It seems alot but from below it seems this will not bring a turning point to the problems !!
Still a lot of uncertainty !!
Per Bloomberg.com :
"Dec. 21 (Bloomberg) -- The European Central Bank will lend euro-area banks more than economists forecast for three years in its latest attempt to keep credit flowing to the economy during the sovereign debt crisis.
The Frankfurt-based ECB awarded 489 billion euros ($645 billion) in 1,134-day loans, more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The ECB said 523 banks asked for the funds, which will be lent at the average of its benchmark rate -- currently 1 percent -- over the period of the loans. They start tomorrow.
Government bond markets may continue to rally if demand for the three-year loans exceeds 250 billion euros, Steven Barrow, head of Group of 10 currency strategy at Standard Bank Plc in London, said before the ECB announced the results.
Europe’s debt crisis has increased the risk of government and bank defaults, making institutions wary of lending to each other and driving up the cost of credit. The ECB is trying to ensure that banks have access to cheap cash for the medium term so that they can keep lending to companies and households. In addition to the longer-term loans, the ECB has widened the pool of collateral banks can use to secure the funds.
Italian and Spanish government bond yields have dropped since the ECB announced the loans on Dec. 8 as banks buy the securities to use them as collateral. French President Nicolas Sarkozy has suggested banks could use the loans to buy even more government debt.
‘Carry Trades’
"What the ECB wants is that the funds be used by banks to keep handing out loans," said Michael Schubert, an economist at Commerzbank AG in Frankfurt. "But there’s a second argument, which is to do carry trades by borrowing on the cheap at the ECB and buying sovereign bonds. We don’t know what the banks are using the money for."
ECB Vice President Vitor Constancio in a Dec. 19 interview predicted "significant" demand for the loans as banks face "very high refinancing needs early next year."
Some 230 billion euros of bank bonds mature in the first quarter of 2012 alone, ECB President Mario Draghi told the European Parliament this week.
"Banks represent about 80 percent of lending to the euro area," Draghi said. "The banking channel is crucial to the supply of credit." He predicted banks will experience "very significant funding constraints" for the "whole" of 2012.
No Turning Point
Banks from the euro region need to refinance 35 percent more debt next year than they did this year, according to a Bank of England study. Lenders have more than 600 billion euros of debt maturing in 2012, around three quarters of which is unsecured, the study says.
The ECB is focusing on greasing the banking system to fight the debt crisis as it resists calls to increase its bond purchases to reduce governments’ borrowing costs. It will offer a second three-year loan in February and banks have the option of repaying them after a year.
"It’s very significant and very helpful for the banks," Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London, told Bloomberg Television. "But it’s not going to bring about a turning point in this crisis."
Wednesday, 21 December 2011
A interesting read !!
I think we in for some negativity.
Bllomberg.com
"Dec. 21 (Bloomberg) -- Some of Wall Street’s biggest firms signaled optimism in October after posting their worst trading and investment-banking period since the financial crisis. Now, analysts say the fourth quarter may have been worse.
Fixed-income trading revenue at U.S. banks may fall 12 percent from the third quarter, minus accounting adjustments, while equities drop 10 percent and investment-bank revenue will probably be unchanged, David Trone, an analyst at JMP Securities, wrote in a Dec. 16 report.
Some analysts had expected a rebound after the third quarter was the worst for trading and investment banking since 2008, when the collapse of real estate markets contributed to a worldwide credit crunch. Now many are looking ahead to 2012 after investors stayed on the sidelines amid concern that the European debt crisis would lead to a global slowdown.
"We’re in a difficult environment," Brad Hintz, an analyst at Sanford C. Bernstein & Co., said yesterday on Bloomberg Television’s "In The Loop" program. "I really don’t think anyone’s going to be focusing on the earnings of these firms. They’re really going to be focusing forward." Hintz is a former Morgan Stanley treasurer.
Twelve analysts cut earnings estimates for Goldman Sachs Group Inc. in the past four weeks and 14 trimmed theirs for JPMorgan Chase & Co., according to data compiled by Bloomberg. Goldman Sachs, which gets the majority of its revenue from trading, may post its lowest annual net income after preferred dividends since 1998 and the least revenue since 2005, Roger Freeman, a Barclays Capital analyst, said in a note titled "Another Year to Forget."
Trading Revenue
Trading revenue at the five biggest Wall Street banks -- JPMorgan, Goldman Sachs, Bank of America Corp., Citigroup Inc. and Morgan Stanley -- may drop from a year earlier for the sixth time in seven quarters. Trading and investment-banking revenue fell 47 percent in the third quarter from the first three months, excluding accounting adjustments.
Richard Staite, an analyst at Atlantic Equities in London, said a weak fourth quarter and the sovereign debt crisis in Europe will "rapidly" turn market attention to the banks’ outlooks for next year.
"Goldman and Morgan Stanley will struggle to paint an upbeat picture of 2012," Staite wrote in a note this month. "With no sign of a clear solution to the problems in Europe and a deteriorating economic backdrop, it will be hard for the pure investment banks to predict the timing of any upturn."
Goldman Sachs Chief Executive Officer Lloyd C. Blankfein, 57, said last month that global growth will "snap back" faster than most forecasters expect. He said he didn’t know when that will happen.
JPMorgan’s Dimon
JPMorgan CEO Jamie Dimon, 55, said at an investor conference this month that revenue at the investment bank will probably be unchanged or down from the third quarter. He said that the decline may be cyclical.
"I don’t think you should look at the business and say, ‘OK that’s permanent.’ It’s not permanent," Dimon said on Dec. 7. "We service a lot of investors. Those investors are going to have twice as much money 10 years from now than they have today to invest. And they’re going to need to invest their money."
Financial firms globally have announced plans this year to eliminate more than 200,000 jobs. New York-based Morgan Stanley, the sixth-biggest U.S. bank by assets and owner of the world’s largest brokerage, said last week it will cut about 1,600 jobs in the first quarter of next year.
Compensation Declines
Firms are also cutting pay. Annual compensation on Wall Street may fall 27 percent to 30 percent from a year earlier, making it the lowest level since 2008, according to New York- based recruitment firm Options Group. Bonuses on average may drop 35 percent to 40 percent, Options Group said.
The Standard & Poor’s 500 Financials Index has fallen 20 percent this year, led by Bank of America’s 61 percent plunge. Goldman Sachs, Morgan Stanley and Citigroup have all fallen at least 45 percent, while JPMorgan has dropped 24 percent.
Bank of America Chief Financial Officer Bruce Thompson said in October that the markets had been better that month than in August and September. Morgan Stanley CFO Ruth Porat said the challenging credit-markets conditions had "hopefully started to moderate." Porat and Dimon indicated the fourth quarter environment would probably depend on macroeconomic developments, such as progress from European leaders on responding to the region’s debt crisis.
Average daily equity-trading volume on the largest U.S. exchanges is down 11 percent from the third quarter. Dollar volume of high-yield corporate bonds has declined 26 percent from a year earlier, while volume of investment-grade bonds dropped 7.5 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Sluggish Activity
"Despite a rise in equity prices, trading and investment banking activity has remained sluggish so far in the fourth quarter," Glenn Schorr, an analyst at Nomura Holdings Inc., wrote this week in a note to investors. "With the usually slower holiday season coming, we see little sign that activity will pick up as we close out 2011." He rates Goldman Sachs, Citigroup and JPMorgan as "buys."
Trading volume, an indicator of performance, may not correlate directly with firms’ revenue because banks make money on changes in the value of the securities they hold and transaction fees that may not be related to volume.
Spokesmen for the five banks declined to comment or didn’t return requests for comment.
Banks’ trading-revenue decline may be mitigated by the lack of inventory losses that were seen in the third quarter, Trone said. Trone is the top-rated analyst covering JPMorgan this year, according to data compiled by Bloomberg.
Credit Trading
The ten largest global investment banks saw combined net losses of about $850 million in their credit-trading units within fixed income in the third quarter, compared with positive revenue of $2.7 billion a year earlier, according to industry consultant Coalition Ltd.
Yields on global corporate bonds relative to similar- maturity Treasuries rose 100 basis points to 263 basis points in the third quarter, Bank of America Merrill Lynch index data show. The average spread has risen 14 basis points this quarter.
Credit trading, along with mortgages, is "very weak," Staite wrote. Interest rates accounted for almost half of all third-quarter fixed-income trading revenue, according to Coalition data. Staite wrote that may stay the strongest area.
Jefferies Group Inc., the New York-based investment bank that’s been expanding its advisory and fixed-income businesses, reported yesterday that trading revenue dropped about 31 percent from a year earlier.
Trading throughout the year was held back by "investors’ reluctance to take risks in transactions in the face of abject political and economic uncertainty," Jefferies CEO Richard Handler, 50, said during a conference call with investors. "2012 is a new year." "
Happy Holidays !!
I think we in for some negativity.
Bllomberg.com
"Dec. 21 (Bloomberg) -- Some of Wall Street’s biggest firms signaled optimism in October after posting their worst trading and investment-banking period since the financial crisis. Now, analysts say the fourth quarter may have been worse.
Fixed-income trading revenue at U.S. banks may fall 12 percent from the third quarter, minus accounting adjustments, while equities drop 10 percent and investment-bank revenue will probably be unchanged, David Trone, an analyst at JMP Securities, wrote in a Dec. 16 report.
Some analysts had expected a rebound after the third quarter was the worst for trading and investment banking since 2008, when the collapse of real estate markets contributed to a worldwide credit crunch. Now many are looking ahead to 2012 after investors stayed on the sidelines amid concern that the European debt crisis would lead to a global slowdown.
"We’re in a difficult environment," Brad Hintz, an analyst at Sanford C. Bernstein & Co., said yesterday on Bloomberg Television’s "In The Loop" program. "I really don’t think anyone’s going to be focusing on the earnings of these firms. They’re really going to be focusing forward." Hintz is a former Morgan Stanley treasurer.
Twelve analysts cut earnings estimates for Goldman Sachs Group Inc. in the past four weeks and 14 trimmed theirs for JPMorgan Chase & Co., according to data compiled by Bloomberg. Goldman Sachs, which gets the majority of its revenue from trading, may post its lowest annual net income after preferred dividends since 1998 and the least revenue since 2005, Roger Freeman, a Barclays Capital analyst, said in a note titled "Another Year to Forget."
Trading Revenue
Trading revenue at the five biggest Wall Street banks -- JPMorgan, Goldman Sachs, Bank of America Corp., Citigroup Inc. and Morgan Stanley -- may drop from a year earlier for the sixth time in seven quarters. Trading and investment-banking revenue fell 47 percent in the third quarter from the first three months, excluding accounting adjustments.
Richard Staite, an analyst at Atlantic Equities in London, said a weak fourth quarter and the sovereign debt crisis in Europe will "rapidly" turn market attention to the banks’ outlooks for next year.
"Goldman and Morgan Stanley will struggle to paint an upbeat picture of 2012," Staite wrote in a note this month. "With no sign of a clear solution to the problems in Europe and a deteriorating economic backdrop, it will be hard for the pure investment banks to predict the timing of any upturn."
Goldman Sachs Chief Executive Officer Lloyd C. Blankfein, 57, said last month that global growth will "snap back" faster than most forecasters expect. He said he didn’t know when that will happen.
JPMorgan’s Dimon
JPMorgan CEO Jamie Dimon, 55, said at an investor conference this month that revenue at the investment bank will probably be unchanged or down from the third quarter. He said that the decline may be cyclical.
"I don’t think you should look at the business and say, ‘OK that’s permanent.’ It’s not permanent," Dimon said on Dec. 7. "We service a lot of investors. Those investors are going to have twice as much money 10 years from now than they have today to invest. And they’re going to need to invest their money."
Financial firms globally have announced plans this year to eliminate more than 200,000 jobs. New York-based Morgan Stanley, the sixth-biggest U.S. bank by assets and owner of the world’s largest brokerage, said last week it will cut about 1,600 jobs in the first quarter of next year.
Compensation Declines
Firms are also cutting pay. Annual compensation on Wall Street may fall 27 percent to 30 percent from a year earlier, making it the lowest level since 2008, according to New York- based recruitment firm Options Group. Bonuses on average may drop 35 percent to 40 percent, Options Group said.
The Standard & Poor’s 500 Financials Index has fallen 20 percent this year, led by Bank of America’s 61 percent plunge. Goldman Sachs, Morgan Stanley and Citigroup have all fallen at least 45 percent, while JPMorgan has dropped 24 percent.
Bank of America Chief Financial Officer Bruce Thompson said in October that the markets had been better that month than in August and September. Morgan Stanley CFO Ruth Porat said the challenging credit-markets conditions had "hopefully started to moderate." Porat and Dimon indicated the fourth quarter environment would probably depend on macroeconomic developments, such as progress from European leaders on responding to the region’s debt crisis.
Average daily equity-trading volume on the largest U.S. exchanges is down 11 percent from the third quarter. Dollar volume of high-yield corporate bonds has declined 26 percent from a year earlier, while volume of investment-grade bonds dropped 7.5 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Sluggish Activity
"Despite a rise in equity prices, trading and investment banking activity has remained sluggish so far in the fourth quarter," Glenn Schorr, an analyst at Nomura Holdings Inc., wrote this week in a note to investors. "With the usually slower holiday season coming, we see little sign that activity will pick up as we close out 2011." He rates Goldman Sachs, Citigroup and JPMorgan as "buys."
Trading volume, an indicator of performance, may not correlate directly with firms’ revenue because banks make money on changes in the value of the securities they hold and transaction fees that may not be related to volume.
Spokesmen for the five banks declined to comment or didn’t return requests for comment.
Banks’ trading-revenue decline may be mitigated by the lack of inventory losses that were seen in the third quarter, Trone said. Trone is the top-rated analyst covering JPMorgan this year, according to data compiled by Bloomberg.
Credit Trading
The ten largest global investment banks saw combined net losses of about $850 million in their credit-trading units within fixed income in the third quarter, compared with positive revenue of $2.7 billion a year earlier, according to industry consultant Coalition Ltd.
Yields on global corporate bonds relative to similar- maturity Treasuries rose 100 basis points to 263 basis points in the third quarter, Bank of America Merrill Lynch index data show. The average spread has risen 14 basis points this quarter.
Credit trading, along with mortgages, is "very weak," Staite wrote. Interest rates accounted for almost half of all third-quarter fixed-income trading revenue, according to Coalition data. Staite wrote that may stay the strongest area.
Jefferies Group Inc., the New York-based investment bank that’s been expanding its advisory and fixed-income businesses, reported yesterday that trading revenue dropped about 31 percent from a year earlier.
Trading throughout the year was held back by "investors’ reluctance to take risks in transactions in the face of abject political and economic uncertainty," Jefferies CEO Richard Handler, 50, said during a conference call with investors. "2012 is a new year." "
Happy Holidays !!
Banks May Flock to ‘Free Money’ as ECB Awards 3-Year Loans
Very Worrying !!, cause him inflation !!
Dec. 21 (Bloomberg) -- The European Central Bank is set to flood euro-area banks with cheap cash as they flock to its offer of three-year loans today.
Banks will ask the ECB for 293 billion euros ($384 billion) of the 1,134-day funds, according to the median of 14 forecasts in a Bloomberg News survey of economists. Estimates range from 150 billion euros to as much as 600 billion euros. The money will be lent at the average of the ECB’s benchmark rate -- currently 1 percent -- over the period of the loan. Results are due at 11:15 a.m. in Frankfurt and the loans start tomorrow.
"This is basically free money," said Jens-Oliver Niklasch, a strategist at Landesbank Baden-Wuerttemberg in Stuttgart. "The conditions are unbeatable. Everybody who can will try to get a piece of this cake."
Europe’s debt crisis has increased the risk of government and bank defaults, making institutions wary of lending to each other and driving up the cost of credit. The ECB is trying to ensure that banks have access to cheap cash for the medium term so that they can keep lending to companies and households. In addition to the longer-term loans, the ECB has widened the pool of collateral banks can use to secure the funds.
The euro rose for a second day amid speculation the ECB’s loans will spur demand for sovereign bonds. The 17-nation currency gained 0.3 percent to $1.3123 at 9 a.m. in Frankfurt.
‘Significant’ Demand
Yields on Italian and Spanish government bonds have dropped since the ECB announced the loans on Dec. 8 as banks buy the securities to use them as collateral. French President Nicolas Sarkozy has suggested banks could use the loans to buy even more government debt.
The ECB’s intention is that banks utilize the funds to refinance themselves, Vice President Vitor Constancio said in a Dec. 19 interview. He predicted "significant" demand as banks face "very high refinancing needs early next year."
Some 230 billion euros of bank bonds mature in the first quarter of 2012 alone, ECB President Mario Draghi told the European Parliament this week.
"Banks represent about 80 percent of lending to the euro area," Draghi said. "The banking channel is crucial to the supply of credit." He predicted banks will experience "very significant funding constraints" for the "whole" of 2012.
Capital Requirements
Banks from the euro region need to refinance 35 percent more debt next year than they did this year, according to a Bank of England study. Lenders have more than 600 billion euros of debt maturing next year, around three quarters of which is unsecured, the study says.
"The good news is that banks won’t have to worry about liquidity for three years," said Carsten Brzeski, an economist at ING Group in Brussels. "However, it remains to be seen whether the money will filter through to the real economy as the ECB hopes. Many banks still have to increase their capital ratios to meet the Basel III criteria by mid-2012."
Regulators are forcing European banks to increase buffers so they can cope with future crises. The European Banking Authority earlier this month ordered the region’s financial firms to raise 114.7 billion euros of additional capital to bolster their core Tier 1 ratios to more than 9 percent of risk- weighted assets by the middle of 2012.
