July 19 (Bloomberg) -- The British economy will shrink 4.4 percent in 2009 before recovering in 2010, Ernst & Young’s Item Club will say tomorrow.
The forecast by the research group, which uses the same economic model as the U.K. Treasury, is worse than the 3.5 percent contraction predicted in April. Tomorrow it will also revise up the prediction for 2010 to show the economy expanding 0.5 percent instead of shrinking 0.1 percent.
U.K. gross domestic product plunged by the most in a half- century in the first quarter, prompting the central bank to cut interest rates to a record low and start buying assets with newly created money. Bank of England Deputy Governor Charles Bean said last week that the economy may return to quarterly growth by the end of this year.
“The economic patient has been in trauma, but thanks to the paramedics at the Treasury and the Bank of England, who pumped billions of pounds worth of medicine into the economy, the patient has been stabilized for now,” Item Club Chief Economic Adviser Peter Spencer will say in a statement. “But it remains unclear how quick and complete recovery will be and there is still a serious chance of a relapse.”
Saturday, July 18, 2009
Friday, July 17, 2009
Asian Currencies Advance on Recovery, Led by South Korea’s Won
July 18 (Bloomberg) -- South Korea’s won led currency gains in Asia this week as improved earnings and evidence the global economy is recovering from a recession bolstered demand for emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index had its best week in almost two months as China and Singapore this week reported economic growth that beat analysts’ estimates. Indonesia’s rupiah fell, trimming the week’s advance, after two separate hotel explosions in Jakarta yesterday. Taiwan’s dollar had its biggest weekly gain since May on speculation a rebound in global demand for personal computers will boost the island’s exports.
“The market has gradually moved back into risk appetite,” said Callum Henderson, head of currency strategy at Standard Chartered Plc in Singapore. “U.S. corporate earnings and Chinese GDP were above expectations, all of that is supportive for the balance in equities and supportive for assets.”
The won jumped 1.8 percent this week to 1,259.3 per dollar in Seoul, according to data compiled by Bloomberg. Singapore’s dollar strengthened 0.8 percent to S$1.4515, while India’s rupee rose 0.5 percent to 48.74. Taiwan’s dollar appreciated 0.3 percent to NT$32.955.
The Asia Dollar Index climbed 0.6 percent this week, the most since May 22, as China on July 16 said gross domestic product increased 7.9 percent in the second quarter from a year earlier, exceeding the median 7.8 percent forecast in a Bloomberg survey. The MSCI Asia Pacific Index of stocks advanced 2.9 percent, the most since the five-day period ended May 8.
Recovery Signs
Singapore said on July 14 that its economy expanded an annualized 20.4 percent last quarter from the previous three months and raised its forecast for 2009, saying GDP will shrink 4 percent to 6 percent this year, compared with an earlier prediction for a 9 percent contraction.
Goldman Sachs Group Inc. said its profit in the second quarter reached a record $3.44 billion, while Intel Corp.’s third-quarter sales and profit forecasts topped analysts’ estimates. Researcher Gartner Inc. said this week that personal- computer shipments declined 5 percent in the three months to June, about half the pace of its earlier forecast.
The won had its biggest weekly advance in two months as overseas investors bought more Korean shares than they sold for a third day. LG Display Co., the world’s second-largest maker of liquid-crystal displays, on July 16 reported second-quarter profit beat estimates. The Kospi index of local shares completed its fourth-straight weekly advance.
“The tech sector has benefited from the positive reports this week,” said David Cohen, director of Asian forecasting at Action Economics in Singapore. “That’s supportive of the Korean won and the Korean stock market.”
Electronics Exports
Taiwan’s dollar touched an almost two-week high on optimism an end to the global recession will fuel demand for the island’s exports. Electronics account for about two-fifths of Taiwan’s overseas sales and China is the biggest buyer.
The rupiah fell the most in two weeks after blasts hit the Ritz Carlton and JW Marriott hotels in Jakarta. The explosions, which killed at least eight people and injured 42, are Indonesia’s first terrorist attacks since 2005.
“This will throw a spanner in the works for regional markets, which have been getting used to an upbeat outlook,” said Wan Suhaimi Saidi, an economist at Kenanga Investment Bank Bhd. in Kuala Lumpur. “This will keep regional currencies in volatile trade.”
Samurai Bond
Indonesia went ahead with a 35 billion yen ($374 million) sale of 10-year samurai bonds yesterday and set the terms in a private placement, Rahmat Waluyanto, the finance ministry’s director general of debt management, said in a text message.
The rupiah fell 0.5 percent yesterday to 10,175 a dollar, trimming the week’s gain to 0.2 percent. Malaysia’s ringgit traded little changed at 3.5680 after touching 3.5535 on July 16, a one-week high.
Indonesia was hit by bombings annually from 1999 to 2005 that left about 280 people dead and authorities have blamed the Southeast Asian terrorist group, Jemaah Islamiyah, for the attacks.
Elsewhere, the Philippine peso climbed 0.5 percent this week to 48.075 a dollar and the Thai baht was little changed at 34.07. China’s yuan traded at 6.8317 versus 6.8328 on July 10.
The Bloomberg-JPMorgan Asia Dollar Index had its best week in almost two months as China and Singapore this week reported economic growth that beat analysts’ estimates. Indonesia’s rupiah fell, trimming the week’s advance, after two separate hotel explosions in Jakarta yesterday. Taiwan’s dollar had its biggest weekly gain since May on speculation a rebound in global demand for personal computers will boost the island’s exports.
