EU leaders at odds over budget, Greek debt write-down | Catalan voters appear ready to pull out of Spain | Thousands march against yet more austerity in Ireland
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November 26, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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Japanese candidates focus hard on flagging economy
Noda/Reuters
Japan's leading candidates for prime minister traded accusations and put forward sharply differing plans for prying the country's economy out of the mire as they campaigned ahead of December snap elections. Notably, front-runner Shinzo Abe seemed to back away from some of his more assertive ideas but continued to push for much larger doses of monetary easing. The Wall Street Journal (tiered subscription model) (11/25)
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EU leaders at odds over budget, Greek debt write-down
Net paying members of the European Union and net receivers of funding were unable to resolve their differences over the increasingly strained EU budget before their meeting broke up Friday. In other EU business, European Central Bank board member Joerg Asmussen tamped down any idea that a debt write-down should be part of the next bailout for Greece. The Wall Street Journal (tiered subscription model) (11/23), Reuters (11/25)
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Catalan voters appear ready to pull out of Spain
Reuters
A constitutional crisis might be piled on debt-racked Spain as voters in Catalonia on Sunday appeared ready to strongly favor parties that are calling for secession. The separation sentiment is fueled by the widespread perception that Catalans are taxed unfairly with not enough local benefit. CNBC/Reuters (11/25)
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Thousands march against yet more austerity in Ireland
A sixth consecutive Irish budget implementing austerity measures prompted a march by 10,000 through the center of Dublin. The mostly left-leaning crowd threatened to balk at paying higher taxes. More protests are expected before the formal unveiling of the budget on Dec. 5. The Washington Post (tiered subscription model)/The Associated Press (11/24)
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U.S. data to reflect effects of storm, budget crisis
Factors from the immediate past and the near-term future both worked to hold down U.S. consumer spending and business investment last month, according to economists looking ahead to reports due this week. Hurricane Sandy's effects will be reflected in the consumer figures, and the ongoing negotiations over deficit reduction probably weighed on business calculations. "What I hear from customers, what I hear from suppliers, what I hear from other CEOs that are running businesses is a real hesitation to step out and make big capital investments, to step out and take on big projects because of the ambiguity of what's going on in the economy," said James Ryan, chairman of W.W. Grainger, a supplier of tools and equipment. Bloomberg Businessweek (11/25)
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INTERNATIONAL MARKETS OVERVIEW
A better outlook for the German economy and optimism that the latest Greek bailout will finally win creditor agreement helped boost European stocks Friday, with the Stoxx Europe 600 rising 0.60% to 273.33, marking a 3.98% gain for the week. In the U.S., the S&P 500 was up 1.30% on Friday to close at 1,409.15. The coming week may see some profit-taking on the U.S. exchanges as negotiators in Washington work on ways to avoid automatic budget cuts and tax increases. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (11/26), Reuters (11/23), Reuters (11/25)
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Sunnier outlooks for China industry, U.S. housing buoy Asian markets
Promising signs for manufacturing in China and the key U.S. housing market gave a big boost to shares across Asia on Friday. The Nikkei jumped 1.56% to 9,366.80, the Hang Seng rose 0.79% to 21,913.98, the Kospi was up 0.62% at 1,911.33, and the S&P/ASX was unchanged at 4,413.00. Bloomberg Businessweek (11/23)
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Economic Trends & Outlook
Morgan Stanley expects improved Indian growth in new year
Reuters
Morgan Stanley is projecting an improvement in Indian GDP growth to 6.1% next year. But for the final quarter of the calendar year, Indian manufacturers are expected to register low or even negative growth. Meanwhile, the government says it is optimistic it can hold the current fiscal year's budget deficit to no more than 5.3% of GDP. The Economic Times (India)/Press Trust of India (11/25), Bloomberg (11/25), The Economic Times (India)/Press Trust of India (11/25)
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South Korea leads OECD nations in recent credit upgrades