Faced with a potential credit crunch, the regulator told banks to raise the money from investors, retained earnings and lower bonuses. Failing that, companies may sell assets, provided the disposals don’t limit overall lending to the "real" economy, the EBA said in a Dec. 8 statement.
‘Lender of Last Resort’
The ECB is focusing on greasing the banking system to fight the debt crisis as it resists calls to increase its bond purchases to reduce governments’ borrowing costs. It will also award 98-day loans today and offer a second three-year loan in February. Banks have the option of repaying them after a year.
With the loans, the ECB is showing it "is the lender of last resort for banks, not for sovereigns," said Royal Bank of Scotland Group Plc economist Silvio Peruzzo.
"This will stabilize the banking sector and is another building block in the ECB’s policy to prevent a much dreaded credit squeeze," said Jan Holthusen, head of fixed-income research at DZ Bank in Frankfurt. "But it’s just one building block and by itself not decisive."
Dec. 21 (Bloomberg) -- The European Central Bank is set to flood euro-area banks with cheap cash as they flock to its offer of three-year loans today.
Banks will ask the ECB for 293 billion euros ($384 billion) of the 1,134-day funds, according to the median of 14 forecasts in a Bloomberg News survey of economists. Estimates range from 150 billion euros to as much as 600 billion euros. The money will be lent at the average of the ECB’s benchmark rate -- currently 1 percent -- over the period of the loan. Results are due at 11:15 a.m. in Frankfurt and the loans start tomorrow.
"This is basically free money," said Jens-Oliver Niklasch, a strategist at Landesbank Baden-Wuerttemberg in Stuttgart. "The conditions are unbeatable. Everybody who can will try to get a piece of this cake."
Europe’s debt crisis has increased the risk of government and bank defaults, making institutions wary of lending to each other and driving up the cost of credit. The ECB is trying to ensure that banks have access to cheap cash for the medium term so that they can keep lending to companies and households. In addition to the longer-term loans, the ECB has widened the pool of collateral banks can use to secure the funds.
The euro rose for a second day amid speculation the ECB’s loans will spur demand for sovereign bonds. The 17-nation currency gained 0.3 percent to $1.3123 at 9 a.m. in Frankfurt.
‘Significant’ Demand
Yields on Italian and Spanish government bonds have dropped since the ECB announced the loans on Dec. 8 as banks buy the securities to use them as collateral. French President Nicolas Sarkozy has suggested banks could use the loans to buy even more government debt.
The ECB’s intention is that banks utilize the funds to refinance themselves, Vice President Vitor Constancio said in a Dec. 19 interview. He predicted "significant" demand as banks face "very high refinancing needs early next year."
Some 230 billion euros of bank bonds mature in the first quarter of 2012 alone, ECB President Mario Draghi told the European Parliament this week.
"Banks represent about 80 percent of lending to the euro area," Draghi said. "The banking channel is crucial to the supply of credit." He predicted banks will experience "very significant funding constraints" for the "whole" of 2012.
Capital Requirements
Banks from the euro region need to refinance 35 percent more debt next year than they did this year, according to a Bank of England study. Lenders have more than 600 billion euros of debt maturing next year, around three quarters of which is unsecured, the study says.
"The good news is that banks won’t have to worry about liquidity for three years," said Carsten Brzeski, an economist at ING Group in Brussels. "However, it remains to be seen whether the money will filter through to the real economy as the ECB hopes. Many banks still have to increase their capital ratios to meet the Basel III criteria by mid-2012."
Regulators are forcing European banks to increase buffers so they can cope with future crises. The European Banking Authority earlier this month ordered the region’s financial firms to raise 114.7 billion euros of additional capital to bolster their core Tier 1 ratios to more than 9 percent of risk- weighted assets by the middle of 2012.
Faced with a potential credit crunch, the regulator told banks to raise the money from investors, retained earnings and lower bonuses. Failing that, companies may sell assets, provided the disposals don’t limit overall lending to the "real" economy, the EBA said in a Dec. 8 statement.
‘Lender of Last Resort’
The ECB is focusing on greasing the banking system to fight the debt crisis as it resists calls to increase its bond purchases to reduce governments’ borrowing costs. It will also award 98-day loans today and offer a second three-year loan in February. Banks have the option of repaying them after a year.
With the loans, the ECB is showing it "is the lender of last resort for banks, not for sovereigns," said Royal Bank of Scotland Group Plc economist Silvio Peruzzo.
"This will stabilize the banking sector and is another building block in the ECB’s policy to prevent a much dreaded credit squeeze," said Jan Holthusen, head of fixed-income research at DZ Bank in Frankfurt. "But it’s just one building block and by itself not decisive."
Asia Stocks, Euro Gain on U.S. Growth, Europe; Bond Risk Falls
A good read from Bloomberg.com !!
"Dec. 21 (Bloomberg) -- Asian stocks jumped the most in almost three weeks, the euro and won strengthened and bond risk dropped after Chinese Premier Wen Jiabao pledged support for exports, better-than-forecast U.S. housing starts and a decline in Spanish borrowing costs.
The MSCI Asia Pacific Index added 1.8 percent at 11:17 a.m. in Tokyo, set for the largest gain since Dec. 1. Standard & Poor’s 500 Index futures were little changed after the stock gauge rallied 3 percent yesterday. The euro climbed 0.3 percent and the won strengthened 0.9 percent. The Markit iTraxx Asia index of credit-default swaps slumped the most since Dec. 7. Oil rose 1.3 percent in New York.
Wen said yesterday China will stabilize policies on exports and provide capital support to small companies. U.S. builders broke ground in November on the most houses in over a year, while German business confidence unexpectedly improved. The European Central Bank will announce results of its first tranche of unlimited three-year loans today, a day after Spain sold more than its maximum target of bills, driving borrowing costs lower.
"The U.S. is showing it’s fairly robust in terms of not being dragged down to the extent of European economies, but there remain significant structural impediments," said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. "There will be significant gains today. The question is, given we are coming into a holiday period, how sustainable those gains are going to be over the next week or so."
Stocks Gain
Almost 11 shares rose for every one that fell on MSCI’s Asia Pacific Index. Japan’s Nikkei 225 Stock Average gained 1.4 percent, South Korea’s Kospi Index rallied 2.7 percent and Australia’s S&P/ASX 200 Index gained 2.1 percent. Onesteel Ltd. jumped 7.1 percent after Goldman Sachs Group Inc. named it among top Australian stock picks for next year.
Taiwan’s Taiex index jumped 4 percent, the region’s biggest advance. Vice Premier Sean Chen said yesterday the island will let the National Stabilization Fund buy stocks to support local markets when necessary. The Shanghai Composite Index added 0.5 percent, with Jiangxi Copper Co. and Anhui Conch Cement Co. pacing gains among companies most-dependent on economic growth.
The S&P 500 jumped yesterday by the most this month after Commerce Department figures showed housing starts increased 9.3 percent to a 685,000 annual rate, exceeding the highest estimate of economists surveyed by Bloomberg News and the most since April 2010. Building permits, a proxy for future construction, also climbed to a more than one-year high.
Bond Yields Fall
The Dollar Index, which tracks the U.S. currency against those of six trading partners, slipped 0.2 percent. The euro traded at $1.3120 and rose 0.2 percent to 102.14 yen. Italian and Spanish two-year rates have slipped more than one percentage point since ECB President Mario Draghi announced unprecedented loans on Dec. 8 as investors bet that banks will use the cash to buy government debt.
Economists forecast banks would seek 293 billion euros ($383 billion), according to the median of 14 estimates in a Bloomberg News survey. Results will be announced today and the loans will start tomorrow.
"There has to be some link between the fact that the sovereign supply that’s come onto the market recently has been so well received and what the ECB is doing here," said Chris Weston, an institutional dealer at IG Markets in Melbourne. "We’ve got a little bit left in this euro rally. We’ll probably see more positive flows," coming from the long-term refinancing operation, he said.
Won, Aussie
The won climbed to 1,151.25 per dollar, extending yesterday’s 1.1 percent increase. Finance Minister Bahk Jae Wan said today that South Korean markets have been stabilizing quickly after the death of North Korean leader Kim Jong Il. The Malaysian ringgit strengthened 0.4 percent to 3.1685 versus the dollar before the release of data on consumer prices, while Australia’s currency rose 0.5 percent to $1.0124.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped four basis points to 210 basis points, Credit Agricole SA prices show. The index is on course for its biggest daily fall since Dec. 7 and is set for the lowest level since Dec. 13, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Crude for February delivery rose as much as 1.2 percent to $98.44 a barrel in New York, following a 3.4 percent gain yesterday. The industry-funded American Petroleum Institute said crude inventories declined 4.57 million barrels last week. An Energy Department report today may show supplies fell 2.13 million barrels, according to a Bloomberg News survey.
Rubber futures in Tokyo jumped as much as 3.1 percent, the most since Dec. 1, to 279.7 yen a kilogram ($3,592 a metric ton). Palladium, used to make pollution-control devices in autos, gained for a second day, rising as much as 0.9 percent to $633.50 an ounce, the highest level in a week. "
"Dec. 21 (Bloomberg) -- Asian stocks jumped the most in almost three weeks, the euro and won strengthened and bond risk dropped after Chinese Premier Wen Jiabao pledged support for exports, better-than-forecast U.S. housing starts and a decline in Spanish borrowing costs.
The MSCI Asia Pacific Index added 1.8 percent at 11:17 a.m. in Tokyo, set for the largest gain since Dec. 1. Standard & Poor’s 500 Index futures were little changed after the stock gauge rallied 3 percent yesterday. The euro climbed 0.3 percent and the won strengthened 0.9 percent. The Markit iTraxx Asia index of credit-default swaps slumped the most since Dec. 7. Oil rose 1.3 percent in New York.
Wen said yesterday China will stabilize policies on exports and provide capital support to small companies. U.S. builders broke ground in November on the most houses in over a year, while German business confidence unexpectedly improved. The European Central Bank will announce results of its first tranche of unlimited three-year loans today, a day after Spain sold more than its maximum target of bills, driving borrowing costs lower.
"The U.S. is showing it’s fairly robust in terms of not being dragged down to the extent of European economies, but there remain significant structural impediments," said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. "There will be significant gains today. The question is, given we are coming into a holiday period, how sustainable those gains are going to be over the next week or so."
Stocks Gain
Almost 11 shares rose for every one that fell on MSCI’s Asia Pacific Index. Japan’s Nikkei 225 Stock Average gained 1.4 percent, South Korea’s Kospi Index rallied 2.7 percent and Australia’s S&P/ASX 200 Index gained 2.1 percent. Onesteel Ltd. jumped 7.1 percent after Goldman Sachs Group Inc. named it among top Australian stock picks for next year.
Taiwan’s Taiex index jumped 4 percent, the region’s biggest advance. Vice Premier Sean Chen said yesterday the island will let the National Stabilization Fund buy stocks to support local markets when necessary. The Shanghai Composite Index added 0.5 percent, with Jiangxi Copper Co. and Anhui Conch Cement Co. pacing gains among companies most-dependent on economic growth.
The S&P 500 jumped yesterday by the most this month after Commerce Department figures showed housing starts increased 9.3 percent to a 685,000 annual rate, exceeding the highest estimate of economists surveyed by Bloomberg News and the most since April 2010. Building permits, a proxy for future construction, also climbed to a more than one-year high.
Bond Yields Fall
The Dollar Index, which tracks the U.S. currency against those of six trading partners, slipped 0.2 percent. The euro traded at $1.3120 and rose 0.2 percent to 102.14 yen. Italian and Spanish two-year rates have slipped more than one percentage point since ECB President Mario Draghi announced unprecedented loans on Dec. 8 as investors bet that banks will use the cash to buy government debt.
Economists forecast banks would seek 293 billion euros ($383 billion), according to the median of 14 estimates in a Bloomberg News survey. Results will be announced today and the loans will start tomorrow.
"There has to be some link between the fact that the sovereign supply that’s come onto the market recently has been so well received and what the ECB is doing here," said Chris Weston, an institutional dealer at IG Markets in Melbourne. "We’ve got a little bit left in this euro rally. We’ll probably see more positive flows," coming from the long-term refinancing operation, he said.
Won, Aussie
The won climbed to 1,151.25 per dollar, extending yesterday’s 1.1 percent increase. Finance Minister Bahk Jae Wan said today that South Korean markets have been stabilizing quickly after the death of North Korean leader Kim Jong Il. The Malaysian ringgit strengthened 0.4 percent to 3.1685 versus the dollar before the release of data on consumer prices, while Australia’s currency rose 0.5 percent to $1.0124.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped four basis points to 210 basis points, Credit Agricole SA prices show. The index is on course for its biggest daily fall since Dec. 7 and is set for the lowest level since Dec. 13, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Crude for February delivery rose as much as 1.2 percent to $98.44 a barrel in New York, following a 3.4 percent gain yesterday. The industry-funded American Petroleum Institute said crude inventories declined 4.57 million barrels last week. An Energy Department report today may show supplies fell 2.13 million barrels, according to a Bloomberg News survey.
Rubber futures in Tokyo jumped as much as 3.1 percent, the most since Dec. 1, to 279.7 yen a kilogram ($3,592 a metric ton). Palladium, used to make pollution-control devices in autos, gained for a second day, rising as much as 0.9 percent to $633.50 an ounce, the highest level in a week. "
Monday, 19 December 2011
Euro 8% Stronger Than Average as Losses Seen for 2012
Per Bloomberg :
"Dec. 19 (Bloomberg) -- The euro, after falling to its weakest level against the dollar since January, is poised to depreciate further as traders lose confidence in the ability of European leaders to contain the region’s debt crisis.
Measures in the derivatives market ranging from future volatility implied by option prices to the cost of insuring against a drop in the euro to the record number of bearish bets by hedge funds and other speculators, show traders expect the blueprint unveiled by European leaders this month for a closer fiscal accord will fail to stem the declines.
While the euro at $1.3024 remains about 8 percent above the average since it began trading in 1999, bears say that provides more scope for depreciation as bond yields in Italy and Spain approach levels that prompted bailouts of Greece, Ireland and Portugal. Companies from Spain’s Grupo Gowex to Germany’s GEA Group AG are preparing for some countries to leave the euro and bank failures.
"The euro trading where it is now reflects a global lack of confidence in those dealing with the sovereign debt crisis," Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London, said in a telephone interview on Dec. 14. "It is also a signal of more bad news to come in the euro zone. I am not certain what future euro negatives lie ahead, but I am certain there will be more."
Ratings Peril
Stress in Europe’s financial system, coupled with slower growth, prompted Standard & Poor’s on Dec. 5 to say Germany and France may be stripped of their AAA credit ratings as it put 15 euro nations on review for possible downgrade. Fitch Ratings lowered its outlook on France to "negative" on Dec. 16 and put Spain and Italy on review for a downgrade, citing Europe’s failure to find a "comprehensive solution" to the debt crisis.
"Things are far from complete," said London-based Fredrik Nerbrand, global head of asset allocation at HSBC Holdings Plc, Europe’s biggest bank by market value, in a telephone interview on Dec. 13.
"Most of policy makers’ recent debate was with regard to fiscal positions as opposed to the underlying problem, which is a lack of growth," he said. "It’s kind of like a doctor trying to treat the symptoms rather than the cause." Nerbrand said he currently has no euro-denominated debt.
The euro depreciated 2.54 percent last week, after trading below $1.30 for the first time since January. It declined to a 10-week low against Japan’s currency, finishing at 101.47 yen, down 2.33 percent from Dec. 9.
Merkel’s Confidence
Even with the losses, the euro is only down 1.27 percent the past 12-months against the dollar. Its average since 1999 is about $1.2049, and has ranged from 82.3 U.S. cents in October 2000 to a high of $1.6038 in July 2008.
The results of the Dec. 9 summit, at which 26 of the 27 European Union members agreed to sign up to or consider tighter deficit limits and sanctions against offenders, would have been "unthinkable" a few months ago and "can’t be overstated," German Chancellor Angela Merkel said in a Dec. 14 speech in Berlin.
Economists at Barclays Plc say a European recession has already begun. The euro area’s gross domestic product will contract 1.4 percent this quarter, 0.6 percent in the first three months of 2012 and stagnate in the second quarter before resuming growing in the third, Barclays said in a Dec. 8 report.
Rising Yields
The debt of Italy was among the worst performing last week of higher-yielding European government securities last week. Italy’s 10-year bond yield climbed 23 basis points to finish the week at 6.59 percent, down from a surge to over 6.75 percent during the week. Italy’s yields rose last month above the 7 percent threshold that led Greece, Ireland and Portugal to seek bailouts. The 10-year yield climbed to 6.78 percent at 7:13 a.m. New York time.
"With the contagion of the crisis having spread to Italy, the risk of a euro breakup is now viewed as no longer non- trivial," David Woo, the global head of rates and currencies in New York at Bank of America Merrill Lynch, said in a Dec. 13 interview. The bank sees the euro falling to $1.25 by April.
Most measures of the future for the euro has deteriorated this quarter. The six-month euro-dollar option butterfly, which measures the gap in implied volatility of out-of-the money, or virtually worthless, options and those that would likely produce a profit, was 0.55 percentage point today.
Risk Reversal Rates
That compares with the 0.76 percentage point reached on Sept. 26, the highest since April 2009, and is up from 0.36 in March, when EU leaders agreed on a retooled bailout plan for the region’s most indebted nations. A higher number signals traders expect large moves in the currency and are buying insurance to hedge that risk.
