Asian Stocks Pare Monthly Slump on U.S. Data Before Jobs Report
By Shani Raja - Sep 2, 2011
Asian stocks rose this week, with a regional benchmark index paring the biggest monthly slump since May 2010, as exporters and commodity producers climbed on optimism the U.S. and Chinese economies are recovering.
Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., jumped 4.9 percent in Hong Kong after U.S. reports showing higher factory orders and consumer spending tempered concern that an economic recovery is faltering. Jiangxi Copper Co. advanced 10 percent as Chinese manufacturing expanded. Stocks fell Sept. 2 ahead of a U.S. jobs report that showed employment growth stagnated in August, paring the MSCI Asia Pacific Index’s greatest weekly gain since March.
“Concern about the health of the U.S. economy was near the top of the laundry list of worries for investors,” said Prasad Patkar, who helps manage the equivalent of $1.1 billion at Platypus Asset Management Ltd. in Sydney. “If the data keeps reinforcing the idea that a new recession is unlikely, markets could rally strongly this quarter. The latest manufacturing data confirms that China’s economy was never headed for a hard landing.”
The MSCI Asia Pacific Index rose 3.2 percent this week to 124.16, extending last week’s 0.7 percent advance. The gauge tumbled 14 percent in the previous four weeks as equity indexes in Australia, Hong Kong and Shanghai entered so-called bear markets, tumbling at least 20 percent from their peaks. The stocks rout was fueled by concern Europe’s debt crisis is worsening and after a U.S. credit rating downgrade by Standard & Poor’s.
S&P 500, Stoxx 600
Stocks in the Asian benchmark are valued at about 12.2 times estimated earnings on average, compared with 11.7 times for the S&P 500 and 9.7 times for the Stoxx 600.
Japan’s Nikkei 225 (NKY) Stock Average gained 1.7 percent this week and South Korea’s Kospi Index (KOSPI) jumped 5 percent. Australia’s S&P/ASX 200 Index advanced 1 percent in Sydney.
Hong Kong’s Hang Seng Index (HSI) surged 3.2 percent. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong climbed 3.5 percent after a report showed the nation’s manufacturing expanded at a faster pace in August. Chinese manufacturing increased from a 29-month low, indicating that the economy is withstanding attempts to cool prices.
China’s government has raised interest rates five times since the start of 2010 and boosted reserve requirements for banks to help control inflation. Stabilizing prices is the country’s top priority and the government doesn’t plan to alter the direction of economic policies, Premier Wen Jiabao said in an article that appeared Sept. 1 on the website of the Communist Party’s Qiushi magazine.
Economic Growth
China stock indexes may rise less than earlier estimated this year, Credit Suisse Group AG analysts wrote in a report this week, citing slower economic and corporate earnings growth. The Hang Seng China Enterprises Index estimate was lowered to 13,000 from 15,000.
Asian stocks climbed this week after reports showed U.S. consumer spending and car sales increased, while business activity and factory orders expanded at a faster pace than economists forecast. That bolstered gains after Federal Reserve Chairman Ben S. Bernanke said Aug. 26 that the nation’s central bank has more means to prop up growth if required.
The MSCI Asia Pacific index pared gains on Sept. 2 ahead of a report that showed the U.S. jobless rate remained at 9.1 percent, and after UBS AG lowered its year-end target for the MSCI Asia Pacific Index Excluding Japan Index by 13 percent. The bank said equities remain “broadly out of favor” amid signs global economic growth is slowing.
U.S. Revenue
Li & Fung, which gets about 65 percent of its revenue in the U.S., gained 4.9 percent to HK$13.84 in Hong Kong this week. Cathay Pacific Airways Ltd. (293), Asia’s largest international carrier, rose 3.7 percent to HK$15.74.
James Hardie Industries SE (JHX), a building materials supplier that gets almost 68 percent of sales from the U.S., gained 4.9 percent to A$6.03 in Sydney. Honda climbed 2.5 percent to 2,507 yen in Tokyo, and South Korean exporter Samsung Electronics Co. jumped 5.9 percent to 769,000 won.
Mining and energy stocks advanced as New York-traded crude oil climbed 1.3 percent in the week, while the London Metal Index of prices for six metals, including copper and aluminum, advanced 0.4 percent.
Rio Tinto Group added 4.2 percent to A$72.05 in Sydney and BHP Billiton Ltd. (BHP), the world’s No. 1 mining company and Australia’s biggest oil producer, rose 1 percent to A$39.04. In Hong Kong, Jiangxi Copper Co., China’s No. 1 producer of the metal, gained 10 percent to HK$21.95 and Chinese oil explorer Cnooc Ltd. (883) surged 7.2 percent to HK$15.44.
Coal Producer
Among other Asian stocks that rose this week, China Shenhua Energy Co., a unit of the country’s largest coal producer, advanced 2.7 percent to HK$34.75 after reporting higher profit. Shimao Property Holdings Ltd. (813), a China-based developer, advanced 14 percent to HK$8.55 after first-half net income increased 57 percent from a year earlier.
Fanuc Corp. (6954), a maker of industrial robots, gained 2.5 percent to 12,570 yen in Tokyo after JPMorgan Chase & Co, named the company its “top pick” among Japanese machinery manufacturers whose earning may benefit from growth in emerging markets. Komatsu Ltd. (6301), which counts China as its biggest market, increased 5.1 percent to 2,086 yen after the investment bank gave it a new “overweight” rating.
Belle International Holdings Ltd. (1880), China’s largest retailer of women’s shoes, climbed 5.2 percent to HK$16.22 in Hong Kong on optimism the mainland’s economy is withstanding anti- inflation measures after a Chinese manufacturing index climbed to 50.9 in August from 50.7 in July. Tencent Holdings Ltd. (700), the nation’s biggest Internet company by revenue, advanced 6.8 percent to HK$187.30.
“The manufacturing data will remove concerns the slowdown in economic growth will be dramatic,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “The economic slowdown will be moderate this year and that will provide support for stocks.”
To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Friday, September 2, 2011
Thursday, September 1, 2011
Asia Stocks Snap Six-Day Win Streak
By Jonathan Burgos and Shani Raja - Sep 1, 2011
Asian stocks snapped a six-day streak of advances ahead of reports expected to show the U.S. jobless rate remained above 9 percent, adding to signs growth in the world’s largest economy is weakening.
