Regions

[Muthukali]

Japanese Stocks, Yen Gain Before BOJ Decision; Grains Rebound
By Bloomberg News - Sep 19, 2012 8:47 AM GMT+0800

Japanese stocks advanced and the yen strengthened as investors waited to see if the Bank of Japan will provide additional stimulus. Oil and grains rallied.

The Nikkei 225 Stock Average gained 0.4 percent as of 9:35 a.m. in Tokyo as the MSCI Asia Pacific Index declined 0.1 percent. Futures for the Standard & Poor’s 500 Index were little changed. Japan’s currency rose against all 16 of its major peers and was up at least 0.1 percent versus the greenback and the euro. Oil in New York rose 0.2 percent, while wheat and soybeans were at least 0.8 percent higher.

The Bank of Japan will announce further monetary easing today as a two-day meeting ends, five of the 21 economists surveyed by Bloomberg forecast. Easing by the BOJ has so far failed to turn around a decade of falling prices.

About the same number of stocks gained as fell on the MSCI Asia Pacific (MXAP) Index. Australia’s S&P/ASX 200 index dropped 0.1 percent as South Korea’s Kospi Index lost 0.4 percent.

Japan Airlines Co. rose as much as 3 percent on its Tokyo trading debut following a 663 billion-yen ($8.4 billion) initial public offering.

Oil advanced to $95.45 a barrel after falling for two days. Wheat traded 0.8 percent higher at $8.7025 a bushel in Chicago, while soybeans rose 0.9 percent to $16.55.

To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at [email protected]

 

[Muthukali]

Anti-Japan Protests Raise Risks for China’s Leadership Shift
By Bloomberg News - Sep 19, 2012 9:18 AM GMT+0800

Demonstrations across China against Japanese businesses and property pose a growing risk for the country’s leaders as the economy slows and the Communist Party prepares for a once-a-decade transition of power.

With growth in danger of reaching a 22-year low, ousted Politburo member Bo Xilai’s case still pending public resolution and the biggest diplomatic spat with Japan since 2005, any uncontrolled protests risk undermining authority before the handover. Thousands waved flags and brandished Mao Zedong portraits yesterday at Japanese diplomatic posts in Beijing and Shanghai in a sign of public fury over a territorial dispute.

“They do not want things to get out of control; there will be more attempts to contain the protests,” said Joseph Cheng, a political science professor at the City University of Hong Kong. The portraits of Mao “are implicit criticisms of the present leadership,” he said. Bo Xilai championed resurrection of Mao slogans before his downfall as Chongqing party boss this year.

Toyota Motor Corp. (7203), Sony Corp. (6758) and Fast Retailing Co. were among companies that halted operations in China after protesters attacked Japanese cars and shops. The Shanghai Composite Index (SHCOMP) of stocks recorded its biggest back-to-back loss since March.

China regards organizations not sanctioned by the government as illegal. Political protests, including those held by students in Tiananmen Square in 1989 and by practitioners of the Falun Gong spiritual group a decade later, have been forcibly suppressed.

Orchestration Undermined
The smooth orchestration of China’s leadership handover has been undermined by the downfall of Bo, whose wife was convicted last month of murdering a British businessman. Wang Lijun, the former Chongqing police chief whose flight to an American diplomatic office in February triggered the country’s biggest political crisis in two decades, yesterday confessed to defecting after a two-day trial.

“What the protests underscore is the level of frustration within society about many things: the slowing down of economic growth, the job market for young graduates,” Jean-Pierre Cabestan, head of the department of government and international studies at Hong Kong Baptist University, said in a telephone interview. “And you have this opaque political system with leaders jockeying for position behind the curtain.”

Xi Jinping, President Hu Jintao’s heir apparent, disappeared from view for two weeks before re-emerging without explanation on Sept. 15. The dearth of information prompted speculation about his health and who else might oversee an economy struggling to overcome a widening wealth gap.

‘Unity is Strength’
At the Japanese embassy in Beijing, protesters threw bottles and branches at the building’s walls, which were spattered with eggs and paint. In Shanghai, protesters marched through the streets waving Chinese flags and shouting slogans saying “Down With the Japanese.”

“We do it from our hearts and to express how we feel,” protester Yu Zhen, 24, said outside the Shanghai consulate. “Japan has infringed on our sovereignty and we can’t be quiet about it. Unity is strength.”

The recent demonstrations escalated after Japan last week purchased the islands, called Diaoyu in Chinese and Senkaku in Japanese, from a private Japanese owner. The islands have been under Japanese administrative control since 1895.

Some demonstrators said they were also protesting Japan’s World War II occupation. China Central Television observed a moment of silence yesterday to commemorate the 81st anniversary of the Manchurian Incident, a staged attack on a Japanese railway that was used as an excuse to start an invasion that would see Japan take control of much of China.

‘Cool Head’
Japanese Prime Minister Yoshihiko Noda last night said the anniversary was one reason for the demonstrations and said both sides must work to repair ties.

“If our relationship remains strained for a long period, it will be harmful not only to our two countries but to the region and the world economy,” he said on TBS Television. “We should keep a cool head, but take a firm line. It is important to at least talk, exchange information and communicate.”

The worst bilateral diplomatic crisis since 2005 is endangering a trade relationship that has tripled in the past decade to more than $340 billion. Japanese retailers in China closed their doors and covered up their logos as protests spread to dozens of cities.

The tensions complicate efforts to fortify growth in each country as Europe’s debt crisis saps demand for exports. China was the largest market for Japanese exports in 2011, while Japan was the fourth-largest market for Chinese exports.

Hot and Cold
“Sino-Japan relations are often described as hot in trade but cold in politics, but now even the trade relationship is getting cold,” said Zhang Jifeng, a researcher with the Institute of Japanese Studies at the Chinese Academy of Social Sciences in Beijing. “It’s hard to tell which side would suffer more from the cooling trade, but it’s sure that the pain will be deep for both.”

Shares of Fast Retailing Co. (9983), owner of the Uniqlo clothing brand, fell the most in three months in Tokyo trading after the company closed 42 stores in China. Seven & I Holdings Co. (3382) closed 211 stores and Aeon Jusco shut 30 outlets.

“If this dispute doesn’t end soon, it could be a very serious problem for Japan, especially when global demand is slowing,” said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. “Japan would also diversify foreign direct investment away from China to China’s neighbors.”

The Japanese government yesterday urged China to “take all measures to prevent any further harm to Japanese citizens or companies,” Chief Cabinet Secretary Osamu Fujimura told reporters in Tokyo.

‘Totally Caused’
Japan “totally caused” the current crisis and should “take responsibility,” Chinese Defense Minister Liang Guanglie told reporters in Beijing yesterday in a joint appearance with U.S. Defense Secretary Leon Panetta. “We will very closely watch the evolution with regards to this dispute and we reserve the right for further actions.”

A Chinese fishing ban in waters surrounding the islands ended Sept. 16, and Chinese and Japanese media aired footage of fishing vessels heading out to sea. The state-run China News Service reported on Sept. 17 that 1,000 fishing boats typically go to the region and the government would send more vessels than in recent years. Hong Kong-based activists may go to the region as early as today, the Apple Daily newspaper reported.

Fujimura said that while 10 Chinese patrol boats have been spotted in waters adjacent to Japan’s territory, Japan has no information about the fishing boats. He confirmed yesterday that two Japanese temporarily landed on one of the islands. At least two Chinese vessels entered Japan’s waters, NHK Television said last night, citing the Coast Guard.

“Considering that Japanese companies make important contributions to the Chinese economy and employment, people should look at the broader picture and act calmly,” Fujimura said.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at [email protected]; Daryl Loo in Beijing at [email protected]

To contact the editor responsible for this story: Peter Hirschberg at [email protected]

 

[Muthukali]

Heineken clears hurdle for APB takeover

Published: 19/09/2012 at 01:17 PM
Online news: News

Heineken NV (HEIA) has cleared the biggest hurdle in its fight to take control of Singapore-based Asia Pacific Breweries Ltd (APB) with billionaire stakeholder Charoen Sirivadhanabhakdi’s Thai Beverage Plc (THBEV) pledging its support.

