July 13 (Bloomberg) -- New Zealand’s retail sales rose for the third time in four months in May, adding to signs that record-low interest rates and income-tax cuts may help the economy emerge from a recession later this year.
Sales gained 0.8 percent from April when they increased 0.5 percent, seasonally adjusted, Statistics New Zealand said in Wellington today. Core retail sales, which exclude car yards, fuel outlets and workshops, surged 1.6 percent, the biggest monthly gain since February 2007.
Higher retail and property sales add to evidence the economy may emerge from the worst recession in three decades by the end of this year. Reserve Bank Governor Alan Bollard kept the benchmark interest rate unchanged last month for the first time in a year, saying household spending may rebound.
“There were some tentative sign of housing-related spending picking up, although this is from a low base and the pickup in housing demand has been relatively modest to date,” said Jane Turner, an economist at ASB Bank Ltd. in Auckland. The report “suggests that underlying consumer demand remains reasonably subdued,” she said.
The increase in sales was four times the 0.2 percent median estimate in a Bloomberg News survey of 10 economists. New Zealand’s dollar bought 62.85 U.S. cents at 11:20 a.m. in Wellington from 62.74 cents just before the report was released.
Interest Rates
Bollard has cut the benchmark interest rate by 5.75 points to a record-low 2.5 percent since July last year. Finance Minister Bill English reduced income taxes on April 1 to help kick-start an economy that shrank for a fifth straight quarter in the three months ended March 31.
The economy may start growing in the fourth quarter of this year, Bollard said on June 11.
Buoying spending, annual immigration growth accelerated to the highest in more than two years in May. Consumers’ pessimism about their future wealth has fallen to the lowest level since February last year, according to a Roy Morgan Research poll taken in the two weeks ended July 5.
House prices were unchanged in June from a year earlier -- the first time in 15 months values hadn’t declined, the Real Estate Institute said last week. House sales rose 40 percent from a year earlier.
Retail sales increased in 14 of the 24 store categories measured in today’s report, led by a 2.2 percent gain in supermarket and grocery sales, which make up one-fifth of all retailing.
Monthly Sales
The monthly sales series isn’t adjusted to exclude price movements and sales. Grocery food prices rose 1 percent in May, according to government figures.
Clothing store sales surged 13 percent as plummeting temperatures and above-average rainfall boosted sales of winter clothes, the statistics bureau said. Appliance sales also gained.
“The cold snap sent shoppers indoors to the mall and boosted clothing sales,” said ASB’s Turner.
Pumpkin Patch Ltd., the nation’s second-largest retailer by market capitalization, last month said trading at its children’s clothing stores, was “reasonably robust.”
Vehicle dealer sales fell for the first time in three months, dropping 1.9 percent. Purchases from fuel outlets declined 2.7 percent.
The core retail trend series, which excludes irregular movements as well as seasonality, rose 0.2 percent from April.
Sunday, July 12, 2009
Most Asian Stocks Fall on Economic Growth Concern; Kirin Surges
July 13 (Bloomberg) -- Most Asian stocks fell, led by technology and mining companies, after an index of U.S. consumer sentiment sank more than economists expected and commodity prices declined. Consumer-related shares advanced.
Samsung Electronics Co., Asia’s biggest maker of computer- memory chips and flat screens, lost 1.2 percent in Seoul. Rio Tinto Group, the world’s third-largest mining company, dropped 1.7 percent after oil and metals prices declined on July 10. Kirin Holdings Co., Japan’s biggest beverage maker, surged 9.8 percent after the Nikkei newspaper said the company may merge with Suntory Holdings Ltd.
The MSCI Asia Pacific Index fell 0.1 percent to 100.58 as of 9:45 a.m. in Tokyo, with three stocks declining for every two that advanced. The gauge lost 4.2 percent in the two weeks through July 10.
“Uncertainty reigns over the market and people are gradually switching to the view that the economic recovery will be harder than expected,” said Tsutomu Yamada, a market analyst at Kabu.com Securities Co.
Japan’s Nikkei 225 Stock Average gained 0.4 percent, while South Korea’s Kospi Index sank 0.8 percent. Australia’s S&P/ASX 200 Index and New Zealand’s NZX 50 Index were little changed.
Futures on the U.S. Standard & Poor’s 500 Index gained 0.3 percent. The measure dropped 0.4 percent on July 10 after the Reuters/University of Michigan preliminary index of consumer sentiment slid to 64.6 in July from the prior month. Economists had estimated the gauge would fall to 70.
“It’s going to be a while before we’re confident we’re going to have a strong, sustainable recovery in place,” U.S. Treasury Secretary Timothy Geithner said, according to a transcript of an interview with “CNN’s Fareed Zakaria GPS” show.
Samsung Electronics Co., Asia’s biggest maker of computer- memory chips and flat screens, lost 1.2 percent in Seoul. Rio Tinto Group, the world’s third-largest mining company, dropped 1.7 percent after oil and metals prices declined on July 10. Kirin Holdings Co., Japan’s biggest beverage maker, surged 9.8 percent after the Nikkei newspaper said the company may merge with Suntory Holdings Ltd.
The MSCI Asia Pacific Index fell 0.1 percent to 100.58 as of 9:45 a.m. in Tokyo, with three stocks declining for every two that advanced. The gauge lost 4.2 percent in the two weeks through July 10.