Sony Corp., Japan’s biggest exporter of consumer electronics, declined 4.6 in Tokyo on speculation exports to the U.S. will fall. Toyota Motor Corp and Honda Motor Co. fell more than 1 percent after both the companies’ share of the U.S. vehicle market shrank last month. BHP Billiton Ltd., the world’s No. 1 mining company lost 1.5 percent in Sydney after a gauge of metal prices in London dropped.
The MSCI Asia Pacific Index slipped 0.8 percent to 124.48 as of 11:21 a.m. in Tokyo, paring this week’s advance to 3.5 percent. About two stocks fell for each that rose on the gauge. The measure slumped 8.6 percent last month, the most since May 2010, amid concern global economic growth is slowing as Europe’s sovereign debt crisis spreads and after Standard & Poor’s cut the U.S. credit rating.
“The U.S. recovery remains anemic, with lingering concerns over job creation and house prices,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Expectations are relatively low for tonight’s jobs data.”
Japan’s Nikkei 225 (NKY) Stock Average dropped 1.1 percent. Australia’s S&P/ASX 200 Index fell 1.1 percent. South Korea’s Kospi Index lost 0.9 percent. Hong Kong’s Hang Seng Index decreased 0.8 percent.
U.S. Futures
Futures on the Standard & Poor’s 500 Index were little changed today. The index dropped 1.2 percent in New York yesterday, snapping a four-day advance, before a Labor Department report today that may show non-farm payrolls climbed by 68,000 in August after a 117,000 increase in July, according to the median forecast of economists surveyed by Bloomberg News. U.S. stocks rose as much as 0.9 earlier yesterday after a report showed manufacturing unexpectedly expanded.
Exporters declined on speculation shipments to the U.S., the biggest market for Asian products, will drop. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, slumped 4.3 percent to 1,625 yen in Tokyo. Canon Inc., the world’s biggest camera maker, slid 1.1 percent to 3,585 yen. James Hardie Industries SE (JHX), a supplier of building materials that gets 68 percent of sales from the U.S., dropped 2.9 percent to A$5.98 in Sydney.
Toyota Motor Corp., the world’s biggest carmaker, dropped 1.4 percent to 2,715 yen. The company’s shipments to the U.S. fell 13 percent in August from a year earlier, reducing its market share to 12.1 percent, according to a report from Autodata Corp.
U.S. Car Sales
Honda Motor Co. declined 2.1 percent to 2,503 yen. The carmaker’s U.S. sales fell 24 percent from a year earlier, dragging its market share to 7.7 percent. Total U.S. sales of new cars and light trucks increased to 1.07 million August from 997,467 a year earlier, the report showed.
Gauges of consumer discretionary stocks, raw material producers and energy companies led the decline among the 10 industry groups in the MSCI Asia Pacific Index. All but one of the sub-indexes fell.
BHP Billiton dropped 1.5 percent to A$39.29 in Sydney. Rio Tinto Group, the world’s second-biggest mining company by sales, lost 0.9 percent to A$72.44. Mitsubishi Corp., the Japanese trading house that gets about 43 percent of revenue from commodities, decreased 1.7 percent to 1,819 yen in Tokyo.
The Thomson Reuters/Jefferies CRB Index of raw materials fell 0.6 percent yesterday. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum dropped 1.3 percent.
The MSCI Asia Pacific Index declined 8.9 percent this year through yesterday, compared with a 4.2 percent drop by the S&P 500 and a 13 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.3 times estimated earnings on average, compared with 12.1 times for the S&P 500 and 9.9 times for the Stoxx 600.
To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Asian stocks snapped a six-day streak of advances ahead of reports expected to show the U.S. jobless rate remained above 9 percent, adding to signs growth in the world’s largest economy is weakening.
Sony Corp., Japan’s biggest exporter of consumer electronics, declined 4.6 in Tokyo on speculation exports to the U.S. will fall. Toyota Motor Corp and Honda Motor Co. fell more than 1 percent after both the companies’ share of the U.S. vehicle market shrank last month. BHP Billiton Ltd., the world’s No. 1 mining company lost 1.5 percent in Sydney after a gauge of metal prices in London dropped.
The MSCI Asia Pacific Index slipped 0.8 percent to 124.48 as of 11:21 a.m. in Tokyo, paring this week’s advance to 3.5 percent. About two stocks fell for each that rose on the gauge. The measure slumped 8.6 percent last month, the most since May 2010, amid concern global economic growth is slowing as Europe’s sovereign debt crisis spreads and after Standard & Poor’s cut the U.S. credit rating.
“The U.S. recovery remains anemic, with lingering concerns over job creation and house prices,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Expectations are relatively low for tonight’s jobs data.”
Japan’s Nikkei 225 (NKY) Stock Average dropped 1.1 percent. Australia’s S&P/ASX 200 Index fell 1.1 percent. South Korea’s Kospi Index lost 0.9 percent. Hong Kong’s Hang Seng Index decreased 0.8 percent.
U.S. Futures
Futures on the Standard & Poor’s 500 Index were little changed today. The index dropped 1.2 percent in New York yesterday, snapping a four-day advance, before a Labor Department report today that may show non-farm payrolls climbed by 68,000 in August after a 117,000 increase in July, according to the median forecast of economists surveyed by Bloomberg News. U.S. stocks rose as much as 0.9 earlier yesterday after a report showed manufacturing unexpectedly expanded.
Exporters declined on speculation shipments to the U.S., the biggest market for Asian products, will drop. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, slumped 4.3 percent to 1,625 yen in Tokyo. Canon Inc., the world’s biggest camera maker, slid 1.1 percent to 3,585 yen. James Hardie Industries SE (JHX), a supplier of building materials that gets 68 percent of sales from the U.S., dropped 2.9 percent to A$5.98 in Sydney.
Toyota Motor Corp., the world’s biggest carmaker, dropped 1.4 percent to 2,715 yen. The company’s shipments to the U.S. fell 13 percent in August from a year earlier, reducing its market share to 12.1 percent, according to a report from Autodata Corp.
U.S. Car Sales
Honda Motor Co. declined 2.1 percent to 2,503 yen. The carmaker’s U.S. sales fell 24 percent from a year earlier, dragging its market share to 7.7 percent. Total U.S. sales of new cars and light trucks increased to 1.07 million August from 997,467 a year earlier, the report showed.
