Spanish unemployment numbers surge | More U.S. jobs figures point up; service-sector growth moderates | China's inflation rate is seen cooling for the time being
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November 6, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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Italy's GDP to shrink 2.3% this year, with more to come
Reuters
Italy's austerity-racked economy is forecast to end the year 2.3% smaller, with a further contraction of 0.5% seen for 2013. "Total investment will drop substantially due to tight credit conditions and persistent negative economic sentiment [while] private consumption is expected to fall," predicted the official statistics service Istat. The Business Times (Singapore) (11/5)
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Spanish unemployment numbers surge
Spain saw a surge in job losses last month, with a jump of 128,242 workers without employment in an economy in which a quarter of the workforce is idle. Meanwhile, the Spanish government continues to avoid further austerity measures that could worsen the domestic situation, but this may not last. The Independent (London) (tiered subscription model)/The Associated Press (11/5), Financial Times (tiered subscription model) (11/5)
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More U.S. jobs figures point up; service-sector growth moderates
Backing up last week's U.S. employment report, an index that charts the reported difficulty of finding jobs revealed a brighter situation last month, with Americans reporting work easier to find. A measure of employment in the service sector also rose, although the rate of overall growth in services slowed somewhat. Bloomberg Businessweek (11/5), Reuters (11/5)
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China's inflation rate is seen cooling for the time being
China's latest inflation numbers are likely to show moderation, with two economists predicting a 1.8% gain in October from a year earlier. The final months of the year, however, might see an uptick due to the recent bottoming-out of the economy. Xinhuanet.com (China) (11/4)
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Chinese companies greatly expand overseas investments
In five years, Chinese enterprises' overseas investments have soared to more than $93 billion so far this year from just $13.58 billion in 2007. One of the recent big attractions has been a wide array of undervalued assets in Europe due to the festering eurozone crisis. Domestic policies have also pointed companies with cash on hand to explore opportunities abroad. Xinhuanet.com (China) (11/5)
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At Laos summit, Europeans tell Asian leaders eurozone is healing
Barroso/Reuters
European leaders at a summit in Laos are reassuring their Asian counterparts that the eurozone crisis is on the way to resolution. The Europeans are expected to make a strong case for greater influence in Asia as a counterweight to the U.S. The Business Times (Singapore) (11/5)
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HSBC sees money-laundering penalties exceeding $1.5 billion
U.S. fines against HSBC related to money laundering could well top $1.5 billion, the bank warned, adding that criminal charges are also a possibility. HSBC said it is setting aside an additional $800 million in anticipation of the penalties. Reuters (11/5), The Wall Street Journal (tiered subscription model) (11/5)
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Market Activities
INTERNATIONAL MARKETS OVERVIEW
Worries over the U.S. elections and an upcoming vote in Greece on further austerity measures weighed on shares across Europe on Monday while U.S. stocks edged higher. The Stoxx Europe 600 ended the day down 0.60% at 273.21, and the S&P 500 added 0.22% to 1,417.26. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (11/6), The Wall Street Journal (tiered subscription model) (11/5), CNNMoney (11/5)
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Ahead of U.S. elections, Asian shares retreat on corporate news
Asian shares declined Monday amid disappointment over corporate developments, including those related to false fuel-economy claims by South Korea's Hyundai and Kia and speculation over the future of Japan's beleaguered Sharp. Overall, investors remain wary of recent gains in the markets, and "I don't see there being significant change until the political situation stabilizes in China and the U.S., and Europe is still a worry," commented Benjamin Tam of IG Investment in Hong Kong. The Nikkei lost 0.48% to 9,007.44, the Hang Seng was down 0.47% at 22,006.40, the Kospi declined 0.55% to 1,908.22, and the S&P/ASX was up 0.37% to 4,474.10. Bloomberg Businessweek (11/5)
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Economic Trends & Outlook
Indonesia sustains growth of 6% plus
Reuters
Indonesia's growth rate slowed a bit in the third quarter from the preceding period but remained above 6%. The new figure -- boosted by domestic demand as exports eased -- means the central bank is likely to refrain from any rate cut for now, setting Indonesia apart from neighbors in Southeast Asia where rate cuts have been used to spur flagging economies. Bloomberg Businessweek (11/5)
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Hong Kong manufacturing returns to growth mode
Hong Kong's manufacturing activity swung back to positive ground last month with help from strong domestic demand, as measured by the HSBC Hong Kong Purchasing Managers' Index. "New product launches and healthy domestic demand kept employers hiring through October, underpinning headcount increase and more than three years of uninterrupted wage growth, putting Hong Kong in good stead to rebound through the fourth quarter," said HSBC Greater China economist Donna Kwok. AutomatedTrader.net (11/5)
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Taiwan Cabinet to weigh looser rules for FDI
Taiwan's Cabinet will be reviewing looser rules for foreign direct investment. Among the provisions are an exemption from advance approval for the large proportion of investments that come to less than US$1 million. China Economic News Service (Taiwan) (11/5)
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Singapore manufacturing contracts again
Singapore's manufacturing contracted for the fourth consecutive month in October. In part, the latest reading of 48.3, down 0.4 points from September, reflects a further decline in export orders. The Business Times (Singapore) (11/5)
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Capital Markets & Financial Products
Volume surges on China's futures market
China's futures market recorded a nearly 19% surge in volume over the first 10 months of the year from the comparable year-earlier period. In October alone, volume was up nearly 42% from a year before. China Daily (Beijing) (11/5)
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Projections upbeat for South Korean economy, Kospi in 2013
Reuters
South Korean securities firms anticipate a bright 2013 for the nation's economy and the Kospi index, which is expected to range up to the 2,400 level. The economy is expected to grow 3% in a gradual recovery. MK.co.kr (South Korea) (11/5)
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South Korean bond markets see pickup in activity
Increased debt sales by local banks in a low-interest-rate environment helped raise over-the-counter bond issuance in South Korea 9% in October from the previous month. Meanwhile, foreign investors switched funds from South Korean stocks to bonds amid expectations that companies' performance will lag as export demand slackens. Yonhap News Agency (South Korea) (subscription required) (11/5), MK.co.kr (South Korea) (11/5)
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Regulatory Update
India's central bank examines low-coupon corporate bond sales
A surge in sales of low-coupon corporate bonds this year has prompted scrutiny from India's central bank, which is requesting more information from the banks involved, according to sources. Tougher sale guidelines may ensue if it is found that current regulations have been violated. The Economic Times (India) (11/5)
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ING attempts to make amends for investment losses in Taiwan
Reuters
Institutions and individual investors who suffered losses related to investments in Ablerex Electronics will receive payments from ING Securities Investment and Trust. The move comes in response to criticism from Taiwan lawmakers and others over alleged mishandling of Labor Insurance, Labor Pension and Public Service Pension funds in 2010. The Taipei Times (Taiwan) (11/6)
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Ethics & Standards
Australian verdict: S&P misled investors
Standard & Poor's was found to have misled investors in Australia with its rating of a derivative issued by ABN Amro's wholesale banking division. Thirteen municipal councils lost AU$16 million on the investments, known as constant proportion debt obligations. The court ruling could open the way for further legal action against S&P in Europe. The Sydney Morning Herald (Australia) (11/5), Financial Times (tiered subscription model) (11/5)
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