., Australia’s second- largest oil producer, slid 1.3 percent to A$40.32. Crude oil slid 4 percent to $64.05 a barrel yesterday in New York, the lowest settlement since May 27.
Tokyo Electric gained 1.2 percent to 2,480 yen on optimism lower oil prices will cut its fuel bill. The company slashed its use of crude oil and fuel oil to generate power after it restarted a nuclear reactor on May 19.
Sumco, LG Electronics
Samsung Electronics gained 1.4 percent to 643,000 won. The company had its rating upgraded to “buy” from “hold” at BNP Paribas, which said the company’s second-quarter earnings guidance was “significantly” higher than analysts’ expectations. The brokerage lifted its share-price estimate to 740,000 won from 630,000 won in a report today. Sumco Corp., the world’s second-largest maker of silicon wafers, jumped 4.8 percent to 1,450 yen. The stock was lifted to “overweight” from “underweight” at Morgan Stanley, which said wafer prices are unlikely to fall further.
LG Electronics Co., the world’s third-largest maker of liquid-crystal display televisions, climbed 2 percent to 125,500 won. The company said it will invest $100 million in its Mexican manufacturing plants over the next three years.
Mitsui O.S.K. Lines sank 2.3 percent to 554 yen. STX Pan Ocean Co., South Korea’s biggest bulk-commodity shipping line, fell 2.6 percent to 11,150 won. The Baltic Dry Index, a measure of shipping costs for commodities, retreated 4.1 percent, taking losses since June 3 to 21 percent.
Daihatsu Motor Co. advanced 6.6 percent to 990 yen. Japan’s largest minicar maker was rated “buy” in new coverage at Deutsche Bank AG and was raised to “buy” from “underperform” at Bank of America Co.’s Merrill Lynch unit.
Mukherjee Seeks Support for Indian Budget After Stocks Plunge
July 7 (Bloomberg) -- India’s Finance Minister Pranab Mukherjee is seeking to convince investors that yesterday’s budget will help turn around the economy after stocks plunged the most in six months.
The finance minister is due to meet industry groups in New Delhi today after the stock index dropped 5.8 percent yesterday and the rupee suffered its worst fall in almost six weeks. Markets tumbled as Mukherjee unveiled the widest budget deficit in 16 years and failed to lay out firm plans to sell state-run assets and ease foreign investment rules.
Mukherjee, who presented his first budget in 1982 when India was a closed economy allied to the Soviet Union, yesterday pledged to spend more on food subsidies and rural jobs to help aid the poor. The 73-year-old politician now needs to convince investors that corporate India will also benefit from the rural growth, tax relief and increased outlays on roads and power.
The budget “will lead to faster economic growth, but it wasn’t packaged and sold well,” said Vikram Kotak, who helps manage the equivalent of $2.4 billion in Indian stocks and bonds at Birla Sun Life Insurance Co. in Mumbai. “His intentions in the budget were good. He now needs to convey them.”
The Sensitive stock index’s slump yesterday was the worst since Jan. 7. The rupee weakened 1.3 percent to 48.5375 against the dollar, while the benchmark bond yield surged 22 percent, the most since March 17, to 6.45 percent.
High Expectations
Investor expectations for the budget were high after Prime Minister Manmohan Singh won a resounding re-election in May, reducing his dependence on allies such as the communist parties who opposed asset sales and looser foreign investment policies during his first term.
Morgan Stanley, for example, expected Mukherjee to announce a target of between $4 billion and $5 billion from selling shares in state-run companies this year. Mukherjee provided for only 11.2 billion rupees ($227 million) in the budget.
Mukherjee lowered the income tax burden on companies and individuals by scrapping the fringe benefit tax and the 10 percent surcharge on personal income tax respectively. He also announced spending of 1.79 trillion rupees on roads, telecommunication and power, where capacity constraints are estimated by the finance ministry to shave two percentage points off the nation’s annual economic growth.
The minister also ended a plan to tax trading commodity futures in India, the world’s biggest user of gold and second- biggest grower of rice and wheat, luring more investors to a market that’s doubled to $1 trillion in the past three years.