The so-called 25-delta risk reversal rate had a 3.64 percentage point premium for euro puts over calls during the first three trading days of last week, before retreating to end the week at 3.12 percent points and to trade today at 2.99 percentage points. A 4.39 percentage-points premium reached Nov. 17 was the biggest since at least 2005, when Bloomberg began to track the data. Puts grant the right to sell the euro, while calls allow for purchases. An increase in the put premium signals investors are wagering the common currency will slide further.
Implied volatility on three-month options for the euro- dollar pair ended last week at 14.3 percent, about four percentage points above its low this year. The gap, which narrowed by the end of the week to 1.2 percentage points, is viewed by traders as an indicator of how expensive or cheap options are.
‘Hedging Downside’
The increase in volatility and the price of the option butterfly since September is a result of demand from longer-term investors, such as corporations, for contracts to provide insurance against further depreciation of the euro, said Bank of America’s Woo.
Grupo Gowex, a Spanish provider of Wi-Fi wireless services, said it is moving funds to Germany because it expects Spain to exit the euro, according to Jenaro Garcia, founder and chief executive officer of Madrid-based Grupo Gowex. Juerg Oleas, CEO of GEA Group, a machinery maker based in Dusseldorf, said it is limiting amounts held at any one bank.
Three-month implied volatility on euro-dollar options reached 2.6 percentage points above the level of historic volatility, which measures the pace of actual price swings in the underlying currency. The gap, which narrowed by the end of the week to 1.2 percentage points, is viewed by traders as a sign that option prices being expensive amid heightened demand.
Option Hedges
"The high price of option hedges against a slide in the euro shows a quiet resignation to the situation rather than out- and-out panic," Simon Smollett, a senior options strategist at Credit Agricole Corporate & Investment Bank in London, said in a telephone interview on Dec. 12. "The work the ECB and European politicians are going to do is going to take time; there is no instant solution."
That’s little comfort for European banks which saw their cost to borrow in dollars in the currency swaps market surge last week. The three-month cross-currency basis swap, the rate banks pay to convert euro-based payments into dollars, fell to 147 basis points below the euro interbank offered rate, signaling an increased price for dollar funding, before easing by the end of the week to 122 basis points below Euribor, and moving to 119 basis points below today.
On Dec. 8, banks received only 109 basis points less than Euribor when using the swaps market.
‘Range of Outcomes’
Hedge funds and other large speculators held a record net 116,457 contracts at the CME Group as of Dec. 13 that the 17- nation currency will fall versus the dollar in the, according to Commodity Futures Trading Commission data. The so-called net- shorts exceeded the previous all-time high of 113,890 in May 2010, when Greece accepted a 110 billion-euro ($145 billion) aid package.
"The possible range of outcomes for Europe is quite binary," Jose Wynne, the head of North America foreign-exchange research at the investment banking unit of Barclays, said during a briefing at the firm’s New York office Dec. 8. "Either you fix it or trouble comes. If more trouble comes then all of the banking sector in Europe will be feeling the stress." "
"Dec. 19 (Bloomberg) -- The euro, after falling to its weakest level against the dollar since January, is poised to depreciate further as traders lose confidence in the ability of European leaders to contain the region’s debt crisis.
Measures in the derivatives market ranging from future volatility implied by option prices to the cost of insuring against a drop in the euro to the record number of bearish bets by hedge funds and other speculators, show traders expect the blueprint unveiled by European leaders this month for a closer fiscal accord will fail to stem the declines.
While the euro at $1.3024 remains about 8 percent above the average since it began trading in 1999, bears say that provides more scope for depreciation as bond yields in Italy and Spain approach levels that prompted bailouts of Greece, Ireland and Portugal. Companies from Spain’s Grupo Gowex to Germany’s GEA Group AG are preparing for some countries to leave the euro and bank failures.
"The euro trading where it is now reflects a global lack of confidence in those dealing with the sovereign debt crisis," Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London, said in a telephone interview on Dec. 14. "It is also a signal of more bad news to come in the euro zone. I am not certain what future euro negatives lie ahead, but I am certain there will be more."
Ratings Peril
Stress in Europe’s financial system, coupled with slower growth, prompted Standard & Poor’s on Dec. 5 to say Germany and France may be stripped of their AAA credit ratings as it put 15 euro nations on review for possible downgrade. Fitch Ratings lowered its outlook on France to "negative" on Dec. 16 and put Spain and Italy on review for a downgrade, citing Europe’s failure to find a "comprehensive solution" to the debt crisis.
"Things are far from complete," said London-based Fredrik Nerbrand, global head of asset allocation at HSBC Holdings Plc, Europe’s biggest bank by market value, in a telephone interview on Dec. 13.
"Most of policy makers’ recent debate was with regard to fiscal positions as opposed to the underlying problem, which is a lack of growth," he said. "It’s kind of like a doctor trying to treat the symptoms rather than the cause." Nerbrand said he currently has no euro-denominated debt.
The euro depreciated 2.54 percent last week, after trading below $1.30 for the first time since January. It declined to a 10-week low against Japan’s currency, finishing at 101.47 yen, down 2.33 percent from Dec. 9.
Merkel’s Confidence
Even with the losses, the euro is only down 1.27 percent the past 12-months against the dollar. Its average since 1999 is about $1.2049, and has ranged from 82.3 U.S. cents in October 2000 to a high of $1.6038 in July 2008.
The results of the Dec. 9 summit, at which 26 of the 27 European Union members agreed to sign up to or consider tighter deficit limits and sanctions against offenders, would have been "unthinkable" a few months ago and "can’t be overstated," German Chancellor Angela Merkel said in a Dec. 14 speech in Berlin.
Economists at Barclays Plc say a European recession has already begun. The euro area’s gross domestic product will contract 1.4 percent this quarter, 0.6 percent in the first three months of 2012 and stagnate in the second quarter before resuming growing in the third, Barclays said in a Dec. 8 report.
Rising Yields
The debt of Italy was among the worst performing last week of higher-yielding European government securities last week. Italy’s 10-year bond yield climbed 23 basis points to finish the week at 6.59 percent, down from a surge to over 6.75 percent during the week. Italy’s yields rose last month above the 7 percent threshold that led Greece, Ireland and Portugal to seek bailouts. The 10-year yield climbed to 6.78 percent at 7:13 a.m. New York time.
"With the contagion of the crisis having spread to Italy, the risk of a euro breakup is now viewed as no longer non- trivial," David Woo, the global head of rates and currencies in New York at Bank of America Merrill Lynch, said in a Dec. 13 interview. The bank sees the euro falling to $1.25 by April.
Most measures of the future for the euro has deteriorated this quarter. The six-month euro-dollar option butterfly, which measures the gap in implied volatility of out-of-the money, or virtually worthless, options and those that would likely produce a profit, was 0.55 percentage point today.
Risk Reversal Rates
That compares with the 0.76 percentage point reached on Sept. 26, the highest since April 2009, and is up from 0.36 in March, when EU leaders agreed on a retooled bailout plan for the region’s most indebted nations. A higher number signals traders expect large moves in the currency and are buying insurance to hedge that risk.
The so-called 25-delta risk reversal rate had a 3.64 percentage point premium for euro puts over calls during the first three trading days of last week, before retreating to end the week at 3.12 percent points and to trade today at 2.99 percentage points. A 4.39 percentage-points premium reached Nov. 17 was the biggest since at least 2005, when Bloomberg began to track the data. Puts grant the right to sell the euro, while calls allow for purchases. An increase in the put premium signals investors are wagering the common currency will slide further.
Implied volatility on three-month options for the euro- dollar pair ended last week at 14.3 percent, about four percentage points above its low this year. The gap, which narrowed by the end of the week to 1.2 percentage points, is viewed by traders as an indicator of how expensive or cheap options are.
‘Hedging Downside’
The increase in volatility and the price of the option butterfly since September is a result of demand from longer-term investors, such as corporations, for contracts to provide insurance against further depreciation of the euro, said Bank of America’s Woo.
Grupo Gowex, a Spanish provider of Wi-Fi wireless services, said it is moving funds to Germany because it expects Spain to exit the euro, according to Jenaro Garcia, founder and chief executive officer of Madrid-based Grupo Gowex. Juerg Oleas, CEO of GEA Group, a machinery maker based in Dusseldorf, said it is limiting amounts held at any one bank.
Three-month implied volatility on euro-dollar options reached 2.6 percentage points above the level of historic volatility, which measures the pace of actual price swings in the underlying currency. The gap, which narrowed by the end of the week to 1.2 percentage points, is viewed by traders as a sign that option prices being expensive amid heightened demand.
Option Hedges
"The high price of option hedges against a slide in the euro shows a quiet resignation to the situation rather than out- and-out panic," Simon Smollett, a senior options strategist at Credit Agricole Corporate & Investment Bank in London, said in a telephone interview on Dec. 12. "The work the ECB and European politicians are going to do is going to take time; there is no instant solution."
That’s little comfort for European banks which saw their cost to borrow in dollars in the currency swaps market surge last week. The three-month cross-currency basis swap, the rate banks pay to convert euro-based payments into dollars, fell to 147 basis points below the euro interbank offered rate, signaling an increased price for dollar funding, before easing by the end of the week to 122 basis points below Euribor, and moving to 119 basis points below today.
On Dec. 8, banks received only 109 basis points less than Euribor when using the swaps market.
‘Range of Outcomes’
Hedge funds and other large speculators held a record net 116,457 contracts at the CME Group as of Dec. 13 that the 17- nation currency will fall versus the dollar in the, according to Commodity Futures Trading Commission data. The so-called net- shorts exceeded the previous all-time high of 113,890 in May 2010, when Greece accepted a 110 billion-euro ($145 billion) aid package.
"The possible range of outcomes for Europe is quite binary," Jose Wynne, the head of North America foreign-exchange research at the investment banking unit of Barclays, said during a briefing at the firm’s New York office Dec. 8. "Either you fix it or trouble comes. If more trouble comes then all of the banking sector in Europe will be feeling the stress." "
Tuesday, 13 December 2011
PAIA - PROMOTION OF ACCESS TO INFORMATION ACT - SUBMISSION OF MANUAL BEFORE 31 DECEMBER 2011
Deadline for all entities (Company, CC, Partnership, Sole Traders, Professionals) fit the requirements to submitt their PAIA Manual before 31 December 2011.
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Asia Stocks Drop on European Credit-Rating Concern; Won Weakens
Per Bloomberg, a good read I came across.
"Dec. 13 (Bloomberg) -- Asian stocks dropped, sending the benchmark regional gauge to a two-week low, and the won weakened on speculation that credit-ratings may be cut for European countries. The euro was little changed against the dollar after falling to the weakest level in two months yesterday.
The MSCI Asia Pacific Index slid 1.3 percent as of 11:52 a.m. in Tokyo. The won declined against 16 major counterparts, while the euro held at $1.3186. Gold for immediate delivery dropped as much as 0.9 percent to $1,650.93 an ounce, a seven- week low. Oil was little changed at $97.88 a barrel, while Standard & Poor’s 500 Index futures gained 0.1 percent.
The European Union summit last week offered few new measures and doesn’t diminish the risk of credit downgrades on European nations, Moody’s Investors Service said yesterday. Fitch Ratings said a comprehensive solution has not yet been offered and predicted a "significant economic downturn" in the region. Data today may show German investor confidence slid to a three-year low, while sales at U.S. retailers probably rose in November, based on a survey of economist estimates by Bloomberg.
"The ratings agencies are reminding us of sovereign downgrade risk" in Europe, said Sacha Tihanyi, a Hong Kong- based currency strategist at Scotia Capital, the investment banking unit of Bank of Nova Scotia. "The dollar will have no choice but to find support on the back of euro weakness."
Bond Auction
The Dollar Index was little changed at 79.524 after rising 1.2 percent yesterday. The European Financial Stability Facility will auction as much as 2 billion euros ($2.6 billion) of 91-day bills today, while Greece will sell 1.25 billion euros of 182- day bills. Belgium will offer 1.2 billion euros of short-term debt and Spain will auction 364-day and 553-day bills.
About seven stocks fell for each that rose in the MSCI Asia Pacific Index. The equity gauge, poised for the lowest close since Nov. 30, has fallen 17 percent this year.
The MSCI China Index lost 1.2 percent. Housing transactions in China declined in 27 out of 35 cities tracked by Soufun between Dec. 5 and Dec. 11. Transactions fell more than 60 percent in at least four cities, including Tianjin and Hangzhou.
China Gas Holdings Ltd. surged 22 percent for the biggest advance in the MSCI Asia Pacific Index. ENN Energy Holdings Ltd. and China Petroleum & Chemical Corp. will make an all-cash buyout offer for the piped-gas supplier as they seek to purchase a controlling stake, China Gas said.
German Confidence
S&P 500 futures rose to 1,230.80. The yield on 10-year U.S. Treasuries increased two basis points to 2.03 percent. Sales at retailers probably rose 0.6 percent last month, following a 0.5 percent advance in October, according to the median forecast of 64 economists surveyed by Bloomberg News ahead of the Commerce Department report today.
The ZEW Center for European Economic Research may say its index of German investor and analyst expectations, which aims to predict developments six months in advance, declined to minus 55.8 in December, according to the median estimate in a Bloomberg News survey of economists. That would be the lowest reading since October 2008.
The South Korean won fell for a fourth day, declining 0.7 percent to 1,155.38 per dollar. It touched 1,160.00 earlier, the weakest level since Nov. 28. Copper retreated 0.2 percent to $7,589.75 a metric ton, extending yesterday’s 2.7 percent decline, the most in three weeks. Gold traded at $1,654.88 an ounce. "
"Dec. 13 (Bloomberg) -- Asian stocks dropped, sending the benchmark regional gauge to a two-week low, and the won weakened on speculation that credit-ratings may be cut for European countries. The euro was little changed against the dollar after falling to the weakest level in two months yesterday.
The MSCI Asia Pacific Index slid 1.3 percent as of 11:52 a.m. in Tokyo. The won declined against 16 major counterparts, while the euro held at $1.3186. Gold for immediate delivery dropped as much as 0.9 percent to $1,650.93 an ounce, a seven- week low. Oil was little changed at $97.88 a barrel, while Standard & Poor’s 500 Index futures gained 0.1 percent.
The European Union summit last week offered few new measures and doesn’t diminish the risk of credit downgrades on European nations, Moody’s Investors Service said yesterday. Fitch Ratings said a comprehensive solution has not yet been offered and predicted a "significant economic downturn" in the region. Data today may show German investor confidence slid to a three-year low, while sales at U.S. retailers probably rose in November, based on a survey of economist estimates by Bloomberg.
"The ratings agencies are reminding us of sovereign downgrade risk" in Europe, said Sacha Tihanyi, a Hong Kong- based currency strategist at Scotia Capital, the investment banking unit of Bank of Nova Scotia. "The dollar will have no choice but to find support on the back of euro weakness."
Bond Auction
The Dollar Index was little changed at 79.524 after rising 1.2 percent yesterday. The European Financial Stability Facility will auction as much as 2 billion euros ($2.6 billion) of 91-day bills today, while Greece will sell 1.25 billion euros of 182- day bills. Belgium will offer 1.2 billion euros of short-term debt and Spain will auction 364-day and 553-day bills.
About seven stocks fell for each that rose in the MSCI Asia Pacific Index. The equity gauge, poised for the lowest close since Nov. 30, has fallen 17 percent this year.
The MSCI China Index lost 1.2 percent. Housing transactions in China declined in 27 out of 35 cities tracked by Soufun between Dec. 5 and Dec. 11. Transactions fell more than 60 percent in at least four cities, including Tianjin and Hangzhou.
China Gas Holdings Ltd. surged 22 percent for the biggest advance in the MSCI Asia Pacific Index. ENN Energy Holdings Ltd. and China Petroleum & Chemical Corp. will make an all-cash buyout offer for the piped-gas supplier as they seek to purchase a controlling stake, China Gas said.
German Confidence
S&P 500 futures rose to 1,230.80. The yield on 10-year U.S. Treasuries increased two basis points to 2.03 percent. Sales at retailers probably rose 0.6 percent last month, following a 0.5 percent advance in October, according to the median forecast of 64 economists surveyed by Bloomberg News ahead of the Commerce Department report today.
The ZEW Center for European Economic Research may say its index of German investor and analyst expectations, which aims to predict developments six months in advance, declined to minus 55.8 in December, according to the median estimate in a Bloomberg News survey of economists. That would be the lowest reading since October 2008.
The South Korean won fell for a fourth day, declining 0.7 percent to 1,155.38 per dollar. It touched 1,160.00 earlier, the weakest level since Nov. 28. Copper retreated 0.2 percent to $7,589.75 a metric ton, extending yesterday’s 2.7 percent decline, the most in three weeks. Gold traded at $1,654.88 an ounce. "
Monday, 12 December 2011
Europe Stocks, Euro Drop on Moody’s Review; Commodities Fall
Per Bloomberg.com
"Dec. 12 (Bloomberg) -- European stocks and U.S. equity futures fell and the euro weakened as Moody’s Investors Service said it will review ratings for countries in the region. Italian bonds stayed lower after a debt sale, while commodities retreated.
The Stoxx Europe 600 Index dropped 0.8 percent at 10:55 a.m. in London, after declining as much as 1.3 percent. Standard & Poor’s 500 Index futures lost 0.9 percent. The euro depreciated 0.9 percent to $1.3268. The 10-year Italian bond yield jumped 30 basis points as the government sold 7 billion euros ($9.3 billion) of bills. The cost of insuring against default on European government debt approached a record high. Silver and natural gas declined.