Gauges of consumer discretionary stocks, raw material producers and energy companies led the decline among the 10 industry groups in the MSCI Asia Pacific Index. All but one of the sub-indexes fell.
BHP Billiton dropped 1.5 percent to A$39.29 in Sydney. Rio Tinto Group, the world’s second-biggest mining company by sales, lost 0.9 percent to A$72.44. Mitsubishi Corp., the Japanese trading house that gets about 43 percent of revenue from commodities, decreased 1.7 percent to 1,819 yen in Tokyo.
The Thomson Reuters/Jefferies CRB Index of raw materials fell 0.6 percent yesterday. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum dropped 1.3 percent.
The MSCI Asia Pacific Index declined 8.9 percent this year through yesterday, compared with a 4.2 percent drop by the S&P 500 and a 13 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.3 times estimated earnings on average, compared with 12.1 times for the S&P 500 and 9.9 times for the Stoxx 600.
To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Tuesday, August 30, 2011
Oil Heads for Biggest Monthly Drop Since May on Signal Stockpiles to Climb By Ben Sharples - Aug 30, 2011
By Ben Sharples - Aug 30, 2011
Oil declined, heading for the biggest monthly drop since May, as investors speculated that increasing crude stockpiles in the U.S. indicate fuel demand will falter in the world’s biggest consumer of the commodity.
Futures slipped as much as 0.5 percent, snapping four days of gains, after the industry-funded American Petroleum Institute said supplies rose 5.13 million barrels last week, the biggest gain since March. An Energy Department report today may say inventories fell 500,000 barrels, according to the median estimate in a Bloomberg News survey. Seven respondents forecast a drop and six expected an increase.
“Inventories continue to build, which gives us the real state of play in the market,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. “I don’t think prices will go higher, I think we’re in a range and we’re just testing the top-side of that.”
Crude for October delivery slid as much as 45 cents to $88.45 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.49 at 12 p.m. Sydney time. The contract yesterday advanced $1.63 to $88.90. Prices are down 7.5 percent this month and 3 percent this year.
Brent oil for October settlement was at $114.05, up 3 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $25.57 to U.S. West Texas Intermediate futures, compared with a record close of $26.21 on Aug. 19. Brent is down 2.3 percent this month.
Oil Stockpiles
Crude oil stockpiles increased to 352 million, data from the American Petroleum Institute showed. Supplies are about 3.8 percent above the 5-year average, according to Bloomberg data.
Gasoline inventories declined 3.11 million barrels to 210.8 million last week, according to the API. The Energy Department report may show they fell 950,000 barrels, according to the median of 14 analyst estimates in a Bloomberg News survey.
The API collects stockpile data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed for its weekly survey. Oil-supply totals from the API and the department have moved in the same direction 71 percent of the time in the past year and 75 percent in the past four years.
Oil slid this month amid signs developed economies are weakening. U.S. consumer confidence tumbled to the lowest level since April 2009 and European confidence fell the most since December 2008 in reports for August yesterday from the Conference Board in New York and the European Commission in Brussels.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Oil declined, heading for the biggest monthly drop since May, as investors speculated that increasing crude stockpiles in the U.S. indicate fuel demand will falter in the world’s biggest consumer of the commodity.
Futures slipped as much as 0.5 percent, snapping four days of gains, after the industry-funded American Petroleum Institute said supplies rose 5.13 million barrels last week, the biggest gain since March. An Energy Department report today may say inventories fell 500,000 barrels, according to the median estimate in a Bloomberg News survey. Seven respondents forecast a drop and six expected an increase.
“Inventories continue to build, which gives us the real state of play in the market,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. “I don’t think prices will go higher, I think we’re in a range and we’re just testing the top-side of that.”
Crude for October delivery slid as much as 45 cents to $88.45 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.49 at 12 p.m. Sydney time. The contract yesterday advanced $1.63 to $88.90. Prices are down 7.5 percent this month and 3 percent this year.
Brent oil for October settlement was at $114.05, up 3 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $25.57 to U.S. West Texas Intermediate futures, compared with a record close of $26.21 on Aug. 19. Brent is down 2.3 percent this month.
Oil Stockpiles
Crude oil stockpiles increased to 352 million, data from the American Petroleum Institute showed. Supplies are about 3.8 percent above the 5-year average, according to Bloomberg data.
Gasoline inventories declined 3.11 million barrels to 210.8 million last week, according to the API. The Energy Department report may show they fell 950,000 barrels, according to the median of 14 analyst estimates in a Bloomberg News survey.
The API collects stockpile data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed for its weekly survey. Oil-supply totals from the API and the department have moved in the same direction 71 percent of the time in the past year and 75 percent in the past four years.
Oil slid this month amid signs developed economies are weakening. U.S. consumer confidence tumbled to the lowest level since April 2009 and European confidence fell the most since December 2008 in reports for August yesterday from the Conference Board in New York and the European Commission in Brussels.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Monday, August 29, 2011
Reserve Bank of India Proposes Tougher Capital, Sale Rules for New Banks
Reserve Bank of India Proposes Tougher Capital, Sale Rules for New Banks
By Ruth David and Anoop Agrawal - Aug 29, 2011
India’s central bank recommended tougher capital rules for new lenders and mandatory share sales within two years as conditions for issuing new licenses for the first time in seven years.
New lenders will also have to open at least one in four branches in rural areas that have a population of no more than 9,999 people, the Reserve Bank of India said in draft guidelines posted on its website yesterday. The banks may need to meet a minimum capital requirement of 5 billion rupees ($109 million), more than double the requirement for banks in 2004. Foreign shareholding may be capped at 49 percent for new lenders for five years, the central bank said.
Stringent rules may restrict the number of entrants, according to Viren H. Mehta, a director at Ernst & Young LLP. The license winners will also face competition from State Bank of India (SBIN), which accounts for almost a fourth of India’s loans, and ICICI Bank Ltd. (ICICIBC) Companies including Larsen & Toubro Ltd. (LT) and billionaire Anil Ambani’s Reliance ADA Group have expressed interest in operating in a market where credit is forecast to expand 18 percent in the year to March 31.
“If a business group wants to get into the banking business, they have to be serious players,” said Mumbai-based Mehta. “Serious enough to even change their group structures to become eligible for a license.”
New banks will also need to maintain a 12 percent capital adequacy ratio, compared with the 10 percent mandated by the regulator when it set guidelines for new lenders in 2001.