South Korea has outshone every other nation in the Organization for Economic Cooperation and Development in how far its debt rating has been boosted over the past five years, according to the Korea Center for International Finance. One of the keys is that "since Korea suffered from the 1997 Asian financial crisis, we've kept tabs on capital in- and outflows, foreign exchange volatility and managed the foreign reserves," said Lee Hee-jeong, an economist at Hyundai Economic Research Institute. The Korea Herald (Seoul) (11/25)
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More globally hobbled slow growth seen for S. Korea in new year
The Korea Development Institute scaled back its outlook for South Korean GDP growth next year to 3.0% from 3.4%, pointing to delayed recovery in the global economy. The new figure falls well short of the country's perceived potential growth rate of 3.7%. The Korea Herald (Seoul) (11/25)
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China, South Korea push for more investment
Reuters
China is lobbying South Korean industries for more investment in China, particularly in high-end manufacturing, and South Korean business representatives are calling for wider openings. During meetings to mark the 20th anniversary of diplomatic ties between the two countries, Chinese Deputy Commerce Minister Wang Chao pledged to "widen investment sectors for foreign companies, innovate the use of foreign direct investment and further improve the investment environment." China Daily (Beijing) (11/24)
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China wage growth declines, as do prospects for rebalancing economy
Wages in China are still growing but at a slower pace as corporate profits slide. The tamer pay increases might put a damper on plans to expand China's economy through domestic consumption. "Given the poor profit picture, wage growth is bound to slow down in the coming quarters, and this is set to reduce the robustness of consumption," impinging on China's "rebalancing in the sense that it will reduce the relative role of consumption in the short term," said Louis Kuijs, chief China economist at Royal Bank of Scotland in Hong Kong. Bloomberg (11/25)
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Taiwan central bank explains lower reported FDI growth
Low reported growth in Taiwan's foreign direct investment inflow last year is attributed largely to the transfer of stock ownership from big financial groups to domestic units, the country's central bank says, discounting reports of a less favorable investment climate. Separately, the government reported that Taiwan's unemployment rate rose slightly to 4.33% last month, reversing recent jobs gains. The Taipei Times (Taiwan) (11/26), China Economic News Service (Taiwan) (11/23)
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Philippine GDP figure likely to show effects of slower global growth
The global slowdown is likely to be reflected in a slower pace of growth for the Philippines in the third quarter, economists say. The average projection of 5.45% would be down from 5.9% in the second quarter and 6.3% in the first. Business World (Philippines) (11/25)
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Capital Markets & Financial Products
India sees US$19 billion in FII investment this year
Foreign institutional investors have injected US$19 billion into Indian stocks this year, the second-highest total on record, according to data from Sebi. The high of US$29 billion came in 2010. The Economic Times (India)/Press Trust of India (11/25)
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South Korea to reduce ceiling on currency forward positions
South Korea plans to lower the ceiling on foreign currency forward positions, perhaps in the coming week, as the nation's currency nears the 1,080 won level against the U.S. dollar. "Capital flows are excessively volatile in the domestic foreign exchange market. When the volatility becomes higher, we will do our part to curb the excessive strengthening of the won," said Choi Jong-ku, deputy minister for international affairs with the Ministry of Strategy and Finance. MK.co.kr (South Korea) (11/22)
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Regulatory Update
South Korean brokerage earnings down sharply in first half
Earnings in the first six months of the year were down by nearly half from a year earlier for securities firms in South Korea. The drawn-out economic downturn was cited as the main reason, with commission incomes taking a hit as a result, according to the Financial Supervisory Service. Yonhap News Agency (South Korea) (subscription required) (11/25)
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People & Personalities
Bank of China's Xiao Gang might be headed for central bank
Xiao/Reuters
Xiao Gang might be next in line to succeed Chinese central bank Governor Zhou Xiaochuan, with Xiao widely expected to leave the Bank of China at the end of this year, sources say. Adding to the speculation is Xiao's selection this month as a full member of the Communist Party's Central Committee. Caijing Magazine online (11/25)
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