“The market has gradually moved back into risk appetite,” said Callum Henderson, head of currency strategy at Standard Chartered Plc in Singapore. “U.S. corporate earnings and Chinese GDP were above expectations, all of that is supportive for the balance in equities and supportive for assets.”
The won jumped 1.8 percent this week to 1,259.3 per dollar in Seoul, according to data compiled by Bloomberg. Singapore’s dollar strengthened 0.8 percent to S$1.4515, while India’s rupee rose 0.5 percent to 48.74. Taiwan’s dollar appreciated 0.3 percent to NT$32.955.
The Asia Dollar Index climbed 0.6 percent this week, the most since May 22, as China on July 16 said gross domestic product increased 7.9 percent in the second quarter from a year earlier, exceeding the median 7.8 percent forecast in a Bloomberg survey. The MSCI Asia Pacific Index of stocks advanced 2.9 percent, the most since the five-day period ended May 8.
Recovery Signs
Singapore said on July 14 that its economy expanded an annualized 20.4 percent last quarter from the previous three months and raised its forecast for 2009, saying GDP will shrink 4 percent to 6 percent this year, compared with an earlier prediction for a 9 percent contraction.
Goldman Sachs Group Inc. said its profit in the second quarter reached a record $3.44 billion, while Intel Corp.’s third-quarter sales and profit forecasts topped analysts’ estimates. Researcher Gartner Inc. said this week that personal- computer shipments declined 5 percent in the three months to June, about half the pace of its earlier forecast.
The won had its biggest weekly advance in two months as overseas investors bought more Korean shares than they sold for a third day. LG Display Co., the world’s second-largest maker of liquid-crystal displays, on July 16 reported second-quarter profit beat estimates. The Kospi index of local shares completed its fourth-straight weekly advance.
“The tech sector has benefited from the positive reports this week,” said David Cohen, director of Asian forecasting at Action Economics in Singapore. “That’s supportive of the Korean won and the Korean stock market.”
Electronics Exports
Taiwan’s dollar touched an almost two-week high on optimism an end to the global recession will fuel demand for the island’s exports. Electronics account for about two-fifths of Taiwan’s overseas sales and China is the biggest buyer.
The rupiah fell the most in two weeks after blasts hit the Ritz Carlton and JW Marriott hotels in Jakarta. The explosions, which killed at least eight people and injured 42, are Indonesia’s first terrorist attacks since 2005.
“This will throw a spanner in the works for regional markets, which have been getting used to an upbeat outlook,” said Wan Suhaimi Saidi, an economist at Kenanga Investment Bank Bhd. in Kuala Lumpur. “This will keep regional currencies in volatile trade.”
Samurai Bond
Indonesia went ahead with a 35 billion yen ($374 million) sale of 10-year samurai bonds yesterday and set the terms in a private placement, Rahmat Waluyanto, the finance ministry’s director general of debt management, said in a text message.
The rupiah fell 0.5 percent yesterday to 10,175 a dollar, trimming the week’s gain to 0.2 percent. Malaysia’s ringgit traded little changed at 3.5680 after touching 3.5535 on July 16, a one-week high.
Indonesia was hit by bombings annually from 1999 to 2005 that left about 280 people dead and authorities have blamed the Southeast Asian terrorist group, Jemaah Islamiyah, for the attacks.
Elsewhere, the Philippine peso climbed 0.5 percent this week to 48.075 a dollar and the Thai baht was little changed at 34.07. China’s yuan traded at 6.8317 versus 6.8328 on July 10.
Asian Stocks Record Best Week Since May on Recovery Speculatio
July 18 (Bloomberg) -- Asian stocks rose this week, giving the MSCI Asia Pacific Index its biggest advance since May, amid renewed confidence the global economy is recovering.
CapitaLand Ltd., Singapore’s biggest developer, climbed 10 percent as Singapore upgraded its economic growth forecasts. Alumina Ltd., partner in the world’s biggest producer of the material used to make aluminum, jumped 15 percent in Sydney as commodity prices climbed. Bank of Communications Co. gained 8.3 percent in Hong Kong as economist Nouriel Roubini said the worst of the financial crisis is over.
“The recovery is gaining traction,” said Nader Naeimi, a strategist at AMP Capital Investors in Sydney, which manages about $95 billion. “Even if we don’t see spectacular growth, a stabilization should be enough to support a market rally.”
The MSCI Asia Pacific Index added 2.7 percent to 103.38 this week. The gauge has rallied 47 percent from a five-year low on March 9 amid optimism stimulus policies around the world will revive the global economy. The MSCI World Index gained 6.7 percent this week, the most since March.
Hong Kong’s Hang Seng Index climbed 6.2 percent, while Japan’s Nikkei 225 Stock Average rose 1.2 percent. Indonesia’s Jakarta Composite Index fell 0.6 percent yesterday, paring its weekly gain to 2.1 percent, after bomb blasts killed at least eight people in the city.
The MSCI Asia Pacific Index has risen this week as government reports showed economic growth accelerated in China and U.S. manufacturing improved. Intel Corp. forecast sales that beat analyst estimates, while International Business Machines Corp. raised its profit forecast.
‘Gaining Momentum’
“Sentiment has been gaining momentum following positive economic and earnings news,” said Michiya Tomita, who helps manage $61 billion at Mitsubishi UFJ Asset Management Co. in Hong Kong. “Most of the good news has been priced in. Investors will be looking for more catalysts in the next few weeks as companies report earnings.”