‘Impractical’ Guidelines
The owners of the banks will have to reduce their stake to 40 percent within two years after they are given a license, according to the central bank. Governor Duvvuri Subbarao on Aug. 23 said public ownership of banks would inspire confidence in the financial system and mitigate issues of conflict of interest between shareholders and depositors in the banks.
“The guideline asking for a listing within two years appears to be a bit impractical,” said Hemant Kanoria, chairman and managing director at SREI Infrastructure Finance Ltd. (SREI) “It will be very difficult for branches in the rural areas to start generating profits in the first two years.”
SREI will wait for final guidelines before deciding on applying for a license, Kanoria said in a phone interview yesterday. The regulator has sought feedback by Oct. 31.
SREI climbed as much as 12 percent after the guidelines were released while L&T Finance Holdings Ltd. rose 10.1 percent to 50.8 rupees at the 3:30 p.m. close in Mumbai. Reliance Capital Ltd. (RCAPT) gained 9.6 percent to 377.25 rupees.
India’s Bankex index, which tracks 14 stocks including State Bank and ICICI, climbed 4.1 percent yesterday, trimming its loss this year to 20 percent.
‘Private Pool’
The proposed rules will ensure companies don’t use their banks as a “private pool of readily available funds,” Subbarao said on Aug. 23.
Business groups controlled by Indian residents with at least 10 years of experience may be eligible to set up banks, the central bank said yesterday. Companies that get 10 percent or more of their income or assets from real estate or broking in the last three years won’t be eligible for the licenses, according to the guidelines.
“We want a banking license and the guidelines announced are positive for us,” R. Sridhar, managing director of Shriram Transport Finance Co. said in an interview yesterday. “We may need some time to meet some conditions.”
To contact the reporters on this story: Ruth David in Mumbai at rdavid9@bloomberg.net; Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net
To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
By Ruth David and Anoop Agrawal - Aug 29, 2011
India’s central bank recommended tougher capital rules for new lenders and mandatory share sales within two years as conditions for issuing new licenses for the first time in seven years.
New lenders will also have to open at least one in four branches in rural areas that have a population of no more than 9,999 people, the Reserve Bank of India said in draft guidelines posted on its website yesterday. The banks may need to meet a minimum capital requirement of 5 billion rupees ($109 million), more than double the requirement for banks in 2004. Foreign shareholding may be capped at 49 percent for new lenders for five years, the central bank said.
Stringent rules may restrict the number of entrants, according to Viren H. Mehta, a director at Ernst & Young LLP. The license winners will also face competition from State Bank of India (SBIN), which accounts for almost a fourth of India’s loans, and ICICI Bank Ltd. (ICICIBC) Companies including Larsen & Toubro Ltd. (LT) and billionaire Anil Ambani’s Reliance ADA Group have expressed interest in operating in a market where credit is forecast to expand 18 percent in the year to March 31.
“If a business group wants to get into the banking business, they have to be serious players,” said Mumbai-based Mehta. “Serious enough to even change their group structures to become eligible for a license.”
New banks will also need to maintain a 12 percent capital adequacy ratio, compared with the 10 percent mandated by the regulator when it set guidelines for new lenders in 2001.
‘Impractical’ Guidelines
The owners of the banks will have to reduce their stake to 40 percent within two years after they are given a license, according to the central bank. Governor Duvvuri Subbarao on Aug. 23 said public ownership of banks would inspire confidence in the financial system and mitigate issues of conflict of interest between shareholders and depositors in the banks.
“The guideline asking for a listing within two years appears to be a bit impractical,” said Hemant Kanoria, chairman and managing director at SREI Infrastructure Finance Ltd. (SREI) “It will be very difficult for branches in the rural areas to start generating profits in the first two years.”
SREI will wait for final guidelines before deciding on applying for a license, Kanoria said in a phone interview yesterday. The regulator has sought feedback by Oct. 31.
SREI climbed as much as 12 percent after the guidelines were released while L&T Finance Holdings Ltd. rose 10.1 percent to 50.8 rupees at the 3:30 p.m. close in Mumbai. Reliance Capital Ltd. (RCAPT) gained 9.6 percent to 377.25 rupees.
India’s Bankex index, which tracks 14 stocks including State Bank and ICICI, climbed 4.1 percent yesterday, trimming its loss this year to 20 percent.
‘Private Pool’
The proposed rules will ensure companies don’t use their banks as a “private pool of readily available funds,” Subbarao said on Aug. 23.
Business groups controlled by Indian residents with at least 10 years of experience may be eligible to set up banks, the central bank said yesterday. Companies that get 10 percent or more of their income or assets from real estate or broking in the last three years won’t be eligible for the licenses, according to the guidelines.
“We want a banking license and the guidelines announced are positive for us,” R. Sridhar, managing director of Shriram Transport Finance Co. said in an interview yesterday. “We may need some time to meet some conditions.”
To contact the reporters on this story: Ruth David in Mumbai at rdavid9@bloomberg.net; Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net
To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Saturday, August 27, 2011
Bernanke Outlook Revives Risk Appettite
By John Detrixhe and Catarina Saraiva - Aug 27, 2011
The dollar slid versus the majority of its most-traded peers as Federal Reserve Chairman Ben S. Bernanke said the economy hasn’t deteriorated enough to need immediate stimulus, fueling appetite for higher-risk assets.
Switzerland’s franc had the biggest weekly drop against the euro since July 1 on speculation policy makers will take new steps to curb its strength. The greenback fell for a second week versus the 17-nation currency as Bernanke said yesterday the Fed still has tools to stimulate the economy, spurring bets it may yet take action and damping the currency’s refuge appeal. Data next week may show U.S. employers added fewer jobs this month.
“Bernanke doesn’t want anyone to think that his finger isn’t on the big red button to do more,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “September could bring the trigger for whatever more is going to be.”
The dollar fell against 10 of its 16 major counterparts, dropping 0.7 percent versus the euro to $1.4499 yesterday in New York, from $1.4397 on Aug. 19. It was little changed versus the yen at 76.64, compared with 76.55 a week earlier. Europe’s shared currency appreciated 0.9 percent to 111.17 yen, from 110.20 yen.
New Zealand’s dollar gained the most against the greenback as stocks climbed after Bernanke, in a speech in Jackson Hole, Wyoming, sought to reassure investors that U.S. growth is safe in the long run and the Fed can aid the recovery if needed. The Standard & Poor’s 500 Index rose 1.5 percent yesterday.