Last week’s European Union summit offered few new measures and doesn’t diminish the risk of credit-ranking revisions, Moody’s said today. While a European accord to limit budget deficits represents "progress," the onus is on governments rather than the European Central Bank to resolve the crisis with financial backing, Bundesbank President Jens Weidmann told Frankfurter Allgemeine Sonntagszeitung, according to a report published yesterday.
"The European situation will continue to bother us into next year as policy initiatives seem insufficient," said Mark Matthews, the Singapore-based head of research for Asia at Bank Julius Baer & Co., which oversees about $180 billion globally.
LSE Rating Review
Six shares fell for every one that advanced in the Stoxx 600, extending last week’s 0.1 percent drop. Xstrata Plc and Eurasian Natural Resources Corp. led mining companies lower. London Stock Exchange Group Plc slipped 4.1 percent as S&P placed its credit rating on review for a downgrade and the company agreed to buy the 50 percent of FTSE International Ltd. it doesn’t already own from Pearson Plc.
The decline in S&P 500 futures signaled the U.S. equity benchmark may trim its 1.7 percent gain on Dec. 9. The measure has climbed for two straight weeks, its first back-to-back weekly advance since October.
The two-year Italian note pared declines, with the yield climbing 17 basis points. The government sold 365-day bills at an average yield of 5.952 percent, compared with 6.087 percent at the previous auction. The extra yield investors demand to hold 10-year French bonds instead of benchmark German bunds climbed 11 basis points as the government prepared to offer as much as 6.5 billion euros of 91-, 182- and 308-day instruments.
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed for a fifth day, jumping seven basis points to 370, the highest since Nov. 28, close to its all-time high of 385. The Markit iTraxx Financial Index of contracts linked to the senior bonds of 25 banks and insurers increased five basis points to 301.
U.S. Debt Sales
The yield on the 30-year Treasury bond fell four basis points to 3.07 percent, with 10-year yields also slipping four basis points.
U.S. debt auctions over the next two weeks will probably total $177 billion, the largest concentration of so-called duration supply ever, JPMorgan Chase & Co., one of the 21 primary dealers that underwrite America’s borrowings, said in a report Dec. 9. This week’s sales will consist of $78 billion in notes, bonds and inflation-linked securities in four auctions starting today with $32 billion of three-year debt. The Treasury will announce on Dec. 15 how much it plans to raise in three offerings starting Dec. 19.
The dollar appreciated against most of its major peers monitored by Bloomberg, strengthening 0.2 percent versus the yen and 0.4 percent against the pound.
The Swedish krona weakened against 14 of its 16 most- actively traded counterparts, tumbling 1.4 percent versus the dollar and 0.5 percent against the euro.
European carbon prices rose from record lows after the world’s largest polluters backed away from positions that stymied global climate talks for more than a decade. EU permits for delivery this month rose as much 6.2 percent and traded at 8.10 euros on the ICE Futures Europe exchange in London.
Commodities Fall
Silver dropped 2.4 percent to $31.48 an ounce and natural gas fell 2.3 percent to $3.24 for a million British thermal units. Copper declined 1.7 percent to $7,680 a metric ton and Brent crude was 1.5 percent lower at $107.08 a barrel.
The MSCI Emerging Markets Index slipped 0.1 percent, erasing earlier gains of as much as 0.9 percent. India’s Sensex Index fell 2.1 percent after industrial production fell for the first time since June 2009. The Shanghai Composite Index lost 1 percent after data showed overseas shipments rose by the least in two years. Benchmark gauges in Turkey, Poland and the Czech Republic lost more than 1 percent. "
"Dec. 12 (Bloomberg) -- European stocks and U.S. equity futures fell and the euro weakened as Moody’s Investors Service said it will review ratings for countries in the region. Italian bonds stayed lower after a debt sale, while commodities retreated.
The Stoxx Europe 600 Index dropped 0.8 percent at 10:55 a.m. in London, after declining as much as 1.3 percent. Standard & Poor’s 500 Index futures lost 0.9 percent. The euro depreciated 0.9 percent to $1.3268. The 10-year Italian bond yield jumped 30 basis points as the government sold 7 billion euros ($9.3 billion) of bills. The cost of insuring against default on European government debt approached a record high. Silver and natural gas declined.
Last week’s European Union summit offered few new measures and doesn’t diminish the risk of credit-ranking revisions, Moody’s said today. While a European accord to limit budget deficits represents "progress," the onus is on governments rather than the European Central Bank to resolve the crisis with financial backing, Bundesbank President Jens Weidmann told Frankfurter Allgemeine Sonntagszeitung, according to a report published yesterday.
"The European situation will continue to bother us into next year as policy initiatives seem insufficient," said Mark Matthews, the Singapore-based head of research for Asia at Bank Julius Baer & Co., which oversees about $180 billion globally.
LSE Rating Review
Six shares fell for every one that advanced in the Stoxx 600, extending last week’s 0.1 percent drop. Xstrata Plc and Eurasian Natural Resources Corp. led mining companies lower. London Stock Exchange Group Plc slipped 4.1 percent as S&P placed its credit rating on review for a downgrade and the company agreed to buy the 50 percent of FTSE International Ltd. it doesn’t already own from Pearson Plc.
The decline in S&P 500 futures signaled the U.S. equity benchmark may trim its 1.7 percent gain on Dec. 9. The measure has climbed for two straight weeks, its first back-to-back weekly advance since October.
The two-year Italian note pared declines, with the yield climbing 17 basis points. The government sold 365-day bills at an average yield of 5.952 percent, compared with 6.087 percent at the previous auction. The extra yield investors demand to hold 10-year French bonds instead of benchmark German bunds climbed 11 basis points as the government prepared to offer as much as 6.5 billion euros of 91-, 182- and 308-day instruments.
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed for a fifth day, jumping seven basis points to 370, the highest since Nov. 28, close to its all-time high of 385. The Markit iTraxx Financial Index of contracts linked to the senior bonds of 25 banks and insurers increased five basis points to 301.
U.S. Debt Sales
The yield on the 30-year Treasury bond fell four basis points to 3.07 percent, with 10-year yields also slipping four basis points.
U.S. debt auctions over the next two weeks will probably total $177 billion, the largest concentration of so-called duration supply ever, JPMorgan Chase & Co., one of the 21 primary dealers that underwrite America’s borrowings, said in a report Dec. 9. This week’s sales will consist of $78 billion in notes, bonds and inflation-linked securities in four auctions starting today with $32 billion of three-year debt. The Treasury will announce on Dec. 15 how much it plans to raise in three offerings starting Dec. 19.
The dollar appreciated against most of its major peers monitored by Bloomberg, strengthening 0.2 percent versus the yen and 0.4 percent against the pound.
The Swedish krona weakened against 14 of its 16 most- actively traded counterparts, tumbling 1.4 percent versus the dollar and 0.5 percent against the euro.
European carbon prices rose from record lows after the world’s largest polluters backed away from positions that stymied global climate talks for more than a decade. EU permits for delivery this month rose as much 6.2 percent and traded at 8.10 euros on the ICE Futures Europe exchange in London.
Commodities Fall
Silver dropped 2.4 percent to $31.48 an ounce and natural gas fell 2.3 percent to $3.24 for a million British thermal units. Copper declined 1.7 percent to $7,680 a metric ton and Brent crude was 1.5 percent lower at $107.08 a barrel.
The MSCI Emerging Markets Index slipped 0.1 percent, erasing earlier gains of as much as 0.9 percent. India’s Sensex Index fell 2.1 percent after industrial production fell for the first time since June 2009. The Shanghai Composite Index lost 1 percent after data showed overseas shipments rose by the least in two years. Benchmark gauges in Turkey, Poland and the Czech Republic lost more than 1 percent. "
Thursday, 8 December 2011
Analysts see rand 5% stronger in a year
Per FIN 24:
"Johannesburg - The rand should bounce back 5% in the next year after its hammering since August by investors worried about the knock-on effects of weak eurozone and US economic growth, a Reuters poll showed on Wednesday.
Considered a high-risk asset, the rand is one of the world’s most traded currencies and of late has tended to be sold by global investors at the first signs of bad news coming out of Brussels or Washington.
Analysts said the currency’s roughly 20% decline over the last four months was overdone.
“We think that the market has excessively priced in negative news for the global economy,” said Murat Toprak, a regional strategist at HSBC in London.
“If we assume that the market settles down and this 'risk-on, risk-off' parameter eases, we do not see any reason why the South African rand will trade at such weak levels against the dollar.”
The foreign exchange poll of 30 strategists, traders and economists, which is conducted monthly with other major currencies, saw the rand trading at R8.1 against the dollar in 3 months, R8.0 in 6 months, and R7.68 in a year.
Seven of the respondents saw the currency trading weaker than R8.00 in a year’s time.
Slightly weaker-than-expected retail sales data helped weaken the rand to around R8.08 on Wednesday, but analysts said the ability of the eurozone to resolve its debt crisis would still be the currency’s biggest driver.
“Bad news from the euro area can always cause a pullback, particularly if the euro region fails to demonstrate urgent commitment in finding a solution,” said Annabel Bishop, economist at Investec.
The leaders of France and Germany will not leave this week’s EU summit until a “powerful” deal is reached to arrest the eurozone debt crisis, Paris said on Wednesday, as the latest borrowing figures exposed the stressed state of Europe’s banks.
“The EU leaders summit on Friday is key,” Bishop said.
“South Africa may go on holiday over the end of the year/start of the next but northern markets continue to operate and risk aversion levels will not go into hiatus,” Bishop added. "
"Johannesburg - The rand should bounce back 5% in the next year after its hammering since August by investors worried about the knock-on effects of weak eurozone and US economic growth, a Reuters poll showed on Wednesday.
Considered a high-risk asset, the rand is one of the world’s most traded currencies and of late has tended to be sold by global investors at the first signs of bad news coming out of Brussels or Washington.
Analysts said the currency’s roughly 20% decline over the last four months was overdone.
“We think that the market has excessively priced in negative news for the global economy,” said Murat Toprak, a regional strategist at HSBC in London.
“If we assume that the market settles down and this 'risk-on, risk-off' parameter eases, we do not see any reason why the South African rand will trade at such weak levels against the dollar.”
The foreign exchange poll of 30 strategists, traders and economists, which is conducted monthly with other major currencies, saw the rand trading at R8.1 against the dollar in 3 months, R8.0 in 6 months, and R7.68 in a year.
Seven of the respondents saw the currency trading weaker than R8.00 in a year’s time.
Slightly weaker-than-expected retail sales data helped weaken the rand to around R8.08 on Wednesday, but analysts said the ability of the eurozone to resolve its debt crisis would still be the currency’s biggest driver.
“Bad news from the euro area can always cause a pullback, particularly if the euro region fails to demonstrate urgent commitment in finding a solution,” said Annabel Bishop, economist at Investec.
The leaders of France and Germany will not leave this week’s EU summit until a “powerful” deal is reached to arrest the eurozone debt crisis, Paris said on Wednesday, as the latest borrowing figures exposed the stressed state of Europe’s banks.
“The EU leaders summit on Friday is key,” Bishop said.
“South Africa may go on holiday over the end of the year/start of the next but northern markets continue to operate and risk aversion levels will not go into hiatus,” Bishop added. "
Tuesday, 6 December 2011
Imperial takes tobacco fight to court
Should be a test case !!!
Canberra - A second major tobacco company has gone to Australia's High Court to argue that new laws banning logos from cigarette packs are unconstitutional.
Imperial Tobacco Australia Ltd. on Tuesday filed pleadings in the country's highest court. British American Tobacco Australia Ltd. last week initiated similar action against laws banning distinctive colors and designs from packs and render them uniformly olive-brown starting December 2012.
Imperial Tobacco argues the laws breach Australia's constitution because they acquire intellectual property on unjust terms.
Australia last month became the first country to pass such strict packaging laws aimed at stripping away any lingering glamour associated with smoking. - Sapa-AP
Merkel, Sarkozy Unite on EU Revamp as S&P Warns on Ratings
Dec. 6 (Bloomberg) -- German Chancellor Angela Merkel and French President Nicolas Sarkozy strengthened their push for new rules to tighten euro area economic cooperation after Standard & Poor’s said it may downgrade credit ratings across the region.
The leaders of Europe’s two biggest economies responded in a joint statement late yesterday that they "took note" of the move by S&P, while both countries "reinforce their conviction" that common proposals for closer fiscal union in the European Union will "strengthen coordination of budget and economic policy," and promote stability and growth.
"The actions of the last three years have shown that the euro zone governments are not prepared to act collectively in a way that convinces markets," said Paul Donovan, deputy head of global economics at UBS AG in London. The S&P move "may perhaps heighten the desirability of coming out with a compelling solution for the French and the Germans."
Germany and France risk losing their AAA credit ratings in a review of 15 euro nations for possible downgrade, S&P said. At an earlier meeting in Paris, Merkel and Sarkozy said both countries were aligned on backing automatic penalties for deficit violators and locking limits on debt into euro states’ constitutions. Investors say such moves might pave the way for the European Central Bank to do more to fight the debt crisis.
ECB Focus
The question is whether the Franco-German push toward integration is enough to prompt ECB President Mario Draghi to step up the central bank’s response, said Carsten Brzeski, an economist at ING Group in Brussels.
While the leaders’ announcement is "a good start to the week of truth," Merkel and Sarkozy still "need to put money where their mouth is and bring everyone else on board," Brzeski said by phone. "From a financial market perspective, it’s about them doing enough to deliver Draghi’s fiscal compact."
The euro fell for a third day after S&P’s announcement, which put European nations including the six AAA-rated countries on watch for potential downgrades pending the outcome of a Dec. 8-9 leaders summit. The 17-nation currency declined 0.3 percent to $1.3367 at 12:47 p.m. in Tokyo. Asia stocks dropped for the first time in seven days.
‘Excessive’
The S&P move was "excessive," said Vincent Truglia, managing director at New York-based Granite Springs Asset Management LLP and a former head of the sovereign risk unit at Moody’s Investors Service, a rival rating company.
"Countries like Germany, Luxembourg, Netherlands, Finland are AAA, and Austria is a pretty strong AAA," he said.
S&P said that ratings could be cut by one level for Austria, Belgium, Finland, Germany, Netherlands and Luxembourg, and by up to two notches for the other governments.
The other countries warned are Estonia, France, Ireland, Italy, Malta, Portugal, Slovakia, Slovenia and Spain, according to S&P. The company said it maintained the negative outlook for Cyprus, and Greece wasn’t put on "creditwatch."
"The credit opinion is based on factors that can’t be influenced by Austria alone," according to a statement from Austria’s finance ministry. "It is important that the summit later this week comes up with concrete results."
With the fate of the currency shared by the 17 euro states at risk, Merkel and Sarkozy are stressing their common platform going into the summit that aims to end the crisis now in its third year.
‘United’ Resolve
"Germany and France are united in their resolve to take all necessary measures together with their European partners and the European institutions to safeguard the stability of the euro zone," according to their statement e-mailed late yesterday after the S&P announcement.
Among the measures announced were plans to fast-track the euro’s permanent rescue fund to 2012, one year earlier than envisaged. Germany and France will also seek to ensure that decisions by the fund, the European Stability Mechanism, can be made by a "qualified majority" rather than a unanimous vote by the participating governments. Sarkozy said they aimed to reach consensus on treaty change with other euro leaders by March.
"We don’t have time -- we are conscious of the gravity of the situation," Sarkozy said after meeting with Merkel over lunch at the Elysee palace. "We want to go as fast as possible based on this agreement between France and Germany, which is open to others."
Response
Safeguarding banks, limiting the damage to Italy and Spain and finding additional rescue funds may hinge on the response to Franco-German demands for closer economic integration and tougher policing of fiscal rules.
Draghi signaled last week that should a "new fiscal compact" emerge among the euro nations, "other elements might follow." Merkel and Sarkozy both declined to comment on Draghi’s comments, stressing the ECB’s independence.
"It’s a step in the right direction for the ECB but we’ll want to know how the automatic sanctions are triggered," said Klaus Baader, co-chief economist at Societe Generale SA. "When France and Germany have joint press conferences and say we agree on everything you have to take that with a pinch of salt."
With the EU summit looming, U.S. Treasury Secretary Timothy Geithner arrives in Frankfurt to meet with Draghi and Bundesbank President Jens Weidmann before heading to Berlin for talks with German Finance Minister Wolfgang Schaeuble. The ECB holds a policy meeting on Dec. 8.
‘Bit of Trust’
European leaders will seek to "win back a bit of trust" at the summit after "our reliability has suffered," Merkel said in Paris. "We are steadfastly determined to make the decision at the council now."
Merkel and Sarkozy yesterday repeated their rejection of jointly sold euro bonds in solving the crisis, while seeking to calm concerns of euro-area member states that the European Court of Justice would be able to veto national budgets as part of their proposal for centralized deficit supervision.
With euro bonds ruled out, "the onus is still on the ECB to print money to make huge loans or bond purchases and draw a line under the crisis," said Jennifer McKeown, senior European economist at Capital Economics in London.
The move by S&P adds impetus to that, said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London.
"Anything which impacts the perceived creditworthiness of the main guarantors of euro zone debt is bad news for planned steps towards a fiscal union," he said in an e-mail. "All this puts more pressure on the ECB to hold the fort."
Sent from Bloomberg
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
The leaders of Europe’s two biggest economies responded in a joint statement late yesterday that they "took note" of the move by S&P, while both countries "reinforce their conviction" that common proposals for closer fiscal union in the European Union will "strengthen coordination of budget and economic policy," and promote stability and growth.