Stocks on the MSCI Asia Pacific Index are trading at an average 43 times reported earnings, up from the 15 times shares were trading at during the market’s trough in March. Companies on the S&P 500 are currently at 14 times profit.
In Singapore, the Straits Times Index advanced 5.3 percent this week, after the trade ministry said the city’s gross domestic product will shrink between 4 percent and 6 percent this year, less than an earlier forecast for a contraction of as much as 9 percent.
The economy grew an annualized 20.4 percent last quarter from the previous three months, after declining a revised 12.7 percent between January and March, it said.
Singapore Growth
CapitaLand surged 10 percent to S$3.73. City Developments Ltd., Singapore’s second-largest property company, jumped 14 percent to S$9.38. City Developments has started selling an 85- unit development, the Business Times reported yesterday.
“This upward trend will continue for some time, as economic indicators have confirmed the economy is recovering,” said Harvey Chang, a SinoPac Securities Investment Trust Co. fund manager who helps oversee about $1.5 billion. “There’s plenty of money in the market.”
Energy shares, material producers and finance companies were the best performing of the MSCI Asia Pacific Index’s 10 industry groups this week on speculation economic growth will boost commodity prices, real-estate demand and bank lending.
Alumina jumped 15 percent to A$1.52, while Fortescue Metals Group Ltd., Australia’s third-largest iron ore exporter, climbed 15 percent to A$3.92. BHP Billiton Ltd., the world’s largest mining company and Australia’s largest oil producer, added 7.8 percent to A$35.20.
Metals Rally
A gauge of six metals in London rose 9.1 percent, the best week since Feb. 6. Oil futures in New York added 6.1 percent, the biggest weekly advance since May 29.
Among finance companies, Bank of Communications, part owned by HSBC Holdings Plc, rose 8.3 percent to HK$8.83 in Hong Kong. HSBC, Europe’s largest lender, climbed 9.2 percent to HK$68.30.
Sumitomo Realty & Development Co., Japan’s No. 3 developer, rose 5.2 percent to 1,646 yen. Takashi Hashimoto, a Barclays Capital analyst in Tokyo, assigned an “overweight” recommendation to the company in new coverage.
“The freefall of the economy has stopped,” New York University’s Roubini, who predicted the financial crisis, said on July 16. “There is light at the end of the tunnel. And the light at the end of the tunnel for once is not the one of an incoming train.” Roubini reiterated his view that the contraction would last 24 months.
CapitaLand Ltd., Singapore’s biggest developer, climbed 10 percent as Singapore upgraded its economic growth forecasts. Alumina Ltd., partner in the world’s biggest producer of the material used to make aluminum, jumped 15 percent in Sydney as commodity prices climbed. Bank of Communications Co. gained 8.3 percent in Hong Kong as economist Nouriel Roubini said the worst of the financial crisis is over.
“The recovery is gaining traction,” said Nader Naeimi, a strategist at AMP Capital Investors in Sydney, which manages about $95 billion. “Even if we don’t see spectacular growth, a stabilization should be enough to support a market rally.”
The MSCI Asia Pacific Index added 2.7 percent to 103.38 this week. The gauge has rallied 47 percent from a five-year low on March 9 amid optimism stimulus policies around the world will revive the global economy. The MSCI World Index gained 6.7 percent this week, the most since March.
Hong Kong’s Hang Seng Index climbed 6.2 percent, while Japan’s Nikkei 225 Stock Average rose 1.2 percent. Indonesia’s Jakarta Composite Index fell 0.6 percent yesterday, paring its weekly gain to 2.1 percent, after bomb blasts killed at least eight people in the city.
The MSCI Asia Pacific Index has risen this week as government reports showed economic growth accelerated in China and U.S. manufacturing improved. Intel Corp. forecast sales that beat analyst estimates, while International Business Machines Corp. raised its profit forecast.
‘Gaining Momentum’
“Sentiment has been gaining momentum following positive economic and earnings news,” said Michiya Tomita, who helps manage $61 billion at Mitsubishi UFJ Asset Management Co. in Hong Kong. “Most of the good news has been priced in. Investors will be looking for more catalysts in the next few weeks as companies report earnings.”
Stocks on the MSCI Asia Pacific Index are trading at an average 43 times reported earnings, up from the 15 times shares were trading at during the market’s trough in March. Companies on the S&P 500 are currently at 14 times profit.
In Singapore, the Straits Times Index advanced 5.3 percent this week, after the trade ministry said the city’s gross domestic product will shrink between 4 percent and 6 percent this year, less than an earlier forecast for a contraction of as much as 9 percent.
The economy grew an annualized 20.4 percent last quarter from the previous three months, after declining a revised 12.7 percent between January and March, it said.
Singapore Growth
CapitaLand surged 10 percent to S$3.73. City Developments Ltd., Singapore’s second-largest property company, jumped 14 percent to S$9.38. City Developments has started selling an 85- unit development, the Business Times reported yesterday.
“This upward trend will continue for some time, as economic indicators have confirmed the economy is recovering,” said Harvey Chang, a SinoPac Securities Investment Trust Co. fund manager who helps oversee about $1.5 billion. “There’s plenty of money in the market.”
Energy shares, material producers and finance companies were the best performing of the MSCI Asia Pacific Index’s 10 industry groups this week on speculation economic growth will boost commodity prices, real-estate demand and bank lending.