Rural Jobs
To support consumption in rural India, where more than three-fifths of India’s 1.2 billion people live, Mukherjee allocated 391 billion rupees for a rural jobs program which benefited 45 million households last year. The amount earmarked is 144 percent more than the previous year, the minister said.
“The budget is a fiscal document and we think the short- term policy objective of stimulating demand will likely be achieved,” said Tushar Poddar, a Mumbai-based economist at Goldman Sachs Group Inc.
Mukherjee said the government will provide rice and wheat at a subsidized rate of 3 rupees a kilogram to the rural poor.
Higher spending will see the budget deficit widen to 6.8 percent of GDP in the year ending March 31, from 6 percent, forcing the government to borrow a record 4.51 trillion rupees.
Reserve Bank of India Deputy Governor Shyamala Gopinath said yesterday that the central bank has enough debt-management tools to help the government successfully complete its record bond-sale plan for the current fiscal year.
Mixed Reviews
Mukherjee’s first budget in a quarter century received mixed reviews from credit rating companies. The minister served in the foreign and defense portfolios in the bulk of Singh’s first term.
While Standard & Poor’s said the fiscal deficit was “within the boundary” of their expectation, Fitch Ratings said the budget doesn’t “alleviate” pressure on India’s ratings.
S&P ranks India’s long-term local-currency rating at BBB-, their lowest investment grade. Fitch has a BBB- long-term rating on India, also their lowest investment-grade level.
Political analysts such as Mahesh Rangarajan, a Delhi University history professor, said the budget indicates that the Congress party-led government is looking to extend its support in upcoming state polls. Two of India’s three most populous states, Maharashtra and Bihar, hold elections within 16 months.
“It’s the first socialist budget of the reform era that started in 1991 -- not in terms of squeezing the rich, but in terms of really increasing outlays for welfare programs and public investment in infrastructure,” Rangarajan said. “The politics has been absolutely central to the economics.”
The finance minister is due to meet industry groups in New Delhi today after the stock index dropped 5.8 percent yesterday and the rupee suffered its worst fall in almost six weeks. Markets tumbled as Mukherjee unveiled the widest budget deficit in 16 years and failed to lay out firm plans to sell state-run assets and ease foreign investment rules.
Mukherjee, who presented his first budget in 1982 when India was a closed economy allied to the Soviet Union, yesterday pledged to spend more on food subsidies and rural jobs to help aid the poor. The 73-year-old politician now needs to convince investors that corporate India will also benefit from the rural growth, tax relief and increased outlays on roads and power.
The budget “will lead to faster economic growth, but it wasn’t packaged and sold well,” said Vikram Kotak, who helps manage the equivalent of $2.4 billion in Indian stocks and bonds at Birla Sun Life Insurance Co. in Mumbai. “His intentions in the budget were good. He now needs to convey them.”
The Sensitive stock index’s slump yesterday was the worst since Jan. 7. The rupee weakened 1.3 percent to 48.5375 against the dollar, while the benchmark bond yield surged 22 percent, the most since March 17, to 6.45 percent.
High Expectations
Investor expectations for the budget were high after Prime Minister Manmohan Singh won a resounding re-election in May, reducing his dependence on allies such as the communist parties who opposed asset sales and looser foreign investment policies during his first term.
Morgan Stanley, for example, expected Mukherjee to announce a target of between $4 billion and $5 billion from selling shares in state-run companies this year. Mukherjee provided for only 11.2 billion rupees ($227 million) in the budget.
Mukherjee lowered the income tax burden on companies and individuals by scrapping the fringe benefit tax and the 10 percent surcharge on personal income tax respectively. He also announced spending of 1.79 trillion rupees on roads, telecommunication and power, where capacity constraints are estimated by the finance ministry to shave two percentage points off the nation’s annual economic growth.
The minister also ended a plan to tax trading commodity futures in India, the world’s biggest user of gold and second- biggest grower of rice and wheat, luring more investors to a market that’s doubled to $1 trillion in the past three years.