"The actions of the last three years have shown that the euro zone governments are not prepared to act collectively in a way that convinces markets," said Paul Donovan, deputy head of global economics at UBS AG in London. The S&P move "may perhaps heighten the desirability of coming out with a compelling solution for the French and the Germans."
Germany and France risk losing their AAA credit ratings in a review of 15 euro nations for possible downgrade, S&P said. At an earlier meeting in Paris, Merkel and Sarkozy said both countries were aligned on backing automatic penalties for deficit violators and locking limits on debt into euro states’ constitutions. Investors say such moves might pave the way for the European Central Bank to do more to fight the debt crisis.
ECB Focus
The question is whether the Franco-German push toward integration is enough to prompt ECB President Mario Draghi to step up the central bank’s response, said Carsten Brzeski, an economist at ING Group in Brussels.
While the leaders’ announcement is "a good start to the week of truth," Merkel and Sarkozy still "need to put money where their mouth is and bring everyone else on board," Brzeski said by phone. "From a financial market perspective, it’s about them doing enough to deliver Draghi’s fiscal compact."
The euro fell for a third day after S&P’s announcement, which put European nations including the six AAA-rated countries on watch for potential downgrades pending the outcome of a Dec. 8-9 leaders summit. The 17-nation currency declined 0.3 percent to $1.3367 at 12:47 p.m. in Tokyo. Asia stocks dropped for the first time in seven days.
‘Excessive’
The S&P move was "excessive," said Vincent Truglia, managing director at New York-based Granite Springs Asset Management LLP and a former head of the sovereign risk unit at Moody’s Investors Service, a rival rating company.
"Countries like Germany, Luxembourg, Netherlands, Finland are AAA, and Austria is a pretty strong AAA," he said.
S&P said that ratings could be cut by one level for Austria, Belgium, Finland, Germany, Netherlands and Luxembourg, and by up to two notches for the other governments.
The other countries warned are Estonia, France, Ireland, Italy, Malta, Portugal, Slovakia, Slovenia and Spain, according to S&P. The company said it maintained the negative outlook for Cyprus, and Greece wasn’t put on "creditwatch."
"The credit opinion is based on factors that can’t be influenced by Austria alone," according to a statement from Austria’s finance ministry. "It is important that the summit later this week comes up with concrete results."
With the fate of the currency shared by the 17 euro states at risk, Merkel and Sarkozy are stressing their common platform going into the summit that aims to end the crisis now in its third year.
‘United’ Resolve
"Germany and France are united in their resolve to take all necessary measures together with their European partners and the European institutions to safeguard the stability of the euro zone," according to their statement e-mailed late yesterday after the S&P announcement.
Among the measures announced were plans to fast-track the euro’s permanent rescue fund to 2012, one year earlier than envisaged. Germany and France will also seek to ensure that decisions by the fund, the European Stability Mechanism, can be made by a "qualified majority" rather than a unanimous vote by the participating governments. Sarkozy said they aimed to reach consensus on treaty change with other euro leaders by March.
"We don’t have time -- we are conscious of the gravity of the situation," Sarkozy said after meeting with Merkel over lunch at the Elysee palace. "We want to go as fast as possible based on this agreement between France and Germany, which is open to others."
Response
Safeguarding banks, limiting the damage to Italy and Spain and finding additional rescue funds may hinge on the response to Franco-German demands for closer economic integration and tougher policing of fiscal rules.
Draghi signaled last week that should a "new fiscal compact" emerge among the euro nations, "other elements might follow." Merkel and Sarkozy both declined to comment on Draghi’s comments, stressing the ECB’s independence.
"It’s a step in the right direction for the ECB but we’ll want to know how the automatic sanctions are triggered," said Klaus Baader, co-chief economist at Societe Generale SA. "When France and Germany have joint press conferences and say we agree on everything you have to take that with a pinch of salt."
With the EU summit looming, U.S. Treasury Secretary Timothy Geithner arrives in Frankfurt to meet with Draghi and Bundesbank President Jens Weidmann before heading to Berlin for talks with German Finance Minister Wolfgang Schaeuble. The ECB holds a policy meeting on Dec. 8.
‘Bit of Trust’
European leaders will seek to "win back a bit of trust" at the summit after "our reliability has suffered," Merkel said in Paris. "We are steadfastly determined to make the decision at the council now."
Merkel and Sarkozy yesterday repeated their rejection of jointly sold euro bonds in solving the crisis, while seeking to calm concerns of euro-area member states that the European Court of Justice would be able to veto national budgets as part of their proposal for centralized deficit supervision.
With euro bonds ruled out, "the onus is still on the ECB to print money to make huge loans or bond purchases and draw a line under the crisis," said Jennifer McKeown, senior European economist at Capital Economics in London.
The move by S&P adds impetus to that, said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London.
"Anything which impacts the perceived creditworthiness of the main guarantors of euro zone debt is bad news for planned steps towards a fiscal union," he said in an e-mail. "All this puts more pressure on the ECB to hold the fort."
Sent from Bloomberg
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Stocks cheer as Merkel, Sarkozy meet
Per Fin 24 :
Paris - European stocks rose early on Monday, adding to last week’s 8.5% jump on growing hopes of a comprehensive solution to the eurozone debt crisis as French President Nicolas Sarkozy and German Chancellor Angela Merkel meet ahead of a key summit.
Italy’s fresh €30bn package of austerity measures also eased tensions surrounding the country’s finances and sparked a rally in Italian shares, with Milan’s FTSE MIB index up 3.1% while Italian 10-year bond yields dropped towards 6%.
Banco Popolare surged 7%, UniCredit 5% and Enel was up 3.6%. In afternoon trade the FTSEurofirst 300 index of top European shares was up 1% at 994.84 points, a level not seen in five weeks.
“Markets now seem to want to believe that Merkel and Sarkozy will come out with a common point of view and a lot of austerity and structural measures to bring down the debt and increase competitiveness,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
“And when you listen to their speeches, it looks like the points of view which were far apart clearly have come closer together. If they manage to come to an understanding, they still have to sell some of these very unpopular measures to the rest of Europe. And this would open the door for the European Central Bank to get more involved.”
Shares in financial institutions led the gains, with ING Groep up 3%, BNP Paribas climbing 5.5% and BBVA up 2.6%.
The STOXX eurozone banking index has surged 23% since tumbling to a near-three year low in late November.
Commerzbank bucked the trend, sinking 7% after announcing the buyback of €600m of hybrid capital instruments in a bid to meet European capital requirements without asking for more state intervention, but the move was seen as too timid by investors.
The eurozone’s blue chip Euro STOXX 50 index was up 1.5% at 2 377.67 points, partly filling a downward gap on the chart left open in early November.
The benchmark index was reaching "overbought" territory, with its nine-day relative strength index at 68.5, signalling the index was poised for a short-term pullback. A reading of 70 and above is considered "overbought".
Despite Monday’s gains on the market, the Euro STOXX 50 volatility index - Europe’s yardstick of investor sentiment known as the VSTOXX - was steady at 35.7, signalling investors’ hesitation about piling up more risky assets before the outcome of the Merkel-Sarkozy meeting.
Ripe for pullback?
Kepler Capital Markets trader Patrice Perois said the market looked ripe for a pullback after its best weekly gain in three years.
“There are still significant differences between Sarkozy and Merkel, so we’re in for a volatile week, and the risk is that any kind of disappointment could trigger a pullback,” he said.
“But the medium term looks relatively positive. The Italian government is really regaining credibility, and that’s very important to restore confidence.”
Meeting in Paris on Monday ahead of a key European Union summit later in the week, Sarkozy and Merkel are under pressure to iron out their differences on how to centralise control of eurozone budgets to resolve the region’s debt crisis.
The two leaders will try to reach common ground on measures to boost coercive budget discipline in the eurozone, likely via EU treaty change, which they want all 27 EU leaders to approve at Friday’s summit.
“Too many times before, eurozone leaders have pledged their determination to end the crisis, but end up merely fudging the issue and delaying any decision until later,” said IG Markets analyst Chris Beauchamp.
“The fear now is that this week will turn out the same way, with fine words but little action.” Around Europe, UK’s FTSE 100 index was up 0.7%, Germany’s DAX index up 0.9%, and France’s CAC 40 up 1.4%.
Paris - European stocks rose early on Monday, adding to last week’s 8.5% jump on growing hopes of a comprehensive solution to the eurozone debt crisis as French President Nicolas Sarkozy and German Chancellor Angela Merkel meet ahead of a key summit.
Italy’s fresh €30bn package of austerity measures also eased tensions surrounding the country’s finances and sparked a rally in Italian shares, with Milan’s FTSE MIB index up 3.1% while Italian 10-year bond yields dropped towards 6%.
Banco Popolare surged 7%, UniCredit 5% and Enel was up 3.6%. In afternoon trade the FTSEurofirst 300 index of top European shares was up 1% at 994.84 points, a level not seen in five weeks.
“Markets now seem to want to believe that Merkel and Sarkozy will come out with a common point of view and a lot of austerity and structural measures to bring down the debt and increase competitiveness,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
“And when you listen to their speeches, it looks like the points of view which were far apart clearly have come closer together. If they manage to come to an understanding, they still have to sell some of these very unpopular measures to the rest of Europe. And this would open the door for the European Central Bank to get more involved.”
Shares in financial institutions led the gains, with ING Groep up 3%, BNP Paribas climbing 5.5% and BBVA up 2.6%.
The STOXX eurozone banking index has surged 23% since tumbling to a near-three year low in late November.
Commerzbank bucked the trend, sinking 7% after announcing the buyback of €600m of hybrid capital instruments in a bid to meet European capital requirements without asking for more state intervention, but the move was seen as too timid by investors.
The eurozone’s blue chip Euro STOXX 50 index was up 1.5% at 2 377.67 points, partly filling a downward gap on the chart left open in early November.
The benchmark index was reaching "overbought" territory, with its nine-day relative strength index at 68.5, signalling the index was poised for a short-term pullback. A reading of 70 and above is considered "overbought".
Despite Monday’s gains on the market, the Euro STOXX 50 volatility index - Europe’s yardstick of investor sentiment known as the VSTOXX - was steady at 35.7, signalling investors’ hesitation about piling up more risky assets before the outcome of the Merkel-Sarkozy meeting.
Ripe for pullback?
Kepler Capital Markets trader Patrice Perois said the market looked ripe for a pullback after its best weekly gain in three years.
“There are still significant differences between Sarkozy and Merkel, so we’re in for a volatile week, and the risk is that any kind of disappointment could trigger a pullback,” he said.
“But the medium term looks relatively positive. The Italian government is really regaining credibility, and that’s very important to restore confidence.”
Meeting in Paris on Monday ahead of a key European Union summit later in the week, Sarkozy and Merkel are under pressure to iron out their differences on how to centralise control of eurozone budgets to resolve the region’s debt crisis.
The two leaders will try to reach common ground on measures to boost coercive budget discipline in the eurozone, likely via EU treaty change, which they want all 27 EU leaders to approve at Friday’s summit.
“Too many times before, eurozone leaders have pledged their determination to end the crisis, but end up merely fudging the issue and delaying any decision until later,” said IG Markets analyst Chris Beauchamp.
“The fear now is that this week will turn out the same way, with fine words but little action.” Around Europe, UK’s FTSE 100 index was up 0.7%, Germany’s DAX index up 0.9%, and France’s CAC 40 up 1.4%.
Thursday, 1 December 2011
Monday, 28 November 2011
Mobius: Global economy looks good
REF : BUSINESS REPORT :
Emerging markets expert Mark Mobius has adopted an upbeat tone on the outlook for the global economy, despite headlines depicting doom and gloom on an almost daily basis.
“From a mid- to long-term perspective, I believe the global economic situation continues to look very good for a number of reasons,” he said in response to an online query whether there would be a recession globally or in emerging markets.
Many emerging markets have continued to grow at a rapid pace, he said, and growth was not expected to slow down too much over the next decade, although the percentage changes could decelerate when the GDP numbers get bigger.
“We believe the situation in Europe can be worked out and there will likely be considerable reform in European countries such as cuts in government spending and measures taken to stimulate business by lowering taxes and reducing bureaucratic burdens. We expect the same could happen in the US and Japan, as those countries and the entire developed world are learning that one way to stimulate growth is to allow business and private enterprise to grow, particularly the small- and medium-size businesses.
Although the move to these policies will likely take some time, “we already see the signs of potential change.”
But to Mobius, the European debt situation does not seem as serious as the US debt crisis, both in terms of scale and the possible impact on the global economy. “As such, I believe the world's focus should really be on the US debt crisis.” - I-Net Bridge
Rand gains as risk aversion ebbs
Good Start to week !!
Johannesburg - The rand gained more than 2.3% against the dollar on Monday, the best performance in a basket of 20 emerging market currencies monitored by Reuters, as the currency tracked recovering global markets.The government has said South Africa's economy will not escape unscathed from the eurozone debt crisis, but Finance Minister Pravin Gordhan said in a statement released on Monday continued exchange control liberalisation would encourage greater two-way demand for the rand, mitigating its volatility.The currency was at R8.34 to the greenback in midday trade after earlier touching a near-week high of R8.3290.It was off last week's low of 8.61, the weakest it has been since mid-May 2009, as investors offloaded assets seen as risky on worries eurozone leaders are failing to get a handle on the region's debt woes."After last week's risk aversion, the market is grabbing at any headlines that may offer some positive thoughts - as we saw with the IMF/Italy news," said Anisha Arora, emerging market analyst at 4CAST, adding the moves were based on thin trading volumes.The rand tracked a rally by the euro on a media report of an International Monetary Fund aid package for Italy which was, however, later quashed by the global lender."Liquidity is playing a big part. Across the emerging region liquidity is thin, and hence while dollar/rand moves reflect the market's current sentiments, thin liquidity is also exaggerating rand relief," Arora said.The dollar had taken a beating overnight as European sentiment improved ahead of a summit of eurozone finance ministers on Tuesday, said Brigid Taylor, head of institutional sales at Nedbank."US Treasuries and the dollar have retreated as equities, oil, gold and risk look better this morning," Taylor said.
Johannesburg - The rand gained more than 2.3% against the dollar on Monday, the best performance in a basket of 20 emerging market currencies monitored by Reuters, as the currency tracked recovering global markets.The government has said South Africa's economy will not escape unscathed from the eurozone debt crisis, but Finance Minister Pravin Gordhan said in a statement released on Monday continued exchange control liberalisation would encourage greater two-way demand for the rand, mitigating its volatility.The currency was at R8.34 to the greenback in midday trade after earlier touching a near-week high of R8.3290.It was off last week's low of 8.61, the weakest it has been since mid-May 2009, as investors offloaded assets seen as risky on worries eurozone leaders are failing to get a handle on the region's debt woes."After last week's risk aversion, the market is grabbing at any headlines that may offer some positive thoughts - as we saw with the IMF/Italy news," said Anisha Arora, emerging market analyst at 4CAST, adding the moves were based on thin trading volumes.The rand tracked a rally by the euro on a media report of an International Monetary Fund aid package for Italy which was, however, later quashed by the global lender."Liquidity is playing a big part. Across the emerging region liquidity is thin, and hence while dollar/rand moves reflect the market's current sentiments, thin liquidity is also exaggerating rand relief," Arora said.The dollar had taken a beating overnight as European sentiment improved ahead of a summit of eurozone finance ministers on Tuesday, said Brigid Taylor, head of institutional sales at Nedbank."US Treasuries and the dollar have retreated as equities, oil, gold and risk look better this morning," Taylor said.
Thursday, 24 November 2011
Mugabe: Firms must cede 51% or go
Do we need to wory in SA !!!
Read below what is happening across our borders !!
Per FIN 24
"Harare - Zimbabwean President Robert Mugabe has told foreign firms to leave the country if they do not cede majority shares to local blacks, state media reported on Thursday.
"This is our policy. We do not hide it. We want empowerment of our people. Those who do not want, we say go now, if not yesterday," Mugabe said, the state-run Herald newspaper reported.
"The wealth must be exploited in the interest of our people."
Mugabe was speaking at a function where Anglo American owned Unki mine gave 10% of its shares to the community in the mining town of Shurugwi, about 300km south of the capital Harare.
Unki mine also donated $10m to a trust fund, The Herald said.
All foreign companies in Zimbabwe are required to cede 51% of their shares to local blacks under a law that has been criticised by investors at a time when the country is looking for foreign direct investment.
Most companies missed the September deadline to submit their empowerment plans but discussions are still under way between the government and several foreign firms.
The indigenisation programme is at the centre of a dispute between Mugabe and Prime Minister Morgan Thangeri , who formed a coalition government more than two years ago.
Tsvangirai has said the indigenisation drive will drive away foreign investment."
Read below what is happening across our borders !!
Per FIN 24
"Harare - Zimbabwean President Robert Mugabe has told foreign firms to leave the country if they do not cede majority shares to local blacks, state media reported on Thursday.
"This is our policy. We do not hide it. We want empowerment of our people. Those who do not want, we say go now, if not yesterday," Mugabe said, the state-run Herald newspaper reported.
"The wealth must be exploited in the interest of our people."
Mugabe was speaking at a function where Anglo American owned Unki mine gave 10% of its shares to the community in the mining town of Shurugwi, about 300km south of the capital Harare.
Unki mine also donated $10m to a trust fund, The Herald said.
All foreign companies in Zimbabwe are required to cede 51% of their shares to local blacks under a law that has been criticised by investors at a time when the country is looking for foreign direct investment.