The South Pacific currency strengthened 1.7 percent yesterday to end the week at 84.07 U.S. cents, up 2.8 percent over five days, the most since May.
Canada’s Dollar
The Canadian dollar, another currency of a commodities exporter, rose for the first time in five weeks, gaining 0.9 percent to 98.14 cents per U.S. dollar.
The greenback traded within a two-cent range against the euro this week before Bernanke’s speech at the Kansas City Fed’s annual conference in Jackson Hole, between $1.4328 and $1.45, as investors speculated what the Fed chief would say.
At last year’s conference, Bernanke foreshadowed the second round of quantitative easing to spur growth, the purchase of $600 billion of Treasuries from November through June.
The Fed still “has a range of tools that could be used to provide additional monetary stimulus,” Bernanke said yesterday, without specifying when or whether it might deploy them.
A second day has been added to the bank’s next policy meeting in September to “allow a fuller discussion” of the economy and possible responses, Bernanke said.
‘Continue to Ease’
“The Fed will continue to ease, most likely at its next meeting,” Diane Swonk, chief economist at Mesirow Financial Holdings Inc. in Chicago, wrote on the firm’s website. “Ben didn’t specify what they would do at their next meeting, as he still needs to deal with internal opposition to additional easing, but that will not stop him.”
The U.S. economy grew more slowly from April through June than first estimated, Commerce Department data showed yesterday 90 minutes before the Fed chief’s address. That capped the weakest six months of the economic recovery that began in mid- 2009. Gross domestic product gained at a 1 percent annual rate, versus the earlier estimate of 1.3 percent.
U.S. payroll growth slowed in August to 75,000 jobs, from 117,000 in July, economists in a Bloomberg News survey forecast before the Labor Department reports the data Sept. 2.
European Crisis
The euro gained this week versus the yen and greenback even amid concern Europe’s sovereign-debt crisis is worsening. Greek government two-year note yields climbed 46 percent, a euro-era record. The European Central Bank bought Italian and Spanish government bonds, according to people familiar with the transactions, to hold down borrowing costs and keep the crisis from spreading to the two countries.
The shared currency dropped against most major counterparts on Aug. 25 as French, Italian and Spanish stock-market regulators extended temporary short-selling bans they introduced this month in a bid to stem stock-market volatility.
Short investors sell borrowed shares with plans to buy them back later at a lower price, a practice politicians and some investors blame for roiling markets.
The euro appreciated 0.6 percent over the past three months against nine developed-nation peers, according to Bloomberg Correlation-Weighted Currency Indexes, while the dollar declined 2.1 percent. The Swiss franc strengthened the most, 5.9 percent, and the yen gained 4.5 percent as investors sought refuge amid the slowing U.S. economy and Europe’s debt crisis.
Yen Trading
Japanese Finance Minister Yoshihiko Noda said he’s examining how much speculative trading is influencing the yen, which surged to a post-World War II record of 75.95 per dollar on Aug. 19.
Japan last intervened in the currency market, selling yen to try to curb its climb, on Aug. 4, when it touched 76.97 to the dollar. The yen weakened as much as 4.1 percent that day. It was trading at pre-intervention levels within a week.
The franc tumbled versus all of its 16 most-traded peers this week amid speculation the Swiss National Bank will introduce new measures to damp demand for the currency. Policy makers cut borrowing costs to zero earlier this month, increased bank sight deposits almost sevenfold and left the door open for additional measures.
The Swiss currency fell against the euro and the dollar for a third week, sliding 3.4 percent to 1.1690 per euro in the biggest drop in almost two months, and weakening 2.7 percent to 80.63 centimes per greenback.
To contact the reporters on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net.
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
The dollar slid versus the majority of its most-traded peers as Federal Reserve Chairman Ben S. Bernanke said the economy hasn’t deteriorated enough to need immediate stimulus, fueling appetite for higher-risk assets.
Switzerland’s franc had the biggest weekly drop against the euro since July 1 on speculation policy makers will take new steps to curb its strength. The greenback fell for a second week versus the 17-nation currency as Bernanke said yesterday the Fed still has tools to stimulate the economy, spurring bets it may yet take action and damping the currency’s refuge appeal. Data next week may show U.S. employers added fewer jobs this month.
“Bernanke doesn’t want anyone to think that his finger isn’t on the big red button to do more,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “September could bring the trigger for whatever more is going to be.”
The dollar fell against 10 of its 16 major counterparts, dropping 0.7 percent versus the euro to $1.4499 yesterday in New York, from $1.4397 on Aug. 19. It was little changed versus the yen at 76.64, compared with 76.55 a week earlier. Europe’s shared currency appreciated 0.9 percent to 111.17 yen, from 110.20 yen.
New Zealand’s dollar gained the most against the greenback as stocks climbed after Bernanke, in a speech in Jackson Hole, Wyoming, sought to reassure investors that U.S. growth is safe in the long run and the Fed can aid the recovery if needed. The Standard & Poor’s 500 Index rose 1.5 percent yesterday.
The South Pacific currency strengthened 1.7 percent yesterday to end the week at 84.07 U.S. cents, up 2.8 percent over five days, the most since May.
Canada’s Dollar
The Canadian dollar, another currency of a commodities exporter, rose for the first time in five weeks, gaining 0.9 percent to 98.14 cents per U.S. dollar.
The greenback traded within a two-cent range against the euro this week before Bernanke’s speech at the Kansas City Fed’s annual conference in Jackson Hole, between $1.4328 and $1.45, as investors speculated what the Fed chief would say.
At last year’s conference, Bernanke foreshadowed the second round of quantitative easing to spur growth, the purchase of $600 billion of Treasuries from November through June.
The Fed still “has a range of tools that could be used to provide additional monetary stimulus,” Bernanke said yesterday, without specifying when or whether it might deploy them.
A second day has been added to the bank’s next policy meeting in September to “allow a fuller discussion” of the economy and possible responses, Bernanke said.
‘Continue to Ease’
“The Fed will continue to ease, most likely at its next meeting,” Diane Swonk, chief economist at Mesirow Financial Holdings Inc. in Chicago, wrote on the firm’s website. “Ben didn’t specify what they would do at their next meeting, as he still needs to deal with internal opposition to additional easing, but that will not stop him.”
