April 17 (Bloomberg) -- Japanese bonds rose, completing the largest weekly gain in four months, on speculation banks with excess cash bought debt to secure stable returns.
Five-year notes yesterday had the first two-day advance in a month as the lowest Tokyo interbank offered rate, or Tibor, in almost four years reduced the cost to borrow money for debt purchases. Bonds also rose as Asian stocks slid from a 20-month high, boosting demand for the refuge of government debt.
“The sentiment has been, and will continue to be, positive for bonds,” said Kazuhiko Sano, chief strategist in Tokyo at Citigroup Global Markets Japan Inc., a unit of New York-based Citigroup Inc. “The abundance of funds at banks means that their bond-buying potential is huge.”
The yield on the 1.4 percent security due March 2020 fell 4.5 basis points this week to 1.34 percent, the lowest since March 24, at Japan Bond Trading Co., the nation’s largest interdealer debt broker. That was the largest decline since the week ended Dec. 18. A basis point is 0.01 percentage point.
Ten-year bond futures for June delivery rose 0.53 to 138.93 this week at the Tokyo Stock Exchange.
Five-year yields slid 3.5 basis points this week to 0.51 percent after a 2.4 trillion yen ($25.9 billion) auction of the securities on April 15 drew the highest demand since April 2005.
The yield differential between five- and 10-year bonds narrowed to 83 basis points yesterday from 85 points on April 6, the widest spread since March 2005.
‘Larger Carry’
“The preference is mid-term sectors at the moment, but longer-maturities are becoming more attractive because of their larger carry,” said Kenro Kawano, a debt strategist at Credit Suisse Group AG in Tokyo. “It’s just a matter of time before the downward pressure on yields shifts to longer-term bonds.”
Three-month Tibor fell for a 14th day yesterday declining to 0.405 percent, from 0.407 percent on April 15 and 0.438 percent on March 31, the end of last fiscal year, according to the Japanese Bankers Association.
Meiji Yasuda Life Insurance Co., Japan’s third-largest life insurer, said in a statement released on April 14 that it will boost yen-denominated bond holdings by 1.04 trillion yen this financial year as it seeks more stable returns.
Meiji Yasuda follows larger rival Dai-ichi Life Insurance Co., which this month had the world’s biggest initial share offering in two years, and said this week it will boost holdings of yen-denominated debt in 2010 amid signs the government may withdraw stimulus measures.
U.S. Labor Data
Treasuries gained and Asian stocks fell after a April 15 report showed initial U.S. jobless claims unexpectedly rose last week to the highest level since Feb. 20, spurring concern a weak labor market will weigh on the world’s largest economy.
“Bonds are rising following gains in Treasuries, amid stock declines,” said Atsushi Ito, a Tokyo-based strategist at Morgan Stanley Japan Securities Co.
The difference in yields between 10-year debt in the U.S. and Japan was at 2.47 percentage points yesterday, from 2.50 percentage points at the start of this business year, according to data compiled by Bloomberg.
The Nikkei 225 Stock Average dropped 1.5 percent yesterday. Ten-year yields have a correlation of 0.5 with the Nikkei 225 so far this month, compared with a relationship of 0.4 in the year ended March 31, according to Bloomberg data. A value of 1 would mean the two moved in lockstep.
Friday, April 16, 2010
Asian Chip Shares Advance This Week as Commodity Stocks Decline
April 17 (Bloomberg) -- Asian technology stocks rose this week on speculation demand for computers will climb, while commodity shares fell after China moved to cool economic growth and Alcoa Inc. reported lower-than-expected sales.
Toshiba Corp., Japan’s biggest maker of memory chips, advanced 3.7 percent this week in Tokyo after California-based Intel Corp. forecast sales that exceeded analysts’ estimates. Ibiden Co., an Intel supplier, jumped 10 percent in Tokyo. Alumina Ltd., Alcoa’s venture partner, slumped 9.1 percent in Sydney. China Overseas Land & Investment Ltd., a Hong Kong- traded builder, tumbled 10 percent after the nation’s cabinet increased down-payment ratios for some home purchases.
“Companies are demonstrating that economic conditions are improving, while the data is still pointing to an ongoing theme of recovery,” said Prasad Patkar, who helps oversee about $1.9 billion at Platypus Asset Management in Sydney. “You now need to watch the underlying performance of the global economy once all the stimulus has washed through.”
The MSCI Asia Pacific Index was little changed at 128.27 this week, as concern China would tighten money supply and an unexpected climb in U.S. jobless claims countered signs of economic recovery.
Japan’s Nikkei 225 Stock Average lost 0.9 percent this week. China’s Shanghai Composite Index retreated 0.5 percent and Hong Kong’s Hang Seng Index sank 1.6 percent. Thailand’s SET Index tumbled 6.8 percent in its holiday-shortened week after clashes between soldiers and protesters.
Chip Shares Advance
Technology-related stocks climbed the second-most this week among the MSCI Asia Pacific Index’s 10 industry groups. Toshiba rose 3.7 percent to 511 yen and Ibiden surged 10 percent to 3,530 yen after Intel, the world’s biggest chipmaker, forecast second-quarter sales that exceeded analysts’ predictions, citing growing worldwide demand for computers.
Global personal-computer shipments topped estimates in the first quarter, the Connecticut-based research firm Gartner Inc. said on April 14, citing a recovery in Europe.
