Greece approves more austerity; jobless rate rises to record | U.S. leaders pledge to avoid "fiscal cliff," but doubts remain | U.S. claims for jobless benefits drop
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November 9, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition

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ECB steady on rates; Draghi says no more aid for Greece
The European Central Bank "is by and large done" helping Greece for now, said ECB President Mario Draghi, who also said the eurozone economy stands little chance of improvement over the remainder of the year. Draghi made his comments after the bank left interest rates on hold Thursday, although the dim outlook for the eurozone opened the possibility of a cut later in the year. Reuters (11/8), Reuters (11/8), The Wall Street Journal (tiered subscription model) (11/8)
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Greece approves more austerity; jobless rate rises to record
A new round of austerity was approved by the Greek Parliament, though only narrowly after the defection of seven lawmakers. The vote came as the unemployment rate was reported at a record 25.4% in August. The Wall Street Journal (tiered subscription model) (11/8), Financial Times (tiered subscription model) (11/8)
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U.S. leaders pledge to avoid "fiscal cliff," but doubts remain
Boehner/Wall Street Journal
In the aftermath of another election that left the U.S. with divided government, key leaders in the debate over the "fiscal cliff" pledged to work to avoid that self-imposed budgetary catastrophe before it kicks in with the new year. But observers are skeptical, seeing the upcoming budget battles as a test of whether government remains functional enough to steer the U.S. clear of a possible self-induced recession. The Wall Street Journal (tiered subscription model) (11/8), The Wall Street Journal (tiered subscription model) (11/8)
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U.S. claims for jobless benefits drop
Initial U.S. claims for unemployment benefits fell 8,000 to 355,000 last week. The decline was sharper than expected, but U.S. jobs data for the next few weeks will be distorted by the lingering effects of Hurricane Sandy along the East Coast. MarketWatch (11/8)
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Chinese central bank official sees signs of economic rebound
China's growth rate might be improving this quarter, suggested Zhou Xiaochuan, head of the People's Bank of China, at the Communist Party's 18th Congress. Zhou said some indicators are turning up and the economy is stabilizing. Looking ahead, he said policy next year should focus on growth while remaining flexible enough to respond to developments. Bloomberg (11/8)
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Japan's export picture darkens; machinery orders plunge
Adding to signs of recession on the horizon, Japan's machinery orders plunged 4.3% in September as global demand dried up, particularly from China. Reduced exports also shrank Japan's current account surplus. Reuters (11/8)
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Bank of England keeps rates steady, offers no more QE
The Bank of England has opted for no more quantitative easing and is keeping interest rates at a record low 0.5%. However, the latest minutes of the bank's policy panel suggest that more QE may be in store at a later date. BBC (11/8)
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JPMorgan, SEC reach accord on mortgage cases
An agreement in principle is now in place between JPMorgan Chase and the U.S. Securities and Exchange Commission over two investigations involving mortgage-backed securities, the company says. Details were not disclosed. Reuters (11/8), The Wall Street Journal (tiered subscription model) (11/8)
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Worries over whether Greece will receive any more near-term aid weighed on stocks in Europe while worries over political dysfunction in Washington pulled down U.S. shares Thursday. The Stoxx Europe 600 ended the day down 0.17% at 270.58, and the S&P 500 fell 1.22% to 1,377.51. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (11/9), The Wall Street Journal (tiered subscription model) (11/8), CNNMoney (11/8)
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Asian stocks take a big hit as investors fret over post-election U.S.
The prospect of post-election political dysfunction in Washington as economic challenges loom and the potential for harm to export-driven Asian economies pushed Asian stock markets to sharp losses Thursday. The Nikkei fell 1.51% to 8,837.15, the Hang Seng plunged 2.41% to 21,566.91, the Kospi declined 1.19% to 1,914.41, and the S&P/ASX was down 0.72% at 4,483,80. The Wall Street Journal (tiered subscription model) (11/8)
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Economic Trends & Outlook
Rebounding economy is seen lifting China loan quality
An improving Chinese economy should translate into better loan quality with the new year, Bank of China is forecasting. Currently, nonperforming loans account for about 1% of total loan advances at China's four largest banks. Bloomberg (11/8)
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Japan's foreign exchange reserves decline
Tumbling prices for U.S. Treasury securities contributed to a $2.84 billion drop in Japan's foreign exchange reserves in October. It was the first decline in four months. The Yomiuri Shimbun (Japan)/Jiji Press (Japan) (11/8)
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South Korean manufacturing growth is subdued as exports struggle
South Korea's manufacturing sector growth of 1.3% in the third quarter was slower than the 2.4% growth posted for the service sector, reversing the usual pattern between the two for the first time in more than three years. One factor restraining manufacturing in general is the export-damping rise of the won against the U.S. dollar. The Korea Herald (Seoul)/Yonhap News Agency (11/8), (South Korea) (11/8)
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Australia's leading banks are found fit for global meltdown
The Australian Prudential Regulation Authority has pronounced the country's five largest banks healthy and capable of withstanding a major global economic downturn. Commonwealth Bank, Westpac, National Australia Bank, ANZ and Macquarie Bank all passed the APRA's recent stress test. The Sydney Morning Herald (Australia) (11/8)
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Strongly growing Indonesia stands pat on interest rates
With Indonesia's economic growth rate hovering above 6%, the country's central bank again passed on a chance to change its reference rate, which remains at 5.75%. Indonesia's latest annual growth pace of 6.17% is the best among major Asia economies outside China. Bloomberg Businessweek (11/8)
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Capital Markets & Financial Products
Responding to demand, China may expand RQFII pilot
China's Renminbi Qualified Foreign Institutional Investor pilot program might soon be loosened and expanded. China's securities regulator is weighing the move in response to the popularity of renminbi-denominated bond funds. Caijing Magazine online (11/8)
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StanChart: Yuan flow one problem for Taiwan's hub ambitions
Taiwan's efforts to become a major offshore yuan trading center won't have trouble accumulating yuan deposits but will need to overcome obstacles that might impede the flow of yuan, says Standard Chartered Bank. "It takes both a large yuan pool and robust yuan flows to build another offshore yuan market after Hong Kong," commented Tony Phoo, a Taipei-based economist for StanChart. The Taipei Times (Taiwan) (11/9)
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Mainland property developers look to Hong Kong for IPOs
At least five mainland Chinese property developers plan to turn to the Hong Kong Stock Exchange for initial public offerings by the end of the year. The offerings, amounting to more than US$2 billion, would come after Chinese regulators have repeatedly turned down such offerings in mainland markets since 2007 in a bid to tamp down an overheating property sector. China Daily (Beijing) (11/8)
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Regulatory Update
Goldman affiliate's fund aims at emigrating Chinese
A Goldman Sachs Group affiliate is launching a fund that targets the rising number of Chinese emigrating to Western nations. The Australia Capital Investment Fund in part comes in response to Australia's plan later this month to begin allowing families who invest at least AU$5 million in certain Australian assets to achieve residency. The Wall Street Journal (tiered subscription model) (11/8)
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