Good week for Gold, thanks to the FED

Read a good Article given to me below:

Please note this is subject to a disclaimer if one wishes for a copy please e-mail me.

"14:13 27Jan12 RTRS-PRECIOUS-Gold set for biggest rise in eight weeks after Fed

    * Fed sets gold up for biggest weekly gain in eight weeks

   * U.S. growth data eyed for impact on dollar

   * Silver set for 20 pct rise in Dec, biggest since April

   * Platinum eyes largest monthly rise since Feb 2008

(Updates prices) 

    By Jan Harvey 

   LONDON, Jan 27 (Reuters) - Gold rose on Friday to head for its best weekly performance since early December after the Federal Reserve signalled a continuation of its ultra-loose monetary policy, keeping the dollar under pressure and the opportunity cost of holding bullion low.  

   Spot gold <XAU=> was up 0.1 percent at $1,722.09 an ounce at GMT at 1201 GMT, while U.S. gold futures <GCv1> for February delivery were down $4.30 an ounce at $1,722.40. Spot prices have risen 10 percent this month, recouping December's hefty losses. 

   The precious metal surged towards $1,730 an ounce on Thursday after the Fed said it planned to keep interest rates on hold until at least 2014 and signalled it would be ready to take further measures to stimulate the economy. 

   "After the Fed chairman's vow to keep the rates low until late 2014, strong buying interest was visible," said Pradeep Unni, senior analyst with Richcomm Global Services. 

   "Anxious investors have joined the fray of speculators who are now increasingly concerned by currency depreciation, as global central banks use easy monetary policies to flood markets with cash." 

   Gold's upward path is unlikely to be one-way, however, he added. "There could be some profit-taking ahead of the U.S. GDP data," he said. 

   The dollar eased 0.3 percent against the euro, further helping gold, which usually benefits from weakness in the U.S. unit. The euro <EUR=> hit a five-week high on Thursday. [FRX/] 

   Financial markets waited for U.S. growth data later on Friday. The U.S. GDP report, due at 1330 GMT, was expected to show growth accelerated to a 3 percent rate in the fourth quarter, from 1.8 percent in the third. It will be watched for its impact on the dollar, a key determinant of gold prices. 

   The single currency was still under pressure from concerns over euro zone debt, as the markets awaited a breakthrough in Greek debt talks. Athens was in negotiations with private creditors to restructure its debt. 

   The European Union and IMF want Greece to push through more budget cuts and implement a series of austerity reforms before they agree on a new bailout the country needs to avert bankruptcy, a report obtained by Reuters showed.[ID:nL5E8CR1KD]  

     

   NEW CATALYST 

   The debt crisis was a major driver of higher gold prices in 2011, as investors bought the metal as insurance against a worsening outlook for the euro zone. However, its rally stalled late last year as investors became acclimatised to the crisis. 

   "The market attitude towards gold for most of January could be summed up in two words: cautious optimism. Investors were reluctant to add to positions aggressively as memories of the disappointment in Q4 lingered," said UBS in a note. 

   "A fresh catalyst was needed and we think the FOMC outcome on Wednesday fit the bill. More accommodative policy is a very good foundation for gold to build on the next move higher." 

   Silver <XAG=> was up 0.1 percent at $33.46 an ounce. 

   Silver is on track for a near 20 percent rise in January, its biggest one-month gain since April 2011, when it rallied to a record $49.51 an ounce. Caution has dominated the market since then, as the all-time high was followed by a sharp correction. 

   Spot platinum <XPT=> was up 0.5 percent at $1,610.99 an ounce, while palladium <XPD=> was down 0.3 percent at $687.97. Platinum has outperformed palladium this month, climbing 15 percent for its biggest one-month rise in nearly four years. 

   "If the advanced economies can manage to collectively maintain even minimal growth in 2012... and global vehicles sales can eke out another year of gains as projected, platinum prices could continue to firm at least through the first half of the year," said A1 Specialized Services & Supplies, the world's biggest PGMs recycler from autocatalysts, in its January note. 

   "There has also been evidence in recent weeks that investors have begun to buy platinum and sell gold in expectation of a correction in the historically low ratio."   "

 (Editing by William Hardy)  ((jan.harvey@thomsonreuters.com)(+44)(0)(207 542 7744)

(Reuters Messaging: jan.harvey.thomsonreuters.com@reuters.net))

Regards

Steven 
Steven Morris Chartered Accountant (SA)
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Mobile :+27 83 943 1858

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Effects of Bernanke on the rest of the world !!

After Yesterday's Postive speech from Bernanke. JSE follows world sentiment - JSE ALSI 250 points 0.74 % UP at 33 887 in first 10 mins of trade. As per my colleague Stu Kantor expect a good recovery today !!. Rand Trading stronger at R7.88 to US $

Steven Morris Chartered Accountant (SA)
3 Bickley Road
Sea Point
Cape Town
8005
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za

Asia Stocks, U.S. Equity Futures Rise on Apple; Yen Weakens

"Jan. 25 (Bloomberg) -- Asian stocks and U.S. equity-index futures climbed after Apple Inc.’s quarterly profit more than doubled and before the Federal Open Market Committee releases forecasts for its key interest rate. The yen weakened after Japan posted its first annual trade deficit in 31 years.

The MSCI Asia Pacific Index rose 0.9 percent at 12:50 p.m. in Tokyo, the highest level since Oct. 31. Nasdaq-100 Index futures jumped 1 percent after Apple shares soared as much as 12 percent in extended trading. The dollar was 0.3 percent from a three-week low versus the euro and gained 0.4 percent against the yen. Australia’s 10-year yields added eight basis points after an inflation measure watched by the Reserve Bank exceeded economist estimates. Copper climbed to a four-month high.

Apple is among the 53 of 82 Standard & Poor’s 500 Index companies that have beaten analyst estimates for quarterly earnings so far. President Barack Obama delivered his third State of the Union address, while the Federal Reserve is set to release rate forecasts for the first time today. Business and political leaders are gathering in Davos, Switzerland, for the start of the World Economic Forum’s annual meeting.

"The yen is weakening, boosting earnings for exporters," said Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. "Investors are more likely to look at the bright side of the global economy."

Stocks Climb

About three shares gained for every one that declined on MSCI’s Asia Pacific Index. Japan’s Nikkei 225 Stock Average rose 1.3 percent, Australia’s S&P/ASX 200 Index rallied 1 percent and South Korea’s Kospi advanced 0.7 percent. Financial markets in Hong Kong, Taiwan and China remain closed for public holidays. Hynix Semiconductor Inc. added 2 percent in Seoul, pacing advances among Apple suppliers.

S&P 500 futures expiring in March rose 0.4 percent, signaling the stocks gauge may rebound from yesterday’s 0.1 percent loss. Apple, the maker of iPhones and iPads, said first- quarter profit surged to $13.1 billion, or $13.87 a share. Analysts surveyed by Bloomberg on average estimated profit of $10.14 a share.