Taiwan Semiconductor Manufacturing Co., the world’s largest contract maker of chips, climbed 0.5 percent to NT$63 in Taipei, its fourth weekly advance. The company’s Chairman Morris Chang said he expects a 22 percent increase in worldwide semiconductor sales this year.
Powerchip Semiconductor Corp., Taiwan’s biggest maker of memory chips, soared 11 percent to NT$6.34 in Taipei to its highest close since August 2008. The company posted its highest profit in three years as rising computer demand boosted sales. The company’s board also approved a plan to sell new shares and cancel existing shares.
Year-to-Date Performance
The MSCI Asia Pacific Index has climbed about 6 percent this year amid growing confidence in the global recovery. Companies in the gauge trade at 16 times estimated earnings on average, the cheapest level since January 2009.
China reporting an 11.9 percent increase in first-quarter economic growth and better-than-estimated U.S. earnings drove the index on April 15 to its highest level since Aug. 6, 2008.
Commodity-related companies fell the second-most among the MSCI Asia Pacific Index’s 10 groups. Alumina slumped 9.1 percent to A$1.69 in Sydney. BHP Billiton Ltd., the world’s biggest mining company, declined 0.8 percent to A$43.54.
Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, declined 5.4 percent to HK$8.42 in Hong Kong. The company said it won China Securities Regulatory Commission’s approval to sell as many as 1 billion yuan-denominated shares.
China Shares Slump
China Overseas Land & Investment tumbled 10 percent this week to HK$15.50 in Hong Kong after China’s cabinet increased down-payment ratios for some home purchases, saying “more forceful” steps are needed to cool speculation. China’s economic growth in the first quarter was the fastest pace in almost three years.
China Resources Land Ltd., a state-controlled property developer, slumped 11 percent to HK$15.26. Guangzhou R&F Properties Co., the biggest real-estate company in the southern Chinese city, plunged 13 percent to HK$11.94.
“These are the harshest measures targeting the property market we have seen recently,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “It adds to concerns that economic growth will be hurt given property’s big contribution to the economy.”
Thai Airways International Pcl, Thailand’s largest carrier, tumbled 18 percent to 22.9 baht in Bangkok. Airports of Thailand Pcl, the country’s biggest airfield operator, sank 8.8 percent to 33.75 baht. The market was closed from April 13 to 15 for a public holiday.
Thailand’s tourism industry may be “decimated” by political unrest that spilled over into violence last weekend, Finance Minister Korn Chatikavanij said on April 15 in an interview. At least 23 people were killed when protesters seeking to oust Prime Minister Abhisit Vejjajiva fought with security forces on April 10.
Toshiba Corp., Japan’s biggest maker of memory chips, advanced 3.7 percent this week in Tokyo after California-based Intel Corp. forecast sales that exceeded analysts’ estimates. Ibiden Co., an Intel supplier, jumped 10 percent in Tokyo. Alumina Ltd., Alcoa’s venture partner, slumped 9.1 percent in Sydney. China Overseas Land & Investment Ltd., a Hong Kong- traded builder, tumbled 10 percent after the nation’s cabinet increased down-payment ratios for some home purchases.
“Companies are demonstrating that economic conditions are improving, while the data is still pointing to an ongoing theme of recovery,” said Prasad Patkar, who helps oversee about $1.9 billion at Platypus Asset Management in Sydney. “You now need to watch the underlying performance of the global economy once all the stimulus has washed through.”
The MSCI Asia Pacific Index was little changed at 128.27 this week, as concern China would tighten money supply and an unexpected climb in U.S. jobless claims countered signs of economic recovery.
Japan’s Nikkei 225 Stock Average lost 0.9 percent this week. China’s Shanghai Composite Index retreated 0.5 percent and Hong Kong’s Hang Seng Index sank 1.6 percent. Thailand’s SET Index tumbled 6.8 percent in its holiday-shortened week after clashes between soldiers and protesters.
Chip Shares Advance
Technology-related stocks climbed the second-most this week among the MSCI Asia Pacific Index’s 10 industry groups. Toshiba rose 3.7 percent to 511 yen and Ibiden surged 10 percent to 3,530 yen after Intel, the world’s biggest chipmaker, forecast second-quarter sales that exceeded analysts’ predictions, citing growing worldwide demand for computers.
Global personal-computer shipments topped estimates in the first quarter, the Connecticut-based research firm Gartner Inc. said on April 14, citing a recovery in Europe.
Taiwan Semiconductor Manufacturing Co., the world’s largest contract maker of chips, climbed 0.5 percent to NT$63 in Taipei, its fourth weekly advance. The company’s Chairman Morris Chang said he expects a 22 percent increase in worldwide semiconductor sales this year.
Powerchip Semiconductor Corp., Taiwan’s biggest maker of memory chips, soared 11 percent to NT$6.34 in Taipei to its highest close since August 2008. The company posted its highest profit in three years as rising computer demand boosted sales. The company’s board also approved a plan to sell new shares and cancel existing shares.
Year-to-Date Performance
The MSCI Asia Pacific Index has climbed about 6 percent this year amid growing confidence in the global recovery. Companies in the gauge trade at 16 times estimated earnings on average, the cheapest level since January 2009.