Alumina jumped 15 percent to A$1.52, while Fortescue Metals Group Ltd., Australia’s third-largest iron ore exporter, climbed 15 percent to A$3.92. BHP Billiton Ltd., the world’s largest mining company and Australia’s largest oil producer, added 7.8 percent to A$35.20.
Metals Rally
A gauge of six metals in London rose 9.1 percent, the best week since Feb. 6. Oil futures in New York added 6.1 percent, the biggest weekly advance since May 29.
Among finance companies, Bank of Communications, part owned by HSBC Holdings Plc, rose 8.3 percent to HK$8.83 in Hong Kong. HSBC, Europe’s largest lender, climbed 9.2 percent to HK$68.30.
Sumitomo Realty & Development Co., Japan’s No. 3 developer, rose 5.2 percent to 1,646 yen. Takashi Hashimoto, a Barclays Capital analyst in Tokyo, assigned an “overweight” recommendation to the company in new coverage.
“The freefall of the economy has stopped,” New York University’s Roubini, who predicted the financial crisis, said on July 16. “There is light at the end of the tunnel. And the light at the end of the tunnel for once is not the one of an incoming train.” Roubini reiterated his view that the contraction would last 24 months.
Indonesia’s Economy May Be Unharmed by Bombings, Citigroup Says
July 18 (Bloomberg) -- Indonesia’s economy is resilient enough to withstand yesterday’s bomb attacks on the Ritz Carlton and JW Marriott hotels in Jakarta, economists said.
“Terrorist threats in Indonesia are nothing new,” said Johanna Chua, head of Asian economic research at Citigroup Inc. in Hong Kong. “The economic impact will likely be limited.”
A decade of continuous expansion in Indonesia hasn’t been interrupted by six major terrorist bombings since October 2002 as the assaults have done little to harm consumer spending, which accounts for almost two-thirds of the economy. Fitch Ratings said an “isolated incident” wouldn’t impact the nation’s credit outlook.
“As tragic as it is, this isn’t a macro-policy-changing event,” Richard Grace, chief currency strategist at Commonwealth Bank of Australia in Sydney, said of yesterday’s attacks. “I think it’s got a short-term impact.”
Indonesia’s $433 billion economy, the largest in Southeast Asia, grew 4.4 percent in the first quarter from a year earlier, compared with a 6.2 percent contraction for Malaysia and Thailand’s 7.1 percent slump.
Growth could accelerate to “significantly” more than 7 percent if President Susilo Bambang Yudhoyono fulfils his pledge to fix the nation’s congested roads, neglected ports and ageing power plants, according to Joachim von Amsberg, the World Bank’s representative in Jakarta.
Foreign Reserves
The rupiah declined the most in three weeks and stocks dropped after the bombings in the nation’s capital, which killed eight people and injured at least 53 others. The currency slid as much as 1 percent to 10,223 per dollar and the Jakarta Composite Index of shares slumped as much as 2.7 percent.
The bombings in Jakarta don’t represent a credit risk for Indonesia, said James McCormack, head of Asian sovereign ratings at Fitch Ratings in Hong Kong. The nation had foreign-currency reserves of $57.6 billion at the end of June, near the highest since July 2008.
“Obviously if this episode were repeated then it becomes a national-security concern,” McCormack said in an interview with Bloomberg Television. “But we’re not there yet.”
Indonesia went ahead yesterday with a 35 billion yen ($374 million) sale of 10-year samurai bonds after the bombing. The sale is the first by a nation to tap Japanese investors since Lehman Brothers Holdings Inc. collapsed in September.
“We do not see any major economic shock as a result of these blasts,” said Helmi Arman, an economist at PT Bank Danamon Indonesia in Jakarta. “The country has lived out numerous other terror attacks in the past five years.”
‘Remains Committed’
Accor SA, Europe’s biggest hotelier and operator of 37 hotels in Indonesia, said it will push through with plans to develop 15 locations in the country.
The Paris-based company, which has 11 hotels in Jakarta, “remains committed to Indonesia,” Gerard Guillouet, vice president for Accor operations in Malaysia, Indonesia and Singapore, said in an e-mailed statement.
“Global factors are still in favor of Indonesia,” said Fauzi Ichsan, senior economist at Standard Chartered Plc in Jakarta. The economy is “fundamentally strong,” he said.
Indonesia’s economy slowed in the months following the October 2002 bombing in Bali, which killed 202 people. Growth eased to 4.75 percent in the quarter ended December 2002 from 5.2 percent in the previous three months, as tourism revenue for the year dropped 20 percent to $4.3 billion from 2001.
The pace of expansion also weakened in the wake of the August 2003 assault on the JW Marriott hotel in Jakarta and the second Bali bombing in October 2005, which saw a halving in the number of tourist arrivals on the island.
Political Stability
“While tourism and general retail and travel-related activities could be affected by the latest events, we expect the impact to be temporary,” said Citigroup’s Chua.
Indonesia’s economy has also benefited in recent years from a more stable political environment and the success of government efforts to crack down on extremists. President Yudhoyono earlier this month was re-elected for a second term.
“There has been a lot of progress made in Indonesia on the terrorist front,” said Stephen Vickers, chief executive of Hong Kong-based FTI International Risk Ltd. “They managed to get completely through the elections without any major incidents.”
Economic growth may still weaken if yesterday’s bombing is the start of a new campaign by Jemaah Islamiyah, a Southeast Asian militant group with links to al Qaeda.
