New Japanese government takes other nations to task over currencies | Forecasts put China trade growth at 8% in 2013, GDP growth at 8% or better | Merkel opponent says austerity too harsh
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December 31, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition

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Obama urges quick action to meet budget deadline
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While signs emanating from U.S. budget talks indicated no progress, President Barack Obama pointed to Republican intransigence and called on Congress to act within the next 48 hours to avoid automatic tax increases and budget cuts. "If people start seeing that on Jan. 1 this problem still hasn't been solved, that we haven't seen the kind of deficit reduction that we could have had had the Republicans been willing to take the deal that I gave them ... then obviously that's going to have an adverse reaction in the markets," Obama said in a TV interview. Separately, Standard & Poor's said it sees little reason to alter its U.S. credit rating regardless of the outcome. The New York Times (tiered subscription model) (12/30), Reuters (12/30), The Sydney Morning Herald (Australia)/Reuters (12/28)
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New Japanese government takes other nations to task over currencies
Japan's new finance minister, Taro Aso, called on Europe and the U.S. to act to strengthen their currencies against the yen, which he noted is falling but remains overvalued. A weaker yen is part of the new government's dramatic strategy to revive Japan's economy, which even now is generating sharp reactions in the currency and the nation's stock market. The Wall Street Journal (tiered subscription model) (12/29), The Yomiuri Shimbun (Japan)/Jiji Press (Japan) (12/30), The Business Times (Singapore) (12/29)
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Forecasts put China trade growth at 8% in 2013, GDP growth at 8% or better
Separate forecasts by the Development Research Center of the Chinese Cabinet and Princeton University economist George Chow project China's growth at 8% or better in 2013. Meanwhile, China's Ministry of Commerce predicts a pickup in trade growth next year, to 8%. (China) (12/30), Caijing Magazine online (12/28), Yonhap News Agency (South Korea) (subscription required) (12/30)
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Merkel opponent says austerity too harsh
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The principal opponent of Chancellor Angela Merkel in next year's German elections says austerity measures being imposed in periphery countries are too much, too soon, with "some societies ... being forced to their knees." Peer Steinbrueck, a former finance minister, said his SPD party would focus on stabilizing the eurozone, both for the sake of Germany and the EU. Reuters (12/30)
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Italy's Monti to try for election in 2013
Italy's unelected technocrat prime minister, Mario Monti, has agreed to run for election next year at the head of a centrist coalition. Financial Times (tiered subscription model) (12/28)
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U.K. businesses express low confidence
U.K. businesses have had their confidence shaken after a 16-year streak of higher spirits, concluding that the country's austerity program is doing more harm than good, according to a BDO index. "Austerity has proved to be the wrong medicine for restoring growth," said Peter Hemington, a partner at BDO and author of the report. The Telegraph (London) (tiered subscription model) (12/29)
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Market Activities
If the recent past of gently lower drifting stock prices really is prologue, U.S. shares over the next week may not plunge if no U.S. budget deal is reached before the year-end deadline. On Friday, the S&P 500 finished 1.10% lower at 1,402.43, and across the Atlantic the Stoxx Europe 600 finished with a loss of 0.65% at 278.78. Here is a continuously updated list of global stock indices. The Wall Street Journal (tiered subscription model) (12/31), Reuters (12/29), Bloomberg (12/28), CNNMoney (12/28)
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Lock-ups may move China's market in shortened week
China's stock market may see a notable effect in this week due to a large number of lock-up agreements accounting for $10.19 billion of shares expiring in a trading week of only two days. Elsewhere in Asia, the sixth week of gains ended on an up note with investors anticipating major moves in Japan and China to lift their economies. The Nikkei gained 0.70% Friday to 10,395.18, the Hang Seng added 0.21% to 22,666.59, the Kospi rose 0.49% to 1,997.05 and the ASX was up 0.50% at 4,671.30. (China) (12/30), Bloomberg (12/28)
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Economic Trends & Outlook
Urgent action needed to revive economy, India's Singh says