Boeing Co., Xerox Corp. and ConocoPhillips are among companies scheduled to release results in the U.S. today. Obama called on Congress to require the highest U.S. earners to pay at least 30 percent of their income in taxes, building on his election-year push for what he terms economic fairness. He also vowed to get tough on unfair trade practices by nations such as China, and said the U.S. should give aid to help domestic companies compete.

The dollar traded at $1.3023 per euro, after reaching $1.3063 yesterday, the least since Jan. 4. The U.S. currency rose 0.4 percent to 77.95 yen.

Fed Rates

The Fed said last week it will offer two charts along with the forecasts for the benchmark rate, which will remain unchanged today, according to a Bloomberg survey of economists. The central bank has left its target for overnight loans between banks in a range of zero to 0.25 percent since 2008 and last month reiterated that economic conditions may warrant "exceptionally low" rates at least through mid-2013.

"The FOMC meeting could be negative for the U.S. dollar against other currencies, but positive against the yen," said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. "If they explicitly say they’re going to leave the Fed funds rate at a record low for a very long time, even though the market already knows that and expects it, it may be positive for risk markets."

The Thai baht was little changed at 31.51 per dollar. The nation’s central bank is forecast to cut its benchmark interest rate to 3 percent from 3.25 percent, according to all 15 economists surveyed by Bloomberg. The Singapore dollar rose 0.4 percent to S$1.2667 against its U.S. counterpart before the release of inflation data today.

Australia’s Inflation

Australia’s dollar rose 0.3 percent to $1.0519, erasing losses of as much as 0.5 percent, and the nation’s 10-year yields climbed to 3.97 percent.

Consumer prices were unchanged in the fourth quarter compared with the previous three-month period, the Bureau of Statistics said in Sydney today. That was weaker than the 0.2 percent gain that was the median estimate in a Bloomberg News survey of economists. The so-called trimmed mean, one of the central bank’s measures of underlying inflation, advanced 0.6 percent, compared with a forecast 0.5 percent rise.

Trade Deficit

The yen weakened against all 16 major counterparts. Exports dropped 8 percent in December from a year earlier, the Ministry of Finance said today, resulting in a 2011 trade deficit of 2.49 trillion yen ($32 billion), the country’s first annual shortfall since 1980.

The Markit iTraxx Japan index added 2 basis points to 171, Citigroup Inc. prices show. The gauge is set for its first increase since Jan. 18, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

Three-month copper jumped as much as 1.2 percent to $8,455.25 a metric ton in London, the highest intraday level since Sept. 19. Inventories in warehouses monitored by the London Metal Exchange fell to the lowest level in more than two years, bourse data showed. Zinc gained 1.4 percent to $2,155 a ton, while nickel increased 0.4 percent to $20,702 a ton."

Source : Bloomberg


Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za

Morning Report from Calibre Investments - Good Summary

"U.S STOCKS:

The S&P 500 closed in the red for the first time in five sessions on Tuesday, as Greece's debt-reduction talks edged toward a standoff and a raft of blue chips delivered mixed quarterly results.

The Dow Jones Industrial Average fell 33.07 points, or 0.3%, to 12675.75. The Dow posted its second consecutive decline for the first time in nearly three weeks, but remains up 3.8% from the start of the year.

The Standard & Poor's 500-stock index shed 1.35 points, or 0.1%, to 1314.65, while the Nasdaq rose 2.47 points, or 0.1%, to 2786.64. Trading activity in recent days has been the calmest in months. On Tuesday, the Dow's moves were contained in a 100-point range for the fourth-straight session, a streak unmatched since April.

European markets declined, with the Stoxx Europe 600 down 0.4%, as investors grew increasingly concerned as talks between Greece and its private investors dragged on without resolution.

The International Monetary Fund trimmed its global growth estimates for the year to 3.3%, warning that the euro-zone debt crisis could shave roughly two percentage points off world-wide output if there isn't a resolution soon.

Meanwhile, Tuesday's docket was full of companies reporting earnings. McDonald's fourth-quarter earnings rose 11% as the fast-food company beat analyst expectations. DuPont edged higher by 0.1% after the diversified manufacturer's fourth-quarter earnings topped estimates, though revenue fell a bit short. Johnson & Johnson finished flat after the consumer-products company reported fourth-quarter earnings and revenue that exceeded expectations but provided a 2012 earnings outlook below current estimates.

At 7:45 AM (AEST), the 10-year Treasury note yield was 2.06% and the 5-year yield was 0.90%.

EUROPEAN STOCKS:

European stock markets ended lower Tuesday as European finance ministers pressured Greece's private creditors to accept lower interest rates on restructured Greek government debt.

The Stoxx 600 index fell 0.4% to close at 256.04, pulling back from a five-month high set the previous session.

Shares across Europe were pressured as Greece has yet to conclude debt talks with its private debtholders to write down the country's debt by EUR100 billion.

Elsewhere, earnings reports from heavyweight blue chips were weighing on sentiment across Europe. Although there was an unexpectedly strong euro-zone purchasing managers index for January. Economists said the rise, which reflected a pickup in activity in Germany and France, showed the region's economic slide may be stabilizing.

The U.K.'s FTSE 100 index slipped 0.5% to end at 5,751.90, while the German DAX 30 settled 0.3% lower at 6,419.22. The French CAC 40 shed 0.5% to close at 3,322.65.

COMMODITIES:

Crude-oil futures fell back below $99 a barrel Tuesday, pressured by strength in the U.S. dollar as traders eyed negotiations over Greece's debt crisis and continued to mull the impact of the European Union's oil embargo on Iran. Light, sweet crude for March delivery settled 63 cents lower at $98.95 a barrel.

Gold futures closed below $1,665 an ounce, pulling back from a six-week high to post their first loss in three sessions on strength in the dollar and a lack of buying support from Chinese markets due to the Lunar New Year holiday there. Gold for delivery in February fell $13.80, or 0.8%, to settle at $1,664.50 an ounce.

Base metals closed mixed on the London Metal Exchange Tuesday after a session in which the euro whipsawed against the dollar and market participants pitted concerns over Greece's crucial debt-restructuring talks against expectations of tightening fundamentals. LME three-month copper, widely considered an industry bellwether, ended the day at $8,350 a metric ton, down $14, or 0.2%, from Monday's close.

AUSTRALIAN STOCKS:

Australian Market Report - Local Markets Poised For Modest Gains

Local stocks are poised for modest gains due to a flat end on US markets.

Ahead of the local open the March SPI futures were 7 points higher at 4,199."

Source: Dow Jones Newswires.

Summary of 25th Jan opening in AUZ

Info from Compass Global Markets in Auz !!

 

"Investor optimism was dented overnight after European finance ministers failed to agree on the Greek debt swap deal and called for a greater contribution from debt holders. Finance ministers are pushing bondholders for greater debt relief by asking them to accept lower interest returns in the proposed debt swap deal. The stalling of negotiation has fuelled concerns that Greece will fail to make a bond payment due in late March. The EUR fell from a high of 1.3065 during the Asian session yesterday to as low as 1.2954 overnight.

