CFA Institute Financial NewsBrief: Asia Pacific Edition

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January 14, 2013

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With tax boost, Greece passes latest lender test


Reuters

Greece met a key condition imposed by international lenders with passage of widely opposed tax increases. The measures close loopholes and include a capital gains tax on share sales. The Business Times (Singapore) (1/12)

U.S. trade deficit widens; higher December retail sales are seen
The U.S. trade deficit deepened to $48.7 billion in November from a revised $42.1 billion the previous month, the Commerce Department reported. Separately, economists are projecting that U.S. retail sales for the key month of December will show a 0.4% gain. Xinhuanet.com (China) (1/11) , MarketWatch (1/13)

China's high figures for December exports are questioned
Private market participants are calling into question China's officially reported 14.1% surge in exports for December. "China’s influence on the global economy has become bigger, so not only Chinese policy makers, but also business people and the rest of the world need better data. Unreliable data could have a negative impact on resource allocation and business planning," said Liu Li-gang, chief Greater China economist at ANZ in Hong Kong. The Taipei Times (Taiwan) (1/14)

China's inflation heats up
China's consumer price index was up 2.6% for all of 2012 and rose at a 2.5% rate in December, a seven-month high, according to the National Bureau of Statistics. The central bank, meanwhile, pledged to pursue a "prudent" course designed to tamp down inflation and promote reforms. Caijing Magazine online (1/11) , China Daily (Beijing) (1/12)

U.N.: Slower growth in China, India might help spark global recession
The economies of China, India, Brazil and others that had been bright spots in a lagging global economy are expected to slow this year, heightening the risk that the world economy will tip back into recession, according to a U.N. assessment. The slackening performance of previously robust developing economies will add to the downward pressure already being exerted by the weak economies of the U.S. and Europe. The Korea Times (Seoul) (1/13)

Japan's PM seeks like-minded central bank chief
Reinforcing his aggressive message for the Japanese economy, Prime Minister Shinzo Abe says the next head of the Bank of Japan will be a "bold policy leader." "We are thinking hard about fiscal discipline as we form the next fiscal year’s budget. Still, the economy isn’t going to change unless we display a firm commitment to escape deflation at the same time," Abe said. Bloomberg Businessweek (1/13)

Jamie Dimon may be publicly targeted in JPMorgan report, sources say


Dimon/Reuters

Inadequate supervision by JPMorgan chief Jamie Dimon and others are cited in an internal report the bank is weighing whether to release to the public this week, sources say. Dimon would be faulted in the loss of $6.2 billion by the trader nicknamed the London Whale. Bloomberg (1/12)

Trillion-dollar coin isn't in the offing, say U.S. Treasury, Fed
The minting of a trillion-dollar coin to surmount a looming impasse over the U.S. debt limit has been ruled out by the U.S. Treasury and Federal Reserve. The current debt ceiling is likely to be exceeded at the end of February. The White House, however, says the responsibility to raise the cap belongs to Congress, with spokesman Jay Carney laying out two options: "Congress can pay its bills or it can fail to act and put the nation into default." The Economic Times (India)/Agence France-Presse (1/12) , The Wall Street Journal (1/13)

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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

INTERNATIONAL MARKETS OVERVIEW
In Europe on Friday, investors focused on overseas developments, including disappointing inflation figures in China and trade figures in the U.S. Shares eased, with the Stoxx Europe 600 edging down 0.13% to 287.08. On the other side of the Atlantic, shares were unchanged with the S&P 500 at 1,472.05 as investors contemplated corporate earnings reports and new economic data. The Wall Street Journal (1/14) , Bloomberg (1/11) , CNNMoney (1/13)

Asian markets end lower for the week
Asian stocks mostly declined last week, finishing the week on a down note Friday as a higher-than-expected Chinese inflation rate weighed on markets. One exception was Japan, where a further drop in the yen buoyed shares. The Nikkei surged 1.40% to 10,801.57 as the Hang Seng eased 0.39% to 23,264.07, the Kospi fell 0.50% to 1,996.67 and the S&P/ASX lost 0.29% to 4,709.50. International Business Times (1/13) , MarketWatch (1/11)