Most companies missed the September deadline to submit their empowerment plans but discussions are still under way between the government and several foreign firms.
The indigenisation programme is at the centre of a dispute between Mugabe and Prime Minister Morgan Thangeri , who formed a coalition government more than two years ago.
Tsvangirai has said the indigenisation drive will drive away foreign investment."
Rand fragile, bonds weak
PER FIN 24
"Johannesburg - Yields on South African 15-year government bonds hit a seven-month high on Thursday as investors shifted to short-term safe-haven debt amid fears of a worsening EU credit crisis, while the rand firmed but looked vulnerable against the dollar.
The yield on 15-year benchmark jumped to 8.73%, while that on the 4-year bond rose to just above 7% - a two-month high.
The trigger was an unsuccessful German auction on Wednesday that drove investors to safe haven bonds regardless of their smaller yield, fearing the debt crisis might engulf the whole euro region.
Slightly higher-than-expected domestic inflation numbers on Wednesday also hit local bonds.
“The failed German auction just put risk-off, and with CPI printing a bit too high yesterday, rate cuts are definitely off the table and that puts pressure on the short end,” said Steve Arnold, a bond trader for Investec.
Consumer inflation hit the top end of the central bank’s 3% - 6% target on Wednesday. Dealers that were long on shorter-dated paper in anticipation of reduced rates would have sold off as the market repriced interest rate expectations.
Economists expect a slight increase in October's producer price inflation year-on-year, due at 09:30 GMT.
The rand was at R8.555 against the dollar at 06:50 GMT, threatening to test Wednesday's 2-1/2 year low of R8.61.
The rand is expected to breach that level if more bad news emerges from Europe. Its next support is seen around R9.00, a level it last hit in April 2009."
"Johannesburg - Yields on South African 15-year government bonds hit a seven-month high on Thursday as investors shifted to short-term safe-haven debt amid fears of a worsening EU credit crisis, while the rand firmed but looked vulnerable against the dollar.
The yield on 15-year benchmark jumped to 8.73%, while that on the 4-year bond rose to just above 7% - a two-month high.
The trigger was an unsuccessful German auction on Wednesday that drove investors to safe haven bonds regardless of their smaller yield, fearing the debt crisis might engulf the whole euro region.
Slightly higher-than-expected domestic inflation numbers on Wednesday also hit local bonds.
“The failed German auction just put risk-off, and with CPI printing a bit too high yesterday, rate cuts are definitely off the table and that puts pressure on the short end,” said Steve Arnold, a bond trader for Investec.
Consumer inflation hit the top end of the central bank’s 3% - 6% target on Wednesday. Dealers that were long on shorter-dated paper in anticipation of reduced rates would have sold off as the market repriced interest rate expectations.
Economists expect a slight increase in October's producer price inflation year-on-year, due at 09:30 GMT.
The rand was at R8.555 against the dollar at 06:50 GMT, threatening to test Wednesday's 2-1/2 year low of R8.61.
The rand is expected to breach that level if more bad news emerges from Europe. Its next support is seen around R9.00, a level it last hit in April 2009."
Wednesday, 23 November 2011
South African Consumer inflation higher than expected
PER FIN 24.com
Johannesburg - South Africa’s targeted consumer inflation quickened faster than expected to 6.0% year-on-year (y/y) in October from 5.7% in September, Statistics South Africa said on Wednesday. On a month-on-month (m/m) basis, inflation also accelerated slightly to 0.5% from 0.4% in September. Economists surveyed by Reuters expected the consumer price index to quicken to 5.9% on a y/y basis and slow to 0.35% m/m. Nedbank economist Carmen Altenkirch said inflation was expected to continue to rise. "Higher food and administered prices will remain the main drivers of inflation. The rand will be the wild card over the coming months. "If a credible plan is not found to resolve the European debt crisis, the rand could fall steeply as investors seek the security of so-called safe haven assets," she said.She said the 6% rise will not cause the Reserve Bank undue concern in the short term. "However, the bank will watch for signs that it is feeding through into higher wage demands and into more generalised inflationary pressures."
Johannesburg - South Africa’s targeted consumer inflation quickened faster than expected to 6.0% year-on-year (y/y) in October from 5.7% in September, Statistics South Africa said on Wednesday. On a month-on-month (m/m) basis, inflation also accelerated slightly to 0.5% from 0.4% in September. Economists surveyed by Reuters expected the consumer price index to quicken to 5.9% on a y/y basis and slow to 0.35% m/m. Nedbank economist Carmen Altenkirch said inflation was expected to continue to rise. "Higher food and administered prices will remain the main drivers of inflation. The rand will be the wild card over the coming months. "If a credible plan is not found to resolve the European debt crisis, the rand could fall steeply as investors seek the security of so-called safe haven assets," she said.She said the 6% rise will not cause the Reserve Bank undue concern in the short term. "However, the bank will watch for signs that it is feeding through into higher wage demands and into more generalised inflationary pressures."
Tuesday, 22 November 2011
Chinese media says US ignoring debt bomb'
PER FIN 24.com - Good Read !!
"Beijing - The United States has ignored a “ticking debt bomb” in admitting defeat in reining in the country’s ballooning debt, Chinese state media said on Tuesday, criticising US legislators for neglecting their duty to the world. On Monday, Republicans and Democrats on a 12-member congressional “super committee” said they were too divided to tackle trillion-dollar budget deficits and a national debt that is roughly equal to the U.S. economy. China’s official Xinhua news agency, in an English-language commentary, blamed the “miscarriage” on political wrangling ahead of a US election season, and said it would overshadow flimsy market confidence around the world. “America’s nonsensical domestic political wrestling” has proved its inability to “step up and shoulder its responsibility” to help spur sustainable and balanced growth in a bearish world economy, the news agency said. “Washington’s political elites ... are obligated to muster the courage to defuse the ticking debt bomb and start to show the world they have the wisdom and determination not to further jeopardize the fragile global economic recovery,” Xinhua said. Such commentaries in state media do not represent official policy of China’s ruling Communist Party but provide insight into government thinking. US lawmakers’ failure to agree on $1.2 trillion in deficit reduction sets up a year of uncertainty on taxes and spending that could further rattle investors already shaken over euro zone debt woes. The US Congress is set to deliver those budget savings through automatic cuts to defense and domestic programmes, but some Republicans have vowed to prevent them from hitting the military. Obama said he would veto any effort to do so. “US politicians have never shied from lecturing other countries about global responsibility, and now it is high time they showed a sense of true global leadership,” Xinhua said. "
"Beijing - The United States has ignored a “ticking debt bomb” in admitting defeat in reining in the country’s ballooning debt, Chinese state media said on Tuesday, criticising US legislators for neglecting their duty to the world. On Monday, Republicans and Democrats on a 12-member congressional “super committee” said they were too divided to tackle trillion-dollar budget deficits and a national debt that is roughly equal to the U.S. economy. China’s official Xinhua news agency, in an English-language commentary, blamed the “miscarriage” on political wrangling ahead of a US election season, and said it would overshadow flimsy market confidence around the world. “America’s nonsensical domestic political wrestling” has proved its inability to “step up and shoulder its responsibility” to help spur sustainable and balanced growth in a bearish world economy, the news agency said. “Washington’s political elites ... are obligated to muster the courage to defuse the ticking debt bomb and start to show the world they have the wisdom and determination not to further jeopardize the fragile global economic recovery,” Xinhua said. Such commentaries in state media do not represent official policy of China’s ruling Communist Party but provide insight into government thinking. US lawmakers’ failure to agree on $1.2 trillion in deficit reduction sets up a year of uncertainty on taxes and spending that could further rattle investors already shaken over euro zone debt woes. The US Congress is set to deliver those budget savings through automatic cuts to defense and domestic programmes, but some Republicans have vowed to prevent them from hitting the military. Obama said he would veto any effort to do so. “US politicians have never shied from lecturing other countries about global responsibility, and now it is high time they showed a sense of true global leadership,” Xinhua said. "
Business urges rethink on secrecy bill
PER FIN 24.com
"Business Unity South Africa (Busa) on Tuesday urged the government "even at this late stage" to reconsider the "public interest" dimension of the protection of information bill. It said this was to allay fears that transparency and accountability in South African public affairs would be greatly weakened by the exclusion of a"public interest" clause. "As economic performance and good governance are closely bound up with each other, Busa supports the need for transparent government and supporting institutions," the business representative body said."In particular it is widely recognised that corruption is a serious threat to the achievement of South Africa's socioeconomic goals and that the free flow of information is an essential part of combating it. "The recent Global Competitiveness Report of the World Economic Forum listed corruption as one of the top four most problematic factors for doing business in South Africa. "In view of the joint commitment by business and government to address the challenge of corruption - which ultimately undermines growth, employment and poverty alleviation - Busa appeals to government to subject the new draft legislation to a 'public interest' test. "Busa believes that such an amendment will go a long way to meeting the serious concerns that have been raised," Busa said. "
"Business Unity South Africa (Busa) on Tuesday urged the government "even at this late stage" to reconsider the "public interest" dimension of the protection of information bill. It said this was to allay fears that transparency and accountability in South African public affairs would be greatly weakened by the exclusion of a"public interest" clause. "As economic performance and good governance are closely bound up with each other, Busa supports the need for transparent government and supporting institutions," the business representative body said."In particular it is widely recognised that corruption is a serious threat to the achievement of South Africa's socioeconomic goals and that the free flow of information is an essential part of combating it. "The recent Global Competitiveness Report of the World Economic Forum listed corruption as one of the top four most problematic factors for doing business in South Africa. "In view of the joint commitment by business and government to address the challenge of corruption - which ultimately undermines growth, employment and poverty alleviation - Busa appeals to government to subject the new draft legislation to a 'public interest' test. "Busa believes that such an amendment will go a long way to meeting the serious concerns that have been raised," Busa said. "
Thursday, 17 November 2011
Branson does it again - Virgin Money to Buy Northern Rock for 747 Million Pounds
While Global Banks are cutting acquisitions Virgin Money takes the step !!
Read re Bloomberg :
"Nov. 17 (Bloom berg) -- Billionaire Richard Brandon's Virgin Money Holdings U.K. Ltd. is to buy Northern Rock Pc for 747 million pounds ($1.2 billion), four years after it suffered the first run on a British bank in more than a century.
The government will also receive 50 million pounds in cash within six months, 150 million pounds of Tier 1 capital notes and as much as a further 80 million pounds in cash in the next five years subject to a profitable initial public offering, U.K. Financial Investments said in a statement today. That would bring the total to as much as 1.03 billion pounds.
The sale is the first by the government since it bailed out four British lenders including Lloyd Banking Group Plc and Royal Bank of Scotland Group Plc following the 2008 credit crisis. Chancellor of the Exchequer George Osborne, seeking to plug the budget deficit, said today the sale is the first step to reducing the government’s holdings in the industry.
"The sale of Northern Rock to Virgin Money is an important first step in getting the British taxpayer out of the business of owning banks," Osborne said in an e-mailed statement. "It represents value for money, will increase choice on the high street for customers, and safeguards jobs in the North East."
Virgin Money pledged to move its headquarters to Newcastle, Northern Rock’s base, and not to impose any compulsory redundancies in the three years following the purchase. It will maintain the same number of branches. The bank has cut about 2,300 jobs since nationalization, reducing total staff numbers to about 4,000.
New Competitor
In January 2010, Northern Rock Plc, the consumer bank, separated from Northern Rock Asset Management Plc, which is closed to new customers. At the same time, the government injected 1.4 billion pounds of capital into the unit.
U.S. private-equity firm JC Flowers & Co. and NBNK Investments Plc, run by Peter Levene, also submitted bids for the bank which the U.K. government took over in February 2008.
The sale "creates a new retail banking competitor with four million customers, bringing additional choice to the U.K. market and securing jobs," said Keith Morgan, head of Wholly Owned Investments at UKFI, the government agency managing its bank stakes. "The deal returns Northern Rock to the private sector and maximizes value for taxpayers."
Read re Bloomberg :
"Nov. 17 (Bloom berg) -- Billionaire Richard Brandon's Virgin Money Holdings U.K. Ltd. is to buy Northern Rock Pc for 747 million pounds ($1.2 billion), four years after it suffered the first run on a British bank in more than a century.
The government will also receive 50 million pounds in cash within six months, 150 million pounds of Tier 1 capital notes and as much as a further 80 million pounds in cash in the next five years subject to a profitable initial public offering, U.K. Financial Investments said in a statement today. That would bring the total to as much as 1.03 billion pounds.
The sale is the first by the government since it bailed out four British lenders including Lloyd Banking Group Plc and Royal Bank of Scotland Group Plc following the 2008 credit crisis. Chancellor of the Exchequer George Osborne, seeking to plug the budget deficit, said today the sale is the first step to reducing the government’s holdings in the industry.
"The sale of Northern Rock to Virgin Money is an important first step in getting the British taxpayer out of the business of owning banks," Osborne said in an e-mailed statement. "It represents value for money, will increase choice on the high street for customers, and safeguards jobs in the North East."
Virgin Money pledged to move its headquarters to Newcastle, Northern Rock’s base, and not to impose any compulsory redundancies in the three years following the purchase. It will maintain the same number of branches. The bank has cut about 2,300 jobs since nationalization, reducing total staff numbers to about 4,000.
New Competitor
In January 2010, Northern Rock Plc, the consumer bank, separated from Northern Rock Asset Management Plc, which is closed to new customers. At the same time, the government injected 1.4 billion pounds of capital into the unit.
U.S. private-equity firm JC Flowers & Co. and NBNK Investments Plc, run by Peter Levene, also submitted bids for the bank which the U.K. government took over in February 2008.
The sale "creates a new retail banking competitor with four million customers, bringing additional choice to the U.K. market and securing jobs," said Keith Morgan, head of Wholly Owned Investments at UKFI, the government agency managing its bank stakes. "The deal returns Northern Rock to the private sector and maximizes value for taxpayers."
Gold sector upbeat on investor demand
Gold sector upbeat on investor demand: Troubled markets will fuel the surge in investment demand for gold, even as record prices force a slump in the jewellery market.
Wednesday, 16 November 2011
70% of Experts; lack confidence in economy dismal
Experts' confidence in economy dismal: Seventy percent of international experts have a pessimistic outlook on the global economy, according to a new survey conducted by the WEF.
JSE lifted by sentiment on Europe
JSE lifted by sentiment on Europe: The JSE reversed its morning losses by noon on Wednesday as sentiment surrounding the eurozone, and Italy in particular, improved.
OBAMA : No quick fix for Europe Troubles
PER FIN 24.COM
"Canberra - US President Barack Obama on Wednesday said he was deeply concerned about the eurozone crisis and market turmoil would continue until Europe has a concrete plan to deal with its sovereign debt woes.
Obama's comments added to a chorus of non-European policymakers urging greater action to deal with the two-year-old crisis, and came as equity markets fell in response to a sell-off in eurozone bond markets.
"Until we put in place a concrete plan and structure that sends a clear signal to the markets that Europe is standing behind the euro and will do what it takes, we are going to continue to see the kinds of market turmoil we saw," Obama told a news conference in the Australian capital of Canberra.
Asian shares fell on Wednesday and the euro slipped to its lowest levels in a month against the dollar and the yen.
Investors have been spooked by signs the crisis is spreading from heavily indebted Greece and Italy to the region's core nations, with yield spreads on Austrian, Belgian and French 10-year bonds over Germany Bunds hitting euro-era highs on Tuesday.
Obama said that whilst there had been progress in putting together unity governments in Italy and Greece, Europe still faced a "problem of political will" rather than a technical problem.
"We're going to continue to advise European leaders on what options we think would meet the threshold where markets would settle down. It is going to require some tough decisions on their part," he said.
"Ultimately, what they are going to need is a firewall that sends a clear signal - we stand behind the European project, we stand behind the euro."
Canada's Finance Minister Jim Flaherty, speaking earlier on Wednesday in Japan, urged European leaders to put "meat on the bones" of plans to stem the contagion.
"Until European countries build firewalls for their financial system, I think we will continue to see market volatility," he said. "Some of us are frustrated by the failure of clear and decisive action in Europe."
China's central bank also voiced its concern, saying in its quarterly monetary policy report posted on its website that the European debt crisis was a prime risk to the global economy.
"The sovereign debt problem in the eurozone will cause continuous turbulence in financial markets, and, if the crisis spreads to core member countries, it may cause global systematic risks," the report said.
Bank of Japan Governor Masaaki Shirakawa told a news conference there were signs the European crisis was starting to affect emerging economies through trade and other channels.
"Dollar funding at European banks has also worsened and there are signs of dollar assets being squeezed, or so-called deleveraging," he said "
"Canberra - US President Barack Obama on Wednesday said he was deeply concerned about the eurozone crisis and market turmoil would continue until Europe has a concrete plan to deal with its sovereign debt woes.
Obama's comments added to a chorus of non-European policymakers urging greater action to deal with the two-year-old crisis, and came as equity markets fell in response to a sell-off in eurozone bond markets.
"Until we put in place a concrete plan and structure that sends a clear signal to the markets that Europe is standing behind the euro and will do what it takes, we are going to continue to see the kinds of market turmoil we saw," Obama told a news conference in the Australian capital of Canberra.
Asian shares fell on Wednesday and the euro slipped to its lowest levels in a month against the dollar and the yen.
Investors have been spooked by signs the crisis is spreading from heavily indebted Greece and Italy to the region's core nations, with yield spreads on Austrian, Belgian and French 10-year bonds over Germany Bunds hitting euro-era highs on Tuesday.
