U.S. GDP growth is revised upward to 2.7% for 3rd quarter | U.S. House speaker sees no major advances in budget talks | U.S. unemployment claims declined last week
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November 30, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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Investors brighten on prospects for global economy
Reuters
Global investor optimism for the world economy is growing as more investors anticipate stronger growth in China and a resolution to avoid impending automatic budget measures in the U.S., according to a Bloomberg poll. The U.S. and China ranked first and second as the best places for investment among those surveyed. Overall, "the global economy is improving, recovering and healing, thanks to the U.S. and the emerging markets. More people are becoming wealthy; less and less are poor," said Andrea Guzzi, a poll respondent and vice president of IST Investmentstiftung fuer Personalvorsorge in Switzerland. Bloomberg (11/29)
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U.S. GDP growth is revised upward to 2.7% for 3rd quarter
Revised figures for U.S. growth in the third quarter showed the economy expanding at a 2.7% pace, much better than the original estimate of 2.0%. However, consumer spending for the period was lower than expected, growing at a 1.4% annual rate. "The pace of consumer spending was disappointing, but it seems less worrisome given that some other sectors of the economy are doing better, like housing," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York. Forbes (11/29), Bloomberg (11/29)
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U.S. House speaker sees no major advances in budget talks
Boehner/Reuters
U.S. House Speaker John Boehner called on the White House to "get serious" in talks to avoid automatic budget cuts and tax increases in the new year. Boehner said he remained hopeful a deal could be reached but said no substantive progress had been made. Reuters (11/29)
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U.S. unemployment claims declined last week
With the effects of Hurricane Sandy fading, U.S. initial claims for jobless benefits fell by 23,000 last week to 393,000, adjusted for seasonal factors. Continuing claims for benefits were also down last week, by 70,000 to 3.29 million. MarketWatch (11/29)
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Economic confidence rises marginally in eurozone
The confidence of consumers and businesses in the eurozone is up a bit this month, with a 1.4-point gain to 85.7, which is still firmly on negative ground below the index average of 100. The European Commission also reported, however, that a more granular industry report points to "stagnating real investment" in the coming year. The Business Times (Singapore) (11/29)
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Bank of Japan remark raises expectations of further easing
Shirakawa/Reuters
Japan's inflation rate remains on course to approach the Bank of Japan's 1% target by year's end, but various negative global factors now weight movement toward the lower end of the bank's anticipated range, said BOJ board member Sayuri Shirai. The comment furthered market expectations of imminent monetary easing. Meanwhile, the central bank faces additional pressure ahead of December elections, as the expected winners accuse the BOJ of not being aggressive enough. The Business Times (Singapore) (11/29), Financial Times (tiered subscription model) (11/29)
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Market Activities
INTERNATIONAL MARKETS OVERVIEW
Early indications of progress in U.S. budget talks lifted stocks in Europe, but later, less optimistic comments from House Speaker John Boehner tempered gains in the U.S. market Thursday. The Stoxx Europe 600 surged 1.16% to 276.31, and the S&P 500 ended 0.43% higher at 1,415.95. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (11/30), Bloomberg Businessweek (11/29), CNNMoney (11/29)
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Positive news in Japan, U.S. lifts Asian shares
Indications of imminent economic stimulus in Japan and the likelihood of avoiding recession in the U.S. as budget talks reportedly progressed helped Asian shares advance Thursday. Japanese and Hong Kong indexes both rose 0.99%, with the Nikkei ending at 9,400.88 and the Hang Seng at 21,922.89. The Kospi, meanwhile, jumped 1.15% to 1,934.85, and the S&P/ASX was up 0.68% to 4,477.70. Bloomberg Businessweek (11/29)
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Economic Trends & Outlook
Official: China might miss trade growth target but still gain in 2013
Reuters