“Uncertainty reigns over the market and people are gradually switching to the view that the economic recovery will be harder than expected,” said Tsutomu Yamada, a market analyst at Kabu.com Securities Co.
Japan’s Nikkei 225 Stock Average gained 0.4 percent, while South Korea’s Kospi Index sank 0.8 percent. Australia’s S&P/ASX 200 Index and New Zealand’s NZX 50 Index were little changed.
Futures on the U.S. Standard & Poor’s 500 Index gained 0.3 percent. The measure dropped 0.4 percent on July 10 after the Reuters/University of Michigan preliminary index of consumer sentiment slid to 64.6 in July from the prior month. Economists had estimated the gauge would fall to 70.
“It’s going to be a while before we’re confident we’re going to have a strong, sustainable recovery in place,” U.S. Treasury Secretary Timothy Geithner said, according to a transcript of an interview with “CNN’s Fareed Zakaria GPS” show.
Berkshire, CapitalSource, Schwab: U.S. Equity Market Preview
July 12 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading tomorrow. Stock symbols are in parentheses, and prices are as of 5:30 p.m. in New York on July 10, unless otherwise specified.
Berkshire Hathaway Inc. (BRK/A US): Warren Buffett’s conglomerate may rise as the recovering U.S. economy boosts the value of its more-than-$50 billion equity portfolio and other investments, Barron’s reported, without citing anyone. Berkshire Hathaway Class A stock fell $475, or 0.5 percent, to $85,125.
BRF Brasil Foods SA (PDA:US): The company formerly known as Perdigao SA, which is taking over Sadia SA, may rise as 36 percent as growth in Brazilian consumption boosts sales, Barron’s reported, citing Renato Prado, an equity analyst at Fator Corretora in Sao Paolo. BRF Brasil’s American depositary receipts, which each represent two ordinary shares, fell 76 cents, or 1.9 percent, to $38.69 on July 10.
CapitalSource Inc. (CSE:US) fell 10 percent to $4.06. The loan provider to small and mid-sized businesses said it plans a public offering of about 17.5 million shares of its common stock.
Charles Schwab Corp. (SCHW:US): The largest independent brokerage by client assets may be undervalued as the company cuts fees and offers new products to attract investors, Barron’s reported. Schwab fell 14 cents to $16.47.
Hoku Scientific Inc. (HOKU:US): The maker of fuel-cell and solar-power components said it retained Deutsche Bank Securities Inc. as its financial adviser to seek a possible sale.
RSC Holdings Inc. (RRR:US): The second-largest construction-equipment rental company in North America may rise to $15 within the next year amid a construction slump as petrochemicals, food processing and other industries spend more on equipment, Barron’s reported, citing Vance Edelson, an analyst at Morgan Stanley in New York. RSC gained 28 cents to $6 on July 10.
State Street Corp. (STT:US): The largest money manager for institutions paid $60 million to repurchase warrants held by the U.S., the U.S. Treasury said in a report on emergency aid to financial institutions.
Berkshire Hathaway Inc. (BRK/A US): Warren Buffett’s conglomerate may rise as the recovering U.S. economy boosts the value of its more-than-$50 billion equity portfolio and other investments, Barron’s reported, without citing anyone. Berkshire Hathaway Class A stock fell $475, or 0.5 percent, to $85,125.
BRF Brasil Foods SA (PDA:US): The company formerly known as Perdigao SA, which is taking over Sadia SA, may rise as 36 percent as growth in Brazilian consumption boosts sales, Barron’s reported, citing Renato Prado, an equity analyst at Fator Corretora in Sao Paolo. BRF Brasil’s American depositary receipts, which each represent two ordinary shares, fell 76 cents, or 1.9 percent, to $38.69 on July 10.
CapitalSource Inc. (CSE:US) fell 10 percent to $4.06. The loan provider to small and mid-sized businesses said it plans a public offering of about 17.5 million shares of its common stock.
Charles Schwab Corp. (SCHW:US): The largest independent brokerage by client assets may be undervalued as the company cuts fees and offers new products to attract investors, Barron’s reported. Schwab fell 14 cents to $16.47.
Hoku Scientific Inc. (HOKU:US): The maker of fuel-cell and solar-power components said it retained Deutsche Bank Securities Inc. as its financial adviser to seek a possible sale.
RSC Holdings Inc. (RRR:US): The second-largest construction-equipment rental company in North America may rise to $15 within the next year amid a construction slump as petrochemicals, food processing and other industries spend more on equipment, Barron’s reported, citing Vance Edelson, an analyst at Morgan Stanley in New York. RSC gained 28 cents to $6 on July 10.
State Street Corp. (STT:US): The largest money manager for institutions paid $60 million to repurchase warrants held by the U.S., the U.S. Treasury said in a report on emergency aid to financial institutions.
Saturday, July 11, 2009
Retail Probably Rose, Factory Slump Eased: U.S. Economy Preview
July 12 (Bloomberg) -- Retail sales in the U.S. probably increased in June for a second straight month and factory production fell at a slower pace as the recession abated, economists said before reports this week.
Sales gained 0.4 percent after a 0.5 percent increase in May, according to the median estimate in a Bloomberg News survey before the Commerce Department’s report on July 14. The next day, Federal Reserve figures may show industrial output fell 0.6 percent last month after a 1.1 percent drop in May.
Consumers are venturing back into stores, seeking discounts and favoring necessities such as food or fuel. Even as the projected increase in sales and reports this week on housing may show the worst of the downturn has passed, a turnaround is likely to be gradual.
