"May 31 (Bloomberg) -- Asian stocks tumbled, heading for the biggest monthly drop in more than three years, while U.S. bond yields fell to a record low and the yen strengthened as divisions widened over solving Europe’s debt crisis. Oil in New York entered a bear market.
The MSCI Asia Pacific Index lost 1.3 percent as of 1:02 p.m. in Tokyo, set for an 11 percent monthly decline. Futures on the Standard & Poor’s 500 Index were little changed. Yields on 10-year Treasuries slid as much as 3 basis points to 1.59 percent, while similar-maturity Australian debt fell below 3 percent for the first time. The yen reached the highest in more than three months against the dollar. Rubber plunged as much as 5.1 percent and oil was 20 percent below this year’s peak.
World stock markets have lost $4.6 trillion this month amid concern Europe’s crisis is spreading. The cost of protecting Spanish bonds against default climbed to a record yesterday and a Greek poll showed support for anti-austerity parties ahead of elections next month, while the European Commission challenged Germany’s remedies to the financial crisis. Japan’s industrial production rose less than economists expected today and Brazil cut its benchmark interest rate to a record low.
“The market is genuinely worried about the potential disorderly default and exit by Greece and what that means in terms of contagion risks,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “It will have to be a response by governments and the central bank to stem the panic in the market.”
Asia Losses
Benchmark 10-year Treasury yields were at 1.62 percent, while Japan’s similar-maturity debt slid as low as 0.81 percent, a level not seen since 2003. U.S. employers probably added 150,000 jobs in May, based on the median estimate from a Bloomberg News survey of economists before the government report tomorrow. The gain was 115,000 in April. The jobless rate is projected to hold at 8.1 percent.
The MSCI Asia Pacific Index is poised for its biggest monthly loss since October 2008. The Nikkei 225 Stock Average dropped 1.9 percent today, the most among the region’s biggest equity markets, led by exporters including Canon Inc. and Honda Motor Co.
The euro slid for an eighth day against the yen before data tomorrow forecast to show the jobless rate rose to a record and manufacturing contracted across the 17 nations that share the euro.
Revised Rescue
An opinion poll yesterday showed most Greeks want to see the terms of a financial rescue revised, stoking fears the nation may default and be forced to exit the euro. The European Union’s central regulator challenged Germany’s remedies for the financial crisis, calling for direct euro-area aid for troubled banks and demanding a path to common bond issuance.
Oil was dropped 24 cents to $87.58 a barrel in New York, set for its biggest monthly drop in more than three and a half years. Crude futures traded near the lowest settlement in seven months after slumping 3.2 percent yesterday. It has fallen 20 percent from this year’s highest settlement of $109.77 a barrel on Feb. 24, a common definition of a bear market.
The S&P GSCI gauge of 24 commodities decreased 0.2 percent to its lowest level since October. Rubber futures fell 3.9 percent in Tokyo, dropping for a second day. Stockpiles of the material used in tires are building up, as car sales decline in China, according to the Qingdao International Rubber Exchange Market.
The cost of insuring bonds from default rose in Asia, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 8 basis points to 203, Credit Agricole SA prices show. The index is headed for its highest close since Jan. 16, according to CMA.
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net ; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net "
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Thursday, 31 May 2012
Graff Diamonds Shelves IPO as Crisis Roils Markets
Sign of the times !!
Opportunity !! as "The Sage of Omaha" says
"May 31 (Bloomberg) -- Graff Diamonds Corp. shelved a $1 billion initial public offering in Hong Kong as Europe’s debt turmoil drives first-time stock sales to the lowest level since the collapse of Lehman Brothers Holdings Inc.
Graff, which depends on just 20 customers for almost half its revenue, cited “consistently declining stock markets” in an e-mailed statement. It had sought a valuation of as much as 24 times estimated full-year earnings, a higher multiple than those of luxury-goods companies including Harry Winston Diamond Corp. and PPR SA.
Demand for new equity collapsed as world stock markets lost about $4 trillion since the start of May, pulled down by speculation that Greece may exit from the euro. Investors have become more skittish about valuations as Facebook Inc. tumbled 26 percent from its IPO price.
“The global IPO markets are dead until European Union issues abate, worldwide economic indicators improve and the overall stock market regains some footing,” said Jim Krapfel, an IPO analyst at Morningstar Inc. in Chicago. “No company wants to go public at a time when investors are applying the brakes.”