Thai Bev and Charoen’s TCC Assets Ltd. agreed to back Heineken’s S$5.6 billion (US$4.6 billion) bid for Fraser & Neave's 40% stake in the beermaker at a shareholders meeting next week after the Dutch brewer agreed not to make a competing offer for F&N, the Amsterdam brewer said.

Heineken had previously operated APB via a joint venture with F&N.

“For Heineken, this significantly improves the level of certainty that our offer will be approved,” John Clarke, a spokesman for Heineken, said by telephone.

APB would be the Dutch brewer’s largest acquisition since its 2010 purchase of Fomento Economico Mexicano S.A.B’s beermaker as it seeks to expand in faster-growing emerging markets, according to data compiled by Bloomberg. Singapore-based APB has rights to brew Bintang in Indonesia, Anchor in China, Southeast Asia and Sri Lanka, and Heineken from China to New Zealand.

TCC, controlled by 68-year-old Charoen, offered S$9 billion on Sept. 13 to buy the 70 percent of F&N he didn’t control, throwing Heineken’s takeover of APB into doubt. Heineken had originally been spurred to bid for control of APB, which it held 42% of, after a company controlled by Charoen’s son-in- law bought shares in APB.

The agreement “should be very positive for Heineken’s share price,” said Gerard Rijk, an analyst at ING Groep NV (INGA) in Amsterdam. “The company will not need to raise its offer further and it will be able to consolidate the APB business.”

F&N shareholders are scheduled to meet on Sept 28 to vote on Heineken’s offer to buy F&N’s shares in APB. F&N recommended that holders accept Heineken’s increased S$53-per-share bid in August. Heineken, the world’s most acquisitive brewer in the past 12 months, had said it would be its final offer.

F&N also has a food and soft-drinks unit and a real estate division. TCC Assets, linked to Charoen’s Thai Bev, offered S$8.88 a share for F&N. The bid is the largest announced by a Thai company in at least 10 years, according to data compiled by Bloomberg.

Charoen’s agreement to support Heineken’s offer for APB may spur speculation that he would break up F&N, a 129-year-old group. Japan’s Kirin Holdings Co. (2503) owns a 15 percent stake in F&N and had considered making a bid for its food and soft-drinks unit, several people with knowledge of the matter said in August. Coca-Cola Co. (KO) explored a bid for the drinks operations, people with knowledge said.

F&N got 30% of its 2011 revenue of S$6.3 billion from property, 12% from soft drinks and 17% from dairies, according to data compiled by Bloomberg.

 

[Muthukali]

Asian Stocks Fall on Chinese Factory Data; Aussie, Copper Drop
By Bloomberg News - Sep 20, 2012 10:49 AM GMT+0800

Asian stocks fell the most in two weeks as a survey indicated Chinese manufacturing contracted and data showed Japanese exports dropped for a third month. The Australian dollar, copper and zinc declined.

The MSCI Asia Pacific Index (MXAP) sank 0.7 percent, the most since Sept. 5, as of 11:46 a.m. in Tokyo. Standard & Poor’s 500 Index futures dropped 0.2 percent. The so-called Aussie weakened against all its 16 major peers and lost 0.4 percent to $1.0441. Copper and zinc futures in London slid at least 0.7 percent, while oil in New York dropped 0.2 percent.

China’s manufacturing may shrink in September for an 11th month, according to preliminary data for a purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics. Japan’s exports declined 5.8 percent in August from a year earlier, the Finance Ministry reported. Data later today may show the euro region’s services and manufacturing industries contracted this month.

“We’re very concerned about the near-term outlook for the global economic picture,” Peter Elston, Singapore-based head of Asia-Pacific strategy at Aberdeen Asset Management, said in a Bloomberg TV interview from Hong Kong today. “There’s some fairly significant weakness just around the corner. We’re fairly cautious.” His firm oversees about $270 billion.

About five stocks declined for every three that gained on the MSCI Asia Pacific Index. The Shanghai Composite Index dropped 1.2 percent, while South Korea’s Kospi Index slid 0.6 percent. Japan’s Nikkei 225 Stock Average fell 0.7 percent after jumping 1.2 percent yesterday, when the central bank unexpectedly expanded an asset-purchase program.

To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at [email protected]; Adam Haigh in Sydney at [email protected]

To contact the editor responsible for this story: Darren Boey at [email protected]

 

[Muthukali]

Jobless Claims to Leading Index Show Weakness: Economy
By Michelle Jamrisko and Lorraine Woellert - Sep 21, 2012 4:43 AM GMT+0800

More Americans than forecast filed claims for unemployment benefits and an index of leading indicators declined for second time in three months, adding to signs of weakness in the world’s largest economy.

Jobless claims decreased by 3,000 in the week ended Sept. 15 to 382,000, Labor Department figures showed today in Washington. The median forecast of 49 economists surveyed by Bloomberg projected 375,000. The New York-based Conference Board’s gauge of the outlook for the next three to six months fell 0.1 percent after a 0.5 percent increase in July.

Companies are holding back on hiring and investment as overseas demand cools and the prospect of tax increases and spending cuts in the U.S. threatens growth. At the same time, the Bloomberg Consumer Comfort Index climbed to a seven-week high, helped in part by stock-market gains that may offer more support for the household spending that accounts for 70 percent of the economy.

Today’s figures are “consistent with modest growth -- we’re not going into recession, there’s no sort of sign that activity is weakening substantially,” said Jeremy Lawson, senior U.S. economist at BNP Paribas in New York. “But there’s no sign of shifting into a higher gear, either.”

Most U.S. stocks fell as the U.S. data, combined with reports from Europe and Asia, reinforced concern the global slowdown is worsening. The Standard & Poor’s 500 Index lost less than 0.1 percent to 1,460.26 at the close of trading in New York after declining as much as 0.8 percent.

Europe Services
A euro-area services and manufacturing gauge fell to a 39- month low in September, London-based Markit Economics said today in an initial estimate, as European leaders struggled to reverse the single-currency bloc’s slide into recession.

In Asia, a Chinese manufacturing survey pointed to an 11th month of contraction and Japan’s exports fell in August, supporting the case for increased stimulus as the region’s growth slows.

Estimates for U.S. jobless claims in the Bloomberg survey ranged from 360,000 to 390,000. The Labor Department revised the previous week’s figure to 385,000 from an initially reported 382,000. Last week’s data covered the period surveyed by the government to calculate the September employment data.

The pace of hiring took a tumble last month. Payrolls rose by 96,000 workers in August after a revised 141,000 increase in July that was smaller than initially estimated, the Labor Department said on Sept. 7.

Fed Stimulus
The lack of progress in the labor market persuaded the Federal Reserve to announce further accommodation last week. The Fed said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month as it seeks to boost growth and reduce unemployment.

Another report today showed that manufacturing in the Philadelphia region shrank for a fifth straight month in September, reinforcing signs the industry will offer less support to the economy.

The Federal Reserve Bank of Philadelphia’s general economic index improved to minus 1.9, higher than forecast, from minus 7.1 in August. Readings less than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware. The median forecast of 62 economists surveyed by Bloomberg was minus 4.5.

Fiscal Cliff
Companies concerned about the so-called fiscal cliff include Caterpillar Inc. (CAT), the largest maker of construction and mining equipment. Combined tax increases and spending cuts of about $600 billion are set to take effect at the beginning of next year unless Congress acts.

“The thing that’s really hanging over us right now is there is a large tax increase pending here at year-end, and there are large spending cuts, government spending cuts, looming at yearend,” Michael DeWalt, director of investor relations at Peoria, Illinois-based Caterpillar, said in a Sept. 14 conference presentation. “If something is not done about that, it could be quite negative. So, it’s not a clear picture.”

Companies from Norfolk Southern Corp. (NSC) to FedEx Corp. are reducing profit forecasts as the slowing economy reduces demand for everything from shipments of commodities to overnight express envelopes.

At the same time, manufacturers were more optimistic about the next six months as the Philadelphia Fed’s future index climbed to 41.2, the highest since January, from 12.5.

Making Headway
Consumer confidence is also making headway. Americans’ view of the economic outlook improved in September as stock prices rallied to a five-year high, according to the Bloomberg Consumer Comfort survey.