 

In more sobering news, the IMF has cut global growth forecasts and warned that the “epicentre of the danger is Europe but the rest of the word is increasingly affected.” It cut global growth for 2012 from a September forecast of 4% to 3.3% and predicted a recession in Europe. The IMF called for an increase in the size of Europe's rescue fund and a more active role from the ECB to address the crisis. In a dire warning, the IMF warned of a 1930's style worldwide depression unless more countries play their part and identified a possible global financing need of over $1 trillion in the next few years. The broadly negative market sentiment has seen the Australian dollar fall to as low as 1.0428.

 

Update from Compass Global Markets

 

US equities fell after advancing for five consecutive sessions as negotiations stalled over differences of opinion between European finance ministers and Greek bondholders on the proposed debt swap deal. Furthermore, the IMF warned that there was potential for “political paralysis” in the United States that could lead to an unwinding of stimulus spending. The S&P 500 closed 0.1% lower at 1,314. Earlier in Europe, the bourses eased with the DAX down 0.27% to 6,419 while the FTSE lost 0.53% to 5,752.

 

Commodity prices managed modest rises despite growing global growth concerns with the CRB index closing 1.11 points higher at 314.69. WTI crude fell 0.5% to $99.10 on the Greek debt concerns. Precious metals have also eased slightly with gold lower by 0.77% to $1,665 while silver has lost 0.84% to $32.00. Soft commodities were mixed with cocoa rising almost 7% while copper has gained 0.33%. Domestically, we have the release of Australian CPI data while overseas there is a plethora of high impact data releases and statements from both the UK MPC and the FOMC. "

 

Kind Regards

Steven 
Steven Morris Chartered Accountant (SA)
3 Bickley Road
Sea Point
Cape Town
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Mobile :+27 83 943 1858

Facsimile : 0866 712 498
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Rand Weakens Against Dollar on European Debt Crisis Concern

As per Bloomberg
"Jan. 24 (Bloomberg) -- The rand declined against the dollar as European finance ministers balked at putting up more public money for Greece, curbing demand for riskier assets.

South Africa’s currency fell as much as 0.4 percent and traded 0.3 percent weaker at 7.9575 as of 9:23 a.m. in Johannesburg. Against the euro, it declined 0.3 percent to 10.3579.

European finance ministers called on bondholders to provide greater debt relief in order to point the way out of the two-year-old crisis. Euro governments stood by an October offer of 130 billion euros ($170 billion) for a second Greek aid package.

"As we are trading at slightly weaker levels this morning than we were yesterday it is clear that the news may have affected sentiment slightly, but as yet it is too soon to suggest that it has reversed the trend," George Glynos, an economist at Johannesburg-based ETM Analytics, wrote in e-mailed comments. "That being said, the markets look ripe for a breather."

The rand strengthened 2.2 percent last week after the central bank left its benchmark interest rate unchanged at 5.5 percent, maintaining the rand’s yield advantage over the dollar.

South Africa’s 13.5 percent bonds due 2015 gained for a second day, driving the yield down less than one basis point, or 0.007 percentage point, to 6.657 percent. "


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Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za

Euro, S&P 500 Futures Drop Amid Debt Crisis; Natural Gas Climbs

Bloomberg on line !!

"Jan. 24 (Bloomberg) -- The euro fell from the highest level in almost three weeks, while U.S. equity futures declined and Japan’s stocks rose as investors weighed Europe’s efforts to tame the debt crisis. Bond risk in Australia and Japan dropped to the lowest since October.

The euro retreated 0.2 percent to $1.2994 as of 11:55 a.m. in Tokyo after climbing 0.6 percent yesterday. The Australian dollar weakened against 15 of its 16 counterparts. The Nikkei 225 Stock Average advanced 0.4 percent, while Standard & Poor’s 500 Index futures slid 0.3 percent. The MSCI Asia Pacific Index was little changed. Natural gas climbed after surging 7.8 percent yesterday. Treasuries held four days of declines.

Markets in China, Hong Kong, South Korea and Singapore are shut for the Lunar New Year holiday. Germany floated the idea of combining Europe’s two rescue funds yesterday, a concession to bolster the fight against the fiscal crisis as regional finance ministers balked at putting up more public money for Greece. India’s economic growth outlook has weakened and inflation remains elevated, the nation’s central bank said on Jan. 23, signaling it may leave interest rates unchanged today.

"The market has gotten used to developments in Europe," said Naoteru Teraoka, a general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $29.9 billion. "Investors are expecting things won’t get worse after they priced in negative factors."

U.S. Earnings

Apple Inc., McDonald’s Corp. and Johnson & Johnson are among U.S. companies scheduled to report quarterly results today. Earnings topped estimates at about 65 percent of the 52 companies in the S&P 500 that released results since Jan. 9, data compiled by Bloomberg show.

The 10-year Treasury yield was little changed at 2.05 percent. The Federal Reserve begins a two-day policy meeting today after which it will provide forecasts for the benchmark interest rate for the first time.

About the same number of stocks rose and fell in the MSCI Asia Pacific Index, which has rallied 6.4 percent this year. The gauge trades at 12.7 times estimated profit, 24 percent less than the six-year average, data compiled by Bloomberg show.

Elpida Memory Inc. advanced 2 percent for a sixth day of gains. The Japanese chipmaker is in talks with Micron Technology Inc. and Nanya Technology Corp. for a three-way merger, the Yomiuri newspaper reported, without saying where it got the information.

Purchasing Managers

Data later today may show a euro-area composite index based on a survey of purchasing managers in both manufacturing and services industries rose to 48.5 this month from 48.3 in December, according to the median economist estimate from a Bloomberg survey before the report from Markit Economics is released. That would be the fifth monthly reading below 50, indicating contraction.

Oil fluctuated below $100 a barrel in New York, failing to extend yesterday’s gain, as speculation U.S. supplies rose last week countered concern Iran will respond to a European ban on its crude exports by shutting the Strait of Hormuz. Crude for March delivery was little changed at $99.55 a barrel in electronic trading on the New York Mercantile Exchange.

Natural gas rose a third day in New York after Chesapeake Energy Corp., the second-largest U.S. producer, said it will cut production and reduce spending. The contract surged 7.8 percent yesterday, rebounding from a 10-year low on Jan. 19.

The cost of insuring corporate bonds in Australia and Japan against non-payment decreased, according to credit-default swap traders. The Markit iTraxx Australia index fell 5 basis points to 157, according to Westpac Banking Corp. The Australian benchmark slid to 157 basis points yesterday, its lowest level since Oct. 28, according to data provider CMA prices in New York. The Markit iTraxx Japan index declined 3.5 basis points to 168, Citigroup Inc. prices show. That’s on course for its lowest level since Oct. 31, according to CMA.



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Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Sent from my BlackBerry® wireless device

CALIBRE MORNING REPORT FROM SYDNEY AUZ 24/1/12 - From Dow Jones Newswires

"

U.S STOCKS:

Blue-chip U.S. stocks finished in the red for the first time in five sessions, while the broader market was flat, as investors watched Europe for developments in its debt crisis.

