Asia's slowdown may be near an end | U.S. jobless data point to improved hiring | U.S. manufacturing, productivity improve
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November 2, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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China manufacturing swings to positive ground
Wall Street Journal
Purchasing managers' indexes from the Chinese government and HSBC showed improvement in October, with Beijing's official reading turning positive at 50.2 for the first time in three months. "The worst is behind us already. Monetary policy has already done its job" and there's "no way we will see another interest-rate cut because we think inflation is going to rebound," said Joy Yang, chief Greater China economist at Mirae Asset Securities in Hong Kong. Bloomberg (11/1), Caijing Magazine online (11/1), Xinhuanet.com (China) (11/1), The Wall Street Journal (tiered subscription model) (11/1)
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Asia's slowdown may be near an end
The latest batch of purchasing managers' indexes from across Asia, though not entirely consistent, points to improved activity for the region. With notable exceptions in Taiwan and resource-driven Australia, output and exports are picking up and showing promise for the remainder of the year. "More investor-friendly financial policies in the eurozone and the U.S. in September have released pent-up demand, and that will support activity in the fourth quarter," commented Tim Condon, ING's chief economist and head of research for Asia. The Wall Street Journal (tiered subscription model) (11/1)
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U.S. jobless data point to improved hiring
U.S. claims for jobless benefits declined a sharper-than-expected 9,000 to 363,000 last week, suggesting that a slight recent pickup in hiring is being sustained. The four-week moving average was also lower, at 367,250. Both readings were below the 400,000 level at which economists believe employment is improving. Chicago Tribune (tiered subscription model)/Reuters (11/1)
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U.S. manufacturing, productivity improve
Reuters
U.S. worker productivity in the third quarter and manufacturing in October both showed gains, adding to signs of economic upturn. The number of hours worked during the quarter was up as well. The positive manufacturing index of 51.7 improved on the 51.5 reading in September and suggests U.S. manufacturers are riding out the global downturn. MarketWatch (11/1), Bloomberg (11/1)
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U.S. consumer confidence rises but remains less than optimistic
An index of U.S. consumer confidence rose to its highest level since early 2008, reaching 72.2 last month. The improvement in the Conference Board gauge, however, was still well below the 90 level that points to a healthy economy. The Washington Post (tiered subscription model)/The Associated Press (11/1)
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In U.S. and U.K., economic crisis policies are found wanting
A prominent U.S. fund manager and a U.K. government study criticized economic crisis policies on both sides of the Atlantic, saying they are ineffective or inadequate. In the U.S., Pacific Investment Management chief Bill Gross said the Federal Reserve's quantitative easing is failing to spur "corporations to invest in future production." And in London, Lord Heseltine warned that the government's tax cuts and deregulation fall well short of the "war psychology" needed to revive the economy. Bloomberg (11/1), The Business Times (Singapore)/Reuters (11/1)
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U.K. manufacturing slump deepens
U.K. manufacturing took a turn for the worse in October, even after a downwardly revised figure for September. The CIPS/Markit Purchasing Managers' Index came in at 47.5, down from the revised 48.1 the previous month. The deepening contraction may open the way for more stimulus by the Bank of England. CNBC (11/1)
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New Greek debt outlook much worse than expected
The Greek government is now projecting that its debt will rise to 192% of gross domestic product in 2014, exceeding by a wide measure even the most pessimistic previous forecasts. Financial Times (tiered subscription model) (10/31)
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INTERNATIONAL MARKETS OVERVIEW
Strong jobs and manufacturing reports out of the U.S. and China boosted shares on both sides of the Atlantic on Thursday. The Stoxx Europe 600 jumped 1.26% to 273.70, and the S&P 500 rallied 1.09% to 1,427.59. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (11/2), Bloomberg Businessweek (11/1), CNNMoney (11/1)
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China manufacturing numbers buoy Asian markets
Strong PMI figures out of China helped lift shares across much of Asia, although tech shares took a hit from Panasonic's shocking projected loss for the year. Despite that, the Nikkei edged up 0.21% to 8,946.87 while the Hang Seng rose 0.83% to 21,821.87, the Kospi fell 0.71% to 1,898.44, and the S&P/ASX dropped 1.32% to 4,457.60. MarketWatch (11/1)