“The spending is more on staples than discretionary purchases,” Tom Porcelli, a senior economist at RBC Capital Markets in New York, said last week. “Aggregate demand is still amazingly weak. Things aren’t falling apart, but don’t expect a robust recovery.”
An index consumer confidence dropped last week on concerns about job losses, sending stocks lower. The Standard & Poor’s 500 Index closed at 879.13 in New York on July 10, down 0.4 percent from the previous day, capping its fourth straight weekly loss. The Dow Jones Industrial Average closed down 0.5 percent to 8146.52.
Car Sales
Car dealers struggled last month, as sales dropped to a 9.7 million annual pace from a 9.9 million rate in May, according to data from Woodcliff Lake, New Jersey-based Autodata Corp.
Sales plunged 42 percent from a year earlier at Auburn Hills, Michigan-based Chrysler Group LLC, and dropped 34 percent at General Motors Corp., located in Detroit. The carmakers, two of the three biggest in the U.S., are restructuring through bankruptcy.
Excluding automobiles, retail sales probably rose 0.5 percent in June, matching the gain in the prior month, according to the Bloomberg survey.
The Commerce report may also show receipts at service stations climbed, in part because of higher fuel prices. Regular unleaded gasoline averaged $2.64 a gallon at the pump in June, up 35 cents from the prior month, according to AAA.
Oil costs also will be reflected in June price reports due from the Labor Department. An index of producer prices, to be released on July 14, and a gauge of consumer prices, due the next day, may show bigger gains compared with May, the survey showed. Excluding food and energy, inflation remains contained, economists said.
Bargain Hunters
Bargain-conscious consumers drove sales gains at chains that sell discounted goods, reports showed last week, including Framingham, Massachusetts-based TJX Cos., owner of T.J. Maxx stores, and Pleasanton, California-based Ross Stores Inc., owner of the Ross Dress for Less chain.
Sales declined more than analysts forecast at San Francisco-based Gap Inc., operator of the Old Navy and Banana Republic chains, and Abercrombie & Fitch Co., a teen-clothing retailer based in New Albany, Ohio.
The International Council of Shopping Centers, which said June retail sales fell by 5.1 percent based on 32 chains, predicted July results may show as much as a 5 percent drop.
“Tough times certainly will linger for most, even through the summer,” Mike Niemira, the New York-based trade group’s chief economist, said in a July 9 telephone interview.
Meanwhile, one area of the economy showing signs of bottoming out is housing.
Housing, Construction
A Commerce Department report due July 17 may show builders broke ground on houses at a 528,000 annual rate in June, after a 532,000 pace the prior month and compared with a record-low 454,000 in April, according to the survey median.
Building permits, which point to future construction, likely rose.
The deterioration in industrial production may ease as companies, which have been slashing output to get rid of excess inventories, make progress in bringing stockpiles closer to demand. Still, the report may also show capacity utilization continued to decline, economists said.
Regional Fed reports from the New York and Philadelphia areas may add to evidence the manufacturing slump is waning, economists said. The reports are due on July 15 and 16.
On July 15, Fed policy makers will release minutes from their two-day meeting in June which will likely contain their most recent forecasts for growth, inflation and unemployment, plus officials’ discussion of monetary policy.
Sales gained 0.4 percent after a 0.5 percent increase in May, according to the median estimate in a Bloomberg News survey before the Commerce Department’s report on July 14. The next day, Federal Reserve figures may show industrial output fell 0.6 percent last month after a 1.1 percent drop in May.
Consumers are venturing back into stores, seeking discounts and favoring necessities such as food or fuel. Even as the projected increase in sales and reports this week on housing may show the worst of the downturn has passed, a turnaround is likely to be gradual.
“The spending is more on staples than discretionary purchases,” Tom Porcelli, a senior economist at RBC Capital Markets in New York, said last week. “Aggregate demand is still amazingly weak. Things aren’t falling apart, but don’t expect a robust recovery.”
An index consumer confidence dropped last week on concerns about job losses, sending stocks lower. The Standard & Poor’s 500 Index closed at 879.13 in New York on July 10, down 0.4 percent from the previous day, capping its fourth straight weekly loss. The Dow Jones Industrial Average closed down 0.5 percent to 8146.52.
Car Sales
Car dealers struggled last month, as sales dropped to a 9.7 million annual pace from a 9.9 million rate in May, according to data from Woodcliff Lake, New Jersey-based Autodata Corp.
Sales plunged 42 percent from a year earlier at Auburn Hills, Michigan-based Chrysler Group LLC, and dropped 34 percent at General Motors Corp., located in Detroit. The carmakers, two of the three biggest in the U.S., are restructuring through bankruptcy.
Excluding automobiles, retail sales probably rose 0.5 percent in June, matching the gain in the prior month, according to the Bloomberg survey.
The Commerce report may also show receipts at service stations climbed, in part because of higher fuel prices. Regular unleaded gasoline averaged $2.64 a gallon at the pump in June, up 35 cents from the prior month, according to AAA.
Oil costs also will be reflected in June price reports due from the Labor Department. An index of producer prices, to be released on July 14, and a gauge of consumer prices, due the next day, may show bigger gains compared with May, the survey showed. Excluding food and energy, inflation remains contained, economists said.
