India’s central bank said reducing inflation is the “dominant” goal at the moment, signaling the possibility of an interest-rate increase today.
“The anti-inflationary focus of monetary policy would have to continue,” the Reserve Bank of India said in a report yesterday. “Since a lower inflation regime is essential for sustainable high growth, containing inflation becomes the dominant policy objective in the current environment.”
Governor Duvvuri Subbarao may join South Korea and Thailand in raising borrowing costs this month after boosting them six times in 2010, the most by any central bank in Asia. The move will buttress government efforts to cool inflation after Prime Minister Manmohan Singh unveiled plans to import onions from Pakistan and keep a ban on exports of lentils and edible oils.
“The RBI’s pretty hawkish stance indicates that a rate hike is a done deal,” said Shubhada Rao, a Mumbai-based economist at Yes Bank Ltd. “Inflation is becoming a huge challenge for policy makers.”
Twenty one of 22 economists in a Bloomberg News survey forecast Subbarao will raise the benchmark repurchase rate by a quarter-point to 6.5 percent. One expects a half-point increase. The RBI is due to announce the decision at 11:30 a.m. in Mumbai.
Bonds Fall
India’s benchmark nine-year government bonds fell for a second day on speculation the RBI will tighten policy. The yield rose one basis point to 8.17 percent as of the 5 p.m. close in Mumbai yesterday. A basis point is 0.01 percentage point.
The Bombay Stock Exchange’s Sensitive Index, which has declined 6.6 percent this year, gained 0.8 percent. The rupee slipped 0.1 percent to 45.68 against the dollar.
Subbarao refrained from boosting borrowing costs in the last policy statement on Dec. 16 as a record 1.1 trillion rupees ($24.1 billion) of share sales by companies including Coal India Ltd. caused a cash squeeze at lenders.
Inflation in India is being stoked by the higher cost of farm products. The food-inflation rate rose to 15.5 percent in the week to Jan. 8 in Asia’s third-largest economy, undermining spending power in a country where the World Bank estimates 828 million people live on less than $2 a day.
The benchmark wholesale-price inflation rate may average 8.5 percent in the year ending March 31, according to a survey of forecasts by lenders and research groups including the International Monetary Fund and the Asian Development Bank compiled by the RBI, yesterday’s report showed. In November, the average inflation was projected at 8.1 percent.
Faster Growth
The survey showed the economy may grow 8.7 percent in the year through March, faster than the 8.5 percent estimated three months ago.
“While inflation upsurge has largely come from supply-side elements, monetary policy would need to factor in near-term risks to inflation from high input cost pressures transmitting to output prices,” the central bank said in the report. “The risks to generalized inflation cannot be overlooked as inflation expectations are currently ruling high.”
Companies including Hindustan Unilever Ltd., India’s biggest household products maker, may suffer lower profit in the three quarters through September as input prices rise, Amit Mishra, a Mumbai-based analyst at Macquarie Securities India Pvt., said in an interview on Jan. 7.
Asian Rates
Officials across Asia have tightened monetary policy in recent weeks.
The Bank of Korea on Jan. 13 raised borrowing costs for the third time since the global financial crisis while Thailand on Jan. 12 increased its benchmark rate for the fourth time in seven months.
China, which boosted rates twice in the fourth quarter of last year, told banks on Jan. 14 to set aside more deposits as reserves for the fourth time in just over two months.
India’s main opposition Bharatiya Janata Party started a month-long campaign on Jan. 20 against Singh’s government, alleging corruption and a failure to check price gains.
Singh, who wants to cap prices before his Congress party faces nine state elections in the next 18 months, said Jan. 19 he’s “confident” of slowing inflation by March.
Chakravarthy Rangarajan, the top economic adviser to Singh, said Jan. 7 that “some action” by the RBI may be needed to contain prices.
Monday, January 24, 2011
India’s growth push gets regional boost
Asian countries are among the biggest investors in India as the region increasingly backs its own rapid growth amid a fall-off in longer-term capital from the west.
India, the world’s fastest-growing large economy after China, has witnessed a surge in foreign direct investment from countries such as China, Japan and Malaysia. Investments from the US, France and the UK have declined over the past year.
Higher levels of FDI are crucial for India to achieve its ambition of double-digit growth. Duvvuri Subbarao, India’s central bank governor, has warned that India needs a quantum step” in investment if it is to propel its growth rate higher than the current 8.5 per cent.