A modest recovery in China's trade picture remains in store for 2013, although the country is unlikely to meet its growth target of 10%, Commerce Minister Chen Deming says. Chen also said trade growth should pick up during the new year, with the second half stronger than the first. Separately, Standard & Poor's reaffirmed its rating of China's sovereign debt, indicating continued confidence in the country's economic progress. China Daily (Beijing) (11/29), The Economic Times (India)/Agence France-Presse (11/29)
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Goldman sees accelerating growth for India
India's economy should pick up its pace of growth from this year's 5.4% to 6.5% next year and 7.2% in 2014, Goldman Sachs predicts. Goldman credits stronger external demand, "easing financial conditions, in part driven by some reduction in policy rates, a continuation of reforms boosting confidence, and a normal agricultural crop" for the expected gains. The Hindu (India)/Press Trust of India (11/29)
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Capital Markets & Financial Products
Dim sum bond sales climb on yuan globalization intent
Reuters
Cuing off confidence in Chinese leaders' expressed interest in making the yuan a global currency, so-called dim sum bond sales reached a four-month high this month. More volume is expected, said Societe Generale rates strategist Wee-Khoon Chong, who also noted that "there isn't as much of a yuan-appreciation story, so investors will be assessing issuers on their merits. On the other hand, there is no depreciation risk." Bloomberg (11/29)
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Asia futures markets look to new opportunities after rough 2012
Structural changes weighed on Asia's futures markets this year, but regulations might hold the possibility of new opportunities ahead, according to speakers at the Futures Industry Association's Asia derivatives conference. Financial Times (tiered subscription model) (11/29)
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South Korea sets state bond sale
South Korea's Finance Ministry says a state bond issue totaling 6 trillion won (US$5.5 billion) is planned for next month. The sale will break down into 1.7 trillion won in three-year Treasurys, 1.7 trillion won in five-year bonds, 1.5 trillion won in 10-year bonds, 700 billion won in 20-year bonds and 400 billion won in 30-year bonds. Yonhap News Agency (South Korea) (subscription required) (11/29)
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Hong Kong Exchanges cleared for LME acquisition
Hong Kong Exchanges & Clearing received the final go-ahead from the U.K.'s Financial Services Authority to acquire the London Metal Exchange and immediately raised $800 million in equity markets. Financial Times (tiered subscription model) (11/29)
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Regulatory Update
Olam slams Muddy Waters but might address concerns
Singapore-based commodity trader Olam International says it is willing to temper its fast-paced acquisition strategy in a bid to ease investor concerns raised in the wake of a scathing report by Muddy Waters. At the same time, however, CEO Sunny Verghese accused Muddy Waters of being a front behind which "are some very strong hedge funds" shorting the stock. The Business Times (Singapore) (11/29), The Wall Street Journal (tiered subscription model) (11/29)
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BlackRock wastes no time moving into China
Reuters
BlackRock is eyeing major-player status in China as its markets open up, beginning with two licenses this year to invest in the domestic equity market. Financial Times (tiered subscription model) (11/29)
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MUFG is reported moving quickly for Merrill Lynch share of venture
An announcement of Mitsubishi UFJ Financial Group's plan to acquire Bank of America Merrill Lynch's 49% stake in the two companies' private banking joint venture might come as soon as next month, sources say. The move could enhance MUFG's ability to coordinate with partner Morgan Stanley in asset management and private banking, one source noted. The Wall Street Journal (tiered subscription model) (11/29)
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South Korea refuses to publish activities in forex market
Calling the South Korean won an exceptional case compared with other currencies, the government has decided to resist U.S. pressure and not publish data on its intervention in the foreign exchange market. Justifying the Ministry of Strategy and Finance decision, one official noted that "the Korean forex market is relatively more volatile, and Korea is the sole forex market for the won." MK.co.kr (South Korea) (11/29)
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People & Personalities
Goldman Sachs Asset Management taps Patel for Singapore post
Sheila Patel is Goldman Sachs Asset Management's latest head of international operations. From her new base in Singapore, Patel will lead the company's Asia-Pacific operations ex-Japan, succeeding Oliver Bolitho. AsianInvestor.net (11/29)
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