Bargain Hunters
Bargain-conscious consumers drove sales gains at chains that sell discounted goods, reports showed last week, including Framingham, Massachusetts-based TJX Cos., owner of T.J. Maxx stores, and Pleasanton, California-based Ross Stores Inc., owner of the Ross Dress for Less chain.
Sales declined more than analysts forecast at San Francisco-based Gap Inc., operator of the Old Navy and Banana Republic chains, and Abercrombie & Fitch Co., a teen-clothing retailer based in New Albany, Ohio.
The International Council of Shopping Centers, which said June retail sales fell by 5.1 percent based on 32 chains, predicted July results may show as much as a 5 percent drop.
“Tough times certainly will linger for most, even through the summer,” Mike Niemira, the New York-based trade group’s chief economist, said in a July 9 telephone interview.
Meanwhile, one area of the economy showing signs of bottoming out is housing.
Housing, Construction
A Commerce Department report due July 17 may show builders broke ground on houses at a 528,000 annual rate in June, after a 532,000 pace the prior month and compared with a record-low 454,000 in April, according to the survey median.
Building permits, which point to future construction, likely rose.
The deterioration in industrial production may ease as companies, which have been slashing output to get rid of excess inventories, make progress in bringing stockpiles closer to demand. Still, the report may also show capacity utilization continued to decline, economists said.
Regional Fed reports from the New York and Philadelphia areas may add to evidence the manufacturing slump is waning, economists said. The reports are due on July 15 and 16.
On July 15, Fed policy makers will release minutes from their two-day meeting in June which will likely contain their most recent forecasts for growth, inflation and unemployment, plus officials’ discussion of monetary policy.
Friday, July 10, 2009
Japanese Bonds Gain for Fourth Week as Producer Prices Slide
July 11 (Bloomberg) -- Japanese bonds rose for a fourth week after a central bank report showed producer prices fell at a record pace, helping boost the purchasing power of the fixed payments from debt.
Ten-year yields approached a three-month low yesterday after the Bank of Japan said the costs companies pay for commodities and unfinished goods tumbled 6.6 percent in June from a year earlier, after sliding a revised 5.5 percent in May. Demand for bonds this week was tempered as technical charts suggested the recent rally in the securities was excessive.
“The latest producer prices show demand remains much weaker than supply, helping bonds,” said Akio Kato, leader of a six-member team investing in Japanese bonds in Tokyo at Kokusai Asset Management Co., which runs the world’s second-biggest debt fund and has $73 billion in assets.
The yield on the 1.4 percent bond maturing in June 2019 fell two basis points this week to 1.295 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker. Yields declined to 1.27 percent on July 9, the lowest level since March 25.
Twenty-year yields fell half a basis point this week to 1.995 percent. Ten-year bond futures for September delivery added 0.40 to 138.84 this week at the Tokyo Stock Exchange.
Inflation Bonds
Five-year inflation bonds yesterday yielded 1.59 percentage points more than similar-maturity regular notes, according to data compiled by Bloomberg. Inflation-adjusted securities typically yield less than regular bonds because their principal payment increases at the same rate as inflation.
Gains in bonds were limited as technical charts traders use to predict prices suggested the 15 percent gain in 10-year securities and the 8 percent advance in 20-year debt over the past month were excessive.
“Ten-year and 20-year bonds are showing signs that they are struggling to live below 1.3 percent and 2 percent respectively,” Peter Wilson, a yen strategist in London at the local subsidiary of Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by assets, wrote in a note on July 9.
The 14-day relative strength index on 10-year yields was 26 on July 9, below the 30 level that suggests the securities are poised to change direction. The stochastic oscillator on 20-year yields dropped to 5 on July 9, less than the 20 level that signals yields are likely to rebound. A stochastic oscillator chart measures the closing price of a security relative to its highs and lows to try to predict whether it will rise or fall.
Pimco Buys
Pacific Investment Management Co., which runs the world’s largest bond fund, said investors who avoid Japanese government debt may miss out on a rally.
Japan’s benchmark bonds may gain this year, pushing 10-year yields to the lowest since August 2003, as the world’s second- largest economy struggles to emerge from its worst postwar recession and avoid a deflationary spiral, said Tomoya Masanao, a Pimco executive vice president in Tokyo. The Newport Beach, California-based company manages $756 billion in assets.
“There is a huge risk not holding bonds,” Masanao said in an interview with Bloomberg News on July 8. “The growth rate won’t rise much and inflation will remain low.”
Japan’s economy is likely to contract 6 percent in the fiscal year that started April 1, the International Monetary Fund said this week. Economists in a Bloomberg News survey said Japan’s quarterly growth rate will remain below 3 percent through the three months ending June 30, 2010. Consumer prices, excluding fresh food, slid a record 1.1 percent in May from a year earlier, the statistics bureau said last month.
Ten-year yields approached a three-month low yesterday after the Bank of Japan said the costs companies pay for commodities and unfinished goods tumbled 6.6 percent in June from a year earlier, after sliding a revised 5.5 percent in May. Demand for bonds this week was tempered as technical charts suggested the recent rally in the securities was excessive.
“The latest producer prices show demand remains much weaker than supply, helping bonds,” said Akio Kato, leader of a six-member team investing in Japanese bonds in Tokyo at Kokusai Asset Management Co., which runs the world’s second-biggest debt fund and has $73 billion in assets.
The yield on the 1.4 percent bond maturing in June 2019 fell two basis points this week to 1.295 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker. Yields declined to 1.27 percent on July 9, the lowest level since March 25.