The gap between positive and negative expectations narrowed to minus 8 this month, the highest reading since May, as the percentage saying the U.S. was heading in the wrong direction dropped by the most in three years. The weekly index rose to a seven-week high of minus 40.8 in the period ended Sept. 16 from minus 42.2.

The share of households viewing the economy as heading in the wrong direction dropped to 34 percent in September, the fewest since June, from 45 percent the prior month, according to the Bloomberg monthly expectations gauge. The 11-point improvement is the biggest since October 2009.

Women and Americans living in the Northeast were among the groups that showed the biggest declines in pessimism this month, the report showed. Those saying the economy was on the right track climbed to 26 percent this month from 23 percent in August.

Unexpected Gains
The Bloomberg Consumer Comfort Index is in line with the Thomson Reuters/University of Michigan preliminary consumer sentiment for September, which unexpectedly rose to a four-month high of 79.2, according to a report last week.

Growing confidence may help boost consumer spending after disappointing results last month. Sales at general merchandise, clothing and electronics stores dropped in August, data from the Commerce Department showed last week. Total retail sales increased 0.9 percent, the most in six months, led by demand for automobiles and a surge in receipts at service stations as gasoline prices climbed.

Kohl’s Corp. (KSS) of Menomonee Falls, Wisconsin, the third- largest U.S. department-store company, plans to hire more than 52,700 workers to help with year-end holiday sales, an increase of more than 10 percent from last year, according to a company statement this week.

To contact the reporters on this story: Lorraine Woellert in Washington at [email protected]; Michelle Jamrisko in Washington at [email protected]

To contact the editor responsible for this story: Christopher Wellisz at [email protected]

 

[Muthukali]

Asia Stocks Fall as Australian Dollar, Kiwi Weaken; Gold Drops
By Jason Clenfield and Adam Haigh - Sep 24, 2012 9:10 AM GMT+0800

Asian stocks dropped, with the regional benchmark retreating from near a four-month high, as the Australian dollar and New Zealand’s kiwi fell. Gold slid.

The MSCI Asia Pacific Index lost 0.3 percent as of 10 a.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed. Gold declined 0.5 percent to $1,763.55 per ounce, down from an almost seven-month high. The Aussie weakened 0.3 percent to $1.0426, while New Zealand’s dollar slid 0.5 to 82.5 U.S. cents. The euro slipped 0.1 percent against the greenback, following its biggest five-day decline in two months.

Chancellor Angela Merkel and President Francois Hollande clashed over the weekend on a timetable for starting joint oversight of the Europe’s banking sector, underlining Franco- German disagreement. German business sentiment remained near a two-year low, a report is forecast to indicate today, while China’s Beige Book showed manufacturers and retailers are less optimistic about sales than they were three months ago and are cutting jobs.

“A period of consolidation in the month ahead looks the more likely outcome,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth management unit. The Swiss bank has about $1.5 trillion in assets under management. “In Europe, there will continue to be some lingering challenges. As we approach the end of the quarter, investors will fine-tune and adjust their portfolios across all the asset classes.”

Monetary Stimulus
The MSCI Asia Pacific Index (MXAP) is trading within 1 percent of the highest level since May. The gauge has risen more than 6 percent since Sept. 6 after the European Central Bank started the latest wave of global easing, announcing unlimited bond purchases to curb the debt crisis. The Bank of Japan announced more asset purchases last week, following a third round of quantitative easing from the Federal Reserve.

The Ifo institute in Munich will probably say its business climate index, based on a survey of 7,000 executives, was at 102.8 this month from 102.3 in August, according to the median estimate of economists surveyed by Bloomberg News before the data on Sept. 24. Last month’s reading was the lowest since March 2010.

To contact the reporter on this story: Jason Clenfield in Tokyo at [email protected]; Adam Haigh in Sydney at [email protected]

To contact the editor responsible for this story: Shelley Smith at [email protected]

 

[Muthukali]

Oil, Metals Rebound as Nikkei 225 Gains Before Dividend Deadline
By Jason Clenfield and Adam Haigh - Sep 25, 2012 10:27 AM GMT+0800

Oil and metals rebounded from declines yesterday that almost erased gains this year for a benchmark commodities gauge. Japan’s stocks rose before a deadline on dividends.

Oil gained 0.4 percent to $92.30 a barrel as of 11:23 a.m. in Tokyo, after falling five of the last six days. Copper rebounded 0.7 percent from the biggest decline in more than a month yesterday. The euro was near the lowest in more than a week before reports that may show Europe’s debt crisis is hurting sentiment in the region. Japan’s Nikkei 225 Stock Average advanced 0.3 percent on the last day to buy most shares on the gauge and get a dividend. Standard & Poor’s 500 Index futures gained 0.3 percent after the gauge dropped a third day.

Data today may show U.S. home prices rose in July, which would back comments by Stuart Miller, chief executive officer of homebuilder Lennar Corp., that housing is “beginning to revert to normal.” Meanwhile concern about Europe’s ability to contain its debt crisis remains, with Nobel Prize-winning economist Joseph Stiglitz saying euro members will have to share debts and speed the creation of a banking union to prevent a situation in which “the whole system falls apart.”

“We expect the euro zone to muddle through its tortuous crisis-management process for a very long time,” said Benjamin Yeo, Singapore-based head of investment strategy at Barclays Plc’s wealth-management, which handles about $285 billion. “The region’s headwinds will remain a strong headwind for the global economy.”

Homes, Confidence
The MSCI Asia Pacific Index of regional shares swayed between gains and losses today. Treasuries halted a six-day rally, with the benchmark 10-year note yield rising one basis point to 1.72 percent.

An index from S&P/Case-Shiller may show home prices in 20 U.S. cities rose 1.1 percent in July from the year-before period, the most since August 2010, based on a Bloomberg News survey of economists before the report. The Conference Board’s index of consumer confidence probably rose to 63.2 in September from 60.6 in August, a separate poll showed.

Discord has widened over how to stem Europe’s fiscal woes, with disagreement on the establishment of a banking union, Spain’s indecision on whether it needs a full rescue and discussions in Greece on how to meet bailout commitments.

A report from Germany’s Ifo institute yesterday showed business confidence unexpectedly fell to the lowest in more than two and a half years in September. Data due today is forecast to show French business confidence worsened, while other reports may show consumer sentiment in Germany and Italy stagnated.

To contact the reporter on this story: Jason Clenfield in Tokyo at [email protected]; Adam Haigh in Sydney at [email protected]

To contact the editor responsible for this story: Nick Gentle at [email protected]

 

[Muthukali]

Asian Stocks Drop to Two-Week Low on Growth Concern; Won Climbs
By Glenys Sim and Adam Haigh - Sep 27, 2012 8:31 AM GMT+0800

Asian stocks fell to a two-week low, trimming a quarterly gain, as South Korean manufacturers’ confidence stayed near the lowest level since the financial crisis, adding to data signaling global growth may be waning amid concern Europe’s debt problems are worsening. The won advanced and oil climbed.

The MSCI Asia Pacific Index (MXAP) lost 0.1 percent at 9:28 a.m. in Tokyo, as Japan’s Nikkei 225 Index slid 0.4 percent and South Korea’s Kospi Index fell 0.3 percent. Standard & Poor’s 500 Index futures rose 0.2 percent and the won strengthened 0.2 percent. Oil gained 0.4 percent to $90.38 a barrel after dropping below $90 yesterday for the first time in eight weeks.

A Bank of Korea index of manufacturers confidence for October was at 72 from 75 the previous month, after reaching 70 in August, the lowest level since May 2009. The Bank of Spain said the economy kept falling at a “significant pace” in the third quarter. Reports yesterday showed new U.S. home sales trailed the median economist estimate, French consumer confidence dropped for a third month in September and Italian retail sales declined in July.

“Economic data is not improving,” said Mikio Kumada, a Singapore-based global strategist for LGT Capital Management, which oversees more than $20 billion. “A sudden economic rebound would come close to a miracle and agreements on fiscal policy will be much harder to achieve than the recent monetary policy decisions.”

U.S. stocks fell for a fifth day yesterday in the longest slump since July as protests against European austerity measures fueled concern the region’s fiscal crisis may escalate. Spanish protesters yesterday marched for a second night in Madrid, calling on Prime Minister Mariano Rajoy to reverse budget cuts, while police in Athens dispersed protestors with tear gas.