IPOs have raised $58.9 billion globally since January, according to data compiled by Bloomberg, the slowest start to a year since 2009, when equity capital markets were reeling from Lehman’s bankruptcy.
Felda IPO
Asian stocks are set for the biggest monthly drop in more than three years, with the MSCI Asia Pacific Index down about 11 percent in May. U.S. 10-year Treasury yields reached a record low of 1.595 percent today after Spanish credit default swaps surged, spurring demand for safer assets.
Companies have scrapped or delayed $2 billion of IPOs in Asia this year, data compiled by Bloomberg show. China Yongda Automobiles Services Holdings Ltd., China’s biggest distributor of BMW cars, this week canceled plans to raise as much as $430 million in Hong Kong. Sany Heavy Industry Co. cut the size of a planned share sale in the city to $2 billion, people with knowledge of the matter said May 30.
Some companies are pushing ahead with IPOs. Felda Global Ventures Holdings Bhd., the Malaysian palm oil and rubber producer, has set a price range for a sale that may raise as much as $3.3 billion in Malaysia, according to a term sheet sent to investors today.
Tiffany’s Multiple
Formula One, owner of the auto-racing series, is planning an IPO in Singapore that may raise as much as $3 billion, people with knowledge of the matter have said. The company plans to push ahead with the deal and will meet potential investors early next week, one person said today.
Graff was offering as many as 311.2 million shares at HK$25 ($3.22) to HK$37 apiece, according to a sales prospectus. The company was targeting a $1 billion IPO, including stock sold by an existing shareholder, the document shows.
The jeweler’s price range had valued it at 18 times to 24 times full-year earnings as estimated by bankers arranging the IPO. Harry Winston, the Toronto-based diamond mining company and jewelry retailer, trades at 13.7 times estimated full-year earnings, data compiled by Bloomberg show.
Tiffany & Co., the world’s second-largest luxury jeweler, is trading at 15.1 times earnings on that basis. Last week, Tiffany cut its profit and sales forecasts for the year, sending its shares tumbling.
Graff’s IPO is “too expensive for the current market to digest,” said Jason Yuan, head of research at Pegasus Investment Management in Beijing, which has $500 million assets under management.
The Magnificence
Graff, founded by Laurence Graff in 1960, says its ability to find, cut and polish the finest diamonds sets it apart from competitors. Those include the Magnificence, a 243.96-carat stone that was certified in 2008 as the world’s largest “Emerald Cut, D Colour, Flawless diamond,” according to Graff’s listing document.
The company said in a January statement that it provided the diamond for actress Drew Barrymore’s engagement ring. Other customers have included Oprah Winfrey and Victoria Beckham, according to the New York Times.
Graff marketed its IPO amid a slowdown in luxury-goods spending in Hong Kong, where Chinese tourists splurge to take advantage of lower tax rates than in the country’s mainland. Sales of jewelery, watches and valuable gifts in Hong Kong rose an average of 17 percent in the first three months of the year from a year earlier, according to data compiled by Bloomberg. That’s down from growth of about 37 percent in the last quarter of 2011, the data show.
‘Super Rich’
Still, demand for high-end diamonds will increase in China and other Asian countries as the ranks of the “super rich” swell, Graff Chief Executive Officer Francois Graff, the son of Laurence Graff, told reporters on May 28 in Hong Kong.
Graff directly owns 18 stores globally and plans to open five others in Hong Kong, Shanghai, Macau, Hangzhou and Tokyo this year, Graff said. He also plans to open six more across Asia.
“The company is committed to growing its business and will continue to do so irrespective of today’s announcement,” Graff Diamonds said in the statement.
To contact the reporters on this story: Simon Casey in New York at scasey4@bloomberg.net ; Fox Hu in Hong Kong at fhu7@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Opportunity !! as "The Sage of Omaha" says
"May 31 (Bloomberg) -- Graff Diamonds Corp. shelved a $1 billion initial public offering in Hong Kong as Europe’s debt turmoil drives first-time stock sales to the lowest level since the collapse of Lehman Brothers Holdings Inc.
Graff, which depends on just 20 customers for almost half its revenue, cited “consistently declining stock markets” in an e-mailed statement. It had sought a valuation of as much as 24 times estimated full-year earnings, a higher multiple than those of luxury-goods companies including Harry Winston Diamond Corp. and PPR SA.
Demand for new equity collapsed as world stock markets lost about $4 trillion since the start of May, pulled down by speculation that Greece may exit from the euro. Investors have become more skittish about valuations as Facebook Inc. tumbled 26 percent from its IPO price.