Rural Jobs
To support consumption in rural India, where more than three-fifths of India’s 1.2 billion people live, Mukherjee allocated 391 billion rupees for a rural jobs program which benefited 45 million households last year. The amount earmarked is 144 percent more than the previous year, the minister said.
“The budget is a fiscal document and we think the short- term policy objective of stimulating demand will likely be achieved,” said Tushar Poddar, a Mumbai-based economist at Goldman Sachs Group Inc.
Mukherjee said the government will provide rice and wheat at a subsidized rate of 3 rupees a kilogram to the rural poor.
Higher spending will see the budget deficit widen to 6.8 percent of GDP in the year ending March 31, from 6 percent, forcing the government to borrow a record 4.51 trillion rupees.
Reserve Bank of India Deputy Governor Shyamala Gopinath said yesterday that the central bank has enough debt-management tools to help the government successfully complete its record bond-sale plan for the current fiscal year.
Mixed Reviews
Mukherjee’s first budget in a quarter century received mixed reviews from credit rating companies. The minister served in the foreign and defense portfolios in the bulk of Singh’s first term.
While Standard & Poor’s said the fiscal deficit was “within the boundary” of their expectation, Fitch Ratings said the budget doesn’t “alleviate” pressure on India’s ratings.
S&P ranks India’s long-term local-currency rating at BBB-, their lowest investment grade. Fitch has a BBB- long-term rating on India, also their lowest investment-grade level.
Political analysts such as Mahesh Rangarajan, a Delhi University history professor, said the budget indicates that the Congress party-led government is looking to extend its support in upcoming state polls. Two of India’s three most populous states, Maharashtra and Bihar, hold elections within 16 months.
“It’s the first socialist budget of the reform era that started in 1991 -- not in terms of squeezing the rich, but in terms of really increasing outlays for welfare programs and public investment in infrastructure,” Rangarajan said. “The politics has been absolutely central to the economics.”
Sunday, July 5, 2009
Australian Job Advertisements Fell 6.7% in June, ANZ Bank Says
July 6 (Bloomberg) -- Australian advertisements for job vacancies tumbled in June for a 14th month, adding to signs the nation’s economy is being buffeted by the global recession.
Jobs advertised in newspapers and on the Internet dropped 6.7 percent from May and 51.4 percent from a year earlier, the largest annual decline since the series began in 1998, according to an Australia & New Zealand Banking Group Ltd. report released in Melbourne today.
Falling global demand for natural resources is prompting mining companies such as BHP Billiton Ltd. to pare production and workers. Central bank Governor Glenn Stevens will leave the benchmark interest rate at a half-century low of 3 percent tomorrow to spur domestic demand, according to all 20 economists surveyed by Bloomberg News.
Today’s report “suggest that hiring intentions by Australian businesses are still weak,” said Warren Hogan, head of economics at ANZ Bank in Sydney. “Employment outcomes will be critical in determining future interest rate moves,” he said.
National vacancies advertised in newspapers and on the Internet averaged 127,346 a week last month, today’s report showed. Newspaper advertisements rose 0.9 percent to an average of 8,192 a week. Internet notices dropped 7.2 percent to 119,154, the ANZ Bank report said.
Employers probably cut 20,000 jobs last month and the unemployment rate rose to 5.9 percent from 5.7 percent, according to the median estimate in a Bloomberg survey of economists. The government’s employment report will be released on July 9 in Sydney.
Jobs advertised in newspapers and on the Internet dropped 6.7 percent from May and 51.4 percent from a year earlier, the largest annual decline since the series began in 1998, according to an Australia & New Zealand Banking Group Ltd. report released in Melbourne today.
Falling global demand for natural resources is prompting mining companies such as BHP Billiton Ltd. to pare production and workers. Central bank Governor Glenn Stevens will leave the benchmark interest rate at a half-century low of 3 percent tomorrow to spur domestic demand, according to all 20 economists surveyed by Bloomberg News.
Today’s report “suggest that hiring intentions by Australian businesses are still weak,” said Warren Hogan, head of economics at ANZ Bank in Sydney. “Employment outcomes will be critical in determining future interest rate moves,” he said.
