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January 31, 2013
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  Top Stories 
  • U.S. economy takes surprising downturn in 4th quarter
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    The U.S. economy shrank at an annual rate of 0.1% in the fourth quarter, a result that surprised economists who had predicted 1% growth but reflected the effects of Hurricane Sandy and a government and private-sector spending pullback in anticipation of January's "fiscal cliff." It marked the first decline in GDP since the end of the recession that launched the ongoing economic malaise. Analysts believe, however, that the economy remains resilient, with fundamentals still basically sound. The Wall Street Journal (1/30) , Bloomberg (1/30) LinkedInFacebookTwitterEmail this Story

  • U.S. Fed's asset buying might finally be paying off
    Analysts point to rising bond yields as evidence that the U.S. Federal Reserve's third round of asset purchases is beginning to pay off with a firming economy. "As the economy picks up, we'd expect that would be a force putting upward pressure on yields regardless of what the Fed is doing on the bond supply side," said James Hamilton, a professor at the University of California, San Diego. Bloomberg (1/30) LinkedInFacebookTwitterEmail this Story
  • Japanese leader defends economic program
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    Prime Minister Shinzo Abe dismissed accusations abroad that Japan's economic policy is aimed primarily at driving down the yen, saying instead that beating back persistent deflation is the true objective. However, his government's forecast of 2.5% growth for the year is being challenged by private analysts at home who see a number of challenges ahead. Reuters (1/30) , Yomiuri Shimbun (Japan) (1/30) LinkedInFacebookTwitterEmail this Story

  • China's consumer sentiment picks up in 4th quarter
    China's consumer confidence remained well above the global average in the fourth quarter, rising from the previous quarter as the nation's employment situation and inflation outlook brightened, according to data from Nielsen. "The rise of the confidence index in the fourth quarter is a positive signal regarding a rosy economic trend for 2013," said Yan Xuan, the president of Nielsen Greater China. China Daily (Beijing) (1/30) LinkedInFacebookTwitterEmail this Story
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  Market Activities 
  • Asian markets advance broadly
    Japanese stocks surged and markets across Asia posted more modest gains Wednesday on a generally more robust economic outlook. "Market sentiment is that the economic backdrop is better than this time last year," said Andrew Sullivan, director of sales trading at Kim Eng Securities. The Nikkei jumped 2.28% to 11,113.95, the Hang Seng rose 0.71% to 23,822.06, the Kospi added 0.43% to 1,964.43 and the S&P/ASX edged up 0.16% to 4,896.69. MarketWatch (1/30) LinkedInFacebookTwitterEmail this Story
  Economic Trends & Outlook 
  • December retail sales edge up 0.1% in Japan amid slack economy
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    Japan's retail sales registered a weak month-to-month gain of 0.1% in December, switching from an equal contraction in November. Economists had predicted a stronger 0.4% gain. "There are few positive signs for private consumption. Employment and income conditions aren't improving much, as wages aren't rising," said Yoshimasa Maruyama, chief economist at Itochu. Bloomberg Businessweek (1/29) LinkedInFacebookTwitterEmail this Story

  • RBI chief says current-account gap a factor in rate cuts
    Tuesday's quarter-point rate cut by the Reserve Bank of India may be followed by more, but the nation's current-account deficit, as well as inflation, will be an important factor in the decision-making, said bank Governor Duvvuri Subbarao. Separately, the central bank's action was followed swiftly by the country's largest lender, State Bank of India, which reduced its borrowing rate Wednesday by 0.05 percentage points. The Economic Times (India)/Reuters (1/30) , The Hindu (India) (1/30) LinkedInFacebookTwitterEmail this Story

  Capital Markets & Financial Products 

  • China's strained banks face another surge in capital demand
    Seven trillion yuan worth of projects approved by China's National Development and Reform Commission in the past few months are expected to put banks' lending capacity to the test this year. The new investment push comes as loan-deposit ratios and capital adequacy ratios are already just marginally within regulatory standards. Caijing Magazine online (1/29) LinkedInFacebookTwitterEmail this Story
  • China regulator raises lending warning flag
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    Defaults are a growing possibility in China's banking industry, the chairman of the China Banking Regulatory Commission reportedly warned at an annual working meeting in mid-January. Characterizing loans outstanding as "highly concentrated" and "broadly impacted," the chairman noted total loan balances amount to about 67 trillion yuan, with half to local governments, property and business clusters as well as industries with overcapacity. Caijing Magazine online (1/30) LinkedInFacebookTwitterEmail this Story

  • Taiwan banks may launch yuan operations next week
    Next Wednesday is the earliest date at which Taiwan's local banks may begin accepting deposits in yuan, Taiwan's central bank announced. Individual banks, however, must qualify by submitting applications and the required documents to the Bank of China's branch in Taipei for approval. The Taipei Times (Taiwan) (1/31) LinkedInFacebookTwitterEmail this Story
  Industry & Regulatory Update 

  • HSBC agreement to sell Ping An stake going down to the wire
    China's insurance regulator must approve HSBC's US$7.4 billion sale of its Ping An Insurance stake to Thai billionaire Dhanin Chearavanont by 11:59 tonight or the agreement will expire. But "the odds are high that the agreement will be extended, given that the buyer may need more time to prove its ability to finance the purchase," observed Olive Xia, an analyst at Core Pacific-Yamaichi International. Bloomberg (1/30) LinkedInFacebookTwitterEmail this Story
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