The Dow Jones Industrial Average fell 11.66 points, or 0.1%, to 12708.82. The Dow slipped into negative territory after climbing to an eight-month high early in Monday's session.

The Standard & Poor's 500-stock index ticked edged higher by 0.6 point, or 0.1%, to 1316.00, and the Nasdaq Composite fell 2.53 points, or 0.1%, to 2784.17 . All three benchmarks have posted weekly gains for the past three weeks, and traders cited profit taking as a factor behind stocks' failure to keep momentum. Telecommunications and health-care stocks led Monday's declines, while energy and technology stocks were the best performers on the S&P 500.

Europe was in focus in a session that was light in quarterly earnings reports and featured no U.S. economic data. Investors watched Greece as it tries to negotiate a debt-restructuring agreement with its private creditors, an issue that was expected to dominate Monday's meeting of euro-zone finance ministers. Traders pinned gains a potential resolution in Greece.

No economic data greeted investors Monday, though Wednesday brings pending-home-sales data as well as the end of the Federal Reserve's policy meeting. Jobless claims, durable-goods orders and new-home sales are due Thursday, and the first take on fourth-quarter growth in gross domestic product will be released Friday.

At 7:45 AM (AEST), the 10-year Treasury note yield was 2.07% and the 5-year yield was 0.91%.

EUROPEAN STOCKS:

European stock markets reached a five-month high Monday, as investors remained optimistic that Greece and its creditors will agree on a deal to write down debt by up to 70%.

The pan-European Stoxx 600 index closed 0.5% higher at 257.01.

Talks to cut Greece's debt by as much as EUR100 billion had stalled over the weekend. An agreement is crucial for Greece to avoid a default when EUR14.4 billion comes due March 20. Euro-zone finance ministers met in Brussels Monday to discuss the Greek situation, budget rules and other plans to tackle the debt crisis.

Meanwhile, bank shares across Europe surged on Financial Times reports that German Finance Minister Wolfgang Schaeuble and French counterpart Francois Baroin would urge a relaxation of global bank-capital rules to prevent a lending slowdown. Schaeuble later issued a denial.

The French CAC 40 index was up 0.5% at 3,338.42. Tthe DAX 30 index lifted 0.5% to 6,436.62. The U.K. FTSE 100 rose 0.9% to 5,782.56.

COMMODITIES:

Crude-oil futures gained Monday as the European Union imposed an import ban on Iranian oil, leading to concerns about supplies. Iranian authorities have threatened to close the Strait of Hormuz, a key shipping lane for the oil trade,

and disrupt oil supplies in retaliation against the ban. Light, sweet crude for March delivery on the New York Mercantile Exchange settled 1.3% higher at $99.58 a barrel.

Gold and silver futures both settled at six-week highs as a weaker dollar boosted demand for alternative investments amid a murky economic outlook. Gold for February delivery, the most active contract, rallied $14.30, or 0.9%, to settle at $1,678.30 a troy ounce . The most actively traded silver contract, for March delivery, settled up 59.5 cents, or 1.9%, at $32.270 a troy ounce .

Copper closed the London Metal Exchange's afternoon kerb trading 1.8% higher Monday, having held in positive territory throughout the session on a stronger euro and hopes of an improving demand picture. LME three-month copper ended the PM kerb at $8,364 a metric ton, well up on Friday's close of $8,219/ton. Data showing record-high copper imports into China, the world's largest consumer of the metal, also helped to shore up sentiment for the industrial commodities. "

Asia Open 24th January 2012

Info received from Compas Global Markets (PTY) LTD from Australia

"The EUR staged a rally as European finance ministers meet in Brussels to discuss new budget rules and the Greek debt swap plan. In a familiar pattern, Europhoria seems to grip the markets every time officials meet to discuss the debt crisis and the EUR rallies. We expect that history will repeat itself and the EUR will once again fall after the optimism surrounding the meetings subside. The negotiations surrounding the Greek debt swap continue and investors are nervously awaiting a finalisation of talks. The EUR rose to as high as 1.3053 overnight

Germany proposed the idea of combining the temporary and permanent rescue funds in an effort to reinforce the funds and boost resources to them. European finance ministers are meeting to discuss Greece's latest offer to bondholders and the German initiative for a stronger fiscal plan in the Eurozone. Despite all the event risk in the markets, the Australian dollar continues to climb maintaining its lofty heights against the cross rates. The little Aussie battler surged to as high as 1.0574 overnight.

 

 

 

Equity markets in the US have closed flat for the session as investors took time to evaluate the reasons for three consecutive weekly rises in stocks and caution still surrounds the debt crisis in Europe. The S&P 500's 14 day relative strength index has stayed above 65 since mid January and is recording its strongest run in almost a year. European bourses were higher with the DAX gaining 0.5% to 6,437 and the FTSE rose almost 1% to 5,782

 

Commodity prices rose overnight lead by a rise in crude and copper futures with the CRB index closing 3.67 points higher at 313.58. WTI crude surged more than 1.5% to almost $100.00 after the EU agreed to a ban on Iranian crude imports fuelling concerns of response from that nation which may disrupt supplies. The rise in geopolitical tensions also aided precious metals which continue to rise with gold higher by 0.75% to $1,677 while silver has gained more than 1.8% to $32.25. Soft commodities were broadly higher while copper gained 1.7%. "

US Equity Markets Getting Overbought

INFO from Calibre asset Management in Australia

"Equity markets in the US are now significantly overbought with momentum indicators showing the same stretched levels as back at the market peak in May 2011.
The risk of a material pullback on US benchmark indices remains high especially if markets are to make a serious attempt at breaking through the key areas of resistance.
In this regard we prefer to use weakness as a buying opportunity rather than risking fresh capital at a time when markets in the US are stretched on the upside."

"Jan. 23 (Bloomberg) -- European stocks rose and the euro erased losses before regional policy makers meet in Brussels to discuss new budget rules and a Greek debt swap. U.S. equity futures and oil declined.

The Stoxx Europe 600 Index climbed 0.2 percent as of 8:20 a.m. in London, poised for its fifth advance in six days. The euro was little changed against the dollar after earlier falling as much as 0.6 percent. Standard & Poor’s 500 Index futures slid 0.1 percent and oil declined 0.2 percent. Treasuries snapped three days of losses and wheat and corn futures added at least 0.9 percent.

Markets including China, South Korea and Taiwan were shut today for the Lunar New Year holiday. Bondholders negotiating a debt swap with Greece have made their "maximum" offer, leaving it to the European Union and International Monetary Fund to decide whether to accept the deal, said Charles Dallara, managing director of the Institute of International Finance and representative for the private creditors.

"Traders are treading cautiously, faced with the heightened risk of a disorderly default in Greece," said Jonathan Sudaria, a trader at London Capital Group. A deal "is in the hands of two groups that appear to be in a standoff waiting to see who blinks first."