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Economic Trends & Outlook

Indian industry group sees economic warning signs
Citing India's 1991 economic crisis as a cautionary signpost, the industry organization Assocham said the nation's economy is being hemmed in on several sides, raising the possibility of a deteriorating fiscal condition. "With little room available for taking counter-cyclical fiscal measures, India’s faltering growth coupled with unresponsive inflation can push the country’s economy to a precarious situation," Assocham said. The Hindu (India)/Press Trust of India (1/13)

India clears 14 new FDI proposals


Reuters

The Indian government has approved 14 major new proposals for foreign direct investment. Six other proposals were deferred by the Foreign Investment Promotion Board, and three were rejected The Hindu (India) (1/11)

Japan bank lending rises for 14th straight month
December marked the 14th consecutive month of increases in Japan's average daily balance of lending by banks, according to the Bank of Japan. The 1.2% gain in the latest month was the sharpest since October 2009. Yomiuri Shimbun (Japan)/Jiji Press (Japan) (1/12)

Australia's Swan sees global hope in China stabilization
An upturn in China is one reason among a number that bode well for the world economy this year, according to Australian Treasurer Wayne Swan. "One cause of optimism is recent evidence that China’s economy appears to be stabilizing after economic conditions moderated in 2012," Swan said ahead of a visit to Hong Kong. In China, meanwhile, the General Chamber of Commerce forecast sharper gains in retail sales this year than last. Bloomberg Businessweek (1/13) , Xinhuanet.com (China) (1/11)

Australian banks darken outlook for nation's economy


Reuters

The outlook in December for the coming year wasn't bearish enough, and now National Australia Bank and ANZ are forecasting much more aggressive rate cutting this year by Australia's central bank. NAB in particular sees a weakening economy and rising unemployment despite general optimism for the world economy. The Sydney Morning Herald (Australia) (1/12)

South Korean currency rises rapidly against dollar, yen
Just halfway into January, the South Korean won has already strengthened against the U.S. dollar as much as it was forecast to gain on average for the year as a whole. The won's advance in relation to the Japanese yen has been even more rapid. MK.co.kr (South Korea) (1/11)

Philippine growth outlook brightens
Strong private-sector investment, encouraging employment numbers and overall growth in production capacity with a tame inflation outlook combine in a favorable growth scenario for the Philippine economy this year, central bank Assistant Governor Cyd N. Tuaño-Amador said in an interview. "The potential growth of the economy is slowly changing, slowly rising from the old path of 4.75% to 5%," she said. Business World (Philippines) (1/13)

Deutsche Bank is bullish on China, Southeast Asia, with caveats
Deutsche Bank is even more bullish on China this year than last, though some of that optimism is tempered by concerns over the banking system and largely unregulated wealth management funds, says Deutsche's Michael Spencer. Elsewhere in Asia, the Southeast Asian nations minus Singapore are likely to maintain strong growth in 2013, although Indonesia is worrisome because of overstimulation by the central bank and high inflation. The Wall Street Journal (1/11)

Capital Markets & Financial Products

Australia moves up quickly as offshore renminbi hub
Australia is now in a challenging position vis-a-vis Singapore in terms of its status as an offshore renminbi center. Australia now ranks fourth in that category, two places behind Singapore. Treasurer Wayne Swan is expected to press Australia's case for a bigger renminbi role during his visit to Hong Kong. The Business Times (Singapore) (1/12) , The Sydney Morning Herald (Australia) (1/12)

China prepares for trial overseas-investment program
Individual Chinese will be permitted to invest in overseas capital markets under a trial program Beijing is preparing as part of plans to expand the role of the country's currency globally. The People's Bank of China rates the so-called QDII2 program as one of its top priorities for the new year. Bloomberg (1/11)

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