China reporting an 11.9 percent increase in first-quarter economic growth and better-than-estimated U.S. earnings drove the index on April 15 to its highest level since Aug. 6, 2008.
Commodity-related companies fell the second-most among the MSCI Asia Pacific Index’s 10 groups. Alumina slumped 9.1 percent to A$1.69 in Sydney. BHP Billiton Ltd., the world’s biggest mining company, declined 0.8 percent to A$43.54.
Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, declined 5.4 percent to HK$8.42 in Hong Kong. The company said it won China Securities Regulatory Commission’s approval to sell as many as 1 billion yuan-denominated shares.
China Shares Slump
China Overseas Land & Investment tumbled 10 percent this week to HK$15.50 in Hong Kong after China’s cabinet increased down-payment ratios for some home purchases, saying “more forceful” steps are needed to cool speculation. China’s economic growth in the first quarter was the fastest pace in almost three years.
China Resources Land Ltd., a state-controlled property developer, slumped 11 percent to HK$15.26. Guangzhou R&F Properties Co., the biggest real-estate company in the southern Chinese city, plunged 13 percent to HK$11.94.
“These are the harshest measures targeting the property market we have seen recently,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “It adds to concerns that economic growth will be hurt given property’s big contribution to the economy.”
Thai Airways International Pcl, Thailand’s largest carrier, tumbled 18 percent to 22.9 baht in Bangkok. Airports of Thailand Pcl, the country’s biggest airfield operator, sank 8.8 percent to 33.75 baht. The market was closed from April 13 to 15 for a public holiday.
Thailand’s tourism industry may be “decimated” by political unrest that spilled over into violence last weekend, Finance Minister Korn Chatikavanij said on April 15 in an interview. At least 23 people were killed when protesters seeking to oust Prime Minister Abhisit Vejjajiva fought with security forces on April 10.
Thursday, April 15, 2010
Asian Stocks Decline on U.S. Jobless Claims, China Tightening
April 16 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index from a 20-month high, after U.S. jobless claims unexpectedly rose, China announced measures to cool the real-estate market and commodity prices dropped.
Sony Corp., which gets 23 percent of its sales in the U.S., sank 1.3 percent in Tokyo. Komatsu Ltd., a maker of construction machinery that counts China as its fastest-growing market, lost 1.1 percent to 1,922 yen after that nation raised down-payment ratios for some home purchases. BHP Billiton Ltd. lost 0.8 percent in Sydney after oil and copper prices retreated in New York. Newcrest Mining Ltd. climbed as investors seeking a haven bought gold producers.
“People are a bit cautious about having too much risk on the table,” said Angus Gluskie, who oversees $300 million at White Funds Management Pty. in Sydney. “The China figures yesterday were sufficiently strong that China’s going to have to act firmly to bring growth levels under sufficient control to prevent an inflationary breakout.”
The MSCI Asia Pacific Index declined 0.4 percent to 128.58 as of 10:51 a.m. in Tokyo, with three stocks falling for each one that advanced. The gauge has risen 0.4 percent this week, its third-straight weekly gain, as China reported an 11.9 percent increase in first-quarter gross domestic product and U.S. earnings beat analyst estimates. The index closed yesterday at the highest level since Aug. 6, 2008.
Japan’s Nikkei 225 Stock Average fell 1.3 percent and China’s Shanghai Composite Index sank 1 percent. South Korea’s Kospi index lost 0.4 percent. Australia’s S&P/ASX 200 Index dropped 0.5 percent.
Jobless Benefits
Futures on the Standard & Poor’s 500 Index declined 0.5 percent. The gauge fluctuated yesterday before closing 0.1 percent higher. The number of Americans filing claims for jobless benefits increased in the week ended April 10, while economists had projected a drop, a Labor Department report showed. Factory production rose 0.9 percent in March, the Federal Reserve said.
Honda Motor Co., which gets 44 percent of its sales in North America, dropped 1.1 percent to 3,230 yen in Tokyo. Sony lost 1.3 percent to 3,365 yen.
China-related equities fell after the country’s cabinet yesterday increased down payment ratios for some home purchases, saying “more forceful” steps are needed to cool speculation. China’s economic growth in the first quarter was the fastest pace in almost three years.
Komatsu lost 1.1 percent to 1,922 yen. Sharp Corp., a Japanese company seeking to expand its share in China’s mobile- phone market, declined 1.2 percent to 1,234 yen.
Copper, Oil Futures
“Concern about China’s tightening may weigh on the Asian stock markets,” said Kazuhiro Takahashi, a general manager at Daiwa Securities Capital Markets Co. in Tokyo.
BHP Billiton, the world’s biggest mining company, retreated 0.8 percent to A$43.56 in Sydney, as copper and oil futures in New York fell for a second day. Rio Tinto Group, the third biggest mining company, slipped 0.4 percent to A$79.72.
Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, declined 1.2 percent to A$46.92. Santos Ltd., the third largest, dropped 2.5 percent to A$14.31. In Wellington, New Zealand Oil & Gas Ltd. sank 5.6 percent to NZ$1.52.
The MSCI Asia Pacific Index has climbed 13 percent from its low this year on Feb. 8 amid growing confidence in the global recovery. Companies in the MSCI gauge trade at an average 16.5 times estimated profit, compared with 15.5 times for the S&P 500. Macarthur Coal Ltd. climbed 7.4 percent to A$16.41 after its third-biggest shareholder, Posco, said it supported Peabody Energy Corp.’s revised A$4.1 billion ($3.8 billion) cash offer for the Australian coal producer. Peabody raised its offer by 14 percent yesterday, seeking to trump rival proposals to control Macarthur from New Hope Corp. and Noble Group Ltd.
