U.S. Fed's "Beige Book" surveys a growing but still cautious economy | Japan faces confidence hurdle in turning around economy | Economists foresee a sluggish eurozone economy
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January 18, 2013
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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U.S. jobs, housing data point up
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Reuters
The latest numbers for weekly U.S. jobless-benefit applications and for housing starts were the best since 2008. The jobless data for last week point to continued slow improvement in employment, although January figures can be deceptive. The housing-starts figure, for December, was also an encouraging sign in a key segment that drives much of the rest of the economy, though much of the gain came from the volatile multifamily sector. The Washington Post (tiered subscription model)/The Associated Press (1/17), Reuters (1/17)
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U.S. Fed's "Beige Book" surveys a growing but still cautious economy
Sustained gains in consumer spending across the U.S., recovery from last year's superstorm in the Northeast and a boost from holiday spending all point to a moderately growing economy, the Federal Reserve's latest "Beige Book" report says. However, the report notes tentativeness in the economy over continued budget squabbles in Washington, with some industries, notably in defense, holding off on hiring. The Hill (1/16)
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Japan faces confidence hurdle in turning around economy
Political clout to restore confidence in Japan's economy and stimulate spending is seen as indispensable to round out actions already taken by the government with its 2012 supplementary budget and a goal of 2% inflation. One likely holdup, however, is the broad perception that a deflationary environment will persist. Meanwhile, the World Bank has nearly halved its growth outlook for Japan's economy to 0.8% this year, largely due to reduced exports to China. The Yomiuri Shimbun (Japan) (1/17), The Yomiuri Shimbun (Japan)/Jiji Press (Japan) (1/17)
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Economists foresee a sluggish eurozone economy
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Draghi/Reuters
No growth is likely in the eurozone economy in the current quarter as the French economy stalls and recovery in Italy is delayed, according to a survey of economists. For the year, regional economic shrinkage is pegged at 0.1%, improving slightly from last year's estimated 0.4% contraction. Bloomberg Businessweek (1/17)
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EU lawmaker looking for world's most hazardous financial products
A member of the European Parliament is teaming with two nongovernmental groups to launch a competition to identify and, possibly, eliminate the world's most dangerous financial products before they can wreak havoc in the global economy. "Financial products can be dangerous in several ways. They might be intransparent for investors, investing in harmful technologies or products, causing systemic risks or are unnecessarily complex," said the lawmaker, Sven Giegold. The Business Times (Singapore) (1/17)
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Market Activities
INTERNATIONAL MARKETS OVERVIEW
Strong U.S. economic indicators helped lift stocks Thursday in Europe and the U.S., with European shares getting an additional boost from retailers while corporate earnings reports in the U.S. were mixed. The Stoxx Europe 600 rose 0.46% to 287.35, the S&P 500 added 0.56% to 1,480.94, and the blue-chip Dow Jones Industrials ended near a five-year high with a 0.63% gain to 13,596.02. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (1/18), The Wall Street Journal (tiered subscription model) (1/17), CNNMoney (1/17)
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Asian shares drift
Asian shares were down modestly Thursday but mainly lacked direction ahead of new data releases in China and amid concerns over stock valuations and persistent uncertainties in Europe and the U.S. The Nikkei edged up 0.09% to 10,609.64, the Hang Seng slipped 0.07% to 23,339.76, the Kospi lost 0.16% to 1,974.27 and the S&P/ASX added 0.38% to 4,756.60. MarketWatch (1/17)
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Economic Trends & Outlook
Australia's jobless rate rises, but rate cut might not follow
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Reuters
Australia's unemployment rate rose to 5.4% in December, adding to evidence of a weakening national economy. However, an imminent rate cut by the central back is still regarded as less than certain. Separately, a report by PricewaterhouseCoopers projects that Australia will fall out of the world's top 20 economies by 2050. The Sydney Morning Herald (Australia) (1/18), The Sydney Morning Herald (Australia) (1/17), The Sydney Morning Herald (Australia) (1/17)
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India's loosening of FDI for insurance hits a snag
A proposal to raise to 49% India's limit on foreign direct investment in insurance stumbled in Parliament, failing to clear the Standing Committee on Finance. "The government is not discussing it with us. The insurance bill unfortunately is stuck on only one issue on whether FDI should be 26% or 49%. It is possible to have a way out," said committee member Yashwant Sinha. The Economic Times (India) (1/17)