Obama said that whilst there had been progress in putting together unity governments in Italy and Greece, Europe still faced a "problem of political will" rather than a technical problem.
"We're going to continue to advise European leaders on what options we think would meet the threshold where markets would settle down. It is going to require some tough decisions on their part," he said.
"Ultimately, what they are going to need is a firewall that sends a clear signal - we stand behind the European project, we stand behind the euro."
Canada's Finance Minister Jim Flaherty, speaking earlier on Wednesday in Japan, urged European leaders to put "meat on the bones" of plans to stem the contagion.
"Until European countries build firewalls for their financial system, I think we will continue to see market volatility," he said. "Some of us are frustrated by the failure of clear and decisive action in Europe."
China's central bank also voiced its concern, saying in its quarterly monetary policy report posted on its website that the European debt crisis was a prime risk to the global economy.
"The sovereign debt problem in the eurozone will cause continuous turbulence in financial markets, and, if the crisis spreads to core member countries, it may cause global systematic risks," the report said.
Bank of Japan Governor Masaaki Shirakawa told a news conference there were signs the European crisis was starting to affect emerging economies through trade and other channels.
"Dollar funding at European banks has also worsened and there are signs of dollar assets being squeezed, or so-called deleveraging," he said "
Tuesday, 15 November 2011
Rand weakens on eurozone concerns
Per : @fin24
"Johannesburg - The rand weakened in midday trade, off 1%, and in line with the single currency as fears over the state of the eurozone continued to drive sentiment.
At 11:52 local time, the rand was bid at 8.0859 to the dollar from its previous close of 7.9998. It was bid at 10.9455 to the euro from 10.9031 before, and at 12.8201 against sterling from 12.7169 previously.
The euro was at $1.3541 from $1.3623 previously.
A local dealer said: "We are seeing a similar play to yesterday with renewed concerns over the eurozone. We all know that this is not going to blow away any time soon so expect the rand to fluctuate accordingly."
He put resistance against the dollar at 8.12-8.13.
Standard Bank analysts said in a morning note that the rand had fallen victim to the eurozone crisis.
"The rand weakened sharply yesterday as risk aversion returned. The yield demanded on Italian bonds rose to a eurozone high at an auction yesterday."
Clearly, investors remained concerned about Italy's ability to get its debt under control despite the recent change in this country's leadership.
"Earlier in the day, the rand had firmed after Japan's encouraging GDP data; this economy has returned to growth for the first time in four quarters. However, this rally was short-lived."
Standard Bank said while the rand might enjoy further bouts of strength into year-end, events in Europe were still calling the shots.
"We therefore believe that the rand will weaken to our year-end target of R8.20/USD."
Meanwhile Dow Jones Newswires noted scepticism from Commerzbank. "There is some GDP data as well as the ZEW economic expectations data due for publication in Europe today. Disappointing results might make it more difficult to contain the debt crisis and as a result might put further strain on the markets while positive surprises are unlikely to change the picture."
Germany's ZEW was expected to show that investors and analysts became less optimistic in November, with the current conditions index seen falling to 32.0 from October's 38.4. While this was significantly off the recent peak of 91.5 in May, it was still in positive territory, said Rabobank.
In the US, retail sales, producer price index and Empire State manufacturing were expected at 13:30 GMT, while business inventories were due out at 15:00 GMT. German GDP rose 0.5% in the third quarter, compared with the second quarter, in line with estimates. Meanwhile, French GDP expanded 0.4% from the second quarter, also as expected. "
STEVEN:
If one looks at above it is good as it shielded our market against the negative Europe Markets most down 1.5% and shaky.
The rand's fairer value in my understanding should be at about 8.15 to the $.
It seem to flitz back and forward between 7.88 & 8.15 in a two week bracket.
Until the euro crisis is sorted we in for the sideways movement !!
Hold on, it has to settle soon. The indicators are very Bullish which is good.
"Johannesburg - The rand weakened in midday trade, off 1%, and in line with the single currency as fears over the state of the eurozone continued to drive sentiment.
At 11:52 local time, the rand was bid at 8.0859 to the dollar from its previous close of 7.9998. It was bid at 10.9455 to the euro from 10.9031 before, and at 12.8201 against sterling from 12.7169 previously.
The euro was at $1.3541 from $1.3623 previously.
A local dealer said: "We are seeing a similar play to yesterday with renewed concerns over the eurozone. We all know that this is not going to blow away any time soon so expect the rand to fluctuate accordingly."
He put resistance against the dollar at 8.12-8.13.
Standard Bank analysts said in a morning note that the rand had fallen victim to the eurozone crisis.
"The rand weakened sharply yesterday as risk aversion returned. The yield demanded on Italian bonds rose to a eurozone high at an auction yesterday."
Clearly, investors remained concerned about Italy's ability to get its debt under control despite the recent change in this country's leadership.
"Earlier in the day, the rand had firmed after Japan's encouraging GDP data; this economy has returned to growth for the first time in four quarters. However, this rally was short-lived."
Standard Bank said while the rand might enjoy further bouts of strength into year-end, events in Europe were still calling the shots.
"We therefore believe that the rand will weaken to our year-end target of R8.20/USD."
Meanwhile Dow Jones Newswires noted scepticism from Commerzbank. "There is some GDP data as well as the ZEW economic expectations data due for publication in Europe today. Disappointing results might make it more difficult to contain the debt crisis and as a result might put further strain on the markets while positive surprises are unlikely to change the picture."
Germany's ZEW was expected to show that investors and analysts became less optimistic in November, with the current conditions index seen falling to 32.0 from October's 38.4. While this was significantly off the recent peak of 91.5 in May, it was still in positive territory, said Rabobank.
In the US, retail sales, producer price index and Empire State manufacturing were expected at 13:30 GMT, while business inventories were due out at 15:00 GMT. German GDP rose 0.5% in the third quarter, compared with the second quarter, in line with estimates. Meanwhile, French GDP expanded 0.4% from the second quarter, also as expected. "
STEVEN:
If one looks at above it is good as it shielded our market against the negative Europe Markets most down 1.5% and shaky.
The rand's fairer value in my understanding should be at about 8.15 to the $.
It seem to flitz back and forward between 7.88 & 8.15 in a two week bracket.
Until the euro crisis is sorted we in for the sideways movement !!
Hold on, it has to settle soon. The indicators are very Bullish which is good.
Monday, 14 November 2011
Eskom Secures more green energy funding
Per FIN 24.com :
"Power utility Eskom signed a loan for about R1.9bn that will finance the building of South Africa’s largest solar energy and wind power generation projects.
Signing the guarantee, Finance Minister Pravin Gordhan said South Africa had “a huge comparative advantage” when it came to solar power generation.
Public Enterprises Minister Malusi Gigaba said the loan was an indication that there was “great investor confidence in South Africa".
The 40-year loan, signed in Pretoria, will help finance the building of a 100 megawatt solar power plant near Upington and the 100 MW Sere wind farm near Vredendal in the Western Cape.
The 200 MW capacity of the two power plants could generate enough electricity to power 200 000 homes.
Eskom chief executive Brian Dames said the wind farm would be completed by 2013 and the the solar farm a year later in 2014.
Repayments on the loan will start in 10 years. It is expected to be paid off over the following 30 years at an interest rate of 0.25 (CORR) percent annually on the amounts dispersed.
The loan was approved by the World Bank on October 27 and comes from its clean technology fund.
Eskom has already received more than R700m from the African Development Bank for the two projects, which will be the largest in South Africa.
The loans are being guaranteed by the South African government.
It is hoped that each project will reduce South Africa’s carbon emissions by five million tonnes a year. "
A good read, seems like going greener is the way to look at things good start !!
"Power utility Eskom signed a loan for about R1.9bn that will finance the building of South Africa’s largest solar energy and wind power generation projects.
Signing the guarantee, Finance Minister Pravin Gordhan said South Africa had “a huge comparative advantage” when it came to solar power generation.
Public Enterprises Minister Malusi Gigaba said the loan was an indication that there was “great investor confidence in South Africa".
The 40-year loan, signed in Pretoria, will help finance the building of a 100 megawatt solar power plant near Upington and the 100 MW Sere wind farm near Vredendal in the Western Cape.
The 200 MW capacity of the two power plants could generate enough electricity to power 200 000 homes.
Eskom chief executive Brian Dames said the wind farm would be completed by 2013 and the the solar farm a year later in 2014.
Repayments on the loan will start in 10 years. It is expected to be paid off over the following 30 years at an interest rate of 0.25 (CORR) percent annually on the amounts dispersed.
The loan was approved by the World Bank on October 27 and comes from its clean technology fund.
Eskom has already received more than R700m from the African Development Bank for the two projects, which will be the largest in South Africa.
The loans are being guaranteed by the South African government.
It is hoped that each project will reduce South Africa’s carbon emissions by five million tonnes a year. "
A good read, seems like going greener is the way to look at things good start !!
Taking the Eish out of doing a VAT Application with SARS.
All business's who provide a Vatable Service of over R1 000 000 per Anum need to register for VAT.
Also importers who import goods into SA and want to claim back the VAT on the goods imported need to apply to be a VAT vendor to claim the input VAT.
Remember VAT on imports is not only charged at 14% input & can be greater depending on the goods imported.
So to benefit from that one should register.
The application process is quite involved and one should get a person who deals with this to handle it for you. SARS have made the process very transparent and involved to ensure not fraud & corruption.
It will be Money well spent to get it done correctly.
Before doing the application the entity must be registered for Income Tax.
Below find a list of what is required for the various entities :
The important issue is :
Registration for VAT is area restricted and therefore you will be required to present yourself in person to the Branch office where the business is situated for validation of information. Only applications which is presented in person by the individual / legal representative vendor / authorised
registered tax practitioner will be accepted. All other applications will be rejected.
Please note all the above or one will have problems with the registration.
One will then have problems as the documents will be out of date and one will have to start the process again from scratch.
Need help contact me :
Steven Morris Chartered Accountant (SA)
3 Bickley Road
Sea Point
Cape Town
8005
E-mail : steven@global.co.za
Also importers who import goods into SA and want to claim back the VAT on the goods imported need to apply to be a VAT vendor to claim the input VAT.
Remember VAT on imports is not only charged at 14% input & can be greater depending on the goods imported.
So to benefit from that one should register.
The application process is quite involved and one should get a person who deals with this to handle it for you. SARS have made the process very transparent and involved to ensure not fraud & corruption.
It will be Money well spent to get it done correctly.
Before doing the application the entity must be registered for Income Tax.
Below find a list of what is required for the various entities :
- Individual Copy of the identity document of the individual
- Copy of the identity documents of the 2 most senior members / directors / shareholders / trustees
- Partnership Copy of the identity documents of the 2 most senior partners of the partnership
- Close Corporation / Company / Trust : Copy of certificate of incorporation
- Association not for Gain / Welfare Copy of constitution / Organisation / Club : Copy of Constitution
- Letter of Authority : If Application is presented by registered Tax Practioner
- Copies of bank statements for the past three months but not older than one month from application
- Copy of financial information listed as source in part four to determine value of tax able supplies (no cashflow projections will be accepted)
- Recent copy of the Business Municipal account
- Recent copy of the Residential Municipal account of individual, partner or representative vendor
- Company / Trust fund VAT 12 1( Application for category E) if tax period is selected to be category E due to the main activity
- Cancelled Cheque of original letter from Banker
- Copy of ID or passport of Rep Taxpayer
- Business Municipal Account or Residential Municipal Account of Rep Tax payer for other entities.
- Copies of the bank statement not older then 3 months
- Copy of Financial info to show vatable supplies.
The important issue is :
Registration for VAT is area restricted and therefore you will be required to present yourself in person to the Branch office where the business is situated for validation of information. Only applications which is presented in person by the individual / legal representative vendor / authorised
registered tax practitioner will be accepted. All other applications will be rejected.
Please note all the above or one will have problems with the registration.
One will then have problems as the documents will be out of date and one will have to start the process again from scratch.
Need help contact me :
Steven Morris Chartered Accountant (SA)
3 Bickley Road
Sea Point
Cape Town
8005
Mobile :+27 83 943 1858
Facsimile : 0866 712 498E-mail : steven@global.co.za
Friday, 11 November 2011
Further to my story on Oppenheimers I read this !!
I came across this article on fin 24.com
A good read from a knowledgeable South African.
I can't dismiss this, unlikely but far from Impossible !!
"A senior South African business figure totally dismissed concerns about the nationalisation of mines in South Africa on Thursday, soon after the ANC suspended a key proponent of the idea.
Well-known mining executive Boddy Godsell said the odds of the mines being nationalised were as remote as those of the Tea Party in the United States being able to abolish the US Federal Reserve.
"The youth league of the ANC has developed some unrealistic and unimplementable answers to some absolutely vital questions," said Godsell, the former chief executive of AngloGold Ashanti and a key member of South Africa's National Planning Commission.
The ANC on Thursday suspended youth wing leader JU JU, one of the leading proponents of the mine nationalisation idea, for five years, accusing him of causing a rift within the party.
"The centre of gravity in the ANC is not there... To do it with compensation, you'd be talking about trillions of dollars, which the South African government doesn't have," said Godsell.
"And to do it without compensation, you need to amend our Bill of Rights, for which you need a 75% majority in the South African parliament, and I can see absolutely no chance of that majority being achieved."
South Africa is one of the world's top platinum and gold producers and Malema's calls for nationalisation of the mines to reduce poverty and inequality have rattled investors both within and outside Africa's largest economy.
Godsell said the extent of poverty, unemployment and inequality in South Africa is unconscionable, but the answers being put forward by Malema and his supporters are untenable.
"It is not possible to build a properly cohesive society with these levels of economic exclusion, so that something needs to be done, to me, is absolutely clear," said Godsell, who nonetheless remains optimistic about the growth prospects of both South Africa and the whole continent.
Godsell noted that for the last decade-and-a-half Africa has recorded the highest continental growth rate in the world, admittedly from a low base. This should only improve, helped by mining, infrastructure spending and investment in a still small energy sector.
"In the next decade, I'd imagine that African growth rates as a whole are going to be 2 percentage points higher than developed country growth rates. And in the better countries in Africa... growth rates will be as much as 4 percentage points above average growth rates in America, Europe or Japan," he said.
"The burgeoning middle class in Africa is also going to be an important driver of demand. Investment follows demand - it seldom anticipates it."
Highlighting details from a report to be released by South Africa's planning commission on Friday, Godsell said the country is taking the necessary action to curb rampant unemployment.
REF : FIN 24
"In the long term, what South Africa needs over the next 20 years is growth at about 5%, and it could then reduce its unemployment rate from about 25% now to 6% by 2030," he said.
A good read from a knowledgeable South African.
I can't dismiss this, unlikely but far from Impossible !!
"A senior South African business figure totally dismissed concerns about the nationalisation of mines in South Africa on Thursday, soon after the ANC suspended a key proponent of the idea.
Well-known mining executive Boddy Godsell said the odds of the mines being nationalised were as remote as those of the Tea Party in the United States being able to abolish the US Federal Reserve.
"The youth league of the ANC has developed some unrealistic and unimplementable answers to some absolutely vital questions," said Godsell, the former chief executive of AngloGold Ashanti and a key member of South Africa's National Planning Commission.
The ANC on Thursday suspended youth wing leader JU JU, one of the leading proponents of the mine nationalisation idea, for five years, accusing him of causing a rift within the party.
"The centre of gravity in the ANC is not there... To do it with compensation, you'd be talking about trillions of dollars, which the South African government doesn't have," said Godsell.
"And to do it without compensation, you need to amend our Bill of Rights, for which you need a 75% majority in the South African parliament, and I can see absolutely no chance of that majority being achieved."
South Africa is one of the world's top platinum and gold producers and Malema's calls for nationalisation of the mines to reduce poverty and inequality have rattled investors both within and outside Africa's largest economy.
Godsell said the extent of poverty, unemployment and inequality in South Africa is unconscionable, but the answers being put forward by Malema and his supporters are untenable.
"It is not possible to build a properly cohesive society with these levels of economic exclusion, so that something needs to be done, to me, is absolutely clear," said Godsell, who nonetheless remains optimistic about the growth prospects of both South Africa and the whole continent.
Godsell noted that for the last decade-and-a-half Africa has recorded the highest continental growth rate in the world, admittedly from a low base. This should only improve, helped by mining, infrastructure spending and investment in a still small energy sector.
"In the next decade, I'd imagine that African growth rates as a whole are going to be 2 percentage points higher than developed country growth rates. And in the better countries in Africa... growth rates will be as much as 4 percentage points above average growth rates in America, Europe or Japan," he said.
"The burgeoning middle class in Africa is also going to be an important driver of demand. Investment follows demand - it seldom anticipates it."
Highlighting details from a report to be released by South Africa's planning commission on Friday, Godsell said the country is taking the necessary action to curb rampant unemployment.
REF : FIN 24
"In the long term, what South Africa needs over the next 20 years is growth at about 5%, and it could then reduce its unemployment rate from about 25% now to 6% by 2030," he said.
Thursday, 10 November 2011
SA stocks, rand cheer Malema suspension
SA stocks, rand cheer Malema suspension: The JSE extended gains and the rand rose after news of the suspension of youth league leader Julius Malema, who has unnerved investors with his drive to nationalise mines.
SA's labour productivity at 40-year low
" Labour productivity fell to its lowest level in 40 years in October while there was no significant change in employment, says the latest Adcorp Employment Index.