An Ernst & Young study, released on Monday, showed that in spite of an often strained relationship across the Himalayas, FDI from China almost doubled over the past year. China was India’s ninth largest investor by number of projects in 2010, up from 16th the year before.
“In terms of potential new long-term trends, perhaps the most significant is the rapid growth of China as an investor in India,” the report said.
Japan has invested more in India than in China over the past two years and has overtaken the UK and Germany as investors, as capital has flowed into India’s manufacturing sector.
Although the US is still India’s largest investor, its share of investment has fallen from 45 per cent of total inflows into India in 2003 to 30 per cent. The number of investments last year was half the tally of four years ago.
Investments in India’s $60bn information technology sector have become increasingly controversial, triggering public anger and strong protectionist rhetoric at a time of high unemployment in the US.
Asian investors show a clear preference for the automotive, electronics and infrastructure sectors. But some are wary of India’s longer-term constraints.
“India is not a large energy-producing country and in view of its anticipated growth I expect the demand for energy to outstrip supply in times to come,” said Daisuke Ochiai, chief financial officer of Mitsui & Co. “I feel this could be a risk factor in India’s growth story.”
China remains the big FDI destination of the region, attracting about two-thirds more than India in spite of projections that India’s growth rate may overtake that of China’s in the coming five years.
India, the world’s fastest-growing large economy after China, has witnessed a surge in foreign direct investment from countries such as China, Japan and Malaysia. Investments from the US, France and the UK have declined over the past year.
Higher levels of FDI are crucial for India to achieve its ambition of double-digit growth. Duvvuri Subbarao, India’s central bank governor, has warned that India needs a quantum step” in investment if it is to propel its growth rate higher than the current 8.5 per cent.
An Ernst & Young study, released on Monday, showed that in spite of an often strained relationship across the Himalayas, FDI from China almost doubled over the past year. China was India’s ninth largest investor by number of projects in 2010, up from 16th the year before.
“In terms of potential new long-term trends, perhaps the most significant is the rapid growth of China as an investor in India,” the report said.
Japan has invested more in India than in China over the past two years and has overtaken the UK and Germany as investors, as capital has flowed into India’s manufacturing sector.
Although the US is still India’s largest investor, its share of investment has fallen from 45 per cent of total inflows into India in 2003 to 30 per cent. The number of investments last year was half the tally of four years ago.
Investments in India’s $60bn information technology sector have become increasingly controversial, triggering public anger and strong protectionist rhetoric at a time of high unemployment in the US.
Asian investors show a clear preference for the automotive, electronics and infrastructure sectors. But some are wary of India’s longer-term constraints.
“India is not a large energy-producing country and in view of its anticipated growth I expect the demand for energy to outstrip supply in times to come,” said Daisuke Ochiai, chief financial officer of Mitsui & Co. “I feel this could be a risk factor in India’s growth story.”
China remains the big FDI destination of the region, attracting about two-thirds more than India in spite of projections that India’s growth rate may overtake that of China’s in the coming five years.
Sunday, January 23, 2011
The Understudy Takes the Stage at Apple
On an 18-hour flight from California to Singapore a few years ago, Timothy D. Cook, Apple’s chief operating officer, had little time for small talk with a colleague. Glued to his business class seat, Mr. Cook had his nose in spreadsheets, preparing for a thorough review of Apple’s Asian operations.
The two landed at 6 a.m., took time to shower and headed into a meeting with Apple’s local executives. Twelve hours later, and well past dinnertime, the local executives were ready to call it quits.
“They were absolutely exhausted,” said Michael Janes, the Apple executive who accompanied Mr. Cook. “Tim was not. He was ready to jump to the next slide and the next slide after that. He is absolutely relentless.”
That relentlessness could be indispensable in the months ahead, because Mr. Cook may be tested as never before. He has been charged with running Apple’s day-to-day operations while his boss, Steven P. Jobs, the company’s visionary chief executive, is on medical leave.
Mr. Cook has done that twice before, briefly and successfully. Yet if Mr. Jobs’s health does not improve, Mr. Cook could be on the job for a long time. And while Apple’s succession plans are closely guarded, Mr. Cook is widely believed to be the most likely candidate to permanently replace Mr. Jobs.