The U.S. economy grew more slowly from April through June than first estimated, Commerce Department data showed yesterday 90 minutes before the Fed chief’s address. That capped the weakest six months of the economic recovery that began in mid- 2009. Gross domestic product gained at a 1 percent annual rate, versus the earlier estimate of 1.3 percent.
U.S. payroll growth slowed in August to 75,000 jobs, from 117,000 in July, economists in a Bloomberg News survey forecast before the Labor Department reports the data Sept. 2.
European Crisis
The euro gained this week versus the yen and greenback even amid concern Europe’s sovereign-debt crisis is worsening. Greek government two-year note yields climbed 46 percent, a euro-era record. The European Central Bank bought Italian and Spanish government bonds, according to people familiar with the transactions, to hold down borrowing costs and keep the crisis from spreading to the two countries.
The shared currency dropped against most major counterparts on Aug. 25 as French, Italian and Spanish stock-market regulators extended temporary short-selling bans they introduced this month in a bid to stem stock-market volatility.
Short investors sell borrowed shares with plans to buy them back later at a lower price, a practice politicians and some investors blame for roiling markets.
The euro appreciated 0.6 percent over the past three months against nine developed-nation peers, according to Bloomberg Correlation-Weighted Currency Indexes, while the dollar declined 2.1 percent. The Swiss franc strengthened the most, 5.9 percent, and the yen gained 4.5 percent as investors sought refuge amid the slowing U.S. economy and Europe’s debt crisis.
Yen Trading
Japanese Finance Minister Yoshihiko Noda said he’s examining how much speculative trading is influencing the yen, which surged to a post-World War II record of 75.95 per dollar on Aug. 19.
Japan last intervened in the currency market, selling yen to try to curb its climb, on Aug. 4, when it touched 76.97 to the dollar. The yen weakened as much as 4.1 percent that day. It was trading at pre-intervention levels within a week.
The franc tumbled versus all of its 16 most-traded peers this week amid speculation the Swiss National Bank will introduce new measures to damp demand for the currency. Policy makers cut borrowing costs to zero earlier this month, increased bank sight deposits almost sevenfold and left the door open for additional measures.
The Swiss currency fell against the euro and the dollar for a third week, sliding 3.4 percent to 1.1690 per euro in the biggest drop in almost two months, and weakening 2.7 percent to 80.63 centimes per greenback.
To contact the reporters on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net.
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Friday, August 26, 2011
Swaps Below RBI Rate for First Time in 15 Month Signal Halt: India Credit
By Unni Krishnan - Aug 26, 2011
For the first time in 15 months, traders in the swap market are anticipating the Reserve Bank of India will stop raising interest rates and may start to ease policy in the next year as the economy slows.
The cost to lock in one-year borrowing costs dropped below the central bank’s 8 percent benchmark rate this month for the first time since May 2010 and was 7.73 percent today, according to data compiled by Bloomberg. The gap has narrowed 58 basis points in August, compared with 110 in Brazil and 37 in China.
India’s central bank has boosted borrowing costs 11 times since March 2010, the most of the biggest emerging nations known as the BRICs. The bid to contain inflation will probably cut economic growth, according to Morgan Stanley and Standard Chartered Plc, which have both reduced their forecasts for India this year. Gross domestic product rose 7.6 percent in the three months through June, the least since the fourth quarter of 2009, according to the median estimate of economists surveyed by Bloomberg ahead of data next week.
“Swaps are signifying that the market is expecting the end of the rate-hike cycle as growth slows,” Vivek Rajpal, a Mumbai based fixed-income strategist at Nomura Holdings Inc., said in an interview yesterday. “Easing at some point of time is possible, but it may be in the form of liquidity-easing measures, not necessarily a cut in interest rates.”
Swap Movements
India’s swap rates, which are pegged to the overnight money-market rate, climbed to a three-year high of 8.37 percent on July 27, a day after the Reserve Bank unexpectedly raised borrowing costs by 50 basis points, or 0.50 percentage point. The cost needed to receive floating payments for one year dropped the most this month since December 2008 after traders pared expectations for rate increases on signs the global economy is slowing.
The one-year swap rate in Brazil is at 11.5 percent, one percentage point below the nation’s benchmark rate. In China, the 3.80 percent swap rate compares with the one-year deposit rate of 3.50 percent. In Russia, which doesn’t target one policy rate, the gauge is 5.31 percent, 52 basis points above the three-month MosPrime interbank rate, data compiled by Bloomberg show. Traders use swaps to guard against fluctuations in borrowing costs.
India’s bonds have rallied amid evidence Asia’s third- biggest economy is slowing. Manufacturing grew in July at the slowest pace in 20 months, the Purchasing Managers’ Index compiled by HSBC Holdings Plc and Markit Economics showed this month. Car sales fell in July from a year earlier for the first time since January 2009, the Society of Indian Automobile Manufacturers said on Aug. 10.
Bond Returns
The yield on benchmark 7.8 percent rupee-denominated notes due in April 2021 has dropped 17 basis points this month to 8.28 percent, according to the central bank’s trading system. The yield rose three basis points today before a debt auction, where the central bank will sell 110 billion rupees ($2.4 billion) of securities due in 2018, 2021 and 2027, according to the government’s debt calendar.
India’s bonds due in 10 years yielded 600 basis points more than similar-maturity U.S. Treasuries yesterday, down from a record-high 621 basis points reached on Aug. 18. Sovereign rupee notes returned 1.7 percent this month, outperforming four of 10 Asian debt markets, according to indexes compiled by HSBC.
The central bank may signal it is equally concerned over slowing growth and inflation when it meets next on Sept. 16, according to Mumbai-based Religare Capital Markets.
Growth Outlook
India’s economy may expand 7.2 percent in the year through March, compared with an earlier prediction of 7.7 percent, Morgan Stanley said on Aug. 1. Standard Chartered cut its forecast on July 26 to 7.7 percent from 8.1 percent. Increases in wholesale prices, which have held above 9 percent for eight months, will retreat to 7 percent by March, the Reserve Bank said in a statement on July 26.
“The RBI’s predominant concern until now was inflation, but now growth is also suddenly coming on the radar,” Jay Shankar, a Mumbai-based chief economist at Religare Capital, said in an interview on Aug. 24. “I hope they won’t raise rates in September.”