Lower S&P 500 futures suggest the U.S. equity benchmark may end its four-day winning streak. The index has gained 4.6 percent in 2012, the best start to a year since 1997, after companies from Goldman Sachs Group Inc. to Union Pacific Corp. and EBay Inc. topped analysts’ profit projections. "

Sent from Bloomberg

Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za

World markets pause -

Bussiness Report from IOL.com

"Asian shares and the euro paused from last week's rally on Monday as investors sweated on the progress of crucial Greek talks on a debt swap deal to avoid a default, while activity was subdued due to the Lunar New Year holiday in much of Asia.

Caution returned as Greece and private creditors struggled to reach an agreement vital for restoring confidence in Europe's refinancing ability, and mixed US corporate earnings revived concerns over global growth prospects and weighed on sentiment.

The MSCI's broadest index of Asia-Pacific shares outside Japan was barely changed from Friday, when it touched its highest in more than two months to post a year-to-date rise of about 7.5 percent.

The pan-Asia index was dragged down by a sluggish Australian stock market, where uncertainty over Greece prompted investors to reassess positions after a 4.5 percent rally in the main share index so far this year.

Japan's Nikkei average closed flat, after hitting a an 11-week high earlier on Monday.

Financial spreadbetters expected Britain's FTSE 100, Germany's DAX and France's CAC-40 to open around 0.1-0.3 percent higher. US stock futures were down 0.3 percent.

A delay in the Greek debt deal helped US Treasuries nudge up in Asia as investors sought safety, after optimism over Europe's funding problems had pushed the yield on 10-year US notes to a two-week high of 2.035 percent on Friday.

With many Asian markets, including China, Hong Kong, Singapore and South Korea, closed for the Lunar New Year holiday, the spotlight turned to the Tokyo Commodity Exchange's (TOCOM) gold futures.

A near 1 percent rise in the benchmark December TOCOM gold futures on Monday helped push cash gold up nearly 1 percent in thin trade, traders said.

“Japanese investors may have found an incentive to buy with the yen's rapid appreciation against the dollar taking a pause, increasing the value of their gold holdings in dollar terms,” said Akira Doi, a vice president at commodity brokerage Daiichi Commodities Co in Tokyo.

The yen has stabilised around 77 yen since hitting a high of 76.30 versus the dollar on Jan. 2, its highest since Oct. 31, 2011, when the Japanese currency rose to a record high of 75.31 yen against the dollar.

Spot gold was up 0.9 percent to $1,672 an ounce.

EURO PRESSURED

The euro eased 0.3 percent to $1.2898, slipping from a 2-1/2 week high around $1.2986 hit on Friday, which was up nearly 3 percent from a 17-month trough near $1.2624 plumbed on Jan. 13.

“There was no clear outcome on the talks about the restructuring of Greek debt over the weekend and that's probably pressured the euro lower,” said Andrew Salter, strategist at ANZ in Sydney.

The single currency is likely to remain firmly capped as speculators boosted net euro shorts to a fourth straight record in the week ended Jan. 17.

After several rounds of talks, Greece and private creditors are converging on a debt swap deal that would stave off bankruptcy for Athens, with investors shouldering losses of up to 70 percent. But many details were still unresolved and the plan must be approved by the International Monetary Fund and others.

Euro zone finance ministers will decide on Monday what terms of a Greek debt restructuring they are ready to accept as part of a second bailout package for Athens.

Rising hopes for progress in the euro zone debt crisis and broader risks receding were highlighted by fresh money flowing into Europe Bond and China Equity Funds. These posted their biggest weekly inflow in more than two years, according to EPFR Global fund data on Friday.

The CBOE Volatility index VIX, which measures expected volatility in the S&P 500 over the next 30 days, closed below 19 on Friday for the first time since July 22, as a stabilising market reduced investor desire to seek protection in stock index options against future losses.

Euro zone interbank lending rates and money market rates continued their decline on Friday as a high level of liquidity injected by the European Central Bank kept downward pressure on market rates. But banks remained wary of lending to one another, choosing instead to park their excess funds at the ECB. - Reuters "

Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za

Asia Open 23rd January 2012 - A Good read

An Article from Compass Expect a quiet week due to Chinese new year !!

"After rising to almost 1.3000 during the Asian session on Friday, it has been one way traffic for the EUR since as it opens this morning below 1.2900. The common currency failed to hold onto gains despite the Institute of International Finance's Managing Director, the lobby group representing creditors negotiating with the Greek government, saying that “the elements of an unprecedented voluntary private-sector” accord are coming into place. An agreement will be vital and is a key milestone for Greece to receive further financing aid before it faces a EUR 14.5 billion bond payment in late March. The Greek debt accord is by no means finalised as the terms for an agreement to swap old bonds with new 30 year securities which may pay coupons as high as 4.75% have yet to be agreed. Furthermore, hedge funds holding Greek bonds may not accept the deal as they may look to a more imminent finalisation of their exposures by looking to trigger the payments from credit default swaps. At the same time Greek officials are also meeting with the ECB, EC and IMF, the “troika” on a new EUR 130 billion financing for the nation. The Greek tragedy is reaching its climax. Despite all the event risk in the markets and falling commodity prices, the Australian dollar managed to gain rising to as high as 1.0496 this morning.   Equity markets in the US rose for the third consecutive week on continued better than expected economic data releases and good corporate earnings reports. The S&P 500 closed less than one point higher at 1,315 on the day but was 2% higher for the week with good earnings from Goldman Sachs and eBay countering fears over Europe. Earlier, European bourses closed lower with the DAX losing 0.18% 6,404 while the FTSE fell 0.22% 5,729.   Commodity prices fell on Friday lead by a decline in crude and copper futures. The CRB index has closed 2.05 points lower at 309.91. WTI crude fell more than 2.2% to $98.30 on the back of Chinese manufacturing which contracted for a third straight month. Precious metals rose with gold higher by 0.57% to $1,664 while silver surged more than 3.8% to $31.65. Soft commodities were mixed while copper lost 1.46%. This week we have the Chinese New Year holidays across Asia. In Australia, there is the release of PPI q/q figures."

CALIBRE MORNING REPORT FROM SYDNEY AUZ 23/1/12 - From Dow Jones Newswires

Bring in the bulls !!

"U.S STOCKS:

Strong earnings from International Business Machines powered blue-chip stocks higher for the fourth-straight session, even as discouraging quarterly reports from other bellwethers kept the broader market flat.

The Dow Jones Industrial Average rose 96.50 points (0.8%) to 12,720.48, ending on Friday at the session high. The Standard & Poor's 500-stock index turned positive in the final minutes of the trading session, gaining 0.88 (0.1%) to 1,315.38. The Nasdaq Composite slipped 1.63 points (0.06%) to 2,786.70. Each measure finished with a third straight weekly gain. The broad market has posted its best start to a new year in 15 years.

The Dow rose to a fresh six-month high, with IBM accounting for nearly two-thirds of the index's gains on Friday. The shares rose $8 (4.4%) to $188.52 after the company's better-than-expected fourth-quarter earnings on Thursday. IBM indicated that 2012 earnings would exceed forecasts.

Microsoft advanced $1.59 (5.7%) to $29.71 after the company reported fiscal second-quarter earnings that beat expectations, with revenue in line. The company also lowered its operating expense outlook for 2012.