“The global IPO markets are dead until European Union issues abate, worldwide economic indicators improve and the overall stock market regains some footing,” said Jim Krapfel, an IPO analyst at Morningstar Inc. in Chicago. “No company wants to go public at a time when investors are applying the brakes.”
IPOs have raised $58.9 billion globally since January, according to data compiled by Bloomberg, the slowest start to a year since 2009, when equity capital markets were reeling from Lehman’s bankruptcy.
Felda IPO
Asian stocks are set for the biggest monthly drop in more than three years, with the MSCI Asia Pacific Index down about 11 percent in May. U.S. 10-year Treasury yields reached a record low of 1.595 percent today after Spanish credit default swaps surged, spurring demand for safer assets.
Companies have scrapped or delayed $2 billion of IPOs in Asia this year, data compiled by Bloomberg show. China Yongda Automobiles Services Holdings Ltd., China’s biggest distributor of BMW cars, this week canceled plans to raise as much as $430 million in Hong Kong. Sany Heavy Industry Co. cut the size of a planned share sale in the city to $2 billion, people with knowledge of the matter said May 30.
Some companies are pushing ahead with IPOs. Felda Global Ventures Holdings Bhd., the Malaysian palm oil and rubber producer, has set a price range for a sale that may raise as much as $3.3 billion in Malaysia, according to a term sheet sent to investors today.
Tiffany’s Multiple
Formula One, owner of the auto-racing series, is planning an IPO in Singapore that may raise as much as $3 billion, people with knowledge of the matter have said. The company plans to push ahead with the deal and will meet potential investors early next week, one person said today.
Graff was offering as many as 311.2 million shares at HK$25 ($3.22) to HK$37 apiece, according to a sales prospectus. The company was targeting a $1 billion IPO, including stock sold by an existing shareholder, the document shows.
The jeweler’s price range had valued it at 18 times to 24 times full-year earnings as estimated by bankers arranging the IPO. Harry Winston, the Toronto-based diamond mining company and jewelry retailer, trades at 13.7 times estimated full-year earnings, data compiled by Bloomberg show.
Tiffany & Co., the world’s second-largest luxury jeweler, is trading at 15.1 times earnings on that basis. Last week, Tiffany cut its profit and sales forecasts for the year, sending its shares tumbling.
Graff’s IPO is “too expensive for the current market to digest,” said Jason Yuan, head of research at Pegasus Investment Management in Beijing, which has $500 million assets under management.
The Magnificence
Graff, founded by Laurence Graff in 1960, says its ability to find, cut and polish the finest diamonds sets it apart from competitors. Those include the Magnificence, a 243.96-carat stone that was certified in 2008 as the world’s largest “Emerald Cut, D Colour, Flawless diamond,” according to Graff’s listing document.
The company said in a January statement that it provided the diamond for actress Drew Barrymore’s engagement ring. Other customers have included Oprah Winfrey and Victoria Beckham, according to the New York Times.
Graff marketed its IPO amid a slowdown in luxury-goods spending in Hong Kong, where Chinese tourists splurge to take advantage of lower tax rates than in the country’s mainland. Sales of jewelery, watches and valuable gifts in Hong Kong rose an average of 17 percent in the first three months of the year from a year earlier, according to data compiled by Bloomberg. That’s down from growth of about 37 percent in the last quarter of 2011, the data show.
‘Super Rich’
Still, demand for high-end diamonds will increase in China and other Asian countries as the ranks of the “super rich” swell, Graff Chief Executive Officer Francois Graff, the son of Laurence Graff, told reporters on May 28 in Hong Kong.
Graff directly owns 18 stores globally and plans to open five others in Hong Kong, Shanghai, Macau, Hangzhou and Tokyo this year, Graff said. He also plans to open six more across Asia.
“The company is committed to growing its business and will continue to do so irrespective of today’s announcement,” Graff Diamonds said in the statement.
To contact the reporters on this story: Simon Casey in New York at scasey4@bloomberg.net ; Fox Hu in Hong Kong at fhu7@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Breaking News - India Growth falls to 5.3% 1st time in 3 years !!
FT.com
India’s economic growth fell below the psychologically significant six per cent level for the first time in three years, a clear sign that the country’s slowdown is deepening and affecting all sectors of the economy.
Sharp falls in the manufacturing and agriculture sectors have led Asia’s third-largest economy to grow only 5.3 per cent in the first three months of 2012, compared to 9.2 per cent growth a year earlier.