National vacancies advertised in newspapers and on the Internet averaged 127,346 a week last month, today’s report showed. Newspaper advertisements rose 0.9 percent to an average of 8,192 a week. Internet notices dropped 7.2 percent to 119,154, the ANZ Bank report said.
Employers probably cut 20,000 jobs last month and the unemployment rate rose to 5.9 percent from 5.7 percent, according to the median estimate in a Bloomberg survey of economists. The government’s employment report will be released on July 9 in Sydney.
Asian Stocks Decline as Commodity Prices, Shipping Rates Drop
July 6 (Bloomberg) -- Asian stocks declined as commodities prices and shipping rates dropped amid concern the global economic recovery will falter.
BHP Billiton Ltd., the world’s biggest mining company, dropped 1.7 percent after metals prices fell. Mitsui O.S.K. Lines Ltd., Japan’s second-biggest shipping line by sales, sank 2.4 percent after shipping rates slumped 4.1 percent on July 3 in London. Inpex Corp., Japan’s largest oil explorer, fell 2 percent after crude oil prices declined.
“There’s a tug of war going on as the focus shifts to the outlook for individual companies,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. “Right now, the market is waiting for some data to provide it with direction.”
The MSCI Asia Pacific Index lost 0.1 percent to 102.74 as of 9:50 a.m. in Tokyo. The gauge has slipped 2.4 percent since climbing to an eight-month high on June 12 as economic data including rising U.S. unemployment and new share issuances have damped enthusiasm for equities. The measure has rallied 45 percent since falling to a more than five-year low on March 9.
Japan’s Nikkei 225 Stock Average slid 0.6 percent to 9,755.83. Australia’s S&P/ASX 200 Index lost 0.8 percent and South Korea’s Kospi gained 0.9 percent.
Commodity Demand
In New York, markets were closed for the July 4 holiday. U.S. Vice President Joe Biden said the Obama administration “misread the economy” when it forecast unemployment would peak at 8 percent if Congress enacted a $787 billion fiscal stimulus plan. Biden, appearing on the ABC News program “This Week,” said that in crafting its initial economic policies, the Obama administration followed consensus views of the severity of the crisis. Unemployment reached 9.5 percent last month, the Labor Department said July 2.
BHP Billiton lost 1.7 percent to A$32.86. Rio Tinto Group Ltd., the world’s third largest mining company, slipped 1.2 percent to A$49.02. Mitsubishi Corp., which gets almost half of its sales from commodities, dropped 1.1 percent to 1,714 yen. A gauge of six metals traded in London fell 1.3 percent on July 3.
Mitsui O.S.K. dropped 2.4 percent to 579 yen. The Baltic Dry index finished a second-straight weekly loss last week amid mounting concern China’s demand for commodities such as iron ore will slow. The index has tumbled 18 percent in the last month.
Inpex dropped 2 percent to 720,000 yen. Crude oil fell as much as 2.7 percent in trading today.
BHP Billiton Ltd., the world’s biggest mining company, dropped 1.7 percent after metals prices fell. Mitsui O.S.K. Lines Ltd., Japan’s second-biggest shipping line by sales, sank 2.4 percent after shipping rates slumped 4.1 percent on July 3 in London. Inpex Corp., Japan’s largest oil explorer, fell 2 percent after crude oil prices declined.
“There’s a tug of war going on as the focus shifts to the outlook for individual companies,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. “Right now, the market is waiting for some data to provide it with direction.”
The MSCI Asia Pacific Index lost 0.1 percent to 102.74 as of 9:50 a.m. in Tokyo. The gauge has slipped 2.4 percent since climbing to an eight-month high on June 12 as economic data including rising U.S. unemployment and new share issuances have damped enthusiasm for equities. The measure has rallied 45 percent since falling to a more than five-year low on March 9.
Japan’s Nikkei 225 Stock Average slid 0.6 percent to 9,755.83. Australia’s S&P/ASX 200 Index lost 0.8 percent and South Korea’s Kospi gained 0.9 percent.