“Smaller, nastier, grittier bombings involving smaller numbers of people are quite likely,” said Vickers. “There are likely to be some more low-intensity, low-scale attacks in the coming weeks.”
“Terrorist threats in Indonesia are nothing new,” said Johanna Chua, head of Asian economic research at Citigroup Inc. in Hong Kong. “The economic impact will likely be limited.”
A decade of continuous expansion in Indonesia hasn’t been interrupted by six major terrorist bombings since October 2002 as the assaults have done little to harm consumer spending, which accounts for almost two-thirds of the economy. Fitch Ratings said an “isolated incident” wouldn’t impact the nation’s credit outlook.
“As tragic as it is, this isn’t a macro-policy-changing event,” Richard Grace, chief currency strategist at Commonwealth Bank of Australia in Sydney, said of yesterday’s attacks. “I think it’s got a short-term impact.”
Indonesia’s $433 billion economy, the largest in Southeast Asia, grew 4.4 percent in the first quarter from a year earlier, compared with a 6.2 percent contraction for Malaysia and Thailand’s 7.1 percent slump.
Growth could accelerate to “significantly” more than 7 percent if President Susilo Bambang Yudhoyono fulfils his pledge to fix the nation’s congested roads, neglected ports and ageing power plants, according to Joachim von Amsberg, the World Bank’s representative in Jakarta.
Foreign Reserves
The rupiah declined the most in three weeks and stocks dropped after the bombings in the nation’s capital, which killed eight people and injured at least 53 others. The currency slid as much as 1 percent to 10,223 per dollar and the Jakarta Composite Index of shares slumped as much as 2.7 percent.
The bombings in Jakarta don’t represent a credit risk for Indonesia, said James McCormack, head of Asian sovereign ratings at Fitch Ratings in Hong Kong. The nation had foreign-currency reserves of $57.6 billion at the end of June, near the highest since July 2008.
“Obviously if this episode were repeated then it becomes a national-security concern,” McCormack said in an interview with Bloomberg Television. “But we’re not there yet.”
Indonesia went ahead yesterday with a 35 billion yen ($374 million) sale of 10-year samurai bonds after the bombing. The sale is the first by a nation to tap Japanese investors since Lehman Brothers Holdings Inc. collapsed in September.
“We do not see any major economic shock as a result of these blasts,” said Helmi Arman, an economist at PT Bank Danamon Indonesia in Jakarta. “The country has lived out numerous other terror attacks in the past five years.”
‘Remains Committed’
Accor SA, Europe’s biggest hotelier and operator of 37 hotels in Indonesia, said it will push through with plans to develop 15 locations in the country.
The Paris-based company, which has 11 hotels in Jakarta, “remains committed to Indonesia,” Gerard Guillouet, vice president for Accor operations in Malaysia, Indonesia and Singapore, said in an e-mailed statement.
“Global factors are still in favor of Indonesia,” said Fauzi Ichsan, senior economist at Standard Chartered Plc in Jakarta. The economy is “fundamentally strong,” he said.
Indonesia’s economy slowed in the months following the October 2002 bombing in Bali, which killed 202 people. Growth eased to 4.75 percent in the quarter ended December 2002 from 5.2 percent in the previous three months, as tourism revenue for the year dropped 20 percent to $4.3 billion from 2001.
The pace of expansion also weakened in the wake of the August 2003 assault on the JW Marriott hotel in Jakarta and the second Bali bombing in October 2005, which saw a halving in the number of tourist arrivals on the island.
Political Stability
“While tourism and general retail and travel-related activities could be affected by the latest events, we expect the impact to be temporary,” said Citigroup’s Chua.
Indonesia’s economy has also benefited in recent years from a more stable political environment and the success of government efforts to crack down on extremists. President Yudhoyono earlier this month was re-elected for a second term.
“There has been a lot of progress made in Indonesia on the terrorist front,” said Stephen Vickers, chief executive of Hong Kong-based FTI International Risk Ltd. “They managed to get completely through the elections without any major incidents.”
Economic growth may still weaken if yesterday’s bombing is the start of a new campaign by Jemaah Islamiyah, a Southeast Asian militant group with links to al Qaeda.
“Smaller, nastier, grittier bombings involving smaller numbers of people are quite likely,” said Vickers. “There are likely to be some more low-intensity, low-scale attacks in the coming weeks.”
Tata Consultancy Net Beats Estimates on Costs, Dollar
July 17 (Bloomberg) -- Tata Consultancy Services Ltd., India’s largest software exporter, beat analysts’ estimates as profit climbed 23 percent on pared costs and a weaker dollar that boosted the value of overseas earnings.
First-quarter net income rose to 15.2 billion rupees ($312 million) in the three months ended June 30, from 12.4 billion rupees a year earlier, Mumbai-based Tata Consultancy said today. That compared with the 12.9 billion-rupee median of 21 analyst estimates compiled by Bloomberg.1. Sales climbed 12 percent.
Tata Consultancy joins closest rival Infosys Technologies Ltd. in beating estimates after the software provider froze pay and capped hiring to cope with the global recession. Chief Executive Officer Subramanian Ramadorai plans to boost non-U.S. sales to reduce the company’s dependence on its biggest market.
“Indian IT companies are going to benefit greatly because of their cost structures” when a recovery begins, Gopal Agrawal, head of equities at Mirae Asset India Investment Co. in Mumbai, said before the results. “Cross-currency movements in the last quarter” also helped software exporters, said Agrawal, who supervises $50 million including Tata Consultancy shares.