Policy makers will need to raise borrowing costs aggressively to attract global investors, according to Mumbai- based IndusInd Bank Ltd. International funds’ holdings of rupee debt totaled $21.7 billion as of Aug. 24, according to the Securities & Exchange Board of India, below the $50 billion ceiling set by the government.
‘No Option’
“To attract global investors you need to keep inflation below the growth rate,” J. Moses Harding, a Mumbai-based executive vice president at IndusInd Bank, said in an interview on Aug. 24. “I think the RBI has no option but to deliver a half percentage point rate hike in September.”
Harding predicts that the 10-year bond yield will be about 8.15 percent by December.
The rupee has dropped 4 percent this month, headed for the biggest slide since May 2010, as exchange data show global funds reduced holdings of Indian stock by $2 billion. The currency was little changed at 46.0738 per dollar today, according to data compiled by Bloomberg.
The cost of insuring the debt of State Bank of India against default using five-year credit-default swaps has climbed this month. The contracts rose 81 basis points to 273, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in privately negotiated markets.
The swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
The central bank will raise borrowing costs by 25 basis points in September before pausing for the rest of the year, Shubhada Rao, chief economist at Mumbai-based Yes Bank Ltd., said in an interview on Aug. 23.
“While we expect RBI to remain significantly hawkish in its tone, we believe that the interest-rate cycle is close to peaking,” Rao said.
To contact the reporter on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
For the first time in 15 months, traders in the swap market are anticipating the Reserve Bank of India will stop raising interest rates and may start to ease policy in the next year as the economy slows.
The cost to lock in one-year borrowing costs dropped below the central bank’s 8 percent benchmark rate this month for the first time since May 2010 and was 7.73 percent today, according to data compiled by Bloomberg. The gap has narrowed 58 basis points in August, compared with 110 in Brazil and 37 in China.
India’s central bank has boosted borrowing costs 11 times since March 2010, the most of the biggest emerging nations known as the BRICs. The bid to contain inflation will probably cut economic growth, according to Morgan Stanley and Standard Chartered Plc, which have both reduced their forecasts for India this year. Gross domestic product rose 7.6 percent in the three months through June, the least since the fourth quarter of 2009, according to the median estimate of economists surveyed by Bloomberg ahead of data next week.
“Swaps are signifying that the market is expecting the end of the rate-hike cycle as growth slows,” Vivek Rajpal, a Mumbai based fixed-income strategist at Nomura Holdings Inc., said in an interview yesterday. “Easing at some point of time is possible, but it may be in the form of liquidity-easing measures, not necessarily a cut in interest rates.”
Swap Movements
India’s swap rates, which are pegged to the overnight money-market rate, climbed to a three-year high of 8.37 percent on July 27, a day after the Reserve Bank unexpectedly raised borrowing costs by 50 basis points, or 0.50 percentage point. The cost needed to receive floating payments for one year dropped the most this month since December 2008 after traders pared expectations for rate increases on signs the global economy is slowing.
The one-year swap rate in Brazil is at 11.5 percent, one percentage point below the nation’s benchmark rate. In China, the 3.80 percent swap rate compares with the one-year deposit rate of 3.50 percent. In Russia, which doesn’t target one policy rate, the gauge is 5.31 percent, 52 basis points above the three-month MosPrime interbank rate, data compiled by Bloomberg show. Traders use swaps to guard against fluctuations in borrowing costs.
India’s bonds have rallied amid evidence Asia’s third- biggest economy is slowing. Manufacturing grew in July at the slowest pace in 20 months, the Purchasing Managers’ Index compiled by HSBC Holdings Plc and Markit Economics showed this month. Car sales fell in July from a year earlier for the first time since January 2009, the Society of Indian Automobile Manufacturers said on Aug. 10.
Bond Returns
The yield on benchmark 7.8 percent rupee-denominated notes due in April 2021 has dropped 17 basis points this month to 8.28 percent, according to the central bank’s trading system. The yield rose three basis points today before a debt auction, where the central bank will sell 110 billion rupees ($2.4 billion) of securities due in 2018, 2021 and 2027, according to the government’s debt calendar.
India’s bonds due in 10 years yielded 600 basis points more than similar-maturity U.S. Treasuries yesterday, down from a record-high 621 basis points reached on Aug. 18. Sovereign rupee notes returned 1.7 percent this month, outperforming four of 10 Asian debt markets, according to indexes compiled by HSBC.
The central bank may signal it is equally concerned over slowing growth and inflation when it meets next on Sept. 16, according to Mumbai-based Religare Capital Markets.
Growth Outlook
India’s economy may expand 7.2 percent in the year through March, compared with an earlier prediction of 7.7 percent, Morgan Stanley said on Aug. 1. Standard Chartered cut its forecast on July 26 to 7.7 percent from 8.1 percent. Increases in wholesale prices, which have held above 9 percent for eight months, will retreat to 7 percent by March, the Reserve Bank said in a statement on July 26.
“The RBI’s predominant concern until now was inflation, but now growth is also suddenly coming on the radar,” Jay Shankar, a Mumbai-based chief economist at Religare Capital, said in an interview on Aug. 24. “I hope they won’t raise rates in September.”
Policy makers will need to raise borrowing costs aggressively to attract global investors, according to Mumbai- based IndusInd Bank Ltd. International funds’ holdings of rupee debt totaled $21.7 billion as of Aug. 24, according to the Securities & Exchange Board of India, below the $50 billion ceiling set by the government.
‘No Option’
“To attract global investors you need to keep inflation below the growth rate,” J. Moses Harding, a Mumbai-based executive vice president at IndusInd Bank, said in an interview on Aug. 24. “I think the RBI has no option but to deliver a half percentage point rate hike in September.”
Harding predicts that the 10-year bond yield will be about 8.15 percent by December.
The rupee has dropped 4 percent this month, headed for the biggest slide since May 2010, as exchange data show global funds reduced holdings of Indian stock by $2 billion. The currency was little changed at 46.0738 per dollar today, according to data compiled by Bloomberg.
The cost of insuring the debt of State Bank of India against default using five-year credit-default swaps has climbed this month. The contracts rose 81 basis points to 273, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in privately negotiated markets.
The swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
The central bank will raise borrowing costs by 25 basis points in September before pausing for the rest of the year, Shubhada Rao, chief economist at Mumbai-based Yes Bank Ltd., said in an interview on Aug. 23.
“While we expect RBI to remain significantly hawkish in its tone, we believe that the interest-rate cycle is close to peaking,” Rao said.