In Silicon Valley, Mr. Jobs is also known for relentlessness. Yet on many levels, he and Mr. Cook are opposites. While Mr. Jobs is mercurial and prone to outbursts, Mr. Cook, who was raised in a small town in Alabama, is polite and soft-spoken. He is often described as a “Southern gentleman.” While Mr. Jobs obsesses over every last detail of Apple’s products, Mr. Cook obsesses over the less glamorous minutiae of Apple’s operations.
Their complementary skills have helped Apple pull off the most remarkable turnaround in American business, and made it the world’s most valuable technology company. When Mr. Cook is on his own, he will have to compensate for the absence of Mr. Jobs — and his inventiveness, charisma and uncanny ability to predict the future of technology and anticipate the wishes of consumers.
“He is going to have to look to others to provide the creative vacuum left by Steve,” said A. M. Sacconaghi Jr., an analyst with Sanford Bernstein & Company.
Mr. Cook and Apple declined to comment for this article. From his first days at Apple in 1998, Mr. Cook, who is known as intensely private, worked in the shadow of Mr. Jobs and other prominent leaders. Although his job — making sure Apple could produce, assemble and ship its breakthrough products around the world, and do so profitably — was not considered sexy, he quickly removed inefficiencies from Apple’s supply chain.
“My favorite scenes were meeting suppliers,” said a former Apple executive who had traveled with Mr. Cook frequently and asked to remain anonymous because he did not want to upset their relationship. “He is Mr. Spreadsheet. If things weren’t right, he would torture the suppliers and demand improvement. At the same time, he had good relationships with them.”
Apple was smaller then and largely focused on making PCs. Its operations were a mess.
Apple was still running its own factories in California, Ireland and Singapore. While more profitable and efficient companies like Dell had moved to a just-in-time manufacturing model, Apple still held 90 days of inventory.
Mr. Cook closed Apple’s factories and outsourced all manufacturing to a far-flung network of suppliers in Asia. Inventories decreased to 60 days, then to 30 days, then to the just-in-time model. Mr. Cook virtually lived in airplanes, traveling the world to meet with suppliers and browbeat them into meeting his demands.
Analysts and investors say Mr. Cook’s efforts on the production end made the difference in turning Apple’s fortunes around. And they still are critical to the company’s success.
Take the iPad. It took Mr. Jobs’s imagination and the expertise of his engineers and designers to create it. But Mr. Cook’s operational abilities allowed Apple to parlay a cool product into a business that has already brought in $9.6 billion, as the company built and shipped worldwide nearly 15 million iPads in just nine months to meet customers’ seemingly insatiable appetite.
The two landed at 6 a.m., took time to shower and headed into a meeting with Apple’s local executives. Twelve hours later, and well past dinnertime, the local executives were ready to call it quits.
“They were absolutely exhausted,” said Michael Janes, the Apple executive who accompanied Mr. Cook. “Tim was not. He was ready to jump to the next slide and the next slide after that. He is absolutely relentless.”
That relentlessness could be indispensable in the months ahead, because Mr. Cook may be tested as never before. He has been charged with running Apple’s day-to-day operations while his boss, Steven P. Jobs, the company’s visionary chief executive, is on medical leave.
Mr. Cook has done that twice before, briefly and successfully. Yet if Mr. Jobs’s health does not improve, Mr. Cook could be on the job for a long time. And while Apple’s succession plans are closely guarded, Mr. Cook is widely believed to be the most likely candidate to permanently replace Mr. Jobs.
In Silicon Valley, Mr. Jobs is also known for relentlessness. Yet on many levels, he and Mr. Cook are opposites. While Mr. Jobs is mercurial and prone to outbursts, Mr. Cook, who was raised in a small town in Alabama, is polite and soft-spoken. He is often described as a “Southern gentleman.” While Mr. Jobs obsesses over every last detail of Apple’s products, Mr. Cook obsesses over the less glamorous minutiae of Apple’s operations.
Their complementary skills have helped Apple pull off the most remarkable turnaround in American business, and made it the world’s most valuable technology company. When Mr. Cook is on his own, he will have to compensate for the absence of Mr. Jobs — and his inventiveness, charisma and uncanny ability to predict the future of technology and anticipate the wishes of consumers.
“He is going to have to look to others to provide the creative vacuum left by Steve,” said A. M. Sacconaghi Jr., an analyst with Sanford Bernstein & Company.