Safe Assets
“Peabody’s bid is in the ball park, however, we cannot be certain that other players aren’t in the wings,” Macquarie Group Ltd. analyst Sophie Spartalis wrote in a report.
Also in Sydney, Newcrest Mining advanced 1.7 percent to A$34.74 as investors sought refuge from risky assets. Gold for immediate delivery gained 0.3 percent yesterday. Bullion dropped 0.4 percent today.
Lihir Gold Ltd., the second-largest gold mining company on the Australian stock exchange, rose 1.5 percent to A$4. The company said it appointed Macquarie Capital Advisers and Greenhill Caliburn as advisers to assess alternatives to a proposal from Newcrest.
Sony Corp., which gets 23 percent of its sales in the U.S., sank 1.3 percent in Tokyo. Komatsu Ltd., a maker of construction machinery that counts China as its fastest-growing market, lost 1.1 percent to 1,922 yen after that nation raised down-payment ratios for some home purchases. BHP Billiton Ltd. lost 0.8 percent in Sydney after oil and copper prices retreated in New York. Newcrest Mining Ltd. climbed as investors seeking a haven bought gold producers.
“People are a bit cautious about having too much risk on the table,” said Angus Gluskie, who oversees $300 million at White Funds Management Pty. in Sydney. “The China figures yesterday were sufficiently strong that China’s going to have to act firmly to bring growth levels under sufficient control to prevent an inflationary breakout.”
The MSCI Asia Pacific Index declined 0.4 percent to 128.58 as of 10:51 a.m. in Tokyo, with three stocks falling for each one that advanced. The gauge has risen 0.4 percent this week, its third-straight weekly gain, as China reported an 11.9 percent increase in first-quarter gross domestic product and U.S. earnings beat analyst estimates. The index closed yesterday at the highest level since Aug. 6, 2008.
Japan’s Nikkei 225 Stock Average fell 1.3 percent and China’s Shanghai Composite Index sank 1 percent. South Korea’s Kospi index lost 0.4 percent. Australia’s S&P/ASX 200 Index dropped 0.5 percent.
Jobless Benefits
Futures on the Standard & Poor’s 500 Index declined 0.5 percent. The gauge fluctuated yesterday before closing 0.1 percent higher. The number of Americans filing claims for jobless benefits increased in the week ended April 10, while economists had projected a drop, a Labor Department report showed. Factory production rose 0.9 percent in March, the Federal Reserve said.
Honda Motor Co., which gets 44 percent of its sales in North America, dropped 1.1 percent to 3,230 yen in Tokyo. Sony lost 1.3 percent to 3,365 yen.
China-related equities fell after the country’s cabinet yesterday increased down payment ratios for some home purchases, saying “more forceful” steps are needed to cool speculation. China’s economic growth in the first quarter was the fastest pace in almost three years.
Komatsu lost 1.1 percent to 1,922 yen. Sharp Corp., a Japanese company seeking to expand its share in China’s mobile- phone market, declined 1.2 percent to 1,234 yen.
Copper, Oil Futures
“Concern about China’s tightening may weigh on the Asian stock markets,” said Kazuhiro Takahashi, a general manager at Daiwa Securities Capital Markets Co. in Tokyo.
BHP Billiton, the world’s biggest mining company, retreated 0.8 percent to A$43.56 in Sydney, as copper and oil futures in New York fell for a second day. Rio Tinto Group, the third biggest mining company, slipped 0.4 percent to A$79.72.
Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, declined 1.2 percent to A$46.92. Santos Ltd., the third largest, dropped 2.5 percent to A$14.31. In Wellington, New Zealand Oil & Gas Ltd. sank 5.6 percent to NZ$1.52.
The MSCI Asia Pacific Index has climbed 13 percent from its low this year on Feb. 8 amid growing confidence in the global recovery. Companies in the MSCI gauge trade at an average 16.5 times estimated profit, compared with 15.5 times for the S&P 500. Macarthur Coal Ltd. climbed 7.4 percent to A$16.41 after its third-biggest shareholder, Posco, said it supported Peabody Energy Corp.’s revised A$4.1 billion ($3.8 billion) cash offer for the Australian coal producer. Peabody raised its offer by 14 percent yesterday, seeking to trump rival proposals to control Macarthur from New Hope Corp. and Noble Group Ltd.
Safe Assets
“Peabody’s bid is in the ball park, however, we cannot be certain that other players aren’t in the wings,” Macquarie Group Ltd. analyst Sophie Spartalis wrote in a report.
Also in Sydney, Newcrest Mining advanced 1.7 percent to A$34.74 as investors sought refuge from risky assets. Gold for immediate delivery gained 0.3 percent yesterday. Bullion dropped 0.4 percent today.
Lihir Gold Ltd., the second-largest gold mining company on the Australian stock exchange, rose 1.5 percent to A$4. The company said it appointed Macquarie Capital Advisers and Greenhill Caliburn as advisers to assess alternatives to a proposal from Newcrest.