Twenty-year yields fell half a basis point this week to 1.995 percent. Ten-year bond futures for September delivery added 0.40 to 138.84 this week at the Tokyo Stock Exchange.
Inflation Bonds
Five-year inflation bonds yesterday yielded 1.59 percentage points more than similar-maturity regular notes, according to data compiled by Bloomberg. Inflation-adjusted securities typically yield less than regular bonds because their principal payment increases at the same rate as inflation.
Gains in bonds were limited as technical charts traders use to predict prices suggested the 15 percent gain in 10-year securities and the 8 percent advance in 20-year debt over the past month were excessive.
“Ten-year and 20-year bonds are showing signs that they are struggling to live below 1.3 percent and 2 percent respectively,” Peter Wilson, a yen strategist in London at the local subsidiary of Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by assets, wrote in a note on July 9.
The 14-day relative strength index on 10-year yields was 26 on July 9, below the 30 level that suggests the securities are poised to change direction. The stochastic oscillator on 20-year yields dropped to 5 on July 9, less than the 20 level that signals yields are likely to rebound. A stochastic oscillator chart measures the closing price of a security relative to its highs and lows to try to predict whether it will rise or fall.
Pimco Buys
Pacific Investment Management Co., which runs the world’s largest bond fund, said investors who avoid Japanese government debt may miss out on a rally.
Japan’s benchmark bonds may gain this year, pushing 10-year yields to the lowest since August 2003, as the world’s second- largest economy struggles to emerge from its worst postwar recession and avoid a deflationary spiral, said Tomoya Masanao, a Pimco executive vice president in Tokyo. The Newport Beach, California-based company manages $756 billion in assets.
“There is a huge risk not holding bonds,” Masanao said in an interview with Bloomberg News on July 8. “The growth rate won’t rise much and inflation will remain low.”
Japan’s economy is likely to contract 6 percent in the fiscal year that started April 1, the International Monetary Fund said this week. Economists in a Bloomberg News survey said Japan’s quarterly growth rate will remain below 3 percent through the three months ending June 30, 2010. Consumer prices, excluding fresh food, slid a record 1.1 percent in May from a year earlier, the statistics bureau said last month.
Indonesia, Vying to Enter BRIC, Has Star Role in ‘Chindonesia’
July 11 (Bloomberg) -- Indonesia’s economy may double in the next six years as the world’s biggest exporter of power- station coal and largest producer of palm oil taps surging demand from India and China, CLSA Asia-Pacific Markets said.
China, India and Indonesia will generate $10 trillion of wealth for investors by 2015, Nicholas Cashmore, head of Indonesia research at CLSA Asia-Pacific Markets, said in a note titled “Chindonesia: Enter the Komodo,” a reference to the reptile found only in eastern Indonesia. The three economies are Asia’s “next growth triangle,” he said.
Feeding the needs of the world’s two most-populated nations as demand from Western countries slows may help President Susilo Bambang Yudhoyono meet his target of boosting growth to 7 percent in his second term. Indonesia wants be included among the so-called BRIC nations of Brazil, Russia, India and China, Emil Salim, a presidential adviser, said.
“Together, China and India are increasingly becoming the biggest marketplace for almost everything sold on the planet,” Cashmore said in the report published yesterday. Indonesia plays a symbiotic role in the emergence of China and India and “as this role becomes more pronounced in years to come, it will boost growth, investment and consumption.”
India’s industrial production increased at the fastest pace in eight months in May, the statistics agency said yesterday. The South Asian nation, the biggest buyer of Indonesia’s palm oil and cashew, may overtake China next year as the world’s fastest growing major economy, according to the World Bank.
BRIC Membership
China’s economy will expand 7.2 percent in 2009 from a year earlier, the Washington-based lender said. Indonesia’s exports to China grew 16 percent last year, compared with a 10.7 percent expansion in demand from the U.S., the second-largest buyer of Indonesian products.
Indonesia’s economic acceleration provides a case for its inclusion among the BRIC economies, Morgan Stanley said in a report to clients last month.
The $433 billion economy can expand “significantly” more than 7 percent once Yudhoyono fixes the nation’s congested roads, neglected ports and ageing power plants, according to Joachim von Amsberg, the World Bank’s representative in Jakarta.
Yudhoyono is set to win a second term after presidential elections this week, providing the 59-year-old former general with a mandate to double spending on roads and power to $140 billion by 2014.
Congested Roads
Fixing Indonesia’s congested roads, neglected ports and ageing power plants needs to be among Yudhoyono’s top priorities for him to achieve his goal of boosting growth and reducing poverty, according to nine of 11 chief executive officers contacted in the past month by Bloomberg News.
He also needs to improve transparency in Indonesia’s legal system and reduce corruption to attract global investors, the survey found.
“Keeping the drive for fair and transparent practices and processes, which helps secure a level playing field for all,” will help business in Indonesia, Stuart Dean, Southeast Asia president of General Electric Co. said in a response to the survey last month.
In 2007, Tata Power Co., which is building a 4,000-megawatt plant in western India, bought a 30 percent stake in two coal mining units owned by Indonesia’s PT Bumi Resources. The $4.14 billion plant will run on coal from the Indonesian mines.