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Economic Trends & Outlook
India manufacturing stays firmly expansionary in October
Reuters
Exports helped sustain India's manufacturing sector in October, with a steady positive reading of 52.9 in HSBC India's purchasing managers' index. "Economic activity in the manufacturing sector picked up slightly thanks to firm new orders. ... New export orders increased for the second successive month," noted Leif Eskesen, HSBC's chief economist for India and ASEAN. Channel NewsAsia (11/1)
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India's Chidambaram meets with FIIs
Representatives of such major foreign institutional investors as Bank of America Merrill Lynch, BlackRock, Goldman Sachs and private equity fund T. Rowe Price met Thursday with Indian Finance Minister P. Chidambaram. The gathering came in the context of a range of measures undertaken by the government to attract more foreign investment. "FIIs met me, and I updated them on where we see the economy going and what steps we are taking," Chidambaram said after the meeting. The Economic Times (India)/Press Trust of India (11/1), The Hindu (India) (11/1)
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South Korean exports rise, widening October surplus
South Korea's trade surplus rose to US$3.8 billion last month, improving on September's US$3.15 billion and more than doubling the year-earlier figure. Total exports edged up 1.2% to US$47.2 billion in October. "Despite a delayed recovery of demands in key markets, the country's exports increased slightly from the same period last year due to growing shipments to Southeast Asian countries and China," the Ministry of Knowledge Economy said. The Korea Herald (Seoul)/Yonhap News Agency (11/1)
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Taiwan, Barclays scale back 2012 growth outlook
Both Barclays and Taiwan's Directorate General of Budget, Accounting and Statistics reduced their 2012 GDP growth forecasts for the country to a little more than 1% after a weaker-than-expected third quarter. The latest period saw year-on-year growth of 1.02%, short of forecasts of about 1.5%. "In the third quarter, the drag on growth came from consumption," said Leong Wai Ho, a Singapore-based economist at Barclays Capital. The Taipei Times (Taiwan) (11/2), China Economic News Service (Taiwan) (11/1)
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Australian manufacturing index rises, but contraction persists
A key Australian manufacturing index climbed to 45.2 last month but remained well below an expansionary level as the nation's strong currency and higher energy costs weighed on the sector. "Manufacturers continue to find the going very tough in the face of the strong [Australian] dollar, weaker demand in export markets and flat conditions across the non-mining sectors of the domestic economy, particularly in commercial and residential construction which has strong linkages with domestic manufacturing," said Innes Willox, chief of Ai Group, which compiles the index. Xinhuanet.com (China) (11/1)
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Capital Markets & Financial Products
Hong Kong again takes top honors as global financial center
Reuters
For the second year in a row, Hong Kong has been selected by the World Economic Forum as the world's leading financial center. Taxes, infrastructure and a friendly business environment were cited as contributing factors. The Business Times (Singapore) (11/1)
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Philippines loses ground in financial development
The Philippines lost ground among the world's financial centers in World Economic Forum rankings, which noted the country's financial-system reforms have stalled. The Philippines now ranks 49th out of 62 ranked countries. Business World (Philippines) (10/31)
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Regulatory Update
Asset management in Asia could benefit from more independence
The fact that asset management groups in Asia tend to be tied to larger business groups inhibits their independence, a sorely needed quality in the region, some say. Financial Times (tiered subscription model) (11/1)
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Sumitomo Mitsui to boost stake in Bank of East Asia
Reuters
In a pan-Asian move, Japan's Sumitomo Mitsui Financial Group is more than doubling its stake in Hong Kong's Bank of East Asia. Financial Times (tiered subscription model) (11/1)
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People & Personalities
Richard Hu Tsu Tau leaving GIC board
Richard Hu Tsu Tau is stepping down from the board of the Government of Singapore Investment Corp. at the end of the month. Hu's appointment to the board in 1981 when he was chief executive of Shell Group was the first GIC board appointment that drew from the private sector. The Business Times (Singapore) (11/1)
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