India’s economic growth fell below the psychologically significant six per cent level for the first time in three years, a clear sign that the country’s slowdown is deepening and affecting all sectors of the economy.
Sharp falls in the manufacturing and agriculture sectors have led Asia’s third-largest economy to grow only 5.3 per cent in the first three months of 2012, compared to 9.2 per cent growth a year earlier.
Wednesday, 30 May 2012
Greek Opinion Poll Shows Majority Want Revised Terms
"May 30 (Bloomberg) -- Most Greeks want to see the terms of an international financial rescue revised even as they acknowledge that not abiding by austerity measures required for the funds may lead to the country leaving the single currency, according to an opinion poll conducted weeks before a second general election on June 17.
Almost eight in 10, or 77 percent, of the 1,600 Greeks surveyed by GPO SA pollsters for the survey broadcast on Athens- based Mega TV today said the terms of the bailout should be revised. More than half, or 52.4 percent, said they should stay in the euro if they were forced to accept the current austerity measures accompanying the bailout while 44.5 percent said they shouldn’t. Most Greeks, or 81 percent, said they wanted to remain in the single currency.
The survey was the latest in a spate of polls to show that the June 17 election may still cast doubt on Greece’s place in the euro area. While the New Democracy party, which supported the international rescue of the country earlier in the year in return for austerity measures, placed ahead of anti-bailout party Syriza, the difference between the two parties remained small.
Bailout Terms
New Democracy had 23.4 percent support compared with Syriza with 22.1 percent, according to the survey. The margin of error is 2.6 percentage points. Syriza leader Alexis Tsipras advocates unilaterally canceling the austerity measures demanded for the bailout, with an agenda of re-negotiating the terms of the rescue.
The cuts required for 240 billion euros ($300 billion) of aid have driven the country into the worst recession since World War II. Polls since the inconclusive May 6 vote have shown Syriza challenging the New Democracy party for first place. Both parties would still need to team up with others to form a majority and govern, running the risk of the country running out of money as soon as early July.
International inspectors won’t visit Greece for a review that allows funds to be paid until a government is formed.
Socialist Pasok, which also supported the bailout in an interim government with New Democracy earlier this year, had 13.5 percent support, the poll showed.
The GPO poll showed Greeks divided on whether they would leave the euro area, with 48 percent saying there was a low possibility compared with 45 percent saying the possibility was high.
Election Outlook
A third of those surveyed said New Democracy was ready to take over government of the country, compared with 16 percent who said Syriza was. More than half of respondents, or 57 percent, said they believed New Democracy would win the elections.
Greece’s exit from the euro currency would lead to an immediate and significant drop in living standards for Greeks, National Bank of Greece SA, the country’s biggest bank, said in a report published yesterday.
Per-capita income would drop by at least 55 percent in euro terms as a new currency would depreciate by about 65 percent, according to the report, e-mailed from the bank.
The recession would deepen by about 22 percent at stable prices, adding to the 14 percent recorded in the 2009 to 2011 period, National Bank said, while unemployment would jump to 34 percent and inflation rise to above 30 percent, pushed up by the higher cost of imported goods.
To contact the reporters on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net ; Natalie Weeks in Athens at nweeks2@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Australia Retail Sales Unexpectedly Drop, Boosting Rate Cut Bets
"May 30 (Bloomberg) -- Australian retail sales unexpectedly fell for the first time in 10 months, sending the nation’s currency, stocks and bond yields lower as bets increased on the central bank’s fourth interest-rate cut since November.
Sales dropped 0.2 percent to A$21.2 billion ($20.7 billion) from March, when they gained a revised 1.1 percent to a record, the Bureau of Statistics said in Sydney today. The result compares with the median forecast in a Bloomberg News survey of 20 economists for a 0.2 percent gain.
The data span a period before Reserve Bank of Australia Governor Glenn Stevens slashed the overnight cash rate target by half a percentage point to a two-year low as inflation cooled and the economy struggled to gain traction. The RBA is trying to boost a housing market in which prices have fallen for five straight quarters, support employment and help confidence that has weakened among consumers who are saving more.
Today’s report “reflects consumers remaining stubbornly cautious despite rate cuts and the possibility of further easing,” said Katrina Ell, an economist at Moody’s Analytics in Sydney. “Unless rate cuts can help consumers get their mojo back in coming months, retail trade is condemned to be below trend through 2012.”
