Central bank action, change in government hold promise for Japan | Citigroup slashing 11,000 jobs globally | China signals growth restraint to smooth out sectoral gains
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December 6, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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Latest eurozone figures point to negative growth
Guindos/Reuters
The eurozone's purchasing managers' index in services rose a bit last month but remained well under the break-even level, and consumers scaled back their spending in October for the third consecutive month. The readings add to indications of negative growth. "I believe this quarter will be the most difficult since the economic contraction started," said Spanish Finance Minister Luis de Guindos. The Wall Street Journal (tiered subscription model) (12/5)
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Central bank action, change in government hold promise for Japan
The Bank of Japan is signaling a willingness to sustain its pro-growth measures and act more forcefully even as the prospect of new political leadership after elections later this month holds out the promise of effective government action to revive Japan's economy. The challenge for both the central bank and lawmakers is the country's stubborn deflationary environment. The Business Times (Singapore) (12/5), Financial Times (tiered subscription model) (12/5)
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Citigroup slashing 11,000 jobs globally
Reuters
Citigroup says 11,000 jobs will be cut worldwide as it takes steps in light of declining revenue and share price. The global consumer-banking unit will bear the brunt, with 84 branch closures planned. Citi's move is the first strategic action since the departure of CEO Vikram Pandit. The Wall Street Journal (tiered subscription model) (12/5)
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China signals growth restraint to smooth out sectoral gains
Although China's economy is stabilizing, according to the Communist Party's Political Bureau, it faces new challenges moving forward and the government may act in the coming year to restrain and smooth out the pattern of growth, especially in exports and real estate, says the Chinese Academy of Social Sciences. The academy is predicting GDP growth of 7.7% this year and 8.2% in 2013. Xinhuanet.com (China) (12/4), Xinhuanet.com (China) (12/5), Xinhuanet.com (China) (12/5)
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7 December 2012
11:30 a.m. EST-12:30 p.m. EST
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Market Activities
INTERNATIONAL MARKETS OVERVIEW
European investors took their cue from indications of further support for China's economy and U.S. investors keyed on good corporate news and positive signs from the White House on budget negotiations as shares posted modest gains Wednesday on both sides of the Atlantic. The Stoxx Europe 600 ended the day with a 0.24% gain to 276.91, and the S&P 500 edged up 0.16% to close at 1,409.28. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (12/6), CNNMoney (12/5), The Wall Street Journal (tiered subscription model) (12/5)
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Asian shares advance
Asian stocks gained, benefiting from reports in China of looser rules allowing for insurers to invest in commercial lenders and as optimism grew over policy support for urban infrastructure spending. The Hang Seng jumped 2.16% to 22,270.91, the Nikkei rose 0.39% to 9,468.84, the Kospi added 0.61% to 1,947.04 and the S&P/ASX was up 0.37% at 4,520.40. Bloomberg (12/5)
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CFA Institute report examines impact of internalization and dark pool trading on market quality.