Commodity Demand
In New York, markets were closed for the July 4 holiday. U.S. Vice President Joe Biden said the Obama administration “misread the economy” when it forecast unemployment would peak at 8 percent if Congress enacted a $787 billion fiscal stimulus plan. Biden, appearing on the ABC News program “This Week,” said that in crafting its initial economic policies, the Obama administration followed consensus views of the severity of the crisis. Unemployment reached 9.5 percent last month, the Labor Department said July 2.
BHP Billiton lost 1.7 percent to A$32.86. Rio Tinto Group Ltd., the world’s third largest mining company, slipped 1.2 percent to A$49.02. Mitsubishi Corp., which gets almost half of its sales from commodities, dropped 1.1 percent to 1,714 yen. A gauge of six metals traded in London fell 1.3 percent on July 3.
Mitsui O.S.K. dropped 2.4 percent to 579 yen. The Baltic Dry index finished a second-straight weekly loss last week amid mounting concern China’s demand for commodities such as iron ore will slow. The index has tumbled 18 percent in the last month.
Inpex dropped 2 percent to 720,000 yen. Crude oil fell as much as 2.7 percent in trading today.
Russia and India Question Reliance on Dollar Before G-8 Summit
July 6 (Bloomberg) -- Russia and India said the world economy is too reliant on the U.S. dollar and called for changes in how $6.5 trillion in currency reserves are managed, as Group of Eight leaders prepare to meet this week.
“The dollar system or the system based on the dollar and euro have shown that they are flawed,” Russian President Dmitry Medvedev said in an interview with Corriere della Sera, repeating his proposal for a new international reserve currency.
Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said in a July 3 interview that he is urging his nation to diversify its foreign holdings away from the dollar.
The challenge to the dollar, a linchpin of world finance and trade since 1945, underlines the shift in relative economic power toward emerging markets and away from the developed nations that spawned the global crisis.
French Finance Minister Christine Lagarde, speaking yesterday at a conference in Aix en Provence, France, said that “we must explore better coordination of exchange-rate policy.”
Questions need to be asked about “the balance of currencies and the role of currencies in a world that has changed because of the crisis and the growing role of emerging countries,” she told reporters.
Bank of France Governor Christian Noyer said at the same conference, “We really need to make sure there is a greater stability between the big currencies in the period to come.”
Dollar Share Grows
For all the concerns about the dollar’s role, emerging markets such as China and India remain dependent on the currency. The International Monetary Fund said June 30 the share of dollars in allocated global foreign-exchange reserves increased to 65 percent, or $2.6 trillion, in the first three months of this year, the highest since 2007.
China doesn’t support the idea of creating a supranational reserve currency and expects the U.S. dollar to maintain its role for “many years to come,” Deputy Foreign Minister He Yafei told reporters in Rome yesterday.
While Medvedev said he sees “no alternative” to the dollar or euro now, he repeated his proposal that “regional reserve currencies” be developed and again questioned the wisdom of relying on the dollar.
‘Cannot Be Hostages’
“In the long term, we must also think about a single unit of payment such as the International Monetary Fund’s Special Drawing Rights,” a unit of an account linked to a basket of currencies, he told the Italian newspaper. “We cannot be hostages to the economic situation of a single country, as is happening today with the United States.”
Russia has support. India’s Tendulkar said he is advising Singh to diversify India’s $264.6 billion in foreign-exchange reserves and hold fewer dollars.
“The major part of Indian reserves are in dollars -- that is something that’s a problem for us,” he said in Aix en Provence. He said big dollar holders face a “prisoner’s dilemma,” a reference to a problem in game theory in which a rational choice for an individual has negative consequences for a group.
The People’s Bank of China, that country’s central bank, said June 26 that the IMF should manage more of its members’ reserves. China said July 2 that it will allow companies to use the yuan to settle cross-border trade and let them keep their entitlement to export tax rebates, seeking to reduce the reliance of importers and exporters on the U.S. dollar.
