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February 7, 2013 Sign up Forward Archive   Top Stories  Bank of Japan policymaker denies targeting a level for the yen    Sato/Reuters Bank of Japan policymaker Takehiro Sato denied that the bank has any specific level for the yen in mind, but did allow that the goal is to reduce the currency's appeal as a safe haven, possibly through a foreign bond buying program in cooperation with the government. Sato also expressed caution about dropping the 0.1% interest rate paid on excess reserves parked at the bank, though he said this remained "a future policy option." Reuters (2/6) , Xinhuanet.com (China) (2/6)      Yuan judged to be near equilibrium, Barclays says Barclays says the Chinese currency is now commonly believed to be near its true value in currency markets and may rise still more against the U.S. dollar. The development is considered to lessen the likelihood of a currency war. Caijing Magazine online (2/6)      Economic experts brighten their outlook for eurozone Confidence in the eurozone has reversed two straight quarters of decline, climbing in the current quarter to a reading of 95.1, Germany's Ifo Institute reports. "A silver lining is appearing on the horizon. The economic situation in the euro area is expected to improve within the next six months," Ifo said of the survey of economic experts. Bloomberg Businessweek (2/6) , Market News International (2/6)      Eurozone demand boosts German factory orders    Reuters Adding to growing signs of a turnaround in the eurozone, factory orders from the region to Germany jumped 7% in December, helping lift Germany's total seasonally adjusted orders 0.8% in December after a 1.8% decline the previous month. "It’s good news that the increase in euro-area orders was so big. It's too early to declare a recovery in the euro area, but for Germany this could be the beginning of some good hard data in the first quarter," said Frederik Ducrozet, an economist at Credit Agricole in Paris. Bloomberg Businessweek (2/6)      India budget deficit may surprise; IMF sees slower GDP growth Some believe a surprise is in store for the Indian budget, as recent cuts may produce a deficit that falls within the old target of 5.1% before the government raised it late last year. Looking ahead on another front, however, the IMF predicts that India's GDP will grow only 5.4% this year, citing structural and cyclical factors as well as persistent inflation. The Wall Street Journal (2/6) , The Economic Times (India)/Press Trust of India (2/6)      U.S. CBO sees smaller deficit, growing economy Depending on what the U.S. Congress does on the economic front, the Congressional Budget Office projects a budget deficit this year of $845 billion, or 5.3% of GDP. However, the national debt is expected to remain at a historically high level of 76% of GDP, or $12.2 trillion, while GDP itself is forecast to grow 1.4% in 2013. U.S. News & World Report (2/5)      Warning: Another financial meltdown may be on the way A repeat of the financial crisis of 2007 may be a prospect as global liquidity due to widespread quantitative easing inflates stock and property prices, the Washington-based Institute of International Finance warns. Further risk is seen in the eurozone, where developing political instability and persistent debt worries indicate that the crisis may re-emerge. The Business Times (Singapore) (2/6)      U.S. Fed mulled possibility of turmoil before 2007 meltdown    Bernanke/Reuters The ebbing credibility of credit rating agencies was cited by U.S. Federal Reserve officials in 2007 as one possible sign of impending financial turmoil, according to newly released transcripts of a Fed Open Market Committee meeting in August of that year. Given the lost confidence, "it is much harder to see that this market will unwind itself in a rather kind and comforting environment," Kevin Warsh, then a Fed governor, said, according to the transcript. Bloomberg (2/5)      RBS Japan unit to plead guilty as parent bank settles in Libor case Royal Bank of Scotland's Japanese unit will plead guilty to U.S. fraud charges as the parent pays US$610 million to U.S. and U.K. authorities in connection with Libor-rigging charges. RBS is the third bank to admit to such manipulation. The Wall Street Journal (2/6)      Help make sense of investing opportunities in this volatile environment with The Forbes/CFA Institute Investment Course: Timeless Principles for Building Wealth, an up-to-date and comprehensive guide for both novice and experienced investors that covers financial planning, security selection, asset allocation, and even choosing an adviser.   Reader Survey  Has implementation of behavioral finance precepts into your investment practice meaningfully improved your results? Yes, we have implemented with success  53.66% No, we have not implemented behavioral finance precepts  36.59% No, we have implemented without success  9.76% Earlier this week, readers were asked whether implementing behavioral finance principles in their investment practice has meaningfully improved results. Among the three possible answers given, 36.59% of respondents indicated that they have not implemented behavioral finance at their investment firms. Although this may seem surprising, a consistent criticism of behavioral finance is its lack of a unifying theory. In other words, although behavioral finance observations of cognitive biases are descriptive, they do not necessarily suggest how to take advantage of these biases or how to avoid them. That said, a majority of respondents (63.42%) stated that they have incorporated behavioral finance tenets at their investment firms. Among this group, 53.66% reported success in implementation, whereas 9.76% stated that they have not achieved success. Perhaps recent works by Greg B. Davies and Arnaud de Servigny (Behavioral Investment Management) and Daniel Kahneman (Thinking, Fast and Slow) will not only increase implementation of behavioral