To contact the reporters on this story: Glenys Sim in Singapore at [email protected]; Adam Haigh in Sydney at [email protected]

To contact the editor responsible for this story: James Poole at [email protected]

 

[Muthukali]

Views divided on bid to revise pension system
Updated: 2012-09-27 02:45
By He Dan ( China Daily)

Proposal measures include raising retirement age and more premiums


Elderly residents take part in a cane aerobics competition in the Shizhong district in Zaozhuang, Shandong province, on Wednesday. About 6,000 senior citizens practice cane aerobics in the district.JI ZHE / FOR CHINA DAILY

The country's top social security fund administrator has suggested making people work longer and receive their pensions later to offset a pension fund shortfall. However, the public and experts expressed mixed reaction toward the proposal.

Dai Xianglong, chairman of the National Council for Social Security Fund and a former central bank governor, said the government should "modify the (current basic pension) system instead of passively putting aside more money" to offset a pension fund shortfall.

He advised that improving the current pension system should include moving back the retirement age for some people from 60 to 63 years old and asking employees to pay pension premiums for 35 years instead of the current 30 years.

Dai made the remarks in a keynote speech at a summit forum on economic development and boosting regional cooperation in Shanghai on Tuesday, local television reported.

Experts estimated that China could face a pension fund shortfall of 18.3 trillion yuan ($2.9 trillion) by 2013 due to accelerated population aging, according to Chinese media reports.

Zheng Bingwen, head of the Global Pension Fund Research Center at the Chinese Academy of Social Sciences, said on Wednesday that the pressure of pension shortfalls is growing because of the increasing life expectancy and shrinking workforce resulting from the family planning policy.

"To ask people to retire later is more feasible than asking them to pay a higher rate of insurance or reducing the benefits," he said.

In addition, "many developed economies set the retirement age at 65, and postponing retirement age is also a global trend," he said.

Zi Liang, deputy director of a real estate development company in Beijing, said he dislikes the idea of raising the mandatory retirement age.

"The Chinese workforce generally works longer hours and have less time for leisure than workers in many other countries. It's cruel to prolong their working life," the 32-year-old said.

"I may choose to retire later in life," he said, "but being forced to do so is the last thing I want."

Wei Shaobiao, who works for an NGO dedicated to poverty alleviation in Beijing, urged the government to improve its investment of the pension funds to increase their value.

Dai's proposal will only increase ordinary people's burden and broaden social injustice, said Wei, 26.

"Why do civil servants and employees of public institutions not have to pay contributions to get pensions while ordinary employees like us pay premiums and receive less than them after retirement?" he questioned.

In China, the State funds the pensions for public servants and permanent staff members at public institutions.

Zheng called the "double-track" system "unfair" and said that modifying pension programs without canceling the special treatment given employees of government departments and institutions will stir resistance from the public.

There are 8 million civil servants and more than 30 million employees in public institutions, Zheng said, without identifying the source of the data.

Lu Xuejing, a social security expert at Capital University of Economics and Business in Beijing, said the government should make up the pension fund shortfalls from fiscal revenue instead of reforming the pension system in a hurry.

Lu said shortfalls in pension programs only emerged in some regions, such as Shanghai, where population aging is more serious than in other parts of the country.

"Thanks to rapid economic growth, government's revenues keep increasing. If the government can reduce unnecessary spending on official receptions, cars and business trips, we will have enough money to cover the fund shortfalls," she said.

"China set up the pension system less than two decades ago. At this stage, frequently amending policies would be unwise and make people lose confidence in the system", she added.

Contact the writer at [email protected]

 

[Muthukali]

US lifting ban on Myanmar goods
Published: 27/09/2012 at 09:39 AM
Online news:

The United States will begin easing an import ban on goods from Myanmar, Secretary of State Hillary Clinton told Myanmar leader Thein Sein Wednesday, in a further lifting of sanctions on the country.

Clinton told the Myanmar president that in recognition of the rapid reforms his Southeast Asian nation, which was once ruled by a military junta, has undertaken "the United States is taking the next step in normalizing our commercial relationship."

"We will begin the process of easing restrictions on imports of Burmese goods into the United States. We hope this will provide more opportunities for your people to sell their goods into our market.

"As we do so, we will continue consulting with Congress and other relevant stakeholders about additional steps while at the same time working with you and supporting those who are hoping that the reforms will be permanent and that progress will continue."

Thein Sein met Clinton Wednesday ahead of his address to the UN General Assembly on Thursday, during a landmark visit to the United States that coincides with a triumphal American tour by opposition leader Aung San Suu Kyi.

"The people of Myanmar are very pleased with the easing of economic sanctions by the United States. We are very grateful for the actions of the United States," he told Clinton.

Thein Sein is expected to outline to the UN his plans for the future of his fast-changing nation during his first trip to the US since taking power last year and ushering in a period of rapid reform.

"We have watched as you and your government have continued the steady process of reform and we have been pleased to respond with specific steps which recognize the government's efforts and encourage further reform," Clinton added.

"The trip will open a new chapter with the international community," Zaw Htay, an official in the Presidential Office told AFP.

"He is expected to explain the reform process of the country including what the government has done and what it is going to do," said Zaw Htay.

Thein Sein, a former junta general who last week freed dozens of political prisoners, will have to share the limelight with Suu Kyi, who has been received with acclaim during her first trip to the US since she began her struggle for democracy more than two decades ago.

Since arriving in the country last week, the Nobel laureate has already received the Congressional Gold Medal, the top honor bestowed by the legislature, and has met President Barack Obama at the White House.

But while US officials have taken pains to stress that Thein Sein deserves credit for Myanmar's breathless pace of change after nearly half a century of junta rule, there are no official plans for him to meet Obama.

The United States last week lifted sanctions on the Myanmar president and lower house parliament speaker Shwe Mann, removing them from the US Treasury's list of "Specially Designated Nationals."

The pair were put on the list in 2007, when Thein Sein was prime minister and Shwe Mann was joint chief of staff of the armed forces, as America raised pressure on the ruling junta.

The agenda for Suu Kyi's unprecedented US tour includes nearly 100 events across the country but rules out a chance of her crossing paths with Thein Sein.


The United States will begin easing an import ban on goods from Myanmar, Secretary of State Hillary Clinton, pictured here at a United Nations Security Council meeting in New York, told Myanmar leader Thein Sein, in a further lifting of sanctions on the country.

 

[Muthukali]

Billionaire Soros pledges $1.5 million to Democratic "Super PACs"
By Alina Selyukh
WASHINGTON | Thu Sep 27, 2012 7:28pm EDT

(Reuters) - Billionaire financier George Soros has committed $1.5 million to "Super PACs" backing President Barack Obama and Democrats running for Congress in the November 6 election, officials with those groups said on Thursday.

Soros - a prominent donor to liberal political causes - has pledged $1 million to Priorities USA Action, which is running ads to help the Democratic president's re-election bid, and $500,000 to Majority PAC and House Majority PAC, which help Democratic congressional candidates, the officials said.

The move by Soros, who had remained largely on the sidelines of this year's Super PAC fundraising barrage, could trigger more big checks from wealthy Democrats who previously avoided giving to the groups, citing dismay over the growing role of money in politics.

Super PACs are outside groups formally unaffiliated with campaigns. They have been raking in unlimited amounts from individuals, corporations and unions to support candidates or issues.

Until this year, Soros, whose net worth is estimated by Forbes at $19 billion, held the record as the biggest contributor in an election cycle for the $27.5 million he estimated he spent in 2004 to try to defeat Republican President George W. Bush.

His record was eclipsed this year by Las Vegas casino owner Sheldon Adelson, who says he has given $70 million to help Republicans in the 2012 election.

Soros' adviser said previously that the financier was more focused in this campaign on grass-roots political organizing.

Soros last year made six-figure donations to the Majority and House Majority PACs and pledged $2 million earlier this year to American Bridge 21st Century, a research-focused Super PAC that does no ads, and America Votes, a group that helps coordinate campaign work for liberal groups nationwide [ID:nL1E8G80B3].