The dollar’s 13 percent decline in the quarter against the pound and 5.6 percent drop versus the euro also boosted earnings. The U.K. market contributed 17 percent of Tata Consultancy’s revenue in the quarter, while continental Europe provided 11 percent.
Tata Consultancy rose 3.4 percent to close at 434.1 rupees in Mumbai trading before the results were reported. The stock has added 82 percent this year, outpacing a 53 percent gain for the benchmark Sensitive Index and Infosys’s 67 percent advance.
Orders Boost Revenue
Sales rose to 72.1 billion rupees, beating analysts’ median estimate of 69.2 billion rupees after Tata Consultancy won eight “large” deals, including five from companies in the U.S.
“In times like this, I believe, we’ve managed our operations exceptionally well,” Ramadorai said at a briefing. “The overall growth has been broad-based across major and emerging markets. We’ve increased our wallet share with our top 10 clients as well.”
Tata Consultancy, which provides computer services and back-office support to Citigroup Inc., Volkswagen AG and other customers, said it won a multimillion dollar order from a specialty retailer in the U.S., where it gets half its sales. The Indian company also signed a multi-year contract with an Australian energy retailer for managing software applications.
Top 10 Clients
The share of revenue from Tata Consultancy’s 10 biggest customers rose to 28 percent in the quarter, from 26.9 percent in the preceding three months, the company said in a presentation to analysts and posted on its Web site.
The proportion of revenue accounted for by sales in the home market rose to 9.1 percent, from 8.2 percent in the previous quarter. Tata Consultancy aims to double sales in India to $1 billion in the next three years, Chief Operating Officer Natarajan Chandrasekaran said in April.
Infosys last week reported profit for the quarter ended June 30 rose 18 percent to 15.3 billion rupees, beating analysts’ estimates, after the company trimmed costs and won orders, including two from Fortune 500 companies.
‘Watchful of the Situation’
“The global economy across countries continues to be weak,” Ramadorai said. “We are certainly watchful of the situation and we don’t rule out the fact that more surprises can be expected.”
Chrysler LLC, which gave Tata Consultancy an order earlier this year, filed for bankruptcy April 30. Citigroup has received a $52 billion government bailout and financial firms worldwide have shed more than 328,000 jobs since the financial crisis started, according to data compiled by Bloomberg.
“IT services firms are mainly catering to global companies in America, mainly U.S. banks, which of course are suffering from the downturn in the financial industry,” Gunnar Pahlson, who oversees $500 million in emerging markets stocks at Sweden’s HQ Fonder AB, said by phone from Stockholm before the results were reported. “I don’t think you should expect a recovery in order flow this year; maybe next year.”
The U.S. information-technology market will shrink by 5 percent in the year ending December and global IT spending will decline 11 percent, Cambridge, Massachusetts-based Forrester Research Inc. forecast last month. Forrester expects a “strong technology recovery” in late 2009 and 2010.
IBM, Intel
International Business Machines Corp., the world’s biggest computer-services provider, yesterday reported second-quarter earnings that topped estimates and raised its full-year forecast. Intel Corp., the world’s biggest chipmaker, also beat estimates with its quarterly results, which were announced on July 14.
The U.S. economy will expand faster than previously forecast in the second half of this year and in 2010 as a revival in consumer spending signals an end to the recession, a Bloomberg News survey of economists showed last week.
Growth will average 1.5 percent in the July-to-December period, compared with last month’s 1.2 percent projection, according to the median of 57 forecasts in the survey.
Tata Consultancy is seeing some signs of improvement in its biggest market and among financial clients, Chandrasekaran said.
“We’ve seen growth in the U.S., we’ve seen growth in the financial services sector,” he told reporters at the briefing. “The deal pipeline is healthy and distributed across industries. Still, we’re cautious about manufacturing and high-tech.”
Wipro Ltd., India’s third-largest computer-services company, will report first-quarter earnings on July 22.
First-quarter net income rose to 15.2 billion rupees ($312 million) in the three months ended June 30, from 12.4 billion rupees a year earlier, Mumbai-based Tata Consultancy said today. That compared with the 12.9 billion-rupee median of 21 analyst estimates compiled by Bloomberg.1. Sales climbed 12 percent.
Tata Consultancy joins closest rival Infosys Technologies Ltd. in beating estimates after the software provider froze pay and capped hiring to cope with the global recession. Chief Executive Officer Subramanian Ramadorai plans to boost non-U.S. sales to reduce the company’s dependence on its biggest market.
“Indian IT companies are going to benefit greatly because of their cost structures” when a recovery begins, Gopal Agrawal, head of equities at Mirae Asset India Investment Co. in Mumbai, said before the results. “Cross-currency movements in the last quarter” also helped software exporters, said Agrawal, who supervises $50 million including Tata Consultancy shares.
The dollar’s 13 percent decline in the quarter against the pound and 5.6 percent drop versus the euro also boosted earnings. The U.K. market contributed 17 percent of Tata Consultancy’s revenue in the quarter, while continental Europe provided 11 percent.
Tata Consultancy rose 3.4 percent to close at 434.1 rupees in Mumbai trading before the results were reported. The stock has added 82 percent this year, outpacing a 53 percent gain for the benchmark Sensitive Index and Infosys’s 67 percent advance.