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Economic Trends & Outlook
India posts sharp drop in exports to China
Reuters
India's trade deficit with China expanded to more than $21 billion in the first half of the year as exports fell nearly 20%. Mineral and pharmaceutical exports were among the several sectors that saw declines, which the commerce ministry attributed to a general slowdown in the global economy. The Economic Times (India)/Press Trust of India (12/5)
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India's retail FDI opening bodes well for GDP, Goldman Sachs says
Noting the general tendency for foreign direct investment to quickly translate into growth in GDP, Goldman Sachs says India's new opening to FDI in retail is essential, in part to reduce the country's stubborn current account deficit. Goldman Sachs India Managing Director Tushar Poddar also pointed out that retail is particularly promising, holding the potential for even stronger boosts to GDP from investment than other sectors. The Economic Times (India) (12/5)
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Goldman sees a brighter 2013 for South Korea
Stronger consumption in a domestic economy benefiting from lower oil prices and better prospects for exports should help South Korea achieve 3.4% growth next year, Goldman Sachs says. Inflation, meanwhile, is expected to remain below 3%, and the Kospi should get a lift from shares in the electronics, auto, steel and banking sectors. The Korea Herald (Seoul) (12/5)
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Australian economy grows 0.5% in 3rd quarter, but slowdown is seen
Australia's economic growth remained in the plus column during the third quarter at 0.5%, off a bit from the 0.6% of the second quarter. Economists, however, pointed to a slowing trend this year and, looking ahead, said this is likely to continue as exports decline, government pares spending and the mining boom levels off. The Sydney Morning Herald (Australia) (12/5)
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Malaysian growth to extend slowing pattern, UBS economist predicts
Reuters
Malaysia is likely to see continued slowing in its economy next year, with 4.5% growth in prospect, predicts UBS Investment Bank senior economist Edward Teather. Weakening exports are the key factor, Teather said. Malaysian GDP grew 7.2% in 2010, easing to 5.1% last year and a projected 5% this year. The Edge Malaysia (12/5)
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Confident Indonesian consumers lifting economy
Southeast Asia's biggest economy is benefiting from high consumer confidence, even as Indonesians register concern over the availability of jobs in the near future, according to Bank Indonesia. Higher wages helped boost the bank's confidence index last month to a reading of 120.1 from 119.5 in October. Consumer spending was up as well, and survey respondents reported seeing increased business activity. The Business Times (Singapore) (12/5)
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Taiwan inflation eases; interest rate appears likely to remain steady
Taiwan's inflation rate continued to moderate in November, registering 1.59% with a core rate of 0.96%. The modest gain in combination with steady economic recovery means the central bank is unlikely to change its key interest rate of 1.875% when the board meets this week. The Taipei Times (Taiwan) (12/6)
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Capital Markets & Financial Products
Foreign investors shy from S. Korea, but banks see bright 2013
Reuters
Global uncertainties are thought to account for a second month of decline in net investment by foreigners in South Korean securities in November. Looking to 2013, however, foreign investment banks are predicting a good year for the country's stock market. MK.co.kr (South Korea) (12/5), Yonhap News Agency (South Korea) (subscription required) (12/5)
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Philippine officials weigh investment holding period
Addressing concerns over sudden inflows of foreign money, Philippine monetary authorities are considering a mandatory holding period for portfolio investments, perhaps 90 days. Still up in the air, however, are details such as whether equities should be included and the how and who of enforcement, said Monetary Board member Felipe M. Medalla. Business World (Philippines) (12/5)
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Regulatory Update
Thailand's Charoen Pokphand to buy HSBC stake in China's Ping An
Chearavanont/Reuters
In what would be the biggest acquisition of a Chinese company by a Thai interest, Charoen Pokphand Group, backed by tycoon Dhanin Chearavanont, has agreed to buy HSBC Holdings' 15.57% stake in Ping An Insurance (Group) Co. The $9.39 billion deal would extend Charoen Pokphand's China investments, which began in the 1970s. Caijing Magazine online (12/5), The Wall Street Journal (tiered subscription model) (12/5)
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Olam-Muddy Waters tussle raising still more questions
Speculation over Singapore-based Olam continued to swirl, stirred in part by Olam's US$1.25 billion rights offer Monday, perceived as a response to short-seller Muddy Waters' charge that Olam is in trouble. Initial angry denials by Olam have given way to more tempered reflections by its CEO, raising further questions. The Business Times (Singapore) (12/5), The Business Times (Singapore) (12/5)
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Asia's mutual funds industry is expected to see strong growth
The mutual fund industry across Asia, ex-Japan, is set to reverse a decline in assets under management over the past four years and top US$1.5 trillion by 2016, according to research firm Cerulli Associates. That would represent 11% compound annual growth, with assets pegged to reach US$1 trillion by the end of this year. AsianInvestor.net (12/5)
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