Traders are pricing in at least a quarter-point reduction in the RBA’s benchmark rate to 3.5 percent at its June 5 meeting and see a 38 percent chance of a 50 basis-point cut, swaps data compiled by Bloomberg show. The local dollar traded at 97.85 U.S. cents at 12:30 p.m. in Sydney, compared with 98.11 cents before the data.
Record-Low Yields
The three-year bond yield dropped to 2.313 percent, a record, and 6 basis points below yesterday’s close; and the 10- year bond yield fell as low as 3.102 percent, 4 basis points below yesterday’s close. Australia’s S&P/ASX 200 Index fell 1 percent.
Spending at department stores fell 1 percent, and consumers spent 0.8 percent less on household goods, today’s report showed. They spent 0.4 percent more at cafes and restaurants, it showed.
Consumer-price growth in Australia was subdued last quarter as the cost of food and non-alcoholic drinks fell 2.1 percent, paving the way for this month’s rate cut. Fruit plunged 30 percent as the breaking of nearly a decade of drought and a historically mild summer caused a glut of fruit and vegetables, the April 24 inflation data showed.
Slower Growth
The central bank, in its quarterly monetary policy statement released this month, cut growth and inflation forecasts.
The RBA sees average growth of 3 percent in 2012, down from its February estimate of 3.5 percent. Consumer prices will rise 2.5 percent in the year to December, from a previous prediction of 3 percent; underlying inflation is predicted at 2.25 percent from a previous 2.75 percent, the central bank said.
“Labor market conditions have continued to be on the soft side to date, with large increases in employment in mining and some service industries roughly offset by declines in the manufacturing, hospitality and retail sectors,” the central bank said in the May 4 statement. “A recovery in housing construction is unlikely in the near term.”
A separate report today showed construction work done rose 5.5 percent last quarter from the final three months of 2011, led by engineering as the nation’s mining investment boom intensifies.
Mining Investment
The RBA, in its May 4 statement, raised its outlook for mining investment, saying its liaison suggested some projects previously seen as “only possible now look more likely to go ahead.”
The RBA’s benchmark rate, at 3.75 percent, is the highest among major developed economies.
David Jones Ltd., Australia’s second-largest department store chain, forecast its smallest profit in six years as rising costs, falling sales, overseas competition and the strong Australian dollar crimp earnings.
David Jones said March 21 that net income will fall 35 percent to 40 percent in the year through July. The forecast implies earnings of A$101 million to A$109 million, as much as 28 percent below the average of 11 analyst estimates compiled by Bloomberg.
Pacific Brands Ltd. said its first-half loss widened 72 percent after it wrote down the value of its underwear division and said the retail outlook remained “challenging.”
The loss in the six months ended Dec. 31 widened to A$353.9 million, from A$206.1 million a year earlier, Melbourne-based Pacific Brands said in a Feb. 17 statement. The apparel company said it will write down the goodwill on its underwear unit by A$388.7 million and that restructuring costs totaled A$13.4 million. Sales declined 19.6 percent to A$684.7 million.
“The writedown of goodwill in the underwear business is disappointing, but a necessary step to reflect the impact of trading conditions,” Pacific Brands Chief Executive Officer Sue Morphet said at the time.
To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net "
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
China Has No Plan for Large Stimulus to Counter Slowdown
"May 30 (Bloomberg) -- China has no plan to introduce stimulus measures to support growth on the scale unleashed during the depths of the global credit crisis in 2008, according to the nation’s state-run Xinhua News Agency.
“The Chinese government’s intention is very clear: It will not roll out another massive stimulus plan to seek high economic growth,” Xinhua said yesterday in the seventh paragraph of an article on economic policy, without attributing the information. “Current efforts for stabilizing growth will not repeat the old way of three years ago.” In 2008, policy makers unveiled a fiscal stimulus of 4 trillion yuan ($586 billion at the time).
China stocks fell as the report damped speculation of government policy action spurred by Premier Wen Jiabao’s call last week for a greater focus on growth. Stimulus restraint may reflect concern that the record lending boom that helped the nation weather a contraction in trade in 2008-2009 raised risks of a bad-loan crisis.
“They have to strike a delicate balance between doing something to stabilize growth and not overshooting,” said Shen Jianguang, Hong Kong-based chief Asia economist for Mizuho Securities Asia Ltd., who previously worked for the International Monetary Fund and European Central Bank.
The Hang Seng China Enterprises Index dropped 2.3 percent as of 10:46 a.m. in Hong Kong, the biggest drop in two weeks. China’s benchmark Shanghai Composite Index lost 0.2 percent, following a 1.9 percent gain since Wen’s call for growth was published May 20.