India’s coal imports will more than double to 100 million tons by 2012 from 40 million tons, estimates Kaamil Fareed, a senior trading manager at the Coal & Oil Group, which supplies coal in India and Pakistan. That’s about 40 percent of Indonesia’s estimated coal production for this year.
“As a leading supplier of commodities, Indonesia is leveraged to the growth of Chindia,” Cashmore said referring to China and India. “Indonesia is ready to rise in the world economic hierarchy and take its place alongside China and India.”
China, India and Indonesia will generate $10 trillion of wealth for investors by 2015, Nicholas Cashmore, head of Indonesia research at CLSA Asia-Pacific Markets, said in a note titled “Chindonesia: Enter the Komodo,” a reference to the reptile found only in eastern Indonesia. The three economies are Asia’s “next growth triangle,” he said.
Feeding the needs of the world’s two most-populated nations as demand from Western countries slows may help President Susilo Bambang Yudhoyono meet his target of boosting growth to 7 percent in his second term. Indonesia wants be included among the so-called BRIC nations of Brazil, Russia, India and China, Emil Salim, a presidential adviser, said.
“Together, China and India are increasingly becoming the biggest marketplace for almost everything sold on the planet,” Cashmore said in the report published yesterday. Indonesia plays a symbiotic role in the emergence of China and India and “as this role becomes more pronounced in years to come, it will boost growth, investment and consumption.”
India’s industrial production increased at the fastest pace in eight months in May, the statistics agency said yesterday. The South Asian nation, the biggest buyer of Indonesia’s palm oil and cashew, may overtake China next year as the world’s fastest growing major economy, according to the World Bank.
BRIC Membership
China’s economy will expand 7.2 percent in 2009 from a year earlier, the Washington-based lender said. Indonesia’s exports to China grew 16 percent last year, compared with a 10.7 percent expansion in demand from the U.S., the second-largest buyer of Indonesian products.
Indonesia’s economic acceleration provides a case for its inclusion among the BRIC economies, Morgan Stanley said in a report to clients last month.
The $433 billion economy can expand “significantly” more than 7 percent once Yudhoyono fixes the nation’s congested roads, neglected ports and ageing power plants, according to Joachim von Amsberg, the World Bank’s representative in Jakarta.
Yudhoyono is set to win a second term after presidential elections this week, providing the 59-year-old former general with a mandate to double spending on roads and power to $140 billion by 2014.
Congested Roads
Fixing Indonesia’s congested roads, neglected ports and ageing power plants needs to be among Yudhoyono’s top priorities for him to achieve his goal of boosting growth and reducing poverty, according to nine of 11 chief executive officers contacted in the past month by Bloomberg News.
He also needs to improve transparency in Indonesia’s legal system and reduce corruption to attract global investors, the survey found.
“Keeping the drive for fair and transparent practices and processes, which helps secure a level playing field for all,” will help business in Indonesia, Stuart Dean, Southeast Asia president of General Electric Co. said in a response to the survey last month.
In 2007, Tata Power Co., which is building a 4,000-megawatt plant in western India, bought a 30 percent stake in two coal mining units owned by Indonesia’s PT Bumi Resources. The $4.14 billion plant will run on coal from the Indonesian mines.
India’s coal imports will more than double to 100 million tons by 2012 from 40 million tons, estimates Kaamil Fareed, a senior trading manager at the Coal & Oil Group, which supplies coal in India and Pakistan. That’s about 40 percent of Indonesia’s estimated coal production for this year.
“As a leading supplier of commodities, Indonesia is leveraged to the growth of Chindia,” Cashmore said referring to China and India. “Indonesia is ready to rise in the world economic hierarchy and take its place alongside China and India.”
Asia Stocks Post Weekly Loss on Concern About Global Recovery
July 11 (Bloomberg) -- Asian stocks fell this week, the third weekly decline in four, as concern the global recovery will falter caused commodity prices to drop and the yen to strengthen.
BHP Billiton Ltd., the world’s biggest mining company, dropped for a fifth week after copper and oil prices slumped. Honda Motor Co., which makes 51 percent of its revenue in North America, tumbled 10 percent on concern a stronger yen will hurt the value of its overseas revenue. STX Pan Ocean Co. Ltd., South Korea’s biggest bulk carrier, sank 11 percent as shipping rates declined.
The MSCI Asia Pacific Index lost 2.1 percent in the past five days, adding to last week’s 0.8 percent decline. That pared the measure’s record 28 percent in the three months ended June 30 on optimism the global economy is stabilizing.
“The market is finally returning its focus to the present, rather than looking for an eventual recovery,” said Masaru Hamasaki, a Tokyo-based strategist at Toyota Asset Management Co., which oversees $14 billion. “The economic rebound won’t be rapid. Share prices are beginning to reflect that.”
The Asian stock benchmark, which plunged by a record last year as the global economy slipped into recession, has now climbed 43 percent since reaching a more than five-year low on March 9. Stocks on the gauge now trade at 22.8 times reported earnings, compared with 15 times at the market trough in March and 14.9 for the U.S.’s Standard & Poor’s 500 Index.
Disappointing Data
Shares of Japanese exporters declined as the yen rose 3.4 percent against the U.S. dollar, the most since the five days through May 15. Honda Motor slumped 10 percent to 2,355 yen. Toyota Motor Corp., which gets about 37 percent of revenue in North America, slipped 5.8 percent to 3,430 yen. Sony Corp., a consumer electronics maker that gets almost half of sales from U.S. and Europe, slid 8.6 percent to 2,230 yen.