Soros' new pledges to the trio of Democratic Super PACs was revealed on Thursday at a gathering of big liberal donors known as Democracy Alliance, according to The New York Times, which first reported the commitment.

In August, Priorities USA for the first time raised more than its Republican counterpart that backs Mitt Romney in his bid for the presidency - $10.1 million to $7 million.

At the end of last month, Priorities USA had $4.8 million left in cash on hand, compared with $6.3 million left in the coffers of the pro-Romney Restore Our Future.

The Majority and House Majority PACs also saw fundraising increase in August. Democratic fundraisers said donors felt increased urgency in the last weeks before Election Day and in the face of powerful Super PACs backing Republican candidates.

(Additional reporting by Eric Johnson; Editing by Alistair Bell and Peter Cooney)

 

[Muthukali]

S&P 500 Posts Biggest Weekly Drop Since June on Economy
By Inyoung Hwang - Sep 29, 2012 6:25 AM GMT+0800

U.S. stocks fell for the week, as the Standard & Poor’s 500 Index posted its biggest drop since June, on concern Europe’s debt crisis is worsening and stimulus measures may not be enough to boost economic growth.

The S&P Supercomposite Homebuilding Index (S15HOME) slid 7.3 percent for the first drop in five weeks amid worse-than-expected housing data. Technology stocks and commodity producers led declines as investors sold shares of companies most tied to economic swings. Apple (AAPL) Inc. posted its biggest drop since May after the release of its iPhone 5. Caterpillar Inc. (CAT) slid 6.2 percent as it cut its earnings forecast.

The S&P 500 erased 1.3 percent to 1,440.67, the biggest weekly slump since June 1. The benchmark index still climbed 2.4 percent in September for the fourth straight monthly gain, and ended the third quarter with a 5.8 percent advance. The Dow Jones Industrial Average (INDU) lost 142.34 points, or 1.1 percent, to 13,437.13 for the week.

“The economy doesn’t have much in the way of momentum,” James Dunigan, who helps oversee $110 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. The Federal Reserve “is doing all it can but it’s really just more of a safety net than any real igniter. They’re trying to awaken animal spirits but they’re not getting very far.”

Data during the week showed the U.S. economy grew 1.3 percent in the second quarter, less than previously estimated, while monthly U.S. business activity unexpectedly contracted for the first time in three years. At the same time, confidence among American consumers rose to a four-month high.

Austerity Package
Stocks fell as European leaders clashed on ways to stem the debt crisis. The Bank of Spain said the economy kept falling at a “significant pace” in the third quarter, and the government announced its fifth austerity package in what may be a move to head off tougher conditions demanded as part of a potential European bailout. China’s manufacturers and retailers are less optimistic about sales than they were three months ago and are cutting jobs, according to a survey.

Equities also slumped as Charles Plosser, president of the Philadelphia Fed, said in a Sept. 25 speech that the stimulus program announced this month probably won’t boost growth or hiring and may jeopardize the central bank’s credibility. The S&P 500 reached an almost five-year high on Sept. 14 after the Fed unveiled another round of quantitative easing and the European Central Bank announced an unlimited bond-buying plan.

The equity index has advanced since June 1 amid optimism central banks around the world will take steps to stimulate the economy. It is 8.6 percent from its all-time record set in October 2007.

Dribs, Drabs
“The major push in September was from the ECB and the idea that the euro zone will survive,” Brian Jacobsen, who helps oversee about $209 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said by e-mail. “There’s the prospect of fiscal stimulus from China, which will likely come in dribs and drabs until the changeover in leadership,” he said. “All of this conspires to push stocks higher.”

Nine out of 10 groups in the S&P 500 fell for the week, with companies most tied to economic growth posting the biggest declines. The Morgan Stanley Cyclical Index (CYC) dropped for the second week, falling 3 percent.

The S&P Supercomposite Homebuilders Index lost 7.3 percent for its first weekly drop since Aug. 24. Purchases of new U.S. homes declined 0.3 percent in August to a 373,000 annual pace, compared with economists’ estimates for a rise to 380,000. Americans also signed fewer contracts than forecast to purchase previously owned homes in August.

Homebuilders Tumble
All 11 stocks in the gauge fell. PulteGroup Inc. (PHM), the largest U.S. homebuilders, declined 8.7 percent to $15.50. Toll Brothers Inc. (TOL), the biggest luxury-home builder in the U.S., slumped 8.8 percent to $33.23.

Material and energy stocks declined 1.9 percent and 1.5 percent, respectively. Caterpillar slid 6.2 percent, the most since May 18, to $86.04 as the world’s biggest construction and mining equipment maker cut its forecast for 2015 earnings after commodity producers reduced capital expenditure.

“We’ve seen a slowing in economic growth that was more than we expected,” Chairman and Chief Executive Officer Doug Oberhelman said in a presentation to analysts at the MINExpo industry conference in Las Vegas. “We think ’13 could look like 2012 in terms of worldwide economic growth.”

Technology companies slumped the most among the 10 groups, retreating 2.4 percent. Apple, the world’s most valuable company, fell 4.7 percent to $667.11 for its biggest drop since May 18 and first weekly slump since July.

IPhone Sales
Debut weekend sales for Apple’s iPhone 5 fell short of some analysts’ estimates after supply constraints delayed shipments. Later in the week, Chief Executive Officer Tim Cook apologized for Apple’s new iPhone mapping application, which replaced Google Inc. (GOOG)’s software and has been criticized for flaws such as misrouted directions and inaccurately located landmarks.

Google rallied for an 11th straight week. The shares gained 2.8 percent to $754.50 and touched a record $756.50 during the week.

Jabil Circuit Inc. (JBL), a supplier for Apple, plunged 13 percent to $18.72. The company reported profit excluding some costs was 54 cents a share in the fourth quarter, trailing the analysts (SPLS)’ average estimate by 4 cents, data compiled by Bloomberg show, a sign that higher spending to manufacture casings for Apple’s iPhone 5 is crimping margins.

NetApp Inc. (NTAP), which Jabil counts among its biggest customers, erased 9.3 percent to $32.88.

Closing Stores
Staples Inc. slumped 6.8 percent to $11.52. Analysts at Credit Suisse Group AG and Citigroup Inc. said the largest U.S. office-supply chain’s plan to revive profits that included closing 60 stores this year was not sufficient.

“While it would be unfair to characterize Staples’ announced moves this morning as simply moving deck chairs on the Titanic, they were not as impactful or far reaching as we and others were hoping,” Credit Suisse’s Gary Balter wrote in a Sept. 25 note.

Accenture Plc (ACN), the world’s second-largest technology consulting company, rose 7.3 percent for the biggest gain in the S&P 500 to a record $70.03 after forecasting full-year earnings topping analysts’ estimates amid a gain in outsourcing bookings.

First Solar Inc. (FSLR) rallied 4.5 percent to $22.15 for the third-largest advance in the S&P 500. The world’s biggest maker of thin-film panels may win a contract to supply NextEra Energy Inc. for what would be the world’s biggest solar farm. NextEra is considering thin-film cadmium telluride solar panels as one possible technology for its 1,000-megawatt Blythe project in southern California, according to a document filed with the California Energy Commission on Sept. 24.

Home Depot Inc. (HD) jumped 1.6 percent to $60.37, the highest level since April 2000. Shares of the largest U.S. home- improvement retailer have surged 44 percent this year amid signs of recovery in the U.S. housing market.

To contact the reporter on this story: Inyoung Hwang in New York at [email protected]

To contact the editor responsible for this story: Lynn Thomasson at [email protected]

 

[Muthukali]

Markets slide as focus remains on Spain
By PAN PYLAS
Associated Press
2012-09-28 11:57 PM

Market fell on Friday as investors continued to fret over Spain's finances in the run-up to a report on the state of the country's banks.

Trading was volatile, possibly due to the fact that Friday is the last day of the financial quarter, the deadline for certain trades and contracts to be settled. This sometimes involves buying and selling large amounts of stocks at the last minute in order to make a profit on a deal.

Investors were cautious over Spain, a day after the country's government announced big spending cuts it hopes will convince potential bailout creditors and investors it has a rock-solid plan to heal its public finances.