U.K. Economic Growth Forecast for 2011 Raised to 1.3% by CEBR
April 16 (Bloomberg) -- The Centre for Economic and Business Research raised its forecast for U.K. growth in the next two years, saying faster global expansion and the weakness of the pound will aid the recovery.
Britain’s economy will expand 1.3 percent next year, up from an earlier prediction for 0.8 percent, the London-based independent research group said in an e-mailed statement. The forecast for 2012 is 1.4 percent, up from 1.1 percent. It kept its prediction for 1.2 percent growth this year unchanged.
The changes assume that the U.S. leads a quicker pace of global expansion than previously predicted. The forecasts are based on a win for the Conservatives in the May 6 election, though growth will be “much the same” through 2015 in the event of a coalition government between the ruling Labour Party and the Liberal Democrats, the group said.
“Whoever wins the election, we will be in for a tough couple of years of sluggish growth at best as the budget deficit issue is addressed,” Douglas McWilliams, chief executive of the CEBR, said in the statement.
A ComRes poll for broadcaster ITV News and The Independent newspaper published yesterday put the Conservatives on 35 percent support, Labour on 29 percent and the Liberal Democrats on 21 percent. That would leave the Conservatives 40 seats short of a majority, according to ComRes. A separate YouGov poll for The Sun put the Conservatives ahead by 41 percent to 32 percent for Labour, still probably not enough for an outright win.
Britain’s economy will expand 1.3 percent next year, up from an earlier prediction for 0.8 percent, the London-based independent research group said in an e-mailed statement. The forecast for 2012 is 1.4 percent, up from 1.1 percent. It kept its prediction for 1.2 percent growth this year unchanged.
The changes assume that the U.S. leads a quicker pace of global expansion than previously predicted. The forecasts are based on a win for the Conservatives in the May 6 election, though growth will be “much the same” through 2015 in the event of a coalition government between the ruling Labour Party and the Liberal Democrats, the group said.
“Whoever wins the election, we will be in for a tough couple of years of sluggish growth at best as the budget deficit issue is addressed,” Douglas McWilliams, chief executive of the CEBR, said in the statement.
A ComRes poll for broadcaster ITV News and The Independent newspaper published yesterday put the Conservatives on 35 percent support, Labour on 29 percent and the Liberal Democrats on 21 percent. That would leave the Conservatives 40 seats short of a majority, according to ComRes. A separate YouGov poll for The Sun put the Conservatives ahead by 41 percent to 32 percent for Labour, still probably not enough for an outright win.
Wednesday, April 14, 2010
Shirakawa Tells BOJ Chiefs Recession Risk Diminished
April 15 (Bloomberg) -- Bank of Japan Governor Masaaki Shirakawa told his regional managers that the economy has been picking up moderately and the risk of a return to a recession has diminished.
“Concerns that the Japanese economy would drastically deteriorate again have pretty much gone, although the pace of pickup will probably remain moderate for the time being,” Shirakawa said at the quarterly branch meeting in Tokyo today. He repeated that beating deflation remains a “critical challenge” and pledged to keep an “accommodative” policy.
The regional chiefs will give their assessment of the local economy later today, amid signs that the recovery is gaining momentum and price declines are moderating. The improvements won’t be enough to prevent the central bank from considering further monetary easing as the government urges it to fight deflation, said economist Seiji Adachi.
“Political pressure on the BOJ to do more will escalate” as a July election approaches, said Adachi, a senior economist at Deutsche Securities Inc. in Tokyo. “The bank is probably ready to implement additional measures, though it will be difficult to get rid of deflation anytime soon.”
Shirakawa said the decline in consumer prices will keep moderating as the economy continues to improve. He said earlier this week he is seeing “more positive signs” for prices. The remarks suggest policy makers may raise their inflation forecasts when they meet on April 30 to give their twice-annual outlook for the economy and policy.
Sovereign Concern
The governor said the global economy is recovering at a moderate pace overall, though there are concerns in financial markets about sovereign debt.
The regional heads are gathering a day after their counterparts at the Federal Reserve said the U.S. economy expanded “somewhat” across most of the country in March as consumer spending and manufacturing improved. Managers of the Osaka, Nagoya, Sapporo and Fukuoka branches will brief the press in Tokyo this afternoon.
Shirakawa and his board doubled a bank lending program to 20 trillion yen ($214 billion) in March amid persistent deflation and as Finance Minister Naoto Kan led government calls for more action. The bank’s next option would be to increase the size of the program again, Deutsche’s Adachi said.
DPJ Lawmakers
A working group of ruling Democratic Party of Japan lawmakers yesterday submitted a deflation-remedy proposal that it wants added to the party manifesto ahead of the July upper house election. The group said the government should consider targeting inflation of more than 2 percent and the central bank should try to attain that goal.
In January, board members forecast consumer prices excluding fresh food would slide 0.5 percent this fiscal year and 0.2 percent in the year ending March 2012. The bank may revise next fiscal year’s estimate up to around zero percent, a person familiar with the matter said last month.
Core prices, the central bank’s key inflation measure, declined 1.2 percent in February from a year earlier, the 12th straight drop.
“Concerns that the Japanese economy would drastically deteriorate again have pretty much gone, although the pace of pickup will probably remain moderate for the time being,” Shirakawa said at the quarterly branch meeting in Tokyo today. He repeated that beating deflation remains a “critical challenge” and pledged to keep an “accommodative” policy.