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South Korean currency's strength is expected to benefit China, Japan
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Reuters
Chinese and Japanese exporters are likely to benefit this year from the strong advance of South Korea's currency over the past year, according to the Hyundai Research Institute. Among the Korean industries seen as most vulnerable are automotive, auto parts, general machinery and steel. Xinhuanet.com (China) (1/17)
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Hong Kong's November exports of goods rise 10.2%
Goods exports from Hong Kong were up 10.2% year-on-year in November, although the figure for the first 11 months of 2012 was down 1.3%, the city's statistics department reported. Prices of total exports of goods were up 3.6% for the 11 months. Xinhuanet.com (China) (1/17)
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Singapore's non-oil exports plunge in December
Singapore's non-oil exports fell 16.3% in December, more than twice the projected decrease. The decline was led by electronics, whose exports were down 19.1% last month from a year before. The Business Times (Singapore) (1/17)
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Private forecasts for Taiwan growth brighten
Improving prospects for regional trade and exports to the U.S. this year should lift Taiwan's GDP well beyond the 3.15% projected by the government, Moody's and HSBC both predict. Meanwhile, a survey by the American Chamber of Commerce in Taipei reveals that foreign businesses plan to step up their local investments in 2013 despite an array of concerns, including a shortage of human resources and various snags encountered when dealing with government. The Taipei Times (Taiwan) (1/17), The Taipei Times (Taiwan) (1/18)
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Capital Markets & Financial Products
A-share accounts in China drop by half, but QFII hits new high
The total of 5.52 million A-share accounts opened last year in China was only about half the previous year's total as the market lagged behind others globally. The number marked a six-year low and was less than 10% of the record total recorded in 2007, according to figures from China Securities Depository and Clearing. However, China's new opening to qualified foreign institutional investors led to a historic high of 120 accounts in 2012. Caijing Magazine online (1/17)
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China raises U.S. debt holdings for 2nd month
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Reuters
For the second straight month, China increased its holdings of U.S. debt in November, adding US$14.3 billion worth. For the first 11 months of 2012, China added a total of US$18.2 billion of U.S. debt. It is now the largest foreign holder of such debt at US$1.17 trillion, exceeding Japan's holding of US$1.13 trillion as of November. Caijing Magazine online (1/17)
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Buoyant Thai stock exchange pursues trading-hub status
With a strong year behind it as Asia's second-best-performing market and other factors, the Stock Exchange of Thailand is working to make the country a regional trading hub. Financial Times (tiered subscription model) (1/17)
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Asia should benefit as West strangles on regulation, CIC official says
Asia stands to benefit from increased investment as banks in Europe and elsewhere face new regulation that amounts to "anti-globalization," said Jesse Wang, deputy head of China's CIC sovereign wealth fund. In particular, Wang noted U.K. recommendations that banks separate their commercial and investment activities and, in the U.S., the Dodd-Frank Act, which he said interferes with Chinese institutional expansion. AsianInvestor.net (1/17)
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Regulatory Update
Chinese brokerages' 2012 profits and revenue slide
An underperforming stock market contributed to a plunge of 16.4% in total net profits for Chinese securities brokerages last year, as reported by the Securities Association of China. Revenue for the firms was down 4.77%. Xinhuanet.com (China) (1/17)
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China's Alibaba denies signing up banks for IPO
Chinese Internet giant Alibaba denies that it has hired either Credit Suisse or Goldman Sachs to help with a planned initial public offering. It had been reported that Alibaba would seek to raise as much as $4 billion with the offering. Caijing Magazine online (1/17)
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Switzerland's Pictet expands China team
Noting "a lot of room to grow," Pictet & Cie's Asia head of wealth management, Claude Haberer, said the Swiss private bank's recent hire of three relationship managers is part of an expansion of its China team. "I am planning to grow the team out of both Hong Kong and Singapore," Haberer said, noting no plans for a mainland China presence. "We have a lot to do in Hong Kong and Singapore, and we have a few years to get busy," he said. AsianInvestor.net (1/17)
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