Mr. Cook and Apple declined to comment for this article. From his first days at Apple in 1998, Mr. Cook, who is known as intensely private, worked in the shadow of Mr. Jobs and other prominent leaders. Although his job — making sure Apple could produce, assemble and ship its breakthrough products around the world, and do so profitably — was not considered sexy, he quickly removed inefficiencies from Apple’s supply chain.
“My favorite scenes were meeting suppliers,” said a former Apple executive who had traveled with Mr. Cook frequently and asked to remain anonymous because he did not want to upset their relationship. “He is Mr. Spreadsheet. If things weren’t right, he would torture the suppliers and demand improvement. At the same time, he had good relationships with them.”
Apple was smaller then and largely focused on making PCs. Its operations were a mess.
Apple was still running its own factories in California, Ireland and Singapore. While more profitable and efficient companies like Dell had moved to a just-in-time manufacturing model, Apple still held 90 days of inventory.
Mr. Cook closed Apple’s factories and outsourced all manufacturing to a far-flung network of suppliers in Asia. Inventories decreased to 60 days, then to 30 days, then to the just-in-time model. Mr. Cook virtually lived in airplanes, traveling the world to meet with suppliers and browbeat them into meeting his demands.
Analysts and investors say Mr. Cook’s efforts on the production end made the difference in turning Apple’s fortunes around. And they still are critical to the company’s success.
Take the iPad. It took Mr. Jobs’s imagination and the expertise of his engineers and designers to create it. But Mr. Cook’s operational abilities allowed Apple to parlay a cool product into a business that has already brought in $9.6 billion, as the company built and shipped worldwide nearly 15 million iPads in just nine months to meet customers’ seemingly insatiable appetite.
Swaps Climb to 2008 High as RBI `Desperate' to Raise Rates: India Credit
The cost of locking in five-year interest rates in India has climbed to the highest level since 2008 as investors brace for the central bank to resume Asia’s most-aggressive tightening of monetary policy.
The fixed rate to receive floating payments for five years in a swap contract surged 118 basis points in the past year, the most in Asia, to a 27-month high of 8.09 percent on Jan. 20, data compiled by Bloomberg show. The Reserve Bank of India will boost its repurchase rate tomorrow by 25 basis points to 6.5 percent, according to 21 of 22 economists in a Bloomberg News survey.
Central bank Governor Duvvuri Subbarao said at a ceremony in Mumbai on Jan. 17 he is “desperate” to cool inflation that accelerated the most in 10 months in December to 8.43 percent. Deutsche Bank AG forecast this month that rates on India’s 2016 swaps, already twice as high as the 4.15 percent for the similar gauge in China, will advance further as investors use the contracts to guard against higher debt costs.
“A 50-basis-point rate increase is probably what’s needed to bring inflation under control and the swap market is telling you just that,” K. Ramanathan, chief investment officer at ING Investment Management Pvt. in Mumbai, said in a Jan. 20 interview. “Monetary policy so far seems to have stayed a bit too pro-growth than was necessary.”
Mumbai-based Credit Analysis & Research Ltd. predicted a 50 basis point increase, a move HSBC Holdings Plc and JPMorgan Chase & Co. also said is possible.
Rate Move
The last time swap rates surged this high, in June 2008, the RBI raised rates by 0.50 percentage point twice in as many months. An increase of that size would be larger than each of the six quarter-point increases of 2010.
Five-year swap rates have gained 65 basis points since the last policy review on Dec. 16, when Subbarao left borrowing costs unchanged after share sales by companies including Coal India Ltd. caused a cash crunch in the banking system.
The Reserve Bank lifted the repurchase rate, its overnight lending rate, by 150 basis points last year, the most by any central bank in Asia. Brazil increased its benchmark on Jan. 19 for the first time since July, to 11.25, while South Korea and Thailand raised rates this month to 2.75 and 2.25. A basis point is 0.01 percentage point. The RBI’s decision will be announced in Mumbai at 11:30 a.m. tomorrow.
‘Out of Hand’
“The RBI is likely to raise rates by 25 basis points but there’s an outside chance of them surprising with a 50 basis points increase,” Jahangir Aziz, the Mumbai-based chief economist at JPMorgan who previously worked at the finance ministry, said in a Jan. 21 interview. “If inflation isn’t subdued at this point in time, it will get out of hand.”
The South Asian nation’s sovereign bonds have lost 0.9 percent this month, the third-worst performance after local- currency debt markets in Indonesia and the Philippines, HSBC indexes show.
