U.S. inflation is flat as manufacturing gains | U.S. assets pull in foreign investment amid uncertainty | Eurozone's December inflation of 2.2% is expected to ease
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January 17, 2013
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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China looks to spending to help sustain recovery
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Reuters
The effect of Chinese government spending on infrastructure projects is set to kick in to buoy the economy once stimulus from monetary easing wears off, analysts say, as the National Bureau of Statistics prepares to report 7.8% growth for the fourth quarter. However, the looser money policy is considered likely to be sustained as inflation moderates. Separately, the Ministry of Commerce says the goal this year will be to accelerate foreign trade in line with China's overall growth. Bloomberg (1/16), Financial Times (tiered subscription model) (1/16), Xinhuanet.com (China) (1/16)
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U.S. inflation is flat as manufacturing gains
U.S. consumer prices held steady in December, relieving any pressure on the Federal Reserve to consider the prospect of higher interest rates anytime soon. Meanwhile, U.S. manufacturing output was up 0.8% in December after climbing 1.3% the previous month, the Fed reported. Reuters (1/16), Bloomberg (1/16)
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U.S. assets pull in foreign investment amid uncertainty
Net foreign purchases of U.S. assets swung from a small negative of $1 billion in October to a strong positive number of $52.3 billion in November as investors reacted to a global slowdown. Analysts say the switch was also driven by November's election result and anticipation of the "fiscal cliff." Bloomberg (1/16)
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Eurozone's December inflation of 2.2% is expected to ease
Holiday spending helped keep the eurozone's inflation at a higher-than-targeted 2.2% in December. The European Central Bank, however, expects prices to moderate in the months ahead, nearing the ECB's target of just below 2%. Reuters (1/16)
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World Bank forecasts 2.4% global growth in 2013
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Kim/Reuters
The global economy should grow 2.4% this year -- up from 2012's estimated 2.3% -- before picking up to 3.1% in 2014, the World Bank projected. Noting a still "fragile" situation, the bank said the possibility of negative disruptions has nonetheless diminished from the threat level of recent years. Xinhuanet.com (China) (1/16), Business World (Philippines) (1/16)
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JPMorgan chief's pay is halved; Morgan Stanley strings out bonuses
Finding that CEO Jamie Dimon bore "ultimate responsibility" for a costly, ill-supervised trade by the so-called London whale, JPMorgan Chase cut Dimon's 2012 compensation by half. Separately, Morgan Stanley, adjusting to a fundamental change in Wall Street pay practices, will hand out its 2012 bonuses in four installments starting in May and extending to January 2016. The Wall Street Journal (tiered subscription model) (1/16), The Wall Street Journal (tiered subscription model) (1/16)
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Goldman earnings nearly triple in latest quarter
Goldman Sachs' fourth-quarter net income nearly tripled from a year before to $2.83 billion, the company's best result since the first quarter of 2010. Financial Times (tiered subscription model) (1/16)
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Market Activities
INTERNATIONAL MARKETS OVERVIEW
Concerns over projections for only modest global growth and the impending U.S. debt-ceiling deadline, as well as corporate-earnings jitters in the U.S., left shares on both sides of the Atlantic basically flat Wednesday. The Stoxx Europe 600 was virtually unchanged, at 286.03, as was the S&P 500, at 1,472.63. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (1/17), The Wall Street Journal (tiered subscription model) (1/16), CNNMoney (1/16)
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Asian shares ease after recent gains
Stocks across Asia took a breather Wednesday from their recent runup, with most markets down in what analysts described as an overbought situation. The Nikkei fell 2.56% to 10,600.44, the Hang Seng edged down 0.10% to 23,356.99 and the Kospi was off 0.32% at 1,977.45 while the S&P/ASX gained 0.46% to 4,738.40. Bloomberg (1/16)
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Economic Trends & Outlook
2012 FDI in China slides 3.7%, first decline since 2009
The global slowdown helped trim foreign direct investment in China last year for the first time since 2009, with the total easing 3.7% to US$111.72 billion. For December alone, the total was down 4.5%. Caijing Magazine online (1/16)
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Deutsche Bank sees 8.5% growth for China in 2nd half