Orders Boost Revenue
Sales rose to 72.1 billion rupees, beating analysts’ median estimate of 69.2 billion rupees after Tata Consultancy won eight “large” deals, including five from companies in the U.S.
“In times like this, I believe, we’ve managed our operations exceptionally well,” Ramadorai said at a briefing. “The overall growth has been broad-based across major and emerging markets. We’ve increased our wallet share with our top 10 clients as well.”
Tata Consultancy, which provides computer services and back-office support to Citigroup Inc., Volkswagen AG and other customers, said it won a multimillion dollar order from a specialty retailer in the U.S., where it gets half its sales. The Indian company also signed a multi-year contract with an Australian energy retailer for managing software applications.
Top 10 Clients
The share of revenue from Tata Consultancy’s 10 biggest customers rose to 28 percent in the quarter, from 26.9 percent in the preceding three months, the company said in a presentation to analysts and posted on its Web site.
The proportion of revenue accounted for by sales in the home market rose to 9.1 percent, from 8.2 percent in the previous quarter. Tata Consultancy aims to double sales in India to $1 billion in the next three years, Chief Operating Officer Natarajan Chandrasekaran said in April.
Infosys last week reported profit for the quarter ended June 30 rose 18 percent to 15.3 billion rupees, beating analysts’ estimates, after the company trimmed costs and won orders, including two from Fortune 500 companies.
‘Watchful of the Situation’
“The global economy across countries continues to be weak,” Ramadorai said. “We are certainly watchful of the situation and we don’t rule out the fact that more surprises can be expected.”
Chrysler LLC, which gave Tata Consultancy an order earlier this year, filed for bankruptcy April 30. Citigroup has received a $52 billion government bailout and financial firms worldwide have shed more than 328,000 jobs since the financial crisis started, according to data compiled by Bloomberg.
“IT services firms are mainly catering to global companies in America, mainly U.S. banks, which of course are suffering from the downturn in the financial industry,” Gunnar Pahlson, who oversees $500 million in emerging markets stocks at Sweden’s HQ Fonder AB, said by phone from Stockholm before the results were reported. “I don’t think you should expect a recovery in order flow this year; maybe next year.”
The U.S. information-technology market will shrink by 5 percent in the year ending December and global IT spending will decline 11 percent, Cambridge, Massachusetts-based Forrester Research Inc. forecast last month. Forrester expects a “strong technology recovery” in late 2009 and 2010.
IBM, Intel
International Business Machines Corp., the world’s biggest computer-services provider, yesterday reported second-quarter earnings that topped estimates and raised its full-year forecast. Intel Corp., the world’s biggest chipmaker, also beat estimates with its quarterly results, which were announced on July 14.
The U.S. economy will expand faster than previously forecast in the second half of this year and in 2010 as a revival in consumer spending signals an end to the recession, a Bloomberg News survey of economists showed last week.
Growth will average 1.5 percent in the July-to-December period, compared with last month’s 1.2 percent projection, according to the median of 57 forecasts in the survey.
Tata Consultancy is seeing some signs of improvement in its biggest market and among financial clients, Chandrasekaran said.
“We’ve seen growth in the U.S., we’ve seen growth in the financial services sector,” he told reporters at the briefing. “The deal pipeline is healthy and distributed across industries. Still, we’re cautious about manufacturing and high-tech.”
Wipro Ltd., India’s third-largest computer-services company, will report first-quarter earnings on July 22.
Thursday, July 16, 2009
Asian Stocks Head for First Weekly Gain in Three; Nomura Gains
July 17 (Bloomberg) -- Asian stocks rose, with the MSCI Asia Pacific Index set for its first weekly gain in three, as commodity prices rose and International Business Machines Corp. earnings beat analyst estimates.
Woodside Petroleum Ltd., Australia’s second-largest oil producer, gained 2.1 percent. Toshiba Corp., Japan’s biggest chipmaker, climbed 2 percent as IBM became the second technology bellwether this week after Intel Corp. to post forecasts that exceeded analyst targets. Macquarie Countrywide Trust jumped 14 percent after selling a stake in U.S. properties. Nomura Holdings Inc., Japan’s largest brokerage, gained 2.2 percent after the Nikkei English News said the nation’s investment banking revenue rose.
“Improved investor risk appetite is being reflected in rising stocks and positive sentiment on commodities,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “The market is starting to surmise that U.S. earnings will not be as weak as forecast.”
The MSCI Asia Pacific Index added 0.3 percent to 102.89 as of 9:40 a.m. in Tokyo, adding to its 4.6 percent advance in the past three days. The gauge has rallied 46 percent from a five- year low on March 9 amid optimism stimulus policies around the world will revive the global economy.
Japan’s Nikkei 225 Stock Average rose 0.3 percent, while South Korea’s Kospi Index added 0.3 percent. Taiwan’s Taiex Index climbed 0.8 percent.
Worst Is Over?
Futures on the Standard & Poor’s 500 Index lost 0.4 percent. The gauge reversed a loss of as much as 0.6 percent to finish 0.9 percent higher in New York yesterday as economist Nouriel Roubini said the worst of the financial crisis is over and reiterated that the recession may end this year. Roubini later said in a statement that his quotes were taken out of context.
“While the consensus is that the U.S. economy will go back close to potential growth by next year, I see instead a shallow, below-par and below-trend recovery,” Roubini, a New York University professor, said in the statement.
Woodside Petroleum added 2.1 percent to A$42.28 in Sydney. Crude oil for August delivery rose 0.8 percent to $62.02 a barrel in New York. An index of six metals traded in London increased 0.5 percent to the highest since June 12.
