U.S. home prices jump 4.3% year-on-year | Japan moves a step closer to higher inflation target | Consumers powering China recovery
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December 27, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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Obama hurries back to Washington as U.S. budget talks enter last lap
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Michelle Obama, Barack Obama/Reuters
The on-again, off-again U.S. budget talks are due to resume this week as President Barack Obama returns to Washington early from a vacation in Hawaii. Prospects for progress are uncertain, with US$500 billion in automatic spending cuts and tax increases to begin next week absent any agreement. The Wall Street Journal (tiered subscription model) (12/25), The Wall Street Journal (tiered subscription model) (12/25)
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U.S. home prices jump 4.3% year-on-year
As of October, U.S. home prices in 20 major cities were up 4.3% from a year before, according to a private index, for the sharpest gain since mid-2010. The S&P/Case-Shiller reading confirms that the key housing market "is definitely starting to recover," adding "about a trillion dollars to household wealth just since the beginning of this year," said Ryan Wang, an economist with HSBC Securities USA. Bloomberg (12/26)
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Japan moves a step closer to higher inflation target
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Abe/Reuters
Reinforcing incoming Prime Minister Shinzo Abe's determination to raise Japan's inflation target, the key coalition partner New Komeito Party has agreed to the policy. The unified position of the new government adds to pressure on the Bank of Japan to adjust its target to fall in line, a move the central bank has agreed to consider. RTT News (12/25)
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Consumers powering China recovery
Consumers are at the leading edge of a modest economic recovery in China, accompanied by upturns as well in real estate, mining and manufacturing, according to China's Beige Book survey of executives nationwide. Separately, the Ministry of Commerce reported that Chinese exports accounted for 11.1% of total world trade in the first three quarters, up 0.6 percentage points from a year before. Reuters (12/26), Xinhuanet.com (China) (12/26)
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China trims 3rd-quarter capital outflow figures
China's third-quarter net capital outflows -- originally reported at $71 billion -- have been revised down to $51.7 billion. Separately, major global investment banks are projecting 8%-plus growth for China's economy in the new year. The Wall Street Journal (tiered subscription model) (12/26), Yonhap News Agency (South Korea) (subscription required) (12/26)
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Market Activities
INTERNATIONAL MARKETS OVERVIEW
A darker outlook for resolution in U.S. budget negotiations pulled U.S. stocks lower Wednesday, with the S&P 500 ending down 0.48% at 1,419.83. European markets were closed, but the Stoxx Europe 600 closed 0.16% lower at 280.50 Monday in light trading amid similar concerns over Washington's apparent budget impasse. Here is a continuously update list of global stock indexes. The Wall Street Journal (tiered subscription model) (12/27), The Wall Street Journal (tiered subscription model) (12/24), CNNMoney (12/26)
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Weakening yen powers Japanese shares
A plunging yen gave a powerful boost to Japanese shares Wednesday, and other Asian markets managed gains as well. The Nikkei jumped 1.49% to 10,230.36 while the Hang Seng added 0.16% to 22,541.18, the Kospi rose 0.02% to 1,982.25 and the S&P/ASX ended 0.25% higher at 4,635.20. MarketWatch (12/26)
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BRIC markets reflect bright outlook for new year
The so-called BRIC nations' stock markets finished strongly Wednesday, confirming a year of gains and an outlook for improvement in 2013. Financial Times (tiered subscription model) (12/26)
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Economic Trends & Outlook
China to continue reining in property market
China will extend its policy of requiring higher down payments and other measures to keep a lid on the property market in 2013, the Ministry of Housing and Urban-Rural Development says. Separately, nearly 3 in 10 wealthy investors faced big real estates losses after failing to sell luxury properties under the tighter rules, according to a report from the Boston Consulting Group and China Construction Bank. China Daily (Beijing) (12/26)
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India plans more help for exporters; FDI in services rises
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Reuters
India plans to continue its program of providing credits to some exporters while widening the categories of businesses included, the Commerce Ministry announced. Separately, the Industry Ministry reported foreign direct investment in the services sector rose 5% from April through October. Bloomberg Businessweek (12/26), The Hindu (India)/Press Trust of India (12/25)
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South Korean consumers remain pessimistic
Domestic demand is slackening in South Korea, with the consumer sentiment index for December registering 99, below the point of optimism and even with the previous month. Meanwhile, a measure of Koreans' household debt situation shows that the average financial leeway has narrowed sharply, by two-thirds, over the past three years. The Korea Herald (Seoul)/Yonhap News Agency (12/26), MK.co.kr (South Korea) (12/24)
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Money supply figures brighten Taiwan stock outlook
The growth rate of Taiwan's narrow M1B measure of money supply exceeded that for the wider M2 in November, the central bank reported, boding well for the stock market. Meanwhile, the private Yuanta-Polaris Research Institute scaled back its growth projection for Taiwan, citing austerity measures elsewhere in the world and ebbing domestic demand. China Economic News Service (Taiwan) (12/26), The Taipei Times (Taiwan) (12/27)
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Vietnam growth in 2012 is slowest since 1999
Stagnant lending and sour debts contributed to slower growth in Vietnam's economy this year. The General Statistics Office reported a 5.03% gain in gross domestic product, the slowest since 1999 and down from last year's 5.89% pace. RTT News (12/25)
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Thai exports jump 26.9% in November
Thailand's exports surged 26.9% in November from a year earlier, up sharply from October's year-on-year gain of 15.6%, according to the Ministry of Commerce. Looking ahead, "signs of improvement in the global economy lately will ensure export growth next year. We expect the central bank to stand pat from now unless the global economy takes an unexpected dive," said Pimonwan Mahujchariyawong, an economist at Kasikorn Research in Bangkok. Bloomberg Businessweek (12/25)
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Capital Markets & Financial Products
China considers risk warning for debts of local governments
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Reuters
After Guangzhou became the first municipality in China to disclose its local debt, the Ministry of Finance is considering whether to launch a warning system to reveal the risk of local defaults. Governments have been borrowing heavily and launching stimulus measures over the past few months in a bid to buoy the lagging economy. Caijing Magazine online (12/26)
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2013 offers rosier outlook for Chinese IPOs
After a slow year for initial public offerings in China, 2013 is expected to see a pickup driven by small and medium-sized companies. Chinese companies should be more prominent in the U.S. IPO market next year as well. China Daily (Beijing) (12/26)
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Tokyo Stock Exchange shoots for top IPO status in Asia
As he prepares for the merger with the stock exchange in Osaka, the president of the Tokyo Stock Exchange says he hopes to make the exchange Asia's top IPO destination. Financial Times (tiered subscription model) (12/26)
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Regulatory Update
Strong yen, overseas M&A activity create business for Japan's brokers
Japan's Daiwa Securities Group and SMBC Nikko Securities are looking abroad to expand their business as the strong yen creates more demand for advisory services in mergers and acquisitions. "A lot of Japanese companies are making an M&A move bolstered by a strong yen ... and I encourage our bankers to get [advisory] deals," said Daiwa President Takashi Hibino. The Wall Street Journal (tiered subscription model) (12/26)
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