British business group urges more government action | SEC action might cast pall over Chinese listings in U.S. | China's nonmanufacturing sector grows in November
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December 5, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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German objections threaten to derail eurozone banking supervisor
Schaeuble/Reuters
Prospects for a single eurozone banking supervisor under the European Central Bank were cast into doubt Tuesday as German and French finance ministers split on the issue. Germany's Wolfgang Schaeuble objected that "the right of the last decision cannot be left to the ECB Governing Council." Tuesday's eruption comes just a week ahead of a summit of EU leaders and suggests that any move in this direction is likely to be delayed. Financial Times (tiered subscription model) (12/4), Reuters (12/4)
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British business group urges more government action
The British Chambers of Commerce called on Chancellor of the Exchequer George Osborne to take more action to stimulate investment as the BCC notched down its forecast for 2013 growth to 1% from 1.2%. "We have always been behind the chancellor's aim of reducing the deficit, but this has to be supported with the right conditions that allow businesses to thrive, or we will fail to see the growth the economy so desperately needs," said BCC Director General John Longworth. The BCC report came a day ahead of a meeting of the Bank of England's Monetary Policy Committee. Bloomberg (12/4)
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SEC action might cast pall over Chinese listings in U.S.
Reuters
China-based companies with listings in the U.S. are likely to feel the chilling effects of a U.S. Securities and Exchange Commission action against the Chinese affiliates of five leading accounting firms. The SEC says the affiliates refused to produce documents related to investigations of suspicions of accounting fraud at nine Chinese companies. However, "the biggest loser if [a resolution of the issue isn't negotiated] is the American exchanges because it makes the U.S. a much less attractive place to raise capital," said Paul Gillis, an accounting professor at Peking University's Guanghua School of Management. Caijing Magazine online (12/4), The Wall Street Journal (tiered subscription model) (12/4)
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China's nonmanufacturing sector grows in November
China's nonmanufacturing sector is looking up, with a purchasing managers' index registering 55.6 for November, up 0.1 points from October and sitting at a three-month high. The improvement parallels a gain in manufacturing and is likely to be reflected in stronger GDP growth in the final quarter or early 2013. China Daily (Beijing) (12/4)
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Recovering U.S. banking industry sees best results in 6 years
Gruenberg/Reuters
With a bigger lift from traditional revenue sources than from set-asides for bad loans, the U.S. banking industry saw its healthiest profits in six years in the third quarter, according to the Federal Deposit Insurance Corp. "Loan growth is becoming more established. Banks continue to clean up and strengthen their balance sheets," said FDIC Chairman Martin Gruenberg. Reuters (12/4), The Wall Street Journal (tiered subscription model) (12/4)
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U.N.: Global manufacturing ekes out only a 0.2% gain in 3rd quarter
Economic performance that weakened in the third quarter from the first half of the year translated into a tiny 0.2% year-on-year growth in global manufacturing in the latest period, according to data compiled by the U.N. Industrial Development Organization. It was the weakest performance reported by UNIDO since 2009. Xinhuanet.com (China) (12/4)
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IMF highlights potential pitfalls in capital-flow liberalization
Noting considerable risk associated with freer worldwide capital flows, the International Monetary Fund called for carefully planned timing and sequencing to avoid the worst problems. Different countries' circumstances should dictate their relative openness, with various degrees of institutional and financial development among the key factors, the IMF said. Xinhuanet.com (China) (12/4)
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CFA Institute report examines impact of internalization and dark pool trading on market quality.