Traders are waiting for the publication later in the day of the results of stress test results into 14 of the country's banks. The tests are expected to identify a capital shortfall of around (EURO)60 billion ($77 billion).

Rating agency Moody's is also expected to issue an evaluation of Spain's creditworthiness. There are concerns the agency will downgrade Spain's government debt to junk status.

Craig Erlam, markets analyst at Alpari, said a downgrade to junk status could "create some panic" among holders of Spanish debt.

"The positive side to this is this could accelerate the bailout request," Erlam said. The other 16 countries that use the euro and the European Central Bank are prepared to help Spain financially, should it need it, but Madrid has so far put off a request.

Madrid's IBEX index was one of the worst performers in Europe as investors awaited developments. The IBEX fell 1.7 percent to close at 7,708.50.

Elsewhere, Germany's DAX ended 1 percent lower at 7,216.15 while the CAC-40 in France fell 2.5 percent to 3,354.82. The FTSE 100 index of leading British shares dropped 0.7 percent to 5,742.07.

In the U.S., the Dow Jones industrial average was 0.7 percent lower at 13,398.19 while the broader S&P 500 index fell 0.7 percent to 1,437.63.

In other financial markets, the euro was down 0.4 percent at $1.2849 and a barrel of oil was down 15 cents at $91.70.

Earlier in Asia, stocks had been buoyed by speculation that China's central bank will act soon to help the world's No. 2 economy.

Hong Kong's Hang Seng Index rose 0.4 percent to 20,840.38. South Korea's Kospi added nearly 0.4 percent to 1,996.21. But Japan's Nikkei 225 index lost 0.9 percent to 8,870.16, sinking on a government report that showed industrial production fell a further 1.3 percent in August.

Mainland Chinese shares rose ahead of an extended holiday next week. The Shanghai Composite Index gained 1.5 percent to 2,086.17 and the Shenzhen Composite Index rose 1.9 percent to 853.83.

 

[Muthukali]

India PM: Reforms here to stay
Published: 29/09/2012 at 09:04 PM
Online news: News

Indian Prime Minister Manmohan Singh vowed on Saturday to press ahead with reforms to further liberalise the country's still inward-looking economy, undeterred by strong political opposition.

Singh's government announced in September a sudden blitz of reforms designed to open the retail, aviation and broadcasting sectors to more foreign investment and revive an economy in which growth stalled at around three-year lows.

"We will do what is good for the country... reforms are not a one-off process," Singh told reporters in New Delhi.

The reforms have prompted a coalition ally to pull out of the Congress-led government and a string of protests nationwide.

But they have been warmly greeted by business and investors, with the Indian currency hitting a five-month high of 52.49 rupees against the dollar Friday as more foreign investment has poured in.

Singh, who was speaking on the sidelines of the swearing-in of India's new chief justice, Altamas Kabir, did not outline what new steps he plans, but analysts expect him also to liberalise the insurance and other sectors.

The premier had no comment on a report by a government panel late Friday that warned India faced a "fiscal precipice" and called on New Delhi to phase out fuel, food and fertiliser subsidies to rein in a ballooning deficit.

"We cannot overemphasise the need and urgency of fiscal consolidation," the panel said, warning corrective moves were an "imperative necessity" as India's "external payment situation is flashing red lights".

Singh's left-leaning government is deeply wary of cutting subsidies, especially on food, in the still heavily poor country of 1.2 billion people, fearing a voter backlash in general elections due in 2014.

The panel headed by former Indian finance secretary Vijay Kelkar also called for stepping up sales of stakes in state-owned firmed and revamping India's archaic, patchwork tax system that drives up company costs.

India could find itself in a worse financial state than during 1991 balance-of-payments crisis when the country teetered on the edge of bankruptcy and was forced to seek a bailout by the International Monetary Fund.


"Reforms are not a one-off process," says PM Manmohan Singh.

 

[Muthukali]

Survey shows China manufacturing contracting
Associated Press
2012-10-01 10:40 AM

A new survey shows Chinese manufacturing contracted again in September in a sign of enduring economic weakness.

An industry group, the China Federation of Logistics & Purchasing, said its monthly purchasing managers' index stood at 49.8 points on a 100-point scale on which numbers below 50 indicate a contraction. That was up 0.6 points from August's numbers.

Some analysts have suggested China's deepest economic downturn since the 2008 global crisis is stabilizing but officials including President Hu Jintao have warned conditions might deteriorate further before growth rebounds.

China's economic growth fell to a three-year low of 7.6 percent in the quarter ending in June. That is strong by Western standards but has hurt Chinese manufacturers and construction companies that depend on high growth.

 

[Muthukali]

Asian stocks quiet amid holidays; Nikkei declines
By PAMELA SAMPSON
Associated Press
2012-10-01 10:38 AM

Japan's benchmark Nikkei 225 index fell Monday after a closely watched survey showed confidence in the economy weakening.

The Bank of Japan's "tankan" confidence index was minus 3, a worsening from the previous quarter's minus 1.

The index is a percentage of the companies with a positive outlook versus those who see unfavorable conditions ahead, so a minus number means there are more pessimistic companies than optimistic ones.

Australia's S&P/ASX 200 rose marginally to 4,390.20, with solid gains among big banks and resource shares. Still, trading was light due to a public holiday in parts of the country.

Markets in China, Hong Kong and South Korea were closed for public holidays.

Wall Street stocks fell Friday. Investors remain nervous about Spain, even though the results of stress-tests for the country's most troubled banks contained no surprises. A report in the U.S. showing that high gasoline prices were the only reason that consumer spending rose last month also weighed on market sentiment.

The Dow Jones industrial average fell 0.4 percent to 13,437.13. The S&P 500 index fell 0.5 percent to 1,440.67. The Nasdaq composite index fell 0.7 percent to 3,116.23.

Benchmark oil for November delivery was down 68 cents to $91.51 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 34 cents to finish at $92.19 per barrel on the Nymex on Friday.

In currencies, the euro fell to $1.2828 from $1.2855 late Friday in New York. The dollar fell to 77.91 yen from 77.99 yen.

 

[Muthukali]

Manufacturing in U.S. Expands Unexpectedly as Orders Rise
By Michelle Jamrisko - Oct 2, 2012 1:24 AM GMT+0800

Manufacturing unexpectedly expanded in September after three months of contraction, reflecting stronger orders that ease concern the U.S. economy will slow further.

The Institute for Supply Management’s factory index rose to 51.5 last month from 49.6 in August, the Tempe, Arizona-based group said today. Readings above 50 show expansion, and the September measure exceeded the most optimistic forecast in a Bloomberg survey.

Stocks extended gains after the figures showed American factories are holding up in contrast to their counterparts in Europe and Asia. Sustained strength in motor vehicle sales and a rebound in demand for home construction materials are helping cushion manufacturers from weaker exports and cutbacks in business investment.

“Housing is definitely supporting,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “The economy still seems to be expanding, even if modestly, and that should keep overall manufacturing growing.” Still, “it’s hard to see things materially accelerating from here.”

The median forecast in the Bloomberg survey was 49.7, and estimates from the 76 economists surveyed ranged from 48 to 51.2. A reading above 42.6 generally indicates an expansion in the overall economy, the ISM said. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.

Construction Spending
Homebuilding outlays climbed 0.9 percent in August, a report from the Commerce Department showed today. A drop in non- residential projects pushed down overall construction spending by 0.6 percent, the most since July 2011.

Federal Reserve Chairman Ben S. Bernanke today renewed a pledge to sustain record stimulus even after the U.S. expansion gains strength, while saying policy makers don’t expect the economy to remain weak through 2015.

“We expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens,” Bernanke said in a speech in Indianapolis. Policy makers’ forecast to hold the main interest rate near zero until at least mid-2015 “doesn’t mean that we expect the economy to be weak through” that year.

The Standard & Poor’s 500 Index climbed 0.3 percent to 1,444.49 at the close in New York. Treasuries were little changed with the yield on the benchmark 10-year note at 1.62 percent compared to 1.63 late on Sept. 28.

Orders, Employment
The ISM’s new orders measure rose to a four-month high of 52.3 from 47.1. The employment index advanced to 54.7 from an almost three-year low of 51.6 the prior month. The gain from August was the biggest since October 2009. The group’s measures of production, export demand, prices paid and order backlogs also climbed in September.