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In year-end remarks, India's reformist Prime Minister Manmohan Singh reiterated the need for urgent action to lift India's lagging economy, calling among other things for a crackdown on corruption and waste. "We cannot change the global economy, but we can do something about the domestic constraints which have contributed to the downturn," Singh said. Separately, India's Planning Commission said it will advocate lowering the average annual growth rate for the 12th Five-Year Plan to 8% from 8.2% this week before the National Development Council. The Sydney Morning Herald (Australia) (12/29), The Hindu (India)/Press Trust of India (12/26)
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Modest gain seen in South Korea's per-capita GDP
South Korea is expected to finish the year with a modest 1.3% gain in per-capita GDP to US$22,705, according to a report by Korea Investment & Securities. Separately, lending rates to South Korean households by the nation's banks reached a record low in November, the central bank reported. The Korea Herald (Seoul) (12/30), (South Korea) (12/28)
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Singapore's economy at a low point with little room for maneuver
Singapore's economy is probably in recession now, according to a Bloomberg News survey of economists, even as inflation remains elevated, narrowing the scope of possible stimulus heading into 2013. Another limiting factor is Singapore's heavy reliance on exports, making it highly sensitive to developments in the global economy. Bloomberg Businessweek (12/30), The Business Times (Singapore) (12/29)
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Taiwan seen still in transition to full recovery
Taiwan's Council for Economic Planning and Development indicates the economy remained in transition toward recovery in November. The council also said full recovery still may be some way off, with much hanging on global growth in the coming year. China Economic News Service (Taiwan) (12/28)
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Philippines sees balanced growth again in 2013
The Philippines' good balance of growth and inflation this year can probably be duplicated in 2013, the central bank says. "I think we can repeat our achievement of reaching a sweet spot this year. Our growth and inflation targets next year are similar to our performance in 2012," bank Governor Amando M. Tetangco Jr. said. Business World (Philippines) (12/28)
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Capital Markets & Financial Products
BRIC markets underperform world again
The rapid growth on offer in the so-called BRIC markets has proved less alluring for global investors than the known quantities of developed markets for the third year running. The MSCI All-Country World Index rose 12.6% in 2012, outpacing the MSCI BRIC Index of shares in Brazil, Russia, India and China by 1.6 percentage points. Bloomberg (12/30)
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Amid low rates, South Koreans turn to real estate funds
South Korean funds invested in real estate have nearly tripled in value since 2007, reaching 20 trillion won in 2012. The total is up more than 20% from last year, reflecting demand for alternative investments while interest rates remain low. Yonhap News Agency (South Korea) (subscription required) (12/30)
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Regulatory Update
Taiwan's Chinatrust reported in talks to acquire Tokyo Star Bank
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Looking to expand its global footprint, Taiwan's Chinatrust Commercial Bank is reported in talks to acquire Tokyo Star Bank. The Nikkei business daily reports Tokyo Star's shareholders are expected to begin evaluating the terms of the proposed takeover soon. The Taipei Times (Taiwan) (12/31)
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China's central bank sets out 2013 goals with a focus on risk
China's central bank outlined a broad set of goals for the new year, targeting risk, stable growth and rebalancing the economy, all while keeping inflation in check. The focus on risk is thought to reflect mounting concerns over recent non-bank lending and the possibility of defaults that could upset social stability. Bloomberg (12/30)
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South Korea adds second manager for public funds pool
South Korea's investment pool for public funds will have co-lead managers in 2013, with Korea Investment Management picked to work alongside Samsung Asset Management. The addition marks a departure from past practice of placing the fund under one manager. (South Korea) (12/28)
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Editor's Note
Reminder: Jan. 1 holiday
CFA Institute's Financial NewsBrief Asia Pacific Edition will not publish Tuesday. Enjoy the holiday.
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Editor:  Sean McMahon
Contributing Editor:  Jim Berard

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