Intel gained 75 cents (2.9%) to $26.38 -- a roughly four-year high -- after the chip maker topped fourth-quarter earnings and revenue forecasts, amid strength in the personal-computer business.

Google fell $53.58 (8.4%) to $585.99, and was S&P 500's biggest laggard after reporting fourth-quarter earnings and revenue that fell short of expectations. The average cost that advertisers paid Google per click declined from year-ago levels. Despite Google's decline, technology stocks on the S&P 500 were one of three sectors in positive territory on Friday.

At 7:45 AM (AEST), the 10-year Treasury note yield was 2.02% and the 5-year yield was 0.89%.

EUROPEAN STOCKS:

Most European stocks edged lower on Friday, snapping a four-session run of gains, as investors lost patience with Greek debt negotiations.

The Stoxx 600 closed 0.3% lower at 255.85, ending with a weekly gain of 2.7%.

Investors were closely following talks between the Greek government and private creditors, which continued on a third day in a bid to reach a crucial agreement to write down debt. The talks broke down last Friday, raising concerns that Greece would miss another multibillion-euro bailout. European markets spiked during the afternoon on media reports that Greek Prime Minister Lucas Papademos and global bank representatives had concluded their meeting and would resume Friday night. No definite agreement was announced at market close and stocks pulled back into the red for the weekend.
The UK FTSE 100 fell 0.2% to 5,728.55 and the French CAC 40 index was down 0.2% at 3,321.50. The German DAX 30 index was down 0.2% to 6,404.39.

COMMODITIES:

Crude futures slumped Friday, retreating from gains posted earlier in the week, on a weaker euro and hope for easing tensions between Iran and the West. Light, sweet crude for February delivery recently settled $1.93, lower at $98.46 a barrel. The February contract expired at settlement, and the more heavily traded March contract settled $2.21, or 2.2%, lower at $98.33 a barrel. Brent crude on the ICE futures exchange traded $1.57 lower at $109.85 a barrel.
Gold futures eased on Friday, as investors moved to the sidelines ahead of the weekend with Chinese buying expected to slow during a holiday there and investors cautious amid Greek debt negotiations. The most actively traded gold contract, for February delivery, recently fell $1.80, or 0.1%, to $1,652.70 a troy ounce .

Base metals closed mostly lower the London Metal Exchange Friday, as a stronger dollar and a measure of profit-taking dented the week's impressive rally. At the close of open outcry trading, LME three-month copper was 1.7% lower at $8,219 a metric ton, well below the fresh four-month high at $8,428.50/ton it hit earlier in the session.

Prices in dollar a metric ton.

3 Months Metal Bid-Ask Change from

Thursday PM kerb

   Copper                8219.0- 8220.0  Dn 141

   Lead                  2184.0- 2185.0  Up 2

   Zinc                  2013.0- 2014.0  Dn 17

   Aluminum              2217.0- 2218.0  Dn 14

   Nickel               20450.0-20455.0  Up 265

   Tin                  21845.0-21850.0  Dn 5

   Aluminum Alloy        2090.0- 2100.0  Dn 40

Aluminum Alloy-NASAAC 2245.0- 2250.0 Dn 15

FOREX:

The EUR/USD opens lower early in Asia after talks between Greece and its private-sector creditors over a debt write-down plan stall over the weekend. The sticking point is new disagreements over how much Greece would pay its bondholders in the future. The EUR/USD was last at 1.2885, down from 1.2935 late Friday in New York.

INTERBANK FOREIGN EXCHANGE RATES:

Latest Previous % Chg

Close

USD/JPY 76.95-7.20 76.95-7.20 +0.07

EUR/USD 1.2914-34 1.2914-34 -0.06

GBP/USD 1.5571-82 1.5571-82 +0.01

USD/CHF 0.9340-47 0.9340-47 -0.34

USD/CAD 1.0127-38 1.0127-38 +0.00

AUD/USD 1.0483-88 1.0483-88 +0.01

NZD/USD 0.8059-66 0.8059-66 -0.01

Interbank Foreign Exchange Rates at 2050 GMT.

AUSTRALIAN STOCKS:

Australian Market Report - Local Markets Likely Higher On US Leads

Local markets are likely to open up slightly stronger following the positive US moves on Friday.

Ahead of the local open the March SPI futures were 6 points lower at 4,213.

AUSTRALIAN & NZ CORPORATE & ECONOMIC CALENDAR:

LOCAL TIME/GMT

1130/0030 AUS Q4 PPI

Source: Dow Jones Newswires."

Stock market rally still missing one thing: A crowd

A good story from Money Control.com
India's No 1 Financial Portal !

Read it !!

"The January stock rally has brought with it hopes that the market will rebound from last year's middling performance, but it has lacked one key ingredient: enough investors.

The Standard & Poors 500 has rallied 4.5% so far, but the average retail investorcounted on to power the market has stayed away.

Average daily volume on the New York Stock Exchange hasnt eclipsed one billion shares since Dec. 16a flat day for the marketand volume has been above its current 50-day moving average just once in the last six sessions.

So what does it mean?

While the market has had plenty of experience with low-volume gains since the financial panic hit in 2008, the lack of participation by mom-and-pop investors still spurs concerns over the rallys durability.

Market strength has been undermined by light trading volume, Ari Wald, equity analyst at Brown Brothers Harriman, said in a note. Light selling pressure in November was a reason we viewed the November-December correction as a healthy pullback that set the S&P 500 up for its most recent strength. My view is that stocks can grind higher given light volume, but it is difficult to sustain gains given these conditions.

The early advances for 2012the best since 1987are reminiscent of how the previous year started. The S&P 500 registered a 3.33% jump at the same point in 2011, but NYSE volume at that point averaged nearly 1.1 billion shares a day.

Stocks wobbled in November, though on light volume, and recovered in December, which featured a sharp gain on volume that was decent for a holiday season.

We view strong volume flows as the final step toward confirming a reversal, and without it there remains evidence to suggest another correction could lurk in the coming months, Wald said. It will be important to watch volume during the next setback. If volume remains light, the grind higher continues. If volume on down days begins to outpace volume on up days, there might be some money to be made on

the short side. One positive note for the market is that investors last week took the most money out of zero-earning money market funds since September. Cash on the sidelines fell by USD 12.6 billion to USD 2.69 trillion, according to the Investment Company Institute, which tracks fund flows for the government. Retail investors pulled out USD 3.72 billion, while institutional funds lost USD 8.87 billion, ICI said. Investors also remain optimistic, though a bit less so than in recent weeks. The latest American Association of Individual Investors survey shows bullishness down just 1.9 percentage points to 47.2%, while bears jumped 6.4 percentage points to 23.6%, largely due to a substantial decrease in the number of those neutral on the market. The rallys future, then, seems to depend on whether those fence-sitters pulling cash out of money markets are willing to put it to work in the stock market. This mix of good and bad news explains why advisors who are hopeful arent exuberant, said Charles Rotblut, vice president and editor at AAII. Many bulls expect more volatility (as do many bears). In other words, this is shaping up to be a year when market forecasts come with a footnote that reads fingers crossed. " Steven Morris Chartered Accountant (SA) 3 Bickley Road Sea Point Cape Town 8005 Mobile :+27 83 943 1858 Facsimile : 0866 712 498 E-mail : steven@global.co.za

South African Economists forecast lower growth through 2012

A good Article I read from FA News by Gareth Stokes.
Interesting Read & be aware.