Government spending and a pickup in corporate earnings will lift the Chinese economy to an 8.5% rate of growth in the latter half of the year, Deutsche Bank predicts. Noting slow growth of 7.4% in the third quarter last year, DB China chief economist Ma Jun said the period marked "the trough for year-on-year GDP growth, and a recovery was already under way in the fourth quarter." Shanghai Securities News (1/16)
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Japan's machinery orders surged in November
Machinery orders, an indicator of economic optimism, rose a surprisingly strong 3.9% in Japan in November, far outpacing the median forecast of 0.3%. "The current recession may end up being very short. The rapid depreciation of the yen may make companies more inclined to invest in the coming months," said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo. Bloomberg Businessweek (1/15)
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India focuses on boosting investment, taming inflation in 2013
Finance Minister P. Chidambaram says his first priority is to maintain India's investment cycle rather than raise taxes as he continues to look for signs of a "discernible trend" in the economy. Meanwhile, central bank Governor D. Subbarao said that inflation is his main focus, with the rate still too high despite progress made in the past two years. The Economic Times (India)/Press Trust of India (1/16), The Economic Times (India)/Press Trust of India (1/16)
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Capital Markets & Financial Products
South Korea expects much livelier IPO market this year
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Reuters
South Korea's initial public offering market could amount to as much as 3.50 trillion won this year, more than double last year's total, as projected in a survey by the Korea Exchange. "The Korean IPO market would be more dynamic than last year as an increasing number of companies which decided not to go public last year under a worsening financing condition are expected to reattempt to float their shares," an exchange official said. MK.co.kr (South Korea) (1/16)
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Eyeing slow recovery, China sovereign fund to focus on real assets
Real assets and property will be the focus this year for China's sovereign wealth fund in a switch from last year's concentration in public stocks and bonds. Speaking at the Asian Financial Forum in Hong Kong this week, China Investment Corp. chief Lou Jiwei said CIC anticipates only a "slow recovery" for the world economy in 2013. AsianInvestor.net (1/16)
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South Korea's KB Financial looks to Israel for venture-fund model
Israel's Yozma public-private venture capital fund will be the model for South Korea's KB Financial Group as it sets up a new fund to focus on the country's venture companies. "The VC fund market can emerge as a niche market for local banks, and setting up such funds is in line with [President-elect Park Geun-hye's "creative economy"] pledge and policy direction," said a senior official at KB Financial. MK.co.kr (South Korea) (1/16)
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Regulatory Update
Credit Suisse, Goldman are said to get Alibaba nod for Hong Kong IPO
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Reuters
Credit Suisse and Goldman Sachs have been tapped by China's Alibaba for an initial public offering, sources say. One source said the e-commerce giant will try to raise as much as $4 billion in a Hong Kong IPO this year. Bloomberg (1/16)
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China scandal prompts Deloitte to step up client screening
Sharper scrutiny of potential clients and changes in tests for cash balances are among the steps Deloitte Touche Tohmatsu is taking to improve its screening process, said Deloitte's Asia Pacific CEO, Chaly Mah. The change comes after U.S. regulators launched an administrative proceeding over Deloitte Touche's refusal to turn over documents sought in investigations of alleged accounting frauds at nine Chinese companies. The Wall Street Journal (tiered subscription model) (1/16)
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2nd South Korean agency acts to curb capital flight
Tax avoidance by channeling funds out of the country carried out by individual payers and corporations is the target as the Korea Customs Service steps up its enforcement in line with the National Tax Service. About 1.9 trillion won was believed lost to capital flight over the first nine months of 2012, the KCS says. The Korea Herald (Seoul) (1/16)
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Singapore panel proposes rules for financial advisory industry
Minimum experience for CEOs and a higher bar of educational requirements for advisers are among the recommendations from Singapore's Financial Advisory Industry Review committee to improve the industry. New minimum base capital requirements are part of the plan as well as suggestions to lower costs for clients. The Business Times (Singapore) (1/16)
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