India’s 7.8 percent bonds due May 2020 are headed for their first monthly loss since October, pushing yields close to the highest level since the notes were issued in May. The yield on the security rose three basis points to 8.16 percent on Jan. 21, according to the central bank’s trading system.
“Inflation will remain a worry in 2011,” Kumar Rachapudi, a Singapore-based fixed-income strategist at Barclays Plc, said in a Jan. 19 interview. “With no clear respite in sight for interest rates due to sticky inflation, we see the yield on the benchmark bond rising above 8.4 percent” by the end of June.
Real Yields
Real yields on nine-year government bonds, adjusted for inflation, ended last week at a negative 0.27 percent, compared with a positive 0.45 percent a month earlier, as the benchmark wholesale-price index rose faster. In China, 10-year real yields are a negative 0.61 percent.
“We are still bearish on India,” Adeline Ng, who oversees $1.6 billion in Singapore as head of Asian fixed-income trading at BNP Paribas Investment Partners, a unit of France’s largest bank, said in a Jan. 19 interview. “Central banks will still hike rates, partially to normalize rates where many of the countries are still having negative interest rates.”
The BNP Paribas L1 Bond Asia Ex-Japan fund uses interest- rate swaps to profit from its forecasts.
Inflation in India is being stoked by the higher cost of farm products. The food-inflation rate rose 15.5 percent in the week to Jan. 8 in Asia’s third-largest economy, undermining spending power in a country where the World Bank estimates 828 million people live on less than $2 a day.
Political Pressure
The main opposition Bharatiya Janata Party started a month- long campaign on Jan. 20 against Prime Minister Manmohan Singh’s government for failing to check price gains. The government is targeting economic growth of 9 percent over the next two decades to cut poverty.
Singh, who is under pressure to cap prices before his Congress party faces nine state elections in the next 18 months, said Jan. 19 he’s “confident” of slowing inflation by March. Chakravarthy Rangarajan, the top economic adviser to Singh, said Jan. 7 that “some action” on rates may be needed to contain prices.
The cost of protecting debt of State Bank of India from default for five years rose 23 basis points to 183 this year. Some investors use State Bank as a proxy for sovereign credit- default swaps. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to debt agreements. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
India’s rupee fell 0.2 percent to 45.62 per dollar on Jan. 21. The currency rose 4.1 percent in 2010 after gaining 4.9 percent in 2009, and slumping 19 percent in 2008.
“With inflation remaining above its comfort level, the RBI needs to demonstrate strong resolve to tackle it in order to maintain credibility,” Anubhuti Sahay, a Mumbai-based economist at Standard Chartered Plc, said in a Jan. 18 interview.
The fixed rate to receive floating payments for five years in a swap contract surged 118 basis points in the past year, the most in Asia, to a 27-month high of 8.09 percent on Jan. 20, data compiled by Bloomberg show. The Reserve Bank of India will boost its repurchase rate tomorrow by 25 basis points to 6.5 percent, according to 21 of 22 economists in a Bloomberg News survey.
Central bank Governor Duvvuri Subbarao said at a ceremony in Mumbai on Jan. 17 he is “desperate” to cool inflation that accelerated the most in 10 months in December to 8.43 percent. Deutsche Bank AG forecast this month that rates on India’s 2016 swaps, already twice as high as the 4.15 percent for the similar gauge in China, will advance further as investors use the contracts to guard against higher debt costs.
“A 50-basis-point rate increase is probably what’s needed to bring inflation under control and the swap market is telling you just that,” K. Ramanathan, chief investment officer at ING Investment Management Pvt. in Mumbai, said in a Jan. 20 interview. “Monetary policy so far seems to have stayed a bit too pro-growth than was necessary.”
Mumbai-based Credit Analysis & Research Ltd. predicted a 50 basis point increase, a move HSBC Holdings Plc and JPMorgan Chase & Co. also said is possible.
Rate Move
The last time swap rates surged this high, in June 2008, the RBI raised rates by 0.50 percentage point twice in as many months. An increase of that size would be larger than each of the six quarter-point increases of 2010.
Five-year swap rates have gained 65 basis points since the last policy review on Dec. 16, when Subbarao left borrowing costs unchanged after share sales by companies including Coal India Ltd. caused a cash crunch in the banking system.