The regional chiefs will give their assessment of the local economy later today, amid signs that the recovery is gaining momentum and price declines are moderating. The improvements won’t be enough to prevent the central bank from considering further monetary easing as the government urges it to fight deflation, said economist Seiji Adachi.
“Political pressure on the BOJ to do more will escalate” as a July election approaches, said Adachi, a senior economist at Deutsche Securities Inc. in Tokyo. “The bank is probably ready to implement additional measures, though it will be difficult to get rid of deflation anytime soon.”
Shirakawa said the decline in consumer prices will keep moderating as the economy continues to improve. He said earlier this week he is seeing “more positive signs” for prices. The remarks suggest policy makers may raise their inflation forecasts when they meet on April 30 to give their twice-annual outlook for the economy and policy.
Sovereign Concern
The governor said the global economy is recovering at a moderate pace overall, though there are concerns in financial markets about sovereign debt.
The regional heads are gathering a day after their counterparts at the Federal Reserve said the U.S. economy expanded “somewhat” across most of the country in March as consumer spending and manufacturing improved. Managers of the Osaka, Nagoya, Sapporo and Fukuoka branches will brief the press in Tokyo this afternoon.
Shirakawa and his board doubled a bank lending program to 20 trillion yen ($214 billion) in March amid persistent deflation and as Finance Minister Naoto Kan led government calls for more action. The bank’s next option would be to increase the size of the program again, Deutsche’s Adachi said.
DPJ Lawmakers
A working group of ruling Democratic Party of Japan lawmakers yesterday submitted a deflation-remedy proposal that it wants added to the party manifesto ahead of the July upper house election. The group said the government should consider targeting inflation of more than 2 percent and the central bank should try to attain that goal.
In January, board members forecast consumer prices excluding fresh food would slide 0.5 percent this fiscal year and 0.2 percent in the year ending March 2012. The bank may revise next fiscal year’s estimate up to around zero percent, a person familiar with the matter said last month.
Core prices, the central bank’s key inflation measure, declined 1.2 percent in February from a year earlier, the 12th straight drop.
Asian Stocks Rise as JPMorgan, United Parcel Fuel Profit Hopes
April 15 (Bloomberg) -- Asian stocks rose, driving the MSCI Asia Pacific Index to a 20-month high, as U.S. earnings reports from JPMorgan Chase & Co. to United Parcel Service Inc. bolstered confidence in the global economy.
Mitsubishi UFJ Financial Group Inc. advanced 1.2 percent in Tokyo after JPMorgan said a “broad-based” economic recovery boosted profit. Canon Inc., which got 28 percent of its revenue last year in the Americas, advanced 1.1 percent after a government report showed U.S. retail sales rose. BHP Billiton Ltd., the world’s biggest mining company, gained 0.8 percent after oil and metal prices increased yesterday.
“There’ve been concerns about the stretched nature of valuations, but the stellar earnings season so far has thoroughly justified the performance,” said Chris Weston, a Melbourne-based research analyst at IG Markets. “Economic data has been in line, if not better, and pointing to a clear V- shaped recovery. The biggest risk I see right now is over- confidence.”
The MSCI Asia Pacific Index climbed 0.6 percent to 129.06 as of 9:15 a.m. in Tokyo, headed for its highest close since Aug. 6, 2008. Japan’s Nikkei 225 Stock Average rose 0.8 percent and Australia’s S&P/ASX 200 Index gained 0.5 percent.
New Zealand’s NZX 50 Index advanced 0.4 percent as a report showed the nation’s manufacturing industry expanded for a seventh month in March.
Futures on the U.S. Standard & Poor’s 500 Index were little changed. The gauge climbed 1.1 percent yesterday to the highest level since September 2008 as a Commerce Department report showed U.S. retail sales increased 1.6 percent last month, surpassing the 1.2 percent advance estimated by economists.
Earnings Recovery
JPMorgan, the second-biggest U.S. bank by assets, reported a 55 percent jump in first-quarter net income, helped by record fixed-income trading revenue. Shares of UPS, the world’s largest package-delivery company, jumped 4.5 percent in after-hours trading after boosting its full-year profit forecast.
“With corporate earnings and the global economy getting better, there is potentially substantial demand for shares,” said Mitsushige Akino, who oversees the equivalent of $450 million in assets in Tokyo at Ichiyoshi Investment Management Co. “There are still many investors who haven’t bought yet.”
A gauge of material producers in the MSCI Asia Pacific Index, the best-performing industry group in the past 12 months, rose 0.6 percent after crude oil for May delivery climbed 2.1 percent yesterday, breaking a five-day losing streak. A gauge of six metals advanced 1.2 percent in London.
The MSCI Asia Pacific Index has gained 6.6 percent this year, compared with an 8.6 percent jump by the S&P 500. Companies in the MSCI gauge trade at 1.7 times book value, the highest level since September 2008.
Xstrata Bid
“The market may be pricing in an earnings recovery too fast, and I’m afraid of a recoil afterwards,” said Ichiyoshi Investment’s Akino.
Shares of Australia’s Macarthur Coal Ltd. were bid higher. Xstrata Plc may have offered major shareholders of Macarthur Coal a cash and scrip offer of just under A$16 a share, the Australian Financial Review reported in its Street Talk column, without saying where it got the information.