"Those holding thumbs for a major economic recovery through 2012 should prepare for disappointment. At an Absa Capital presentation hosted in Johannesburg during December 2011 the group’s economists downgraded their South Africa GDP growth forecast for FY 2012 from 3.6% to just 2.8%. This adjustment comes hot on the heels of a slight reduction in their FY 2011 forecast, to 3%. “This is a meaningful change not only in magnitude but direction,” observed Head of Macro and Fixed Income Research, Jeff Gable. Last year’s economic growth was hampered by poor performances from the mining and manufacturing sectors and the loss of approximately 18 million work days to industrial action. The promising Q1 2011 quarter-on-quarter (q/q) GDP growth of 4.6% was undone by 1.3% (Q2 q/q), 1.4% (Q3 q/q) and a forecast 2.1% in the final quarter.
Why are economists revising their GDP forecasts downwards? On her New Year visit to our shores International Monetary Fund (IMF) MD Christine Lagarde identified unemployment and the ongoing Euro-zone debt crisis as the biggest threats to South Africa’s economy. Absa Capital pre-empted her fears: “We are concerned by the significant slowdown we have observed in global Purchasing Managers Indices (PMIs) and trade of late, particularly with respect to Europe.” More recently, news agency REUTERS added their voice to the “doom and gloom” brigade. They said the latest Euro-zone PMIs pointed to a mild recession across the region, with South Africa’s exports under threat as a result.
Can the consumer save South Africa Inc?
The good news is that South Africa’s household consumption sector remains resilient. Absa Capital expects household consumption expenditure to come in at 3.8% in 2012 (down only slightly from their previous 4.1% forecast) thanks to improvements in households’ real disposable income. Higher employment (193 000 jobs were created in Q3 2011), a benign interest rate environment (there were no rate hikes last year) and manageable debt servicing costs should reflect positively on this segment of the economy this year. Consumer confidence – which has been in decline since mid-2010 – turned the corner in the final quarter last year. “Given our view that consumer confidence is key to discretionary spending in the economy, this resilience in confidence is critical for the consumer to remain the backbone of GPD Growth through 2012,” they say.
They caution, however, that “the ability and willingness of consumers to take on significant amounts of new debt remains constrained!” Local credit extension came in at a paltry R50.2 billion to October 2011, some R13 billion short of the comparable 2010 period.
Pinning our hopes on international trade
Flicking through the international business broadcasts feels a bit like being trapped in a poor remake of the movie Groundhog Day. Each New Year since 2009 has brought a similar package of global financial problems – all revolving around monetary system liquidity and sovereign debt. The Euro-zone debt issue looms as large this year as it did 12 months ago… And just when we thought it couldn’t get any worse Iran kicked off a round of sabre-rattling with the US! Absa Capital reminds us that the global economy is among the top downside risks South Africa will face through 2012.
Our developed world trading partners are struggling with GDP growth forecasts of 2% or less despite interest rates at multi-year lows. If demand from the US and Europe remains sluggish our manufacturing sector will experience another bad year. A third of our 2010 manufactured exports went to Europe, with Africa (27%), Asia (22%) and North America (13%) each accounting for a large slice. There is some respite from a better regional mix of mineral exports. Asia – which is not as troubled as the developed world – accounts for 58% of this trade… We should therefore enjoy some insulation from developed world woes thanks to the powerhouse emerging market economies China and India.
The war with inflation to continue
Inflation will most likely trend higher this year. Absa Capital expects a peak of 6.7% in CPI in Q2 2012 with an average 6.5% for the full year. Upward pressure on prices will come largely from food and fuel. “Food inflation has overshot both our and the market expectations in recent months,” they say. A maize deficit in the local market could push prices even higher as South Africa is forced to import to meet its food needs. But despite these pressures the Reserve Bank is expected to keep rates on hold for longer. A rate hike is still on the cards, but the  economists now believe it will be delayed until Q4 2012. “As long as GDP muddles around 3% we believe that rising inflation will matter more to the Reserve Bank,” opines Absa Capital.
The value of the rand against the currencies of our major trading partners will also impact on price levels this year. Absa Capital expects the rand to reverse its disappointing 2011 performance and have pencilled in a R7.70/$ level by year end. They forecast a weakest level of some R8.20/$ between April and June. The favourable fundamentals which continue to exist for the rand are likely to limit the extent of further deprecation. A REUTERS’ survey of 34 foreign exchange analysts and economists backs this view. The consensus forecast is for the rand to weaken to R8.33 by March and to climb back to R7.82 by year end.

Editor’s thoughts: Financial services performance hinges almost entirely on the financial health of local consumers. Although Absa Capital expects consumption demand to remain buoyant through 2012 there are some indications that consumers are still struggling with debt. Do you expect your clients to have more or less disposable income through 2012? "

Steven 

Steven Morris Chartered Accountant (SA)

3 Bickley Road
Sea Point
Cape Town
8005

Mobile :+27 83 943 1858

Facsimile : 0866 712 498
E-mail : steven@global.co.za

SARS DEADLINE : Provisional Tax Payers - 28 February 2011 Tax Submissions due 31 Jan 2012

Dear all.

Just to keep you all updated.

Next Tax Deadline due to SARS is 31 January 2012 for all provisional tax payers to submitt
their 28 February 2011 Tax Returns.

If you have any queries or need it to be done on your behalf, looking forward to hearing from you.

Don't be caught short.

Contact me !


Found Regards


Steven

Steven Morris CA (SA)

Mobie : 083 943 1858

Fax: 086 671 2498

E-Mail: steven@global.co.za

China Said to Weigh Easing Constraints on Banks as Growth Slows

Knowledge is power !! Enjoy this read

"Jan. 19 (Bloomberg) -- China is allowing the nation’s five biggest banks to increase first-quarter lending and weighing a plan to relax capital requirements as economic growth cools.

The central bank will let the larger lenders increase new loans by a maximum of about 5 percent from a year earlier, according to two people at state lenders who have knowledge of the matter. The banking regulator is delaying implementing the most stringent capital adequacy ratios and may lower risk weightings for loans to small businessmen and companies, four people said separately.

Chinese policy makers are under pressure to ease credit after growth in the world’s second-biggest economy moderated to the slowest pace in 10 quarters as Europe’s debt crisis capped export demand and home sales slipped. Premier Wen Jiabao aims to sustain the expansion without re-inflating property-price bubbles or driving up consumer prices.

The steps are "policy easing and fine-tuning and both measures aim to support the real sector of the economy," said Liu Li-Gang, an economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, who previously worked at the World Bank. "This year, credit conditions will be more relaxed than last year."

The Shanghai Composite Index rose 0.95 percent as of 10:20 a.m. local time. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, rose 1.9 percent in Hong Kong, while China Construction Bank Corp. gained 2 percent.