To contact the reporter on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
Thursday, August 11, 2011
India’s Industrial Output Growth Quickens to 8.8%, Weathering Higher Rates
By Kartik Goyal - Aug 12, 2011
India’s industrial production grew at the quickest pace in three months in June, weathering the fastest interest-rate increases among Asia’s major economies.
Output at factories, utilities and mines rose 8.8 percent from a year earlier, following a revised 5.9 percent gain in May, the Central Statistical Office said in a statement in New Delhi today. The median of 23 estimates in a Bloomberg News survey was for a 5.5 percent advance.
Reserve Bank of India Governor Duvvuri Subbarao, whose term was extended by two years on Aug. 9, has to weigh the risks to expansion posed by Europe’s debt crisis and a faltering U.S. recovery after tightening monetary policy to slow inflation. Asian central banks from South Korea to Indonesia kept borrowing costs unchanged this week as they assess the global economy.
“The Indian central bank’s job has become even more challenging at this juncture,” Indranil Pan, chief economist at Kotak Mahindra Bank Ltd. in Mumbai, said before the report. “The RBI has to control inflation at a time when the global economic turmoil poses risks to growth.”
The Bombay Stock Exchange Sensitive Index was little changed at 17,052.10 at 11:12 a.m. in Mumbai. The rupee gained 0.1 percent to 45.34 per dollar, and the yield on the 7.80 percent bond due April 2021 held at 8.26 percent.
Inflation Forecast
India’s benchmark wholesale-price inflation in July will probably be 9.2 percent, according to the median estimate in a Bloomberg News survey, staying above 9 percent for eight straight months. The commerce ministry will release the data on Aug. 16.
The Reserve Bank has increased borrowing costs 11 times since mid-March 2010. Its repurchase rate is 8 percent.
Inflation is a political issue in India as it erodes spending power in a nation where the World Bank estimates more than three-quarters of the population live on less than $2 a day.
Steel and cement production, and an expansion in bank loans in India, show demand pressures are growing, stoking prices.
Steel output by companies including Tata Steel Ltd. rose 12.5 percent in June from a year earlier, compared with a 6.1 percent gain in May, according to the commerce ministry. Cement production rose 0.8 percent after a 2.3 percent decline in May, the ministry said.
Bank Loans
Commercial loans given by lenders such as ICICI Bank Ltd. (ICICIBC), the nation’s biggest private lender, jumped 19.33 percent in the 12 months to July 15, exceeding the central bank’s 18 percent projection, according to Reserve Bank data.
Concerns that the global economy will slow wiped more than $8 trillion of stocks worldwide between July 22 and Aug. 8, according to data compiled by Bloomberg.
Finance ministers and central bankers from the Group of Seven nations, which include the U.S., U.K. and Germany, said in a statement on Aug. 8 that they will “take all necessary measures to support financial stability and growth in a spirit of close cooperation and confidence.”
India’s central bank said Aug. 8 that while “downside risks” to India’s expansion may have increased amid weakness in the global economy, “they are likely to have limited impact.”
Finance Minister Pranab Mukherjee said Aug. 6 that India’s challenge is to tame inflation.
The Reserve Bank last month maintained its growth forecast of 8 percent for the current fiscal year ending March 31. The economy expanded 8.5 percent the previous year.
To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
India’s industrial production grew at the quickest pace in three months in June, weathering the fastest interest-rate increases among Asia’s major economies.
Output at factories, utilities and mines rose 8.8 percent from a year earlier, following a revised 5.9 percent gain in May, the Central Statistical Office said in a statement in New Delhi today. The median of 23 estimates in a Bloomberg News survey was for a 5.5 percent advance.
Reserve Bank of India Governor Duvvuri Subbarao, whose term was extended by two years on Aug. 9, has to weigh the risks to expansion posed by Europe’s debt crisis and a faltering U.S. recovery after tightening monetary policy to slow inflation. Asian central banks from South Korea to Indonesia kept borrowing costs unchanged this week as they assess the global economy.
“The Indian central bank’s job has become even more challenging at this juncture,” Indranil Pan, chief economist at Kotak Mahindra Bank Ltd. in Mumbai, said before the report. “The RBI has to control inflation at a time when the global economic turmoil poses risks to growth.”
The Bombay Stock Exchange Sensitive Index was little changed at 17,052.10 at 11:12 a.m. in Mumbai. The rupee gained 0.1 percent to 45.34 per dollar, and the yield on the 7.80 percent bond due April 2021 held at 8.26 percent.
Inflation Forecast
India’s benchmark wholesale-price inflation in July will probably be 9.2 percent, according to the median estimate in a Bloomberg News survey, staying above 9 percent for eight straight months. The commerce ministry will release the data on Aug. 16.
The Reserve Bank has increased borrowing costs 11 times since mid-March 2010. Its repurchase rate is 8 percent.
Inflation is a political issue in India as it erodes spending power in a nation where the World Bank estimates more than three-quarters of the population live on less than $2 a day.
Steel and cement production, and an expansion in bank loans in India, show demand pressures are growing, stoking prices.
Steel output by companies including Tata Steel Ltd. rose 12.5 percent in June from a year earlier, compared with a 6.1 percent gain in May, according to the commerce ministry. Cement production rose 0.8 percent after a 2.3 percent decline in May, the ministry said.
Bank Loans
Commercial loans given by lenders such as ICICI Bank Ltd. (ICICIBC), the nation’s biggest private lender, jumped 19.33 percent in the 12 months to July 15, exceeding the central bank’s 18 percent projection, according to Reserve Bank data.
Concerns that the global economy will slow wiped more than $8 trillion of stocks worldwide between July 22 and Aug. 8, according to data compiled by Bloomberg.
Finance ministers and central bankers from the Group of Seven nations, which include the U.S., U.K. and Germany, said in a statement on Aug. 8 that they will “take all necessary measures to support financial stability and growth in a spirit of close cooperation and confidence.”
India’s central bank said Aug. 8 that while “downside risks” to India’s expansion may have increased amid weakness in the global economy, “they are likely to have limited impact.”
Finance Minister Pranab Mukherjee said Aug. 6 that India’s challenge is to tame inflation.
The Reserve Bank last month maintained its growth forecast of 8 percent for the current fiscal year ending March 31. The economy expanded 8.5 percent the previous year.
To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
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