Disappointing economic data, including worse-than-expected U.S. unemployment figures on July 2, has fanned investor concern that stock gains had outpaced prospects for an economic recovery.
Japan’s government said on July 8 that machinery orders declined 3 percent in May. Economists had estimated a 2 percent increase. Growth in Japanese bank lending slowed to 2.5 percent last month from a year earlier, compared with 3.3 percent growth in May, the Bank of Japan said on the same day.
Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, declined 10 percent to 538 yen. Mizuho Financial Group Inc., Japan’s second-largest bank, dropped 11 percent to 202 yen.
Chinese Developers
Shares of Chinese property developers retreated on concern the government will restrict lending for real estate investments. China Overseas Land & Investment Ltd., a developer controlled by the country’s construction ministry, plunged 9.4 percent to HK$16.20 in Hong Kong. Shimao Property Holdings Ltd., run by billionaire Xu Rongmao, sank 10 percent to HK$14.16 in Hong Kong.
Industrial & Commercial Bank of China Ltd., the world’s largest financial company by market capitalization, dropped 5.2 percent to HK$5.06. China Construction Bank Corp., the mainland’s No. 2 lender, slipped 5.9 percent to HK$5.60.
Rapid credit growth poses a risk to the nation’s lenders and a concentration of loans to some industries may damage the financial system, a China Banking Regulatory Commission official said in a speech posted on the agency’s Web site on July 7. New loans in mainland China rose almost fivefold in June from a year earlier to 1.53 trillion yuan ($224 billion), the central bank said July 8.
“There could be some scrutiny on credit policy to prevent an overheating in the real estate market rather than an overall shift in the policy stance,” Fan Cheuk Wan, head of Asia Pacific research at Credit Suisse Private Banking, said.
Copper, Oil
Shares of commodity producers declined as copper and oil prices dropped this week. The worst recession in half a century may be prolonged because consumers see few signs job losses and declines in home prices are ending, economists Nouriel Roubini and Robert Shiller said.
“The fundamental problem, as Franklin Delano Roosevelt said in 1933, is fear,” Shiller, a Yale University professor, said July 9 on Bloomberg Radio’s “Surveillance.” The Great Depression was deepened by a “sense of lost confidence or animal spirits that was a self-fulfilling prophecy. The worry is that we will have the same kind of issue arising again,” he said.
BHP Billiton dropped 2.3 percent to A$32.65, its fifth week of decline. Rio Tinto Ltd., the world’s third-largest mining company, fell 2.5 percent to A$48.36. Jiangxi Copper Co. Ltd., China’s biggest producer of the metal, slipped 5.1 percent to HK$12.22 in Hong Kong. Copper for September delivery sank 3.7 percent, its second weekly fall.
Baltic Dry Falls
PetroChina Co., the nation’s biggest oil producer and the world’s largest company by market capitalization, slipped 6.9 percent to HK$7.94. Inpex Corp., Japan’s largest oil explorer, dropped 6 percent to 691,000 yen. Woodside Petroleum Ltd., Australia’s second-largest oil producer, fell 3.7 percent to A$39.90.
The Baltic Dry Index, which measures the cost of shipping commodities, dropped 15 percent in London this week, the most since the five days ended March 20.
STX Pan Ocean slumped 11 percent to 10,350 won in Seoul. Mitsui O.S.K. Lines Ltd., the world’s largest operator of iron- ore vessels, dropped 8.6 percent to 542 yen in Tokyo. China Cosco Holdings Ltd., the world’s largest operator of dry-bulk ships, declined 6.9 percent to HK$8.52.
The first companies to go public in China since September surged. Guilin Sanjin Pharmaceutical Co., the nation’s largest maker of herbal lozenges, surged 82 percent to 36.10 yuan. Zhejiang Wanma Cable Co., which supplies cable to the nation’s dominant electricity distributor, jumped 125 percent to 25.93 yuan.
Funds Diverted
In Hong Kong, Amber Energy Ltd. soared 63 percent to HK$2.71 on its debut, after investors subscribed for more than 1,200 times the shares offered in an initial sale.
Chigo Holdings Ltd., which makes air conditioners, will start trading on July 13 In Hong Kong. BBMG Corp., the No. 1 building materials supplier in China’s Beijing, Tianjin and Hebei areas, will start taking orders from institutional investors next week for this year’s second-largest initial public offering in Hong Kong.
“The market’s pulling back as money is tied up with new stocks,” said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong.
-- With contribution from Patrick Rial and Kotaro Tsunetomi in Tokyo. Editors: Nick Gentle, Mike Millard.
BHP Billiton Ltd., the world’s biggest mining company, dropped for a fifth week after copper and oil prices slumped. Honda Motor Co., which makes 51 percent of its revenue in North America, tumbled 10 percent on concern a stronger yen will hurt the value of its overseas revenue. STX Pan Ocean Co. Ltd., South Korea’s biggest bulk carrier, sank 11 percent as shipping rates declined.
The MSCI Asia Pacific Index lost 2.1 percent in the past five days, adding to last week’s 0.8 percent decline. That pared the measure’s record 28 percent in the three months ended June 30 on optimism the global economy is stabilizing.
“The market is finally returning its focus to the present, rather than looking for an eventual recovery,” said Masaru Hamasaki, a Tokyo-based strategist at Toyota Asset Management Co., which oversees $14 billion. “The economic rebound won’t be rapid. Share prices are beginning to reflect that.”