China’s growth cooled to 8.9 percent in the fourth quarter, the statistics bureau said this week. Reports yesterday showed foreign direct investment and home prices slid in December.

‘Major Task’

"The government’s major task will be maintaining stable economic growth this year," said Zhang Ling, general manager at Shanghai River Fund Management Co. "We should be seeing more pro-growth measures going forward and easing restrictions on lending is a good start."

The guidance from the People’s Bank of China to the big lenders on first-quarter new loans amounts to "modest" loosening, said Chang Jian, an economist at Barclays Capital in Hong Kong who has formerly worked for the Hong Kong Monetary Authority and the World Bank. ICBC, Construction Bank, Bank of China Ltd., Agricultural Bank and Bank of Communications Co. are the nation’s five biggest lenders.

The central bank also said that 30 percent of full-year lending should be in the first quarter, with the same amount in the second and 20 percent in each of the final two quarters, the people said. The PBOC won’t comment on anything related to credit quotas, a press official said in Beijing yesterday.

Risk Buffers

The China Banking Regulatory Commission may allow banks to increase the excess bad-loan reserves used in calculating risk buffers, the four people said. A press official for the CBRC, who refused to be named due to the agency’s rules, declined to immediately comment.

The risk weighting on personal operating loans given to small businessmen may be cut to 75 percent from the current 100 percent, while the ratio on loans to small and micro-sized firms would be lowered to 50 percent from 75 percent, two of the people said. The banks had 14.6 trillion yuan ($2.3 trillion) of such loans outstanding in August, accounting for 27 percent of total advances, according to the CBRC.

The regulator is yet to complete setting how capital requirements will be calculated, and hasn’t told banks how long the implementation may be delayed, the people said this week.

Resisting Local Demand

Separately, the CBRC has told lenders to contain risks tied to local government debt, a person with knowledge of the matter said this week.

China warned its banks to resist demand for credit from local governments as new officials in cities, towns and villages pursue projects that bolster growth, the person said.

The banking commission told lenders this month to be on watch for loan applications for new programs disguised as funding requests for unfinished ones, said the person, declining to be identified as the order isn’t public.

Requests may increase as local leaders appointed in a nationwide shuffle seek funds to help create jobs in their regions, the person said. A press official at the banking regulator, who declined to be identified because of the agency’s rules, said he couldn’t immediately comment.

China’s lending peaked in 2009 as officials allowed a credit boom to counter the effects of the global financial crisis. New local currency loans fell year-on-year in the first quarters of 2011 and 2010. In the first three months of last year, the amount was about 2.26 trillion yuan ($360 billion), Bloomberg data shows.

To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net

To contact the editors responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net ; Chitra Somayaji at csomayaji@bloomberg.net "
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Sent from my BlackBerry® wireless device

Asian Stocks Rally in Best Start on Record; Won, Copper Advance

If you want to keep updated one needs to read from Bloomberg on line !!

"Jan. 19 (Bloomberg) -- Asian stocks rose, spurring a record start to the year for the MSCI Asia Pacific Index, while copper gained and South Korea’s won strengthened amid signs China will relax credit controls. Oil advanced after U.S. crude stockpiles fell the most in six weeks.

The MSCI gauge rallied 0.9 percent as of 2:16 p.m. in Tokyo, poised for the highest close since Nov. 9. The Hang Seng China Enterprises Index jumped 1.6 percent, while Standard & Poor’s 500 futures were little changed. Oil added 0.9 percent to $101.51 a barrel. Copper reached a four-month high, gaining 1.1 percent. South Korea’s won rose against all of its 16 major counterparts. Bond risk in Australia fell to a two-month low.

China is letting its five biggest banks boost lending and weighing a plan to relax capital requirements, according to people with knowledge of the matter, who declined to be identified. The world’s second-biggest economy expanded 8.9 percent in the fourth quarter, the slowest in two years, and banks’ reserve requirements were relaxed in December for the first time since 2008.

"The government’s major task will be maintaining stable economic growth this year," said Zhang Ling, general manager at Shanghai River Fund Management Co. in Shanghai. "We should be seeing more pro-growth measures going forward and easing restrictions on lending is a good start."

Technology Stocks

The MSCI Asia Pacific Index has climbed 4.8 percent in 2012, the best start to any year in Bloomberg data going back to 1988. Hero Motocorp Ltd., India’s largest two-wheeler manufacturer, Bajaj Auto Ltd. and Hang Lung Properties Ltd. are among companies in the region scheduled to report earnings.

More than two stocks rose for each that fell in the benchmark index for Asian shares. Technology companies rallied 1.6 percent for the biggest advance among 10 industries. ASML Holding NV, Europe’s biggest semiconductor-equipment maker, forecast higher first-quarter orders and sales at Linear Technology Corp., a U.S. chipmaker, beat analysts’ projections.

Sumco Corp., which produces silicon wafers, surged 7.9 percent in Japan trading. Elpida Memory Inc. and Advantest Corp. climbed at least 4.6 percent.

The Shanghai Composite Index added 0.9 percent. Chinese banks can increase new loans this quarter by a maximum of about 5 percent from a year earlier, according to two people at state lenders who have knowledge of the matter. Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. advanced at least 0.9 percent.

"China is now beginning to ease policy and the big banks are actually reporting relatively strong earnings," said Amit Rajpal, manager of global financial funds for London-based Marshall Wace LLP, in a Bloomberg Television interview. "There’s still a 40-to-50 percent upside" in shares of large Chinese banks.

Copper, Oil

Copper in London gained as much as 1.6 percent to $8,372 a metric ton, the highest level since Sept. 21, on the London Metal Exchange. Gold increased 0.2 percent to $1,663.60 an ounce for a fourth day of gains. Palladium and platinum touched the highest levels in more than a month.

Oil futures have increased 2.8 percent in the past three days. U.S. crude inventories dropped 4.81 million barrels last week, the most since the week ended Dec. 2, figures from the industry-funded American Petroleum Institute showed.

The South Korean won appreciated 0.5 percent to 1,136.05 per dollar. Taiwan’s dollar rose to its strongest level since October amid speculation exporters are repatriating income before the weeklong Chinese New Year holiday. The currency touched NT$29.86 against the dollar.

Currencies

The Australian dollar declined for the first time in three days, sliding 0.4 percent to $1.0398, after a government report showed the nation’s employers unexpectedly cut jobs in December. New Zealand’s currency dropped from an 11-week high, retreating 0.2 percent to 80.26 U.S. cents, following an unexpected drop in consumer prices in the fourth quarter.

The cost of protecting Australian bonds against non-payment fell, according to credit-default swap traders. The Markit iTraxx Australia index declined four basis points to 169, Royal Bank of Scotland Group Plc prices show. The gauge is on track for its lowest close since Oct. 31, 2011, according to data provider CMA.

To contact the reporter on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net

To contact the editor responsible for this story: James Regan in Hong Kong at jregan19@bloomberg.net . "
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Sent from my BlackBerry® wireless device