Toshiba rose 2 percent to 350 yen. IBM, the world’s biggest computer-services provider, said net income rose 12 percent in the second quarter. For the year, earnings will be at least $9.70 a share, a 50-cent increase from its previous forecast, the company said.
Nomura added 2.2 percent to 730 yen. Japanese investment bank commission revenue in the quarter ended in June rose 90 percent to $874 million from a year earlier, Nikkei English News reported, citing research firm Dealogic.
Macquarie Countrywide climbed 14 percent to 58.5 Australian cents. The company agreed to sell its 75 percent interest in a U.S. portfolio of 86 properties for $1.3 billion.
Woodside Petroleum Ltd., Australia’s second-largest oil producer, gained 2.1 percent. Toshiba Corp., Japan’s biggest chipmaker, climbed 2 percent as IBM became the second technology bellwether this week after Intel Corp. to post forecasts that exceeded analyst targets. Macquarie Countrywide Trust jumped 14 percent after selling a stake in U.S. properties. Nomura Holdings Inc., Japan’s largest brokerage, gained 2.2 percent after the Nikkei English News said the nation’s investment banking revenue rose.
“Improved investor risk appetite is being reflected in rising stocks and positive sentiment on commodities,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “The market is starting to surmise that U.S. earnings will not be as weak as forecast.”
The MSCI Asia Pacific Index added 0.3 percent to 102.89 as of 9:40 a.m. in Tokyo, adding to its 4.6 percent advance in the past three days. The gauge has rallied 46 percent from a five- year low on March 9 amid optimism stimulus policies around the world will revive the global economy.
Japan’s Nikkei 225 Stock Average rose 0.3 percent, while South Korea’s Kospi Index added 0.3 percent. Taiwan’s Taiex Index climbed 0.8 percent.
Worst Is Over?
Futures on the Standard & Poor’s 500 Index lost 0.4 percent. The gauge reversed a loss of as much as 0.6 percent to finish 0.9 percent higher in New York yesterday as economist Nouriel Roubini said the worst of the financial crisis is over and reiterated that the recession may end this year. Roubini later said in a statement that his quotes were taken out of context.
“While the consensus is that the U.S. economy will go back close to potential growth by next year, I see instead a shallow, below-par and below-trend recovery,” Roubini, a New York University professor, said in the statement.
Woodside Petroleum added 2.1 percent to A$42.28 in Sydney. Crude oil for August delivery rose 0.8 percent to $62.02 a barrel in New York. An index of six metals traded in London increased 0.5 percent to the highest since June 12.
Toshiba rose 2 percent to 350 yen. IBM, the world’s biggest computer-services provider, said net income rose 12 percent in the second quarter. For the year, earnings will be at least $9.70 a share, a 50-cent increase from its previous forecast, the company said.
Nomura added 2.2 percent to 730 yen. Japanese investment bank commission revenue in the quarter ended in June rose 90 percent to $874 million from a year earlier, Nikkei English News reported, citing research firm Dealogic.
Macquarie Countrywide climbed 14 percent to 58.5 Australian cents. The company agreed to sell its 75 percent interest in a U.S. portfolio of 86 properties for $1.3 billion.
Macquarie Countrywide Jumps After U.S. Portfolio Sale
July 17 (Bloomberg) -- Macquarie CountryWide Trust surged in Sydney trading after the company agreed to sell its 75 percent interest in a U.S. property portfolio for $1.3 billion to repair a balance sheet ravaged by the financial crisis.
Shares of the Sydney-based property trust jumped 9.5 cents, or 18 percent, to 61 cents at 10:10 a.m. local time, taking their gain since a February low to 485 percent.
Global Retail Investors LLC, a joint venture between the California Public Employees’ Retirement System and an affiliate of First Washington Realty Inc., has agreed to buy Macquarie CountryWide’s stake in the portfolio of 86 properties. Settlement of the contracts will occur in three parts, the company said in a statement to the stock exchange today.
So-called “satellite” businesses of Macquarie Group Ltd. including Macquarie CountryWide have been selling assets to pare back debt after the global financial crisis raised interest expenses and cut asset values. Macquarie CountryWide cut the overall book value of its assets by 10 percent in the six months to Dec. 31.
“Gearing and debt will be substantially lessened, providing the trust with greater flexibility to strategically respond to the continuing challenging market conditions,” Macquarie CountryWide’s Chief Executive Officer Steven Sewell said in the statement today.
Shares of the Sydney-based property trust jumped 9.5 cents, or 18 percent, to 61 cents at 10:10 a.m. local time, taking their gain since a February low to 485 percent.
Global Retail Investors LLC, a joint venture between the California Public Employees’ Retirement System and an affiliate of First Washington Realty Inc., has agreed to buy Macquarie CountryWide’s stake in the portfolio of 86 properties. Settlement of the contracts will occur in three parts, the company said in a statement to the stock exchange today.
So-called “satellite” businesses of Macquarie Group Ltd. including Macquarie CountryWide have been selling assets to pare back debt after the global financial crisis raised interest expenses and cut asset values. Macquarie CountryWide cut the overall book value of its assets by 10 percent in the six months to Dec. 31.
“Gearing and debt will be substantially lessened, providing the trust with greater flexibility to strategically respond to the continuing challenging market conditions,” Macquarie CountryWide’s Chief Executive Officer Steven Sewell said in the statement today.
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