The Asian stock benchmark, which plunged by a record last year as the global economy slipped into recession, has now climbed 43 percent since reaching a more than five-year low on March 9. Stocks on the gauge now trade at 22.8 times reported earnings, compared with 15 times at the market trough in March and 14.9 for the U.S.’s Standard & Poor’s 500 Index.
Disappointing Data
Shares of Japanese exporters declined as the yen rose 3.4 percent against the U.S. dollar, the most since the five days through May 15. Honda Motor slumped 10 percent to 2,355 yen. Toyota Motor Corp., which gets about 37 percent of revenue in North America, slipped 5.8 percent to 3,430 yen. Sony Corp., a consumer electronics maker that gets almost half of sales from U.S. and Europe, slid 8.6 percent to 2,230 yen.
Disappointing economic data, including worse-than-expected U.S. unemployment figures on July 2, has fanned investor concern that stock gains had outpaced prospects for an economic recovery.
Japan’s government said on July 8 that machinery orders declined 3 percent in May. Economists had estimated a 2 percent increase. Growth in Japanese bank lending slowed to 2.5 percent last month from a year earlier, compared with 3.3 percent growth in May, the Bank of Japan said on the same day.
Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, declined 10 percent to 538 yen. Mizuho Financial Group Inc., Japan’s second-largest bank, dropped 11 percent to 202 yen.
Chinese Developers
Shares of Chinese property developers retreated on concern the government will restrict lending for real estate investments. China Overseas Land & Investment Ltd., a developer controlled by the country’s construction ministry, plunged 9.4 percent to HK$16.20 in Hong Kong. Shimao Property Holdings Ltd., run by billionaire Xu Rongmao, sank 10 percent to HK$14.16 in Hong Kong.
Industrial & Commercial Bank of China Ltd., the world’s largest financial company by market capitalization, dropped 5.2 percent to HK$5.06. China Construction Bank Corp., the mainland’s No. 2 lender, slipped 5.9 percent to HK$5.60.
Rapid credit growth poses a risk to the nation’s lenders and a concentration of loans to some industries may damage the financial system, a China Banking Regulatory Commission official said in a speech posted on the agency’s Web site on July 7. New loans in mainland China rose almost fivefold in June from a year earlier to 1.53 trillion yuan ($224 billion), the central bank said July 8.
“There could be some scrutiny on credit policy to prevent an overheating in the real estate market rather than an overall shift in the policy stance,” Fan Cheuk Wan, head of Asia Pacific research at Credit Suisse Private Banking, said.
Copper, Oil
Shares of commodity producers declined as copper and oil prices dropped this week. The worst recession in half a century may be prolonged because consumers see few signs job losses and declines in home prices are ending, economists Nouriel Roubini and Robert Shiller said.
“The fundamental problem, as Franklin Delano Roosevelt said in 1933, is fear,” Shiller, a Yale University professor, said July 9 on Bloomberg Radio’s “Surveillance.” The Great Depression was deepened by a “sense of lost confidence or animal spirits that was a self-fulfilling prophecy. The worry is that we will have the same kind of issue arising again,” he said.
BHP Billiton dropped 2.3 percent to A$32.65, its fifth week of decline. Rio Tinto Ltd., the world’s third-largest mining company, fell 2.5 percent to A$48.36. Jiangxi Copper Co. Ltd., China’s biggest producer of the metal, slipped 5.1 percent to HK$12.22 in Hong Kong. Copper for September delivery sank 3.7 percent, its second weekly fall.
Baltic Dry Falls
PetroChina Co., the nation’s biggest oil producer and the world’s largest company by market capitalization, slipped 6.9 percent to HK$7.94. Inpex Corp., Japan’s largest oil explorer, dropped 6 percent to 691,000 yen. Woodside Petroleum Ltd., Australia’s second-largest oil producer, fell 3.7 percent to A$39.90.
The Baltic Dry Index, which measures the cost of shipping commodities, dropped 15 percent in London this week, the most since the five days ended March 20.
STX Pan Ocean slumped 11 percent to 10,350 won in Seoul. Mitsui O.S.K. Lines Ltd., the world’s largest operator of iron- ore vessels, dropped 8.6 percent to 542 yen in Tokyo. China Cosco Holdings Ltd., the world’s largest operator of dry-bulk ships, declined 6.9 percent to HK$8.52.
The first companies to go public in China since September surged. Guilin Sanjin Pharmaceutical Co., the nation’s largest maker of herbal lozenges, surged 82 percent to 36.10 yuan. Zhejiang Wanma Cable Co., which supplies cable to the nation’s dominant electricity distributor, jumped 125 percent to 25.93 yuan.
Funds Diverted
In Hong Kong, Amber Energy Ltd. soared 63 percent to HK$2.71 on its debut, after investors subscribed for more than 1,200 times the shares offered in an initial sale.
Chigo Holdings Ltd., which makes air conditioners, will start trading on July 13 In Hong Kong. BBMG Corp., the No. 1 building materials supplier in China’s Beijing, Tianjin and Hebei areas, will start taking orders from institutional investors next week for this year’s second-largest initial public offering in Hong Kong.
“The market’s pulling back as money is tied up with new stocks,” said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong.
-- With contribution from Patrick Rial and Kotaro Tsunetomi in Tokyo. Editors: Nick Gentle, Mike Millard.
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