The Reserve Bank lifted the repurchase rate, its overnight lending rate, by 150 basis points last year, the most by any central bank in Asia. Brazil increased its benchmark on Jan. 19 for the first time since July, to 11.25, while South Korea and Thailand raised rates this month to 2.75 and 2.25. A basis point is 0.01 percentage point. The RBI’s decision will be announced in Mumbai at 11:30 a.m. tomorrow.
‘Out of Hand’
“The RBI is likely to raise rates by 25 basis points but there’s an outside chance of them surprising with a 50 basis points increase,” Jahangir Aziz, the Mumbai-based chief economist at JPMorgan who previously worked at the finance ministry, said in a Jan. 21 interview. “If inflation isn’t subdued at this point in time, it will get out of hand.”
The South Asian nation’s sovereign bonds have lost 0.9 percent this month, the third-worst performance after local- currency debt markets in Indonesia and the Philippines, HSBC indexes show.
India’s 7.8 percent bonds due May 2020 are headed for their first monthly loss since October, pushing yields close to the highest level since the notes were issued in May. The yield on the security rose three basis points to 8.16 percent on Jan. 21, according to the central bank’s trading system.
“Inflation will remain a worry in 2011,” Kumar Rachapudi, a Singapore-based fixed-income strategist at Barclays Plc, said in a Jan. 19 interview. “With no clear respite in sight for interest rates due to sticky inflation, we see the yield on the benchmark bond rising above 8.4 percent” by the end of June.
Real Yields
Real yields on nine-year government bonds, adjusted for inflation, ended last week at a negative 0.27 percent, compared with a positive 0.45 percent a month earlier, as the benchmark wholesale-price index rose faster. In China, 10-year real yields are a negative 0.61 percent.
“We are still bearish on India,” Adeline Ng, who oversees $1.6 billion in Singapore as head of Asian fixed-income trading at BNP Paribas Investment Partners, a unit of France’s largest bank, said in a Jan. 19 interview. “Central banks will still hike rates, partially to normalize rates where many of the countries are still having negative interest rates.”
The BNP Paribas L1 Bond Asia Ex-Japan fund uses interest- rate swaps to profit from its forecasts.
Inflation in India is being stoked by the higher cost of farm products. The food-inflation rate rose 15.5 percent in the week to Jan. 8 in Asia’s third-largest economy, undermining spending power in a country where the World Bank estimates 828 million people live on less than $2 a day.
Political Pressure
The main opposition Bharatiya Janata Party started a month- long campaign on Jan. 20 against Prime Minister Manmohan Singh’s government for failing to check price gains. The government is targeting economic growth of 9 percent over the next two decades to cut poverty.
Singh, who is under pressure to cap prices before his Congress party faces nine state elections in the next 18 months, said Jan. 19 he’s “confident” of slowing inflation by March. Chakravarthy Rangarajan, the top economic adviser to Singh, said Jan. 7 that “some action” on rates may be needed to contain prices.
The cost of protecting debt of State Bank of India from default for five years rose 23 basis points to 183 this year. Some investors use State Bank as a proxy for sovereign credit- default swaps. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to debt agreements. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
India’s rupee fell 0.2 percent to 45.62 per dollar on Jan. 21. The currency rose 4.1 percent in 2010 after gaining 4.9 percent in 2009, and slumping 19 percent in 2008.
“With inflation remaining above its comfort level, the RBI needs to demonstrate strong resolve to tackle it in order to maintain credibility,” Anubhuti Sahay, a Mumbai-based economist at Standard Chartered Plc, said in a Jan. 18 interview.
Asian Stocks Rise for First Time in Three Days, Led by Japanese Automakers
Asian stocks rose for the first time in three days, led by Japanese carmakers after Nomura Holdings Inc. boosted its investment rating on Honda Motor Co.
Honda, Japan’s second-biggest carmaker by market value, climbed 3.1 percent in Tokyo, and Toyota Motor Corp., the world’s largest automaker, advanced 1.3 percent. Woolworths Ltd., Australia’s No. 1 retailer, dropped 2.5 percent in Sydney after cutting its annual profit forecast. JB Hi-Fi Ltd., an Australian electronics retailer, decreased 1.9 percent.
The MSCI Asia Pacific Index gained 0.2 percent to 136.79 as of 10:27 a.m. in Tokyo, with about three stocks advancing for each two that declined. Of the 40 companies in the gauge that have reported net income for the latest quarter, 18 have exceeded analyst estimates and the same number has missed them, according to data compiled by Bloomberg.
