It's official: Eurozone returns to recession | Inflation eases in austerity-racked eurozone | Germany ekes out 0.2% growth in 3rd quarter
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November 16, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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China's new Communist leaders are introduced
Reuters
China revealed its new Communist Party leadership Thursday, but major reform might take a backseat as leaders with a proven record in that regard were absent. In taking up the post of president, however, Xi Jinping referred to the "many severe challenges and ... pressing problems within the party that need to be resolved, particularly corruption, being divorced from the people, going through formalities and bureaucratism caused by some party officials. We must make every effort to solve these problems. The whole party must stay on full alert." Caijing Magazine online (11/15), The Wall Street Journal (tiered subscription model) (11/15)
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It's official: Eurozone returns to recession
A 0.1% drop in output for the third quarter coming after a 0.2% decline in the preceding period has officially pulled the eurozone back into recession. Markets tumbled across Europe on Thursday as analysts pointed to an even bleaker austerity-driven outlook. Even so, leaders including European Central Bank President Mario Draghi and International Monetary Fund chief Christine Lagarde continued to call for action on the region's debt crisis. The Guardian (London) (11/15), The Wall Street Journal (tiered subscription model) (11/15)
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Inflation eases in austerity-racked eurozone
With consumer spending and investment driven down by austerity measures, eurozone inflation eased to an annual rate of 2.5% in October. "There is a general downward trend of core inflation as the recession should spread to most countries by the end of the year," said Dominique Barbet, an economist at BNP Paribas in Paris. Bloomberg Businessweek (11/15)
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Germany ekes out 0.2% growth in 3rd quarter
Confirming economists' forecasts, Germany's gross domestic product grew 0.2% in the third quarter as the eurozone contagion began to be felt more deeply in the EU's strongest major economy. Looking ahead, "that was the last good number from Germany for the time being. The German economy will probably shrink somewhat in the fourth quarter given that orders have been falling for the last year and the business climate ... has recently caved in," said Commerzbank chief economist Joerg Kraemer. Reuters (11/15)
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France avoids recession by narrow margins
The French economy expanded 0.2% in the third quarter, avoiding official recession designation after the second quarter's revised reading of 0.1% contraction. Meanwhile, The Economist magazine predicts that France will be the next great problem facing the eurozone under a Socialist government that appears unable to institute the kinds of reforms needed to regenerate French industry. The Washington Post (tiered subscription model)/The Associated Press (11/15), The Economic Times (India)/Agence France-Presse (11/15)
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Spanish economy extends recession with 0.3% contraction
Reuters
Spain extended its recession in the third quarter, with the economy contracting 0.3%. For the year, the government is now projecting 1.5% shrinkage. Meanwhile, calls are growing for Spain to seek a long-delayed bailout under the European Central Bank's bond-buying plan. Fox Business/Reuters (11/15)
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U.K. retail sales plunge, raising 4th-quarter fears
U.K. consumer spending took an unexpectedly sharp turn downward in the third quarter, falling 0.8%. The decline raised fears that the final quarter of the year will not generate a hoped-for boost. "This is a really dispiriting result so close to Christmas. September's slight upturn in sales offered retailers mild cause for cheer, but it was frustratingly short-lived," commented Stephen Robertson, the director general of the British Retail Consortium. The Telegraph (London) (tiered subscription model) (11/15)
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U.S. jobless claims jump, driven by storm's displacements
U.S. claims for unemployment benefits shot up to 439,000 last week. However, the number was inflated by people filing in East Coast states that suffered heavy damage from superstorm Sandy. Yahoo/The Associated Press (11/15)
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U.S. mortgage delinquencies at lowest level in nearly 4 years
In a sign that the so-called shadow inventory of U.S. homes overhanging the real estate market might not be as great as feared, the rate of seriously delinquent mortgages is now at its lowest level since the fourth quarter of 2008. "The drop of the shadow inventory is a real positive for the housing market because it reduces concerns that this backlog will be with us," said Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association. Bloomberg (11/15)
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Market Activities
INTERNATIONAL MARKETS OVERVIEW
Confirmation of a double-dip recession across the eurozone pushed European shares lower Thursday, and mounting worries over the U.S. debt crisis weighed on markets on both sides of the Atlantic. The Stoxx Europe 600 fell 0.98% to 265.52, and the S&P 500 edged down 0.16% to 1,353.33. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (11/16), The Wall Street Journal (tiered subscription model) (11/15), CNNMoney (11/15)
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Political news buoys Japanese shares as other Asian markets fade
New of China's new Communist Party leadership led shares lower Thursday across most of Asia, but Japanese shares advanced sharply on hopes for a new government after elections in December. The Nikkei jumped 1.90% to 8,829.72 while the Hang Seng slid 1.55% to 21,108.93, the Kospi declined 1.23% to 1,870.72, and the S&P/ASX dropped 0.89% to 4,349.25. MarketWatch (11/15)
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Economic Trends & Outlook
China's bad loans continue to mount in sluggish economy
Reuters
Banks of all kinds across China saw a fourth consecutive quarterly rise in nonperforming loans in the three months ended in September, the worst run of deterioration since the reporting of the figures began in 2004. The latest data from the China Banking Regulatory Commission come after seven quarters of decelerating economic growth rates. Bloomberg (11/15)
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S. Korean companies post lower profits, consider restructuring
The global economic downturn took a toll on South Korean companies listed on the KOSDAQ market in the third quarter, with smaller operating and net profits widely reported. Meanwhile, a poll of South Korean companies reveals that 15% are weighing plans to restructure in the coming year due to a difficult environment. MK.co.kr (South Korea) (11/15), Yonhap News Agency (South Korea) (subscription required) (11/15)
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Capital Markets & Financial Products
US$1 billion in bonds sold by Export-Import Bank of Korea
Export-Import Bank of Korea sold US$1 billion in three-year senior unsecured notes with a coupon rate of 98 basis points above the three-year U.S. Treasury bond. More than 190 global asset managers participated, with nearly half from the U.S. MK.co.kr (South Korea) (11/15)
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Regulatory Update
Taiwan regulator examines allegations of illegal trading
Reuters
Taiwan's Financial Supervisory Commission is looking into whether managers for four government funds engaged in illegal trading. The investigation grows out of a previous FSC inquiry into allegations that ING Securities Investment & Trust's Sam Hsieh and others manipulated the stock of Ablerex Electronics. The Taipei Times (Taiwan) (11/16)
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Taiwan financial holding companies enjoying a lucrative 2012
Taiwan's 15 financial holding companies are anticipating record annual profits after a 10% surge over the first 10 months of 2012. The gains come despite sharp losses at Yuanta Financial Holding and Waterland Financial Holding attributed to Taiwan's lagging stock market. China Economic News Service (Taiwan) (11/15)
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Qatar Holding signals support for Glencore-Xstrata merger
Glencore International's drawn-out bid to merge with Xstrata apparently got a boost Thursday from Qatar Holding, the second-largest Xstrata shareholder. The favorable sign for the merger involves Qatar Holding voting a certain way in a complex ballot procedure that is causing anxiety among the deal's proponents and opponents, which include Xstrata's board. The Wall Street Journal (tiered subscription model) (11/15)
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People & Personalities
McCombe to succeed Swarbreck at BlackRock
Mark McCombe will succeed the retiring Peter Swarbreck as head of key clients for BlackRock in the Asia-Pacific region. McCombe "has been closely involved with BlackRock's key clients and as he is located in Hong Kong it makes sense for him to take on these responsibilities," a source said. AsianInvestor.net (11/15)
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