finance but also improve results. Also, CFA Institute is hosting a forum, Behavioral Finance: From Theory to Practice, that may aid interested practitioners. -- Jason A. Voss, CFA, Content Director, CFA Institute   Market Activities  INTERNATIONAL MARKETS OVERVIEW The risk posed by the growing possibility of a return to power in Italy for Silvio Berlusconi sent a chill over markets on both sides of the Atlantic on Wednesday, while U.S. investors were also re-evaluating corporate results. The Stoxx Europe 600 declined 0.36% to 284.52, and the S&P 500 barely budged, adding 0.05% to 1,512.12. Here is a continuously updated list of global stock indices. The Wall Street Journal (2/7) , MarketWatch (2/6) , CNNMoney (2/6)      Japanese shares surge on an up day in Asian markets An improved forecast from Toyota and signals of a stronger forthcoming anti-deflation push at the Bank of Japan lifted Japan's stock market to its highest close in four years Wednesday, while shares rose moderately in other Asian markets. The Nikkei surged 3.77% to close at 11,463.75, while the Hang Seng added 0.47% to 23,256.93, the Kospi edged down 0.10% to 1,936.19 and the ASX rose 0.78% to 4,921.00. Bloomberg (2/6)        Economic Trends & Outlook  China's growth outlook strong, but inflation remains a worry    Reuters China's central bank says it will remain on the lookout this year for inflation originating both from foreign influences due to monetary easing and from domestic sources due to slower growth of the labor force as the economy expands. Separately, investment bank CCB International Securities says the outlook is favorable in China this year for growth as well as for an accommodating regulatory environment. Bloomberg (2/6) , China Daily (Beijing) (2/6)      Analysis: China's shadow banking raises worrying questions China's problematic shadow banking sector is rendered more disturbing by the wide range of size estimates, from 5 trillion yuan to 40 trillion. Some regulators say the overall risk posed by the sector is minimal, but its potential effects are acknowledged to touch on a wide range of areas, including monetary policy and macro-control, money creation and potential rescue mechanisms. Caijing Magazine online (2/5)        Capital Markets & Financial Products  China central bank injects record amount into money markets In its latest effort to sustain short-term liquidity and hold down interest rates, the People's Bank of China injected a record 450 billion yuan into the money markets Tuesday. Fourteen-day bond repurchase agreements were used, meaning the money will exit the system in two weeks. The Business Times (Singapore) (2/6)      South Korea looks to bond market for small-business support South Korean financial authorities are discussing with credit rating agencies and securities firms ways to issue high-yield bonds secured against small and midsized business loans at banks in a bid to boost liquidity for these businesses, sources say. The hope is to minimize the need for the government's ongoing direct efforts to support these smaller enterprises, which some believe may pose the danger of moral hazard. MK.co.kr (South Korea) (2/6)      Singapore Exchange posted 42% jump in January volume Average daily trading volume on the Singapore Exchange soared 42% in January from a year earlier. "I think, generally speaking, based on the sentiment for at least the first month it looks like it's a good start," observed analyst James Koh of Maybank Kim Eng. The Business Times (Singapore) (2/6)        Industry & Regulatory Update  Singapore's DBS relying more heavily on investment banking Investment banking will be the key to earnings for Singapore's DBS Group Holdings, as monetary easing forces the bank to reduce lending rates and trim its margin on loans, the bank says. China's easing in particular has made it more attractive for Chinese companies to borrow from onshore banks. The Wall Street Journal (2/6)      HSBC chief owns up to bank's past allure for wrongdoers Its globe-spanning business and a complex structure made HSBC particularly inviting for criminal activity, forcing the bank into extensive restructuring, CEO Stuart Gulliver told U.K. lawmakers. "Our geographic footprint became very attractive to trans-national criminal organizations, whether they are terrorist in origin or criminal in origin," Gulliver said, noting the glaring inadequacy of the bank's anti-money-laundering safeguards in Mexico "crushed our reputation." Reuters (2/6)      Trader says Japanese banks rig lending rate Japanese banks operate in "cartel" fashion to rig loan pricing, a former trader says, working to keep the Tokyo interbank lending rate artificially and destructively high. Financial Times (tiered subscription model) (2/6)      Taiwan Financial optimistic over yuan business, regional expansion Its yuan business should help boost Taiwan Financial Holding to higher profits this year, as should its drive to expand across the Asia-Pacific region, the state-owned financial services provider says. In particular, the company's Bank of Taiwan arm may apply to offer yuan products and services to Taiwanese customers in China as it builds on last year's establishment of its first China branch in Shanghai. The Taipei Times (Taiwan) (2/7)      Learn more about CFA -> About CFA Institute  |  Advertise  |  Educational Resources  |  Social Media     Subscriber Tools     Print friendly format  | Web version  | Search past news  | Archive  | Privacy policy   Read more at SmartBrief.com Industry Home Readers' Choice Search Archive Download a SmartBrief Mobile app today       Recent CFA Institute Financial NewsBrief: Asia Pacific Edition Issues: Wednesday, February 06, 2013 Tuesday, February 05, 2013 Monday, February 04, 2013 Friday, February 01, 2013 Thursday, January 31, 2013     Lead Editor:   Jim Berard       Mailing Address: SmartBrief, Inc.®, 555 11th ST NW, Suite 600, Washington, DC 20004     © 1999-2013 SmartBrief, Inc.®  Legal Information