"While no significant changes in all kinds of jobs - formal, informal, permanent and temporary - were seen during October, South Africa's labour productivity fell to its lowest level in 40 years," Adcorp said.
Labour productivity growth - a leading indicator of job creation - had been negative throughout 2011.
"This negative trend in labour productivity suggests that adding more workers does not necessarily translate into material increases in business output," said Adcorp labour market analyst Loane Sharp.
The index for October shows employment dropped slightly in the mining (-7.8 percent), construction (-7.0 percent) and manufacturing (-4.5 percent) sectors on an annual basis.
These losses were countered by job increases in wholesale and retail trade (4.4 percent) and financial services (three percent).
"Reflecting good underlying conditions in the consumer sectors, employment of clerks (+3.3 percent) and service workers (+2.7 percent) grew steadily, as did domestic work (+5.8 percent)."
For the first time this year, government job creation was essentially static, Sharp said.
Labour productivity was at its lowest level since the early 1970s.
"... One of the problems with the assessment of labour productivity in South Africa, is that it is measured according to 'output per worker' thus attributing all output to workers."
Sharp said it would be more accurate to consider capital equipment, technology, land, and other production factors in determining productivity.
Labour productivity growth in 2011 was negative, at minus one percent.
"This may well explain why, when real GDP rose by 6.6 percent after the 2008/9 global financial crisis, employment rose a meagre 2.6 percent," Sharp said.
"While GDP figures for the third quarter of 2011 are not yet available, we expect them to confirm the worrying declining labour productivity growth trend in this country."
Sharp said labour productivity is a critical indicator of employment.
"When adding workers yields greater output (ie when labour's value-added is positive), employers have an incentive to employ more workers," he said.
Adcorp was not expecting a sustained increase in employment until at least the second half of next year. "
REF : FIN24.COM
"While no significant changes in all kinds of jobs - formal, informal, permanent and temporary - were seen during October, South Africa's labour productivity fell to its lowest level in 40 years," Adcorp said.
Labour productivity growth - a leading indicator of job creation - had been negative throughout 2011.
"This negative trend in labour productivity suggests that adding more workers does not necessarily translate into material increases in business output," said Adcorp labour market analyst Loane Sharp.
The index for October shows employment dropped slightly in the mining (-7.8 percent), construction (-7.0 percent) and manufacturing (-4.5 percent) sectors on an annual basis.
These losses were countered by job increases in wholesale and retail trade (4.4 percent) and financial services (three percent).
"Reflecting good underlying conditions in the consumer sectors, employment of clerks (+3.3 percent) and service workers (+2.7 percent) grew steadily, as did domestic work (+5.8 percent)."
For the first time this year, government job creation was essentially static, Sharp said.
Labour productivity was at its lowest level since the early 1970s.
"... One of the problems with the assessment of labour productivity in South Africa, is that it is measured according to 'output per worker' thus attributing all output to workers."
Sharp said it would be more accurate to consider capital equipment, technology, land, and other production factors in determining productivity.
Labour productivity growth in 2011 was negative, at minus one percent.
"This may well explain why, when real GDP rose by 6.6 percent after the 2008/9 global financial crisis, employment rose a meagre 2.6 percent," Sharp said.
"While GDP figures for the third quarter of 2011 are not yet available, we expect them to confirm the worrying declining labour productivity growth trend in this country."
Sharp said labour productivity is a critical indicator of employment.
"When adding workers yields greater output (ie when labour's value-added is positive), employers have an incentive to employ more workers," he said.
Adcorp was not expecting a sustained increase in employment until at least the second half of next year. "
REF : FIN24.COM
Shares drop as Italy nears brink
Shares drop as Italy nears brink: Asian stocks fell about 3% after soaring Italian borrowing costs stoked fears that the country's debt crisis will overwhelm its financial defences.
Singapore - Asian stocks fell around 3% on Thursday after soaring Italian borrowing costs stoked fears that the debt crisis in the euro zone's third biggest economy will overwhelm its financial defences, raising the risk of a break-up of the currency area.
The euro was steady, after suffering its biggest daily drop in 15 months on Wednesday, while industrial commodities such as copper and oil softened on worries of renewed recession. European shares were set to extend the previous day's losses.
Asian credit spreads blew out as the deepening crisis in Europe sapped investor appetite for risk, while safe haven assets such as Japanese government bonds were in demand.
"Whatever they come up with, it doesn't avoid a European recession," said Su-Lin Ong, senior economist at RBC Capital Markets in Sydney.
"The question now is just how deep it will be and whether this is going to bleed over into the banking system, because that is much more significant."
Finance sector hammered
Tokyo's Nikkei share average fell 2.9%, while MSCI's broadest index of Asia Pacific shares outside Japan lost 3.5%, with the financial and industrial sectors hammered hardest.
Hong Kong's Hang Seng Index, the Asian market that has tended to be most susceptible to European developments in recent months, was the biggest regional loser, falling 4.5% as banks such as HSBC led losses.
Financial spreadbetters expected Britain's FTSE 100 to open down 1.5%, while Germany's DAX and France's CAC-40 were called down 1.7%.
Italy has, for the time being, replaced Greece as the biggest source of concern in Europe's two-year-old debt crisis.
Italian 10-year bond yields rose above 7% on Wednesday, a level most market economists consider unsustainable for financing debt of more than €2 trillion.
A pledge by Italian Prime Minister Silvio Berlusconi to stand down failed to reassure bond markets that Rome has the will to bring its debts under control, and moves by two major clearing houses to raise the level of collateral needed for holders of Italian debt pushed the country near breaking point.
European and US stocks fell steeply on Wednesday in response, with Wall Street shares losing more than 3%. S&P 500 futures traded in Asia were up slightly on Thursday.
Too big to bail
Ireland and Portugal were both forced to seek aid soon after their 10-year bond yields topped 7%, but a rescue for Italy would be on a different scale and Europe's bailout fund is widely considered inadequate for the task.
The European Central Bank (ECB), considered the only institution capable of repelling the bond market attacks, bought Italian bonds in substantial amounts on Wednesday, but is reluctant to go further to force down yields.
"The markets were basically in a panic yesterday and the only thing that can give the euro at least a temporary respite is quick action from the ECB to lower Italian yields," said Koji Fukaya, chief currency strategist at Credit Suisse in Tokyo.
While many outside Europe are calling on the ECB to take a more active role, as other major central banks do, in acting as lender of last resort, Germany remains implacably opposed to what it views as a threat to the central bank's independence.
In a sign of the depth of fear gripping European capitals, EU sources told Reuters that French and German officials had held discussions about a eurozone split.
The single currency was steady around $1.3540, after tumbling around 2% on Wednesday.
The dollar was also steady against a basket of currencies, after surging in the previous session as investors scurried for safety, while yields on 10-year Japanese government bonds fell 1 basis point to 0.965%.
In Asian credit markets, spreads widened around 13 basis points on the Asia ex-Japan iTraxx investment grade index, a gauge of risk appetite.
Concerns about flagging demand knocked London Metal Exchange copper down 2.4%. US crude oil edged down to $95.70 a barrel, while Brent crude dipped a touch to around $112.26.
"We've moved from a low-growth scenario to one where there is a real threat of recession in the eurozone, and that's weighing on oil markets," said Ric Spooner, chief market analyst at CMC Markets in Sydney
Ref : FIN 24.com
Singapore - Asian stocks fell around 3% on Thursday after soaring Italian borrowing costs stoked fears that the debt crisis in the euro zone's third biggest economy will overwhelm its financial defences, raising the risk of a break-up of the currency area.
The euro was steady, after suffering its biggest daily drop in 15 months on Wednesday, while industrial commodities such as copper and oil softened on worries of renewed recession. European shares were set to extend the previous day's losses.
Asian credit spreads blew out as the deepening crisis in Europe sapped investor appetite for risk, while safe haven assets such as Japanese government bonds were in demand.
"Whatever they come up with, it doesn't avoid a European recession," said Su-Lin Ong, senior economist at RBC Capital Markets in Sydney.
"The question now is just how deep it will be and whether this is going to bleed over into the banking system, because that is much more significant."
Finance sector hammered
Tokyo's Nikkei share average fell 2.9%, while MSCI's broadest index of Asia Pacific shares outside Japan lost 3.5%, with the financial and industrial sectors hammered hardest.
Hong Kong's Hang Seng Index, the Asian market that has tended to be most susceptible to European developments in recent months, was the biggest regional loser, falling 4.5% as banks such as HSBC led losses.
Financial spreadbetters expected Britain's FTSE 100 to open down 1.5%, while Germany's DAX and France's CAC-40 were called down 1.7%.
Italy has, for the time being, replaced Greece as the biggest source of concern in Europe's two-year-old debt crisis.
Italian 10-year bond yields rose above 7% on Wednesday, a level most market economists consider unsustainable for financing debt of more than €2 trillion.
A pledge by Italian Prime Minister Silvio Berlusconi to stand down failed to reassure bond markets that Rome has the will to bring its debts under control, and moves by two major clearing houses to raise the level of collateral needed for holders of Italian debt pushed the country near breaking point.
European and US stocks fell steeply on Wednesday in response, with Wall Street shares losing more than 3%. S&P 500 futures traded in Asia were up slightly on Thursday.
Too big to bail
Ireland and Portugal were both forced to seek aid soon after their 10-year bond yields topped 7%, but a rescue for Italy would be on a different scale and Europe's bailout fund is widely considered inadequate for the task.
The European Central Bank (ECB), considered the only institution capable of repelling the bond market attacks, bought Italian bonds in substantial amounts on Wednesday, but is reluctant to go further to force down yields.
"The markets were basically in a panic yesterday and the only thing that can give the euro at least a temporary respite is quick action from the ECB to lower Italian yields," said Koji Fukaya, chief currency strategist at Credit Suisse in Tokyo.
While many outside Europe are calling on the ECB to take a more active role, as other major central banks do, in acting as lender of last resort, Germany remains implacably opposed to what it views as a threat to the central bank's independence.
In a sign of the depth of fear gripping European capitals, EU sources told Reuters that French and German officials had held discussions about a eurozone split.
The single currency was steady around $1.3540, after tumbling around 2% on Wednesday.
The dollar was also steady against a basket of currencies, after surging in the previous session as investors scurried for safety, while yields on 10-year Japanese government bonds fell 1 basis point to 0.965%.
In Asian credit markets, spreads widened around 13 basis points on the Asia ex-Japan iTraxx investment grade index, a gauge of risk appetite.
Concerns about flagging demand knocked London Metal Exchange copper down 2.4%. US crude oil edged down to $95.70 a barrel, while Brent crude dipped a touch to around $112.26.
"We've moved from a low-growth scenario to one where there is a real threat of recession in the eurozone, and that's weighing on oil markets," said Ric Spooner, chief market analyst at CMC Markets in Sydney
Ref : FIN 24.com
Wednesday, 9 November 2011
Moody’s downgrades SA rating - negative
This Article I read from FIN24.com is so well written and covers the full story of the reasons for the downgrade there is nothing further I can add.
I have quoted this story:
Enjoy !!
"Ratings agency Moody’s downgraded the outlook on South Africa’s ratings on Wednesday due to worries that political pressure from unions and black voters wanting greater economic redress for the ills of apartheid could erode the country’s finances.
Moody’s put South Africa’s A3 rating on negative from stable and said there was “growing risk that the political commitment to low budget deficits and the ability to keep within current debt targets could be undermined by popular pressures”.
In its three-year fiscal policy framework unveiled last month, the Treasury said the budget deficit for this year would be higher than previously anticipated at 5.5 percent while weak growth would result in lower revenues.
The rand extended its losses after the outlook downgrade, falling more than two percent to a session low of 7.9720 against the dollar.
Government bonds also weakened, with the yield on the 2015 bond up 10 basis points to 6.47 percent while that on the 2026 note climbed 11.5 basis points to 8.295 percent.
South Africa’s fiscal accounts were in surplus for two years before the recession in 2009 but swung back into deficit as the government spent more to counter the effects of a global slowdown.
More than a million people lost jobs in the recession, and millions of the poor are becoming increasingly disillusioned with the ANC government , raising the risk of social instability.
Investors unsettled
Moody’s said the ANC’s “unwillingness to definitively reject demands from certain segments of the political spectrum for more activist policy interventions was harmful to South Africa’s economic prospects”.
Investors have been unsettled for two years by talk from the ANC’s youth wing to nationalise mines. The ANC has said nationalisation is not government policy but has not dismissed it out of hand.
Absa Capital said a ratings downgrade was unlikely to ensue unless the political noise became a reality.
“Calls for a greater state involvement in the economy and for a larger push on redistribution are being made very loudly from some parts of the ANC sphere, but it remains far from clear as to what changes in broad policy, if any, might be agreed in the course of 2012,” it said in a note.
“We do not believe that a ratings -- rather than outlook -- downgrade is likely until more clarity on the outcomes of these policy debates is delivered.” "
REF: Fin 24.com 9/11/11
I have quoted this story:
Enjoy !!
"Ratings agency Moody’s downgraded the outlook on South Africa’s ratings on Wednesday due to worries that political pressure from unions and black voters wanting greater economic redress for the ills of apartheid could erode the country’s finances.
Moody’s put South Africa’s A3 rating on negative from stable and said there was “growing risk that the political commitment to low budget deficits and the ability to keep within current debt targets could be undermined by popular pressures”.
In its three-year fiscal policy framework unveiled last month, the Treasury said the budget deficit for this year would be higher than previously anticipated at 5.5 percent while weak growth would result in lower revenues.
The rand extended its losses after the outlook downgrade, falling more than two percent to a session low of 7.9720 against the dollar.
Government bonds also weakened, with the yield on the 2015 bond up 10 basis points to 6.47 percent while that on the 2026 note climbed 11.5 basis points to 8.295 percent.
South Africa’s fiscal accounts were in surplus for two years before the recession in 2009 but swung back into deficit as the government spent more to counter the effects of a global slowdown.
More than a million people lost jobs in the recession, and millions of the poor are becoming increasingly disillusioned with the ANC government , raising the risk of social instability.
Investors unsettled
Moody’s said the ANC’s “unwillingness to definitively reject demands from certain segments of the political spectrum for more activist policy interventions was harmful to South Africa’s economic prospects”.
Investors have been unsettled for two years by talk from the ANC’s youth wing to nationalise mines. The ANC has said nationalisation is not government policy but has not dismissed it out of hand.
Absa Capital said a ratings downgrade was unlikely to ensue unless the political noise became a reality.
“Calls for a greater state involvement in the economy and for a larger push on redistribution are being made very loudly from some parts of the ANC sphere, but it remains far from clear as to what changes in broad policy, if any, might be agreed in the course of 2012,” it said in a note.
“We do not believe that a ratings -- rather than outlook -- downgrade is likely until more clarity on the outcomes of these policy debates is delivered.” "
REF: Fin 24.com 9/11/11
Monday, 7 November 2011
Why are the Oppenheimers selling De Beers interest & they leaving the ship (SA) ??
After reading up on this matter & listening to Mr Oppenheimer speaking about this on my Favourite financial show "MONEY WEB" on Friday I have other idea's
Diamond price was at it's highest a few months ago past 2008 price. July 2011
Now it has come down considerably since then.
Mr O said that this deal was done with Anglo's in the last 3 & 1/2 weeks ago.
The value was not based on prior values.
Anglo's have tried to purchase the family interest on a few occasion's.
"Nicky Oppenheimer, the De Beers chairperson who also represents the Oppenheimer family interests, said the decision to sell was tough."
How can a decision on this magnitude be made in 3 & 1/2 weeks
That for me was an indication that things are not what they seem.
Fin 24.com reports very interestingly:
" “The sudden decision by the Oppenheimer family to sell its 40% stake in De Beers to diversified global miner Anglo American $5.1bn (R40bn) has raised questions about the impact of nationalisation talk on investment.
Eskom chief economist Mandla Maleka said: “Anglo American has for years been unsuccessful in its attempt to buy the stake from the Oppenheimers.
One wonders whether the Oppenheimers are selling the stake due to commercial reasons or if there was pressure coming from certain quarters, like the nationalisation debate.” ”
Eskom chief economist Mandla Maleka said: “Anglo American has for years been unsuccessful in its attempt to buy the stake from the Oppenheimers.
One wonders whether the Oppenheimers are selling the stake due to commercial reasons or if there was pressure coming from certain quarters, like the nationalisation debate.” ”
The company has been run by the family directly for over 80 years.
Sir Ernest , Harry O and Nicky O.
Between them De Beers was built into a global diamond empire that currently sells about a third of the world’s rough diamonds.
This has even caught the National Union of Mineworkers (Num) off guard,they are scrambling to meet with Mr Oppenheimer on why his family was pulling out.
This has even caught the National Union of Mineworkers (Num) off guard,they are scrambling to meet with Mr Oppenheimer on why his family was pulling out.
Num has issues with the family on Social Responsibility over the years and this to them makes it even worse.
The family divesting shows a lack of confidence in the local mining industry considering they played a big role in developing the industry.
Even Num feel that "Nationalisation issues" are the order of the day.
I feel that, ANCYL & running of the country may be the reasons.
The Family have been over the last five years reducing interests in Anglo's which was also started by Sir Ernest & JP Morgan. Left 1.9%
Per MD of the family investment company E Oppenheimer & Son Group the family has “no intention at this stage” of further reducing its holding,
This needs to be seen.
If the money is not directed back into this country in one large investment then it will have no effect on the currency according to the IDC.
If it comes slowly it will not have any effect on the rand.
I think that this action shows the chickens are not coming home to roost & If these people who have always backed & I feel still do to a certain respect one must sit up & think seriously !!
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