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January 15, 2013
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  Top Stories 
  • India may be in for quick rate cut as inflation dips
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    India's closely watched headline inflation eased enough last month to raise expectations of a central bank rate cut Jan. 29. The 7.18% annual inflation rate recorded for December's wholesale price index was the lowest in three years. The question now, said HDFC chief economist Abheek Barua, "is whether [the rate cut] will be 25 basis points or higher." The Economic Times (India)/Reuters (1/14) LinkedInFacebookTwitterEmail this Story

  • Eurozone industrial output slips, but turnaround could be in store
    Mixed signals are emerging from the eurozone's unexpected 0.3% drop in industrial production in November. Though it was the third consecutive month of decline, and factory output alone was down 4%, one positive sign was the 0.7% growth in production of machinery used to make other goods, pointing to a possible pickup in business and marking a turnaround after two months of decline in this sector. Reuters (1/14) LinkedInFacebookTwitterEmail this Story
  • Japan's economy minister tempers calls for yen depreciation
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    A further decline in the Japanese yen to 100 or more to the U.S. dollar runs the risk of boosting import prices to the degree that it will harm the economy, warns Economy Minister Akira Amari. Amari said the current level of the yen, a bit better than 90 to the dollar, is a good place to be. The minister's remarks cut across the grain of recent calls by the government for a rapid weakening of the currency. The Wall Street Journal (1/14) LinkedInFacebookTwitterEmail this Story

A New Look at Currency Investing
by Momtchil Pojarliev, CFA, and Richard M. Levich
Research Foundation Publications (December 2012)

The authors of this book examine the rationale for investing in currency. They highlight several features of currency returns that make currency an attractive asset class for institutional investors.
  Market Activities 
    Striking a note of caution ahead of a speech late Monday by U.S. Federal Reserve chief Ben Bernanke, European shares drifted lower Monday. Across the Atlantic, U.S. stocks were little changed, although the tech sector got a lift from a surge in Dell shares. The Stoxx Europe 600 lost 0.37% to 286.01, and the Standard & Poor's 500 edged down 0.09% to 1,470.68. Here is a continuously updated list of global stock indices. The Wall Street Journal (1/15) , MarketWatch (1/14) , CNNMoney (1/14) LinkedInFacebookTwitterEmail this Story
  • Regulator's remark on foreign investment spurs Asian markets
    A remark by a Chinese regulator indicating that the country's future quotas for foreign investment could be increased as much as tenfold lifted shares across Asia on Monday. The Nikkei jumped 1.40% to 10,801.57, the Hang Seng rose 0.64% to 23,413.26, the Kospi added 0.52% to 2,007.04 and the ASX was up 0.22% at 4,719.70. Bloomberg (1/14) LinkedInFacebookTwitterEmail this Story
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  Economic Trends & Outlook 
  • Local borrowing casts doubt on China's economic revival
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    Renewed borrowing last year by local governments across China is raising fears that the country's reviving growth comes with a flip side of not-fully-reckoned financial risk. After a central government crackdown on such activities in 2011 following $1.7 trillion in borrowing over the previous two years, local governments stepped up their efforts again in 2012, borrowing a total of $102 billion. The Wall Street Journal (1/14) LinkedInFacebookTwitterEmail this Story

  • Stiglitz cautions India on opening to FDI in retail
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    India's new opening to foreign direct investment in the multibrand retail sector is likely to breed instability, Nobel economics laureate Joseph Stiglitz warns. While multinational retailers can introduce great productive efficiencies, they also tend to bring corruption and "can be even more efficient at exploitation, in one way or the other," Stiglitz said. The Economic Times (India) (1/14) LinkedInFacebookTwitterEmail this Story

  • Bank of Korea on guard as yen drops
    Movements in the yen will be watched closely, the Bank of Korea says, noting that it will act if the Japanese currency's slide begins to cut into South Korean exports. "If the won's volatility increases, including a steep drop in the Japanese yen, active responses to minimize any negative impacts on exports and investor confidence should be taken as necessary via smoothing operations and macro-prudential measures," bank Gov. Kim Choong-soo told reporters. Yonhap News Agency (South Korea) (1/14) LinkedInFacebookTwitterEmail this Story
  • Singapore corporate results not expected to shine
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    Singapore's resilient currency is one reason that corporate fourth-quarter results in the city-state are expected to be lackluster, extending a pattern set in the third quarter, analysts say. "The manufacturing part of the economy is very weak, so you can expect it to continue to be weak. ... Commodities and shipping companies generally have a weakish revenue profile," commented CIMB research head Kenneth Ng. The Business Times (Singapore) (1/14) LinkedInFacebookTwitterEmail this Story

  • Philippines expected to ascend to investment grade soon
    Rating agencies are likely to give the Philippines investment-grade status in the latter half of the year, Barclays says. The new ratings would stand out among the Philippines' area competitors and have immediate effect in the bond market, where Philippine issues could see incremental buying five times that recorded by Indonesia, Barclays said. Business World (Philippines) (1/14) LinkedInFacebookTwitterEmail this Story
  • Moody's sees Asia-Pacific region making strides
    The Asia-Pacific region is well-positioned to weather continued choppy economic waters globally in 2013, Moody's predicts. General fiscal and financial sustainability are keeping the region's economies humming, Moody's says, while noting that "despite the global financial crisis in 2008 and subsequent downturn in advanced country economic performance, three sovereigns in the Asia-Pacific were upgraded in 2012 -- Korea, Indonesia and the Philippines -- by one notch each." Business World (Philippines) (1/14) LinkedInFacebookTwitterEmail this Story
  Capital Markets & Financial Products 
  • China regulator predicts surge in RQFII, QFII quotas
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    China's total maximum RQFII and QFII quotas are expected to reach as much as 3 trillion yuan eventually, growing perhaps tenfold from the 300 billion yuan approved by the end of 2012, according to Guo Shuqing, chairman of the China Securities Regulatory Commission. Separately, China has awarded 9 billion renminbi in new quotas to eight QFII license holders and 19 billion renminbi to six RQFII players. Caijing Magazine online (1/14) , (1/14) LinkedInFacebookTwitterEmail this Story

  • South Korea found bonds much in demand in 2012
    Although total sales were down slightly from 2011, South Korea found an eager market for its Treasury bonds last year, selling a total of 79.7 trillion won worth. "State bonds in 2012 were issued as planned with little problem, helping raise money needed and enhance the overall stability in the debt market," the Finance Ministry reported. Yonhap News Agency (South Korea) (1/14) LinkedInFacebookTwitterEmail this Story
  • Q1 outlook is bright for South Korean listed companies
    Across nearly all industries, South Korean listed companies are expected to report significantly better results for the current quarter than a year ago, while also improving on the final period of 2012. One prominent exception is likely to be the IT industry, where the combined operating profit is expected to be down more than 4% from the previous quarter. (South Korea) (1/14) LinkedInFacebookTwitterEmail this Story
  Industry & Regulatory Update 
  • Wider horizons seen for mainland China hedge funds
    Hong Kong is among the destinations in the sights of Chinese onshore equity funds, which South Africa-based Skybound Capital says are beginning to widen their horizons as they attempt to diversify. Skybound Chief Investment Officer Theodore Shou notes that "some of the [China] hedge fund managers suffered" through the middle months of 2012. Skybound runs a fund that groups a number of mainland-focused hedge funds. (1/14) LinkedInFacebookTwitterEmail this Story
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