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Market Activities
INTERNATIONAL MARKETS OVERVIEW
Little change was registered in shares on both sides of the Atlantic on Tuesday as investors keyed in to tense negotiations in Washington intended to avoid sharp tax increases and spending cuts in the new year. The Stoxx Europe 600 was nearly unchanged, with only a 0.04% gain to 276.24, and the S&P 500 edged down 0.17% to 1,407.05. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (12/5), The Wall Street Journal (tiered subscription model) (12/4), CNNMoney (12/4)
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Weaker U.S. manufacturing, budget squabbles weigh on Asian shares
Troubling signs from the U.S. in the form of weak manufacturing numbers and disagreement in the late stages of government budget talks held down shares across Asia. The Nikkei eased 0.27% to 9,432.46, the Kospi lost 0.25% to 1,935.18, the S&P/ASX fell 0.62% to 4,503.60 and the Hang Seng edged up 0.15% to 21,799.97. Bloomberg Businessweek (12/4)
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Economic Trends & Outlook
China slowing is expected to be felt in S. Korea; currency accord set
A decade of sharply reduced growth is likely for South Korea as China's economy continues to slow, the Hyundai Research Institute projects, noting the two nations' intertwined economic fates. Separately, South Korea announced an agreement with China to allow both countries' banks to tap an existing swap facility to boost trade settlement in the local currencies. Yonhap News Agency (South Korea) (subscription required) (12/4), Bloomberg (12/4), MK.co.kr (South Korea) (12/4)
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HSBC study puts India at top of trade-growth list
Reuters
India is likely to witness the world's fastest rate of growth in trade through 2020, according to HSBC. The bank cites key trade ties with China and a steadily strengthening domestic market. India also leads the world in the confidence level of its importers and exporters, with 61% of those surveyed saying they're optimistic about growth. The Economic Times (India)/Press Trust of India (12/4)
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Australian central bank cuts rate, matches historical low
As widely expected, Australia's central bank lowered its cash rate to 3%, matching a record set in 2009 in the depths of the financial crisis. The move comes after the emergence of a long list of data pointing to a weakening economy. Nonetheless, the 3% rate remains the highest sovereign rate globally. The Sydney Morning Herald (Australia) (12/4), The Sydney Morning Herald (Australia) (12/4)
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Japan's capital spending rises 2.2% in 3rd quarter
Japan's recent economic growth figures may be due for upward adjustment as the government reports a 2.2% rise in businesses' capital spending for the third quarter from a year before. However, spending was down 2.5% from the second quarter. The Japan Times (12/4)
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Philippine foreign reserves grow as economy thrives
The Philippines' robust domestic economy is continuing to draw inflows, boosting the central bank's foreign reserves, which are now expected to total $83 billion by the end of the year. In addition, foreign direct investment is expected to reach $1.5 billion by year end, up from an earlier forecast of $1.2 billion. Business World (Philippines) (12/4)
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Capital Markets & Financial Products
Bank of England is urged to set up swap line for renminbi
Reuters
Investment banks are urging the Bank of England to establish a swap line with its China counterpart to boost confidence in renminbi trading and help extend the currency's globalization. Financial Times (tiered subscription model) (12/4)
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Avoiding tax, Taiwan investors return in guise of foreigners
Taiwan's stock market has seen a recent boost from domestic investors returning to the market. They had left to avoid a transaction tax and were trading in Hong Kong. Now some are back home in the guise of foreign investors, which allows them to avoid the tax. China Economic News Service (Taiwan) (12/4)
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Regulatory Update
Olam says rights issue to show its health; Muddy Waters voices doubt
Under attack from short seller Muddy Waters, Singapore-based Olam International late Monday announced a rights issue to raise as much as US$1.25 billion that was also intended to show that Olam still can access "both debt and equity capital markets, even in current conditions." But Muddy Waters said the move confirms its analysis that Olam is imperiled. The Business Times (Singapore) (12/4), The Wall Street Journal (tiered subscription model) (12/4), The Business Times (Singapore) (12/4)
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Fidelity's FundsNetwork is reintroduced in Hong Kong, Taiwan
Fidelity Worldwide Investment is reintroducing its FundsNetwork, targeting an affluent audience in Hong Kong and Taiwan. In-house and third-party funds will be on offer in the relaunch, which Fidelity says is intended to address investor anxiety and respond to developments in distribution technology and on the regulatory front. AsianInvestor.net (12/4)
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Several detained in China in unauthorized sale of investment product
A default that cost investors as much as 100 million yuan at China's Huaxia Bank has led to the detention of several people involved. Huaxia said one of those detained, a former employee, had no permission to sell the product, which promised an 11% return for a minimum investment of 500,000 yuan. Caijing Magazine online (12/4)
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