The Asia-Pacific gauge sank 1.7 percent last week amid concern China’s faster-than-expected economic growth will add pressure on policy makers to boost efforts to tame inflation.
Honda, Japan’s second-biggest carmaker by market value, climbed 3.1 percent in Tokyo, and Toyota Motor Corp., the world’s largest automaker, advanced 1.3 percent. Woolworths Ltd., Australia’s No. 1 retailer, dropped 2.5 percent in Sydney after cutting its annual profit forecast. JB Hi-Fi Ltd., an Australian electronics retailer, decreased 1.9 percent.
The MSCI Asia Pacific Index gained 0.2 percent to 136.79 as of 10:27 a.m. in Tokyo, with about three stocks advancing for each two that declined. Of the 40 companies in the gauge that have reported net income for the latest quarter, 18 have exceeded analyst estimates and the same number has missed them, according to data compiled by Bloomberg.
The Asia-Pacific gauge sank 1.7 percent last week amid concern China’s faster-than-expected economic growth will add pressure on policy makers to boost efforts to tame inflation.
Indonesia to sign $15bn deals with India
Indonesia will sign 17 deals worth more than $15bn this week during a visit to India by Susilo Bambang Yudhoyono, Indonesia’s president, along with a dozen of his key ministers. The deals will be a significant boost to ties between Asia’s two largest democracies.
The agreements, to be formalised on Tuesday, are part of an ambitious push by Indonesia, a member of the group of 20 and south-east Asia’s largest economy, to attract $150bn in infrastructure investment.
Among the projects to be implemented over the next three years are multibillion-dollar investments by Indian energy companies Reliance Group, Archean, Adani and Tata, according to a list given to the Financial Times by the Indonesian Investment Co-ordinating Board.
One memorandum of understanding will be with Indian infrastructure developer GVK, the company building Bombay’s new airport, which will construct airport terminals on Indonesia’s resort island of Bali and in Yogyakarta, a city in central Java.
Adani, the energy group, will build a 270km railway and a coal terminal in southern Sumatra with the provincial government in a deal worth $1.6bn. Other deals include the building of coal-fired power plants, railways and shipyards.
Indonesia urgently needs infrastructure investment to meet growing demand for services and goods both at home and abroad.
For decades the country has been a leading source of coal, metal and minerals for richer neighbours but, as an emerging regional power governing 240m people, Jakarta hopes profits from Indonesia’s abundant resources can deepen development.
“It’s not the old paradigm of extracting, it’s the new paradigm of digging, but also creating value, in Indonesia,” Gita Wirjawan, head of the Indonesian Investment Co-ordinating Board, said on Sunday. “This will be a big bang. I am very excited about the fact that the Indians are keen on coming to Indonesia.”
Indonesia is also negotiating similar deals with companies from South Korea, China and Japan that are willing to invest billions in infrastructure to secure supplies of coal, oil and gas.
Mr Yudhoyono will oversee the signing of dozens of other bilateral agreements and will discuss expanding trade in India and the 10 countries of Asean, the south-east Asian regional grouping. Bilateral trade between India and Indonesia is worth $11.8bn per year, while Indonesia is India’s second-largest Asean trading partner, importing large quantities of wood pulp, palm oil and minerals. India invested $26.2m in Indonesia in 2009.
The agreements, to be formalised on Tuesday, are part of an ambitious push by Indonesia, a member of the group of 20 and south-east Asia’s largest economy, to attract $150bn in infrastructure investment.
Among the projects to be implemented over the next three years are multibillion-dollar investments by Indian energy companies Reliance Group, Archean, Adani and Tata, according to a list given to the Financial Times by the Indonesian Investment Co-ordinating Board.
One memorandum of understanding will be with Indian infrastructure developer GVK, the company building Bombay’s new airport, which will construct airport terminals on Indonesia’s resort island of Bali and in Yogyakarta, a city in central Java.
Adani, the energy group, will build a 270km railway and a coal terminal in southern Sumatra with the provincial government in a deal worth $1.6bn. Other deals include the building of coal-fired power plants, railways and shipyards.
Indonesia urgently needs infrastructure investment to meet growing demand for services and goods both at home and abroad.
For decades the country has been a leading source of coal, metal and minerals for richer neighbours but, as an emerging regional power governing 240m people, Jakarta hopes profits from Indonesia’s abundant resources can deepen development.