A pickup in new-home construction and stronger auto sales are sources of strength for manufacturing. Housing starts increased in August, reflecting the strongest pace of single- family projects in more than two years, Commerce Department figures showed Sept. 19.

Autos in August sold at a 14.46 million annual rate, the fastest since the surge in August 2009 tied to the government’s “cash-for-clunkers” program. They were up from a 14.05 million pace in July, according to data from Ward’s Automotive Group.

The ISM figures compare with others showing weakness worldwide. In the euro-area, manufacturing contracted for a 14th month in September, suggesting the economy may have struggled to avoid a recession in the third quarter. A gauge of the industry in the 17-nation currency region based on a survey of purchasing managers was 46.1, Markit Economics said today. The index has held for 14 months below 50, indicating contraction, and fell as low as 44 in July.

U.K. Manufacturing
U.K. factories shrank more than economists forecast and export orders declined for a sixth month. A measure based on a survey of purchasing managers fell to 48.4 from 49.6 in August, Markit Economics and the Chartered Institute of Purchasing and Supply said in London today.

In China, manufacturing contracted for an 11th straight month, increasing pressure on the government to bolster growth in the world’s second-largest economy. The purchasing managers’ index from HSBC Holdings Plc and Markit Economics was at 47.9 last month, compared with 47.6 in August. Export orders declined at the fastest pace in 42 months and factory purchasing activity fell for a fifth consecutive month, the Sept. 29 report showed.

‘Surprisingly Good’
“Manufacturing in the U.S. looks surprisingly good against a backdrop of weak performance in China and the euro area and the looming fiscal cliff,” said Dirk Chlench, head of bond research at Landesbank Baden-Wuerttemberg in Stuttgart, Germany, who had the highest ISM projection, 51.2, in the Bloomberg survey.

Still, some companies, like steel-processor Worthington Industries Inc. (WOR), are tempering their outlook.

“We don’t have a great deal of clarity on where the economy is going,” John McConnell, the Columbus, Ohio-based company’s chairman and chief executive officer, said on a Sept. 27 earnings call. “We’re also not saying that everything’s horrible out there. We’re saying we have some reason to be cautious.”

Caterpillar Inc. (CAT), the world’s biggest construction and mining equipment maker, last week cut its forecast for 2015 earnings after commodity producers reduced capital expenditures. While a global recession remains possible, Caterpillar is forecasting moderate and “anemic” growth through 2015, Chairman and Chief Executive Officer Doug Oberhelman said in a presentation to analysts on Sept. 24.

Europe’s Economy
“We are in no way thinking we’re going to see a recession in 2013,” Oberhelman said. “Europe’s in recession today, probably going be a while to dig out.”

To boost growth and stimulate more hiring that may provide a spark for the economy, the Fed last month said it would keep its target interest rate close to zero until at least mid-2015 and began a third round of stimulus, buying $40 billion in mortgage bonds a month.

“If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate,” the Federal Open Market Committee said Sept. 13 in a statement at the end of a two-day meeting in Washington.

To contact the reporter on this story: Michelle Jamrisko in Washington at [email protected]

To contact the editor responsible for this story: Christopher Wellisz at [email protected]

 

[Muthukali]

SEC Leads From Behind as High-Frequency Trading Shows Data Gap
By Nina Mehta - Oct 2, 2012 7:00 AM GMT+0800

The U.S. Securities and Exchange Commission, stung by criticism that it lacks the knowledge to analyze the computerized trading that has come to dominate American stock markets, is planning to catch up.

Initiatives to increase the breadth of data received from exchanges and to record orders from origination to execution are at the center of the effort. Gregg Berman, who holds a doctorate in physics from Princeton University, will head the commission’s planned office of analytics and research.

“What we will focus on is trying to shed more light on some of the big outstanding questions about market structure,” Berman said in an interview in Washington. “What is the impact of high-frequency trading? What’s the effect of high rates of order cancellations? What’s the connection between exchange- traded funds and individual stocks? How might different rules impact the market?”

Berman’s team will assess how market behavior has been altered after 15 years of regulatory reform and advances in technology that have left trading fragmented across 13 competing exchanges, 10 options markets and dozens of venues operated privately by brokerages. SEC Chairman Mary Schapiro, spurred into action by the stock rout of May 6, 2010, has made improving data collection a priority.

Too Long
High-frequency strategies, which process massive amounts of quote and transaction data and rely on the rapid-fire submission of orders to exchanges, account for 51 percent of U.S. equity volume, up from 35 percent in 2007, according to research firm Tabb Group LLC. They include electronic market making, statistical arbitrage and tactics based on price movements in indexes compared with their constituent stocks.

Critics say the commission isn’t moving fast enough to rein in the quickest traders and that money-raising functions such as initial public offerings are being harmed by perceptions the market is geared toward speculators. Initiatives similar to the so-called consolidated audit trail, meant to enhance order tracking, have been around since the early 1980s, said David Weild, the New York-based head of capital markets with Grant Thornton LLP.

“It’s amazing it’s taken 30 years,” Weild, a former vice chairman of Nasdaq Stock Market, said in a phone interview. “Meanwhile, there’s been an arms race on Wall Street and the SEC is outclassed in its ability to reconstruct events and look for vulnerabilities.”

Facebook, Knight
Concern for the stability of U.S. markets has increased following the so-called flash crash of May 2010, the botched initial public offering of Facebook Inc. (FB) in May and Knight Capital Group Inc. (KCG)’s $440 million trading loss in August. The SEC has scheduled a meeting today in Washington for industry professionals and academics to discuss ways to limit technology breakdowns.

The proliferation of venues, faster trading speeds and the use of increasingly complex orders warrant a coordinated review of regulations that made the market more complicated and helped high-frequency trading flourish, Joseph Mecane, head of U.S. equities at NYSE Euronext (NYX), said at a conference in Washington last month. The analysis should focus on Regulation NMS, the set of rules implemented in 2007 to foster competition among exchanges and drive costs down for investors, he said.

According to Berman, the key to understanding what’s going on and whether rule changes are warranted is first figuring out the right questions to ask and what the data can reveal. Regulators can’t answer everything, he said.

Quantitative Analysis
“The art of quantitative analysis is knowing what you’re supposed to plot on the X axis versus the Y axis so it actually reveals something interesting and actionable,” he said. “It’s about knowing when the result tells you something real and when it’s just an artifact of the data. Sometimes quantitative analysis requires serious math and writing computer programs that go through a complex algorithm, but not always.”

The SEC has two initiatives to make his job easier. Schapiro proposed a mechanism for tracking all order and trading information known as the consolidated audit trail within weeks of the 2010 crash, which briefly erased $862 billion from U.S. share values. The system will trace customer data and the way orders are passed between brokers and private dark pools before they’re completed or canceled, information that has never before been compiled.

It also acquired a research tool from high-frequency firm and technology vendor Tradeworx Inc. What the SEC calls its market information data analytics system, or Midas, will collect trading data that exchanges provide to the high-speed firms and brokers that want information milliseconds before the public. The feeds also include data not available elsewhere.

Audit Trail
The audit trail won’t be in place for several years and the industry hasn’t figured out how much it will cost and who will pay for it. Midas will be fully rolled out by the end of 2012, Berman said. It won’t include information about the one-third of trading that occurs away from exchanges.

“We’re starting with the equities market because there’s a system we can implement quickly,” Berman said. His group may also be able to conduct data-driven research into how other markets function, such as equity options, corporate bonds and exchange-traded products. Still, he said, the research starts with formulating the right questions. “We unfortunately don’t have a HAL 9000 or Star Trek-type computer where you simply throw data at it and it spits out the answer,” he said.

Market Crashes
Data will be gathered to analyze market crashes and other events, discern trends related to how liquidity is provided and how often order cancellations occur, and monitor markets, according to Berman. If automated checks spot an anomaly, analysts can probe the data to decide if further investigation is warranted, he said. The SEC can also use data to inform rulemaking and policies, he said.

In response to asset managers who say that existing orders disappear when they try to buy or sell shares, the SEC can look at instances with individual stocks to see if that happens and how long it takes to “eat through the available liquidity,” said Berman, who is a special adviser to the director of the SEC’s division of trading and markets. The office of analytics and research will be housed within that division.