Safe Haven
The dollar’s role as a safe haven was highlighted last week when the currency advanced 0.5 percent against the euro, to $1.3894, on speculation the global economic recovery is faltering.
“Some emerging countries have decided to deal more in their respective currencies and trust each other,” Lagarde said in an interview yesterday. “That doesn’t stop other countries from seeing the dollar, and to a lesser extent the euro, as currencies of trading if not reserve currencies.”
Lagarde said that any discussion of currencies needs to encompass the dollar, the euro, the yuan and the yen and that the meetings of the Group of 20 are the right forum.
“The appropriate platform is the one in which all the major currencies are represented,” she said.
Asked in Aix en Provence about currencies, European Central Bank President Jean-Claude Trichet said it is “extremely important” that U.S. officials remain committed to their policy of supporting a strong dollar.
“The dollar system or the system based on the dollar and euro have shown that they are flawed,” Russian President Dmitry Medvedev said in an interview with Corriere della Sera, repeating his proposal for a new international reserve currency.
Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said in a July 3 interview that he is urging his nation to diversify its foreign holdings away from the dollar.
The challenge to the dollar, a linchpin of world finance and trade since 1945, underlines the shift in relative economic power toward emerging markets and away from the developed nations that spawned the global crisis.
French Finance Minister Christine Lagarde, speaking yesterday at a conference in Aix en Provence, France, said that “we must explore better coordination of exchange-rate policy.”
Questions need to be asked about “the balance of currencies and the role of currencies in a world that has changed because of the crisis and the growing role of emerging countries,” she told reporters.
Bank of France Governor Christian Noyer said at the same conference, “We really need to make sure there is a greater stability between the big currencies in the period to come.”
Dollar Share Grows
For all the concerns about the dollar’s role, emerging markets such as China and India remain dependent on the currency. The International Monetary Fund said June 30 the share of dollars in allocated global foreign-exchange reserves increased to 65 percent, or $2.6 trillion, in the first three months of this year, the highest since 2007.
China doesn’t support the idea of creating a supranational reserve currency and expects the U.S. dollar to maintain its role for “many years to come,” Deputy Foreign Minister He Yafei told reporters in Rome yesterday.
While Medvedev said he sees “no alternative” to the dollar or euro now, he repeated his proposal that “regional reserve currencies” be developed and again questioned the wisdom of relying on the dollar.
‘Cannot Be Hostages’
“In the long term, we must also think about a single unit of payment such as the International Monetary Fund’s Special Drawing Rights,” a unit of an account linked to a basket of currencies, he told the Italian newspaper. “We cannot be hostages to the economic situation of a single country, as is happening today with the United States.”
Russia has support. India’s Tendulkar said he is advising Singh to diversify India’s $264.6 billion in foreign-exchange reserves and hold fewer dollars.
“The major part of Indian reserves are in dollars -- that is something that’s a problem for us,” he said in Aix en Provence. He said big dollar holders face a “prisoner’s dilemma,” a reference to a problem in game theory in which a rational choice for an individual has negative consequences for a group.
The People’s Bank of China, that country’s central bank, said June 26 that the IMF should manage more of its members’ reserves. China said July 2 that it will allow companies to use the yuan to settle cross-border trade and let them keep their entitlement to export tax rebates, seeking to reduce the reliance of importers and exporters on the U.S. dollar.
Safe Haven
The dollar’s role as a safe haven was highlighted last week when the currency advanced 0.5 percent against the euro, to $1.3894, on speculation the global economic recovery is faltering.
“Some emerging countries have decided to deal more in their respective currencies and trust each other,” Lagarde said in an interview yesterday. “That doesn’t stop other countries from seeing the dollar, and to a lesser extent the euro, as currencies of trading if not reserve currencies.”
Lagarde said that any discussion of currencies needs to encompass the dollar, the euro, the yuan and the yen and that the meetings of the Group of 20 are the right forum.
“The appropriate platform is the one in which all the major currencies are represented,” she said.
Asked in Aix en Provence about currencies, European Central Bank President Jean-Claude Trichet said it is “extremely important” that U.S. officials remain committed to their policy of supporting a strong dollar.
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