San Miguel Corp. may move after the largest Philippine food and drinks company said its profit tripled to a record on gains from the sale of a stake in its beer unit.
Telekom Malaysia Bhd. may also be active in Kuala Lumpur. The Employees Provident Fund, Malaysia’s largest pension fund, bought 5.5 million shares in the company, the nation’s biggest fixed-line operator, a stock-exchange filing showed.
Mitsubishi UFJ Financial Group Inc. advanced 1.2 percent in Tokyo after JPMorgan said a “broad-based” economic recovery boosted profit. Canon Inc., which got 28 percent of its revenue last year in the Americas, advanced 1.1 percent after a government report showed U.S. retail sales rose. BHP Billiton Ltd., the world’s biggest mining company, gained 0.8 percent after oil and metal prices increased yesterday.
“There’ve been concerns about the stretched nature of valuations, but the stellar earnings season so far has thoroughly justified the performance,” said Chris Weston, a Melbourne-based research analyst at IG Markets. “Economic data has been in line, if not better, and pointing to a clear V- shaped recovery. The biggest risk I see right now is over- confidence.”
The MSCI Asia Pacific Index climbed 0.6 percent to 129.06 as of 9:15 a.m. in Tokyo, headed for its highest close since Aug. 6, 2008. Japan’s Nikkei 225 Stock Average rose 0.8 percent and Australia’s S&P/ASX 200 Index gained 0.5 percent.
New Zealand’s NZX 50 Index advanced 0.4 percent as a report showed the nation’s manufacturing industry expanded for a seventh month in March.
Futures on the U.S. Standard & Poor’s 500 Index were little changed. The gauge climbed 1.1 percent yesterday to the highest level since September 2008 as a Commerce Department report showed U.S. retail sales increased 1.6 percent last month, surpassing the 1.2 percent advance estimated by economists.
Earnings Recovery
JPMorgan, the second-biggest U.S. bank by assets, reported a 55 percent jump in first-quarter net income, helped by record fixed-income trading revenue. Shares of UPS, the world’s largest package-delivery company, jumped 4.5 percent in after-hours trading after boosting its full-year profit forecast.
“With corporate earnings and the global economy getting better, there is potentially substantial demand for shares,” said Mitsushige Akino, who oversees the equivalent of $450 million in assets in Tokyo at Ichiyoshi Investment Management Co. “There are still many investors who haven’t bought yet.”
A gauge of material producers in the MSCI Asia Pacific Index, the best-performing industry group in the past 12 months, rose 0.6 percent after crude oil for May delivery climbed 2.1 percent yesterday, breaking a five-day losing streak. A gauge of six metals advanced 1.2 percent in London.
The MSCI Asia Pacific Index has gained 6.6 percent this year, compared with an 8.6 percent jump by the S&P 500. Companies in the MSCI gauge trade at 1.7 times book value, the highest level since September 2008.
Xstrata Bid
“The market may be pricing in an earnings recovery too fast, and I’m afraid of a recoil afterwards,” said Ichiyoshi Investment’s Akino.
Shares of Australia’s Macarthur Coal Ltd. were bid higher. Xstrata Plc may have offered major shareholders of Macarthur Coal a cash and scrip offer of just under A$16 a share, the Australian Financial Review reported in its Street Talk column, without saying where it got the information.
San Miguel Corp. may move after the largest Philippine food and drinks company said its profit tripled to a record on gains from the sale of a stake in its beer unit.
Telekom Malaysia Bhd. may also be active in Kuala Lumpur. The Employees Provident Fund, Malaysia’s largest pension fund, bought 5.5 million shares in the company, the nation’s biggest fixed-line operator, a stock-exchange filing showed.
Monday, April 12, 2010
India hopes high for 3G auction
In India, it is not uncommon to call someone’s mobile only to have to hear the latest Bollywood hit blaring back over the line until the recipient answers the phone.
This is caller ring-back tone, which has been one of the biggest earners for the country’s mobile phone providers at a time when they are struggling with declining revenues in conventional voice call services.
EDITOR’S CHOICE
3G auctions kick off in India - Apr-09
Now, with even this value-added service becoming commoditised, operators and application and content providers are looking towards another potential saviour – third generation mobile services.
Last Friday, the Indian government kicked off what is one of the world’s last great 3G auctions, potentially heralding the beginning of sophisticated mobile applications in India. The auction has attracted industry leaders Bharti Airtel, Reliance Communications, Vodafone Essar and others.
“3G will segment the market, giving carriers a customer who is willing to pay for access and richer content and applications,” said Neeraj Roy, chief executive officer of Hungama Mobile, a mobile entertainment company that claims to be behind 70 per cent of the Bollywood content distributed on cellular phones.
India is the fastest-growing large market in the world for mobile phones, adding nearly 20m subscribers a month and with total user numbers approaching 600m.
Yet, in spite of its progress on this front, the country remains a laggard in terms of internet penetration, with the most optimistic estimates suggesting it has about 70m users.
The launch of the long-delayed 3G auctions on Friday, which are expected to run throughout this week, has therefore been greeted as the beginning of the true internet age in the country.
Nine bidders are competing for slots in the country’s 22 telecom circles, with three pan-India allocations available.
Once the 3G auctions finish, the government will auction two pan India allocations for broadband wireless access spectrum.