“It’s not the old paradigm of extracting, it’s the new paradigm of digging, but also creating value, in Indonesia,” Gita Wirjawan, head of the Indonesian Investment Co-ordinating Board, said on Sunday. “This will be a big bang. I am very excited about the fact that the Indians are keen on coming to Indonesia.”
Indonesia is also negotiating similar deals with companies from South Korea, China and Japan that are willing to invest billions in infrastructure to secure supplies of coal, oil and gas.
Mr Yudhoyono will oversee the signing of dozens of other bilateral agreements and will discuss expanding trade in India and the 10 countries of Asean, the south-east Asian regional grouping. Bilateral trade between India and Indonesia is worth $11.8bn per year, while Indonesia is India’s second-largest Asean trading partner, importing large quantities of wood pulp, palm oil and minerals. India invested $26.2m in Indonesia in 2009.
New Delhi eyes bank reshape
India’s central bank plans to encourage foreign institutions operating in the country to set up wholly owned subsidiaries rather than merely operating as branches of overseas groups.
The Reserve Bank of India said in a discussion paper that having foreign banks set up as locally incorporated, wholly owned subsidiaries would be better for the stability of the financial system than the current structure, where they operate as branches of their overseas parents.
Local incorporation of foreign banks in India would ensure “a clear delineation between the assets and liabilities of the domestic bank and those of its foreign parent and clearly provides for ring-fenced capital within the host country”, it said.
Such a structure would facilitate more “effective control in a banking crisis and enables the host country authorities to act more independently as against branch operations”, the central bank said, while a local board of directors would prioritise local interests.
Some 34 foreign banks operate in India, but all are structured as branches of overseas institutions and face many restrictions on expanding their networks.
However, according to the RBI, during the global financial crisis foreign banks – which had grown substantially in preceding years – sharply curtailed their domestic lending in India as their parent companies ran into difficulties.
As a result, foreign banks accounted for 7.65 per cent of total Indian banking system assets at the end of March 2010, down from about 9 per cent in March 2009. The five biggest foreign banks – including Citibank and Standard Chartered – account for 70 per cent of India’s foreign bank assets.
The RBI said it could not force foreign banks already operating in India to incorporate locally, but that it expected those that had become systemically important – by virtue of their size – to “voluntarily convert their branches into wholly owned subsidiaries”.
It said any bank accounting for at least 0.25 per cent of India’s total financial system assets was to be deemed systemically important.
Wholly owned subsidiaries of foreign banks would be given more favourable treatment for expanding their Indian branch networks than other foreign banks, the RBI proposed.
Local subsidiaries of foreign banks could also be given a five-year transition period to comply with India’s priority sector lending rules.
The RBI has invited feedback on its proposals.
The Reserve Bank of India said in a discussion paper that having foreign banks set up as locally incorporated, wholly owned subsidiaries would be better for the stability of the financial system than the current structure, where they operate as branches of their overseas parents.
Local incorporation of foreign banks in India would ensure “a clear delineation between the assets and liabilities of the domestic bank and those of its foreign parent and clearly provides for ring-fenced capital within the host country”, it said.
Such a structure would facilitate more “effective control in a banking crisis and enables the host country authorities to act more independently as against branch operations”, the central bank said, while a local board of directors would prioritise local interests.
Some 34 foreign banks operate in India, but all are structured as branches of overseas institutions and face many restrictions on expanding their networks.
However, according to the RBI, during the global financial crisis foreign banks – which had grown substantially in preceding years – sharply curtailed their domestic lending in India as their parent companies ran into difficulties.
As a result, foreign banks accounted for 7.65 per cent of total Indian banking system assets at the end of March 2010, down from about 9 per cent in March 2009. The five biggest foreign banks – including Citibank and Standard Chartered – account for 70 per cent of India’s foreign bank assets.
The RBI said it could not force foreign banks already operating in India to incorporate locally, but that it expected those that had become systemically important – by virtue of their size – to “voluntarily convert their branches into wholly owned subsidiaries”.
It said any bank accounting for at least 0.25 per cent of India’s total financial system assets was to be deemed systemically important.
Wholly owned subsidiaries of foreign banks would be given more favourable treatment for expanding their Indian branch networks than other foreign banks, the RBI proposed.
Local subsidiaries of foreign banks could also be given a five-year transition period to comply with India’s priority sector lending rules.
The RBI has invited feedback on its proposals.
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