Some automated strategies may cancel more than 90 percent of the orders they send to exchanges, the SEC said in a 2010 report. Critics such as investment manager T. Rowe Price Group Inc. and broker Themis Trading LLC say the traffic rates and potentially abusive behavior mitigate benefits of high-frequency trading, such as tighter spreads between the best bids and offers.

‘How Markets Work’
“We can actually provide some metrics around some of the anecdotes from institutions that say the volume is fleeting, that it’s there and then it’s not,” Berman said. “Are there patterns between cancels and the size of a stock? How do cancels affect large versus small-cap stocks, or ETFs? This analysis can help us generate more information about how markets work.”

Berman, who studied experimental and nuclear physics, developed trading strategies in commodities and stocks at a hedge fund and became a founding member of RiskMetrics Group Inc. in 1998 when JPMorgan Chase & Co. spun off the company. He writes programming code and did some of the flash-crash modeling when the SEC examined how trade requests were withdrawn from exchange order books that day.

The analytics and research office plans to hire traders from banks and hedge funds as well as financial engineers and individuals with quantitative and analytical skills. It’s looking for programmers in the C++ computer language and “UNIX gurus who really know how to get under the hood and in former lives may have written trading programs and now are going to write analytical programs,” Berman said.

Monitoring Programs
Berman’s group will devise monitoring programs and look for patterns and outliers that might indicate nefarious behavior or market manipulation. It will also study message traffic to spot delays between the proprietary data feeds and the public streams, Berman said. The SEC fined the New York Stock Exchange $5 million last month for sending information to its private feeds faster than it provided the data to the public.

Those drawn to Wall Street because they want to analyze risk will also be welcome, he said.

“Some people thrive on the pressure,” Berman said. “If they can’t lose their shirt in a day, they don’t feel like they’ve lived. But there’s a certain percentage who say ’I have to tolerate that and bear it because I’m interested in analyzing the risk.’ Those are the people that we’re looking for -- people who want to understand the markets without having to commit to the life of someone who trades on Wall Street.”

To contact the reporter on this story: Nina Mehta in New York at [email protected]

To contact the editor responsible for this story: Lynn Thomasson in New York at [email protected].

 

[Muthukali]

Google surpasses Microsoft in market value
Taiwan News, Website Editorial Staff
2012-10-02 11:06 AM

Google Inc. has surpassed Microsoft Corp. to become the second-most valuable tech company in the U.S. by market value.

On Monday, a slight bump in Google’s share price and a drop in Microsoft’s gave Google a market capitalization of $249.19 billion, just ahead of Microsoft’s $247.44 billion. Google’s market value also edged past that of Wal-Mart Stores, making it the third most valuable U.S. company behind Apple and Exxon Mobil.

It was one more sign that the technology industry has entered what some call a post-PC era. Investors are becoming more bullish on the growth opportunities ahead for Google, a company whose fortunes are predicated on the Internet and, increasingly, on mobile devices and services.

Microsoft, meanwhile, has not been able to shake the view that its software business is still largely beholden, in one way or another, to the PC, a technology that is now looking stale next to younger, faster-growing devices like the smartphone and tablet. Microsoft’s software business, though still highly profitable, is not growing the way it once was.

Microsoft once had one of the technology industry’s highest-flying stocks, but its shares have stagnated over the past decade after many big investments by the company, especially in the consumer market, failed to pay off. Its Bing search engine is a big money-loser and a distant second in the market behind Google. Its mobile software business has been marginalized by Apple and Google with their iPhone and Android products.

Google’s attempts to find other sources of revenue, like display and mobile ads, have potential. But many investors had not been convinced, because it takes new businesses some time to grow, and because a business must be very profitable to be more than a drop in the bucket of Google’s earnings from search ads. At the same time, Google’s experiments, like self-driving cars or Groupon-style deals, made some worry that it was throwing money at the wrong places.

Now, however, Google is beginning to convince investors that it is more than a one-trick pony. There is evidence that it has successfully expanded beyond search ads, including with display ads on YouTube and mobile ads on Android phones and other devices. The stock is up 18 percent this year.

Google is expected to topple Facebook and Yahoo this year as the leader in online display advertising, bringing in $2.31 billion in display ad revenue, according to eMarketer. The speed at which Google has come to dominate display advertising surprised analysts who study the company and the advertising industry.

Microsoft’s revenues are still larger than those of Google and are likely to remain so for a while. For the quarter that ended June 30, Microsoft posted revenue of $18.06 billion, while Google reported revenue of $12.21 billion. But while analysts expect Microsoft’s revenue to grow in the high single digits for the next couple of years, they believe Google’s revenue could rise roughly 27 percent next year.

“They have vastly different growth prospects,” said Bill Whyman, an analyst at International Strategy & Investment.

Two years ago, Steve Jobs, Apple’s chief executive then, began promoting the idea that the rise of the iPhone, iPad and other mobile devices heralded the arrival of a post-PC era. That argument gained credence with investors, helping to propel Apple’s market value past Microsoft’s.

Google has a long way to go before it catches Apple, which has a market value of $618.44 billion.

 

[Muthukali]

RBA Cuts Key Rate to 3.25% as Commodities Ease on Global Outlook
By Michael Heath - Oct 2, 2012 12:31 PM GMT+0800

The Reserve Bank of Australia cut its benchmark interest rate to the lowest level since 2009 as a global slowdown weakens commodity prices that have helped drive 21 years of growth without a recession.

Governor Glenn Stevens and his board lowered the overnight cash-rate target by a quarter percentage point to 3.25 percent, the central bank said in a statement in Sydney today. The decision to end a three-month pause was predicted by nine of 28 economists surveyed by Bloomberg News.

Prices of the nation’s key exports, iron ore and coal, have declined in recent months as Europe’s fiscal crisis weighs on global growth and Chinese demand. Stevens’s decision to add to rate reductions in May and June reflects signs of weakness in the labor market, subdued inflation and a slowdown in consumer spending.

“The case for more expansionary monetary policy conditions is compelling,” Bill Evans, chief economist at Westpac Banking Corp. (WBC) in Sydney, said before the decision. “A loss of momentum in the domestic economy,” a weaker global backdrop and the currency’s sustained strength are among the factors, he said.

The local dollar has remained above parity with its U.S. counterpart for all but 23 days this year. It traded at $1.0370 at 2:25 p.m. in Sydney, about 40 percent higher than the average since exchange controls were scrapped in 1983.

Weaker Data
Since the RBA’s Sept. 4 meeting, government data indicated a weaker economy: growth slowed in the second quarter to 0.6 percent from 1.4 percent in the first three months of the year; employers unexpectedly cut payrolls in August; the nation recorded a wider-than-expected trade deficit in July; and business confidence declined.

A quarter of Australia’s exports, making up about 5 percent of gross domestic product, goes to China, and 60 percent of those shipments are iron ore. China’s manufacturing contracted a second month for the first time since 2009, a government survey indicated yesterday.

The data and a contraction shown by a similar gauge Sept. 29 add to signs that China’s growth is at risk of reaching a 22- year low as the ruling Communist Party prepares to begin installing a new generation of leaders next month. China’s central bank has held off from adding to rate cuts in June and July, partly on concern housing prices will rebound, Chen Yulu, a People’s Bank of China academic adviser, said last week.

Australia’s economy grew about 4 percent in the first half of 2012 from a year earlier on the strength of resource-industry investment and consumer spending. Still, weaker commodity prices and an elevated currency prompted mining companies including BHP Billiton Ltd. (BHP) and Fortescue Metals Group Ltd. (FMG) to put off projects and cut jobs in the past two months.

Australian commodity prices declined 4.3 percent in August from the prior month and 18.5 percent from a year earlier in Australian dollar terms, a central bank index showed last month. The gauge reached the lowest level since April 2010.

The RBA lowered borrowing costs by 1.25 percentage points from November to June to help shield the economy from Europe’s debt crisis and slower growth in China.

To contact the reporter on this story: Michael Heath in Sydney at [email protected]

To contact the editor responsible for this story: Stephanie Phang at [email protected]