Analysts estimate operators might pay up to $3bn for national 3G and BWA spectrum combined. This compares with a reserve price of Rs35bn ($787m) for 3G and Rs17.5bn for BWA national spectrum.
These stakes are understandable given the potential yields for operators from 3G. BDA Connect, a telecoms consultancy, estimated in a report last year that India could have 89.9m 3G subscribers by 2013. They would represent about 12 per cent of the overall wireless subscriber base and contribute nearly $16bn in revenues.
The BDA report predicted that by 2013, 3G will have led to an increase in the share of value added services of overall mobile revenue from 9 per cent to 23 per cent. This is a welcome boost for an industry in which the price of voice calls has fallen to less than one cent a minute.
Industry insiders caution, however, that sophisticated uses of 3G will initially be slow in coming to India.
The leading mobile operators are already so short of spectrum that they will at first use the new airwaves from the auction to improve services for existing users.
“There are lots of dropped calls, calls cut off in the middle and so on.
“The biggest use of 3G spectrum, as I see it unfortunately is going to be to fix those problems,” said Arvind Rao, chief executive officer of OnMobile, one of the country’s biggest developers of value added services.
He said the other problem initially facing 3G is that the people who can afford smartphones tend to be middle-aged businessmen who are less likely to use them for social networking, video television and other advanced applications.
The other challenge for the market is the difficulty of making online payments in India, a market that is under-penetrated for credit cards and in which the internet payment culture is not yet deeply embedded.
Still, many industry operators believe that even a small percentage of the overall user base in India will be enough to amount to a sizeable market. Unlike the west, 3G applications in India are expected to be entertainment driven, with Bollywood again leading the way.
Ronnie Screwvala, the head of the UTV, a film, television and gaming group, said he sees a market for short movie clips and three to five-minute television slots.
“Even 10 per cent of the mobile phone universe is 50m people and they will be substantial spenders,” said Mr Screwvala. “Whether it’s with our gaming or other aspects, such as videos and songs.”
This is caller ring-back tone, which has been one of the biggest earners for the country’s mobile phone providers at a time when they are struggling with declining revenues in conventional voice call services.
EDITOR’S CHOICE
3G auctions kick off in India - Apr-09
Now, with even this value-added service becoming commoditised, operators and application and content providers are looking towards another potential saviour – third generation mobile services.
Last Friday, the Indian government kicked off what is one of the world’s last great 3G auctions, potentially heralding the beginning of sophisticated mobile applications in India. The auction has attracted industry leaders Bharti Airtel, Reliance Communications, Vodafone Essar and others.
“3G will segment the market, giving carriers a customer who is willing to pay for access and richer content and applications,” said Neeraj Roy, chief executive officer of Hungama Mobile, a mobile entertainment company that claims to be behind 70 per cent of the Bollywood content distributed on cellular phones.
India is the fastest-growing large market in the world for mobile phones, adding nearly 20m subscribers a month and with total user numbers approaching 600m.
Yet, in spite of its progress on this front, the country remains a laggard in terms of internet penetration, with the most optimistic estimates suggesting it has about 70m users.
The launch of the long-delayed 3G auctions on Friday, which are expected to run throughout this week, has therefore been greeted as the beginning of the true internet age in the country.
Nine bidders are competing for slots in the country’s 22 telecom circles, with three pan-India allocations available.
Once the 3G auctions finish, the government will auction two pan India allocations for broadband wireless access spectrum.
Analysts estimate operators might pay up to $3bn for national 3G and BWA spectrum combined. This compares with a reserve price of Rs35bn ($787m) for 3G and Rs17.5bn for BWA national spectrum.
These stakes are understandable given the potential yields for operators from 3G. BDA Connect, a telecoms consultancy, estimated in a report last year that India could have 89.9m 3G subscribers by 2013. They would represent about 12 per cent of the overall wireless subscriber base and contribute nearly $16bn in revenues.
The BDA report predicted that by 2013, 3G will have led to an increase in the share of value added services of overall mobile revenue from 9 per cent to 23 per cent. This is a welcome boost for an industry in which the price of voice calls has fallen to less than one cent a minute.
Industry insiders caution, however, that sophisticated uses of 3G will initially be slow in coming to India.
The leading mobile operators are already so short of spectrum that they will at first use the new airwaves from the auction to improve services for existing users.
“There are lots of dropped calls, calls cut off in the middle and so on.
“The biggest use of 3G spectrum, as I see it unfortunately is going to be to fix those problems,” said Arvind Rao, chief executive officer of OnMobile, one of the country’s biggest developers of value added services.
He said the other problem initially facing 3G is that the people who can afford smartphones tend to be middle-aged businessmen who are less likely to use them for social networking, video television and other advanced applications.
The other challenge for the market is the difficulty of making online payments in India, a market that is under-penetrated for credit cards and in which the internet payment culture is not yet deeply embedded.
Still, many industry operators believe that even a small percentage of the overall user base in India will be enough to amount to a sizeable market. Unlike the west, 3G applications in India are expected to be entertainment driven, with Bollywood again leading the way.
Ronnie Screwvala, the head of the UTV, a film, television and gaming group, said he sees a market for short movie clips and three to five-minute television slots.
“Even 10 per cent of the mobile phone universe is 50m people and they will be substantial spenders,” said Mr Screwvala. “Whether it’s with our gaming or other aspects, such as videos and songs.”
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