Yesterday’s Xinhua article made no mention of central bank tools including interest rates and the reserve-requirement ratio, previously used to bolster growth. It carried the byline of two reporters and wasn’t labeled as opinion or commentary.
‘Not Sustainable’
Pumping in government money to achieve growth targets is “not sustainable” and China will instead focus on encouraging private investments in railways, infrastructure, energy, telecommunications, health care and education, the story said.
Wen repeated his call for stabilizing growth and reiterated that the economy faces increasing downward pressure, according to remarks published today by the Hunan Daily, citing a speech the premier gave on May 25 in the southern province.
The National Development and Reform Commission may be accelerating construction approvals as part of China’s response, with the planning agency last week saying that Baosteel Group Corp. and Wuhan Iron & Steel Group won permission to build 134 billion yuan ($21 billion) of new factories. The NDRC had delayed approving the two steel projects in 2009, citing industry overcapacity.
Production Slowing
China’s tilt toward supporting expansion followed data showing trade below forecasts in April and industrial production rising the least since 2009. Europe’s debt crisis and austerity measures are threatening exports.
Agencies including the finance ministry, agriculture ministry and the securities regulator will introduce their own measures to stabilize growth, Xinhua said.
Economists at Credit Suisse Group AG and Standard Chartered Plc said May 28 that stimulus will probably be smaller than the 2008 package. Alongside the fiscal measures, China during the credit crisis lowered interest rates, halted appreciation in the yuan against the dollar and oversaw a record credit boom of more than 17.5 trillion yuan in 2009-10.
Credit Suisse said spending on investment this time around will probably range from 1 trillion yuan to 2 trillion yuan. Standard Chartered said China is starting a “mini-me” version of the prior stimulus.
‘Measured’ Stimulus
“The State Council is introducing a measured but still significant set of stimulus measures, which should begin to affect growth in August-September,” Standard Chartered economists led by Stephen Green in Hong Kong wrote in a note to clients this week. Concern that a surge in credit would lead to faster inflation and higher property prices will be reflected in “a much more controlled pace of bank lending,” they wrote.
Bank of China Ltd. sees slower loan growth in 2012 than last year and has no plans to relax its lending policy, President Li Lihui said today at a shareholders meeting in Beijing.
Elsewhere in the Asia-Pacific region, Australian retail sales unexpectedly fell 0.2 percent in April from the prior month after a revised 1.1 percent advance in March, a report showed today. New Zealand home-building approvals fell 7.2 percent to 1,385 in April from a month earlier after a revised 19.6 percent gain in March.
Euro Area Sentiment
In the euro area, an index of executive and consumer sentiment probably fell for a second month to 91.9 in May from 92.8 in April, a Bloomberg News survey showed ahead of a report due later today.
Sweden’s economy may have expanded 0.2 percent in the first quarter from the fourth quarter, when it contracted 1.1 percent, a Bloomberg survey showed.
Pending sales of existing homes in the U.S. were probably unchanged in April from March, when they climbed 4.1 percent, according to a Bloomberg survey of 42 economists. The Mortgage Bankers Association’s weekly index of mortgage applications for the period ended May 25 is also due today.
China’s economy is forecast to expand 8.2 percent this year, based on the median estimate of analysts surveyed this month by Bloomberg News. That would be the least since 1999.
“The authorities won’t give the impression that they are repeating what they did with the massive stimulus in global financial crisis,” Mizuho’s Shen said. The government’s tone “may also partly reflect their genuine concerns about not committing the same mistakes as in the 4 trillion yuan stimulus,” he said.
Speeding up Approvals
The nation has sped up the approval process for major projects, Xinhua said May 28. The country will also encourage greater private investment in banks, according to guidelines released by the China Banking Regulatory Commission in a statement posted on its website May 26.
The People’s Bank of China on May 12 lowered banks’ reserve ratios by 50 basis points, the third cut in six months.
“Unlike in 2008 when the Chinese government rushed to spend, the new stimulus package will be small and modest,” said Zhang Xinfa, an economist with China Galaxy Securities Co. in Beijing. Bank lending will play a smaller role in the new round of investment, he said.
To contact Bloomberg News staff for this story: Bloomberg News in Beijing at xzhou68@bloomberg.net "
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
“The Chinese government’s intention is very clear: It will not roll out another massive stimulus plan to seek high economic growth,” Xinhua said yesterday in the seventh paragraph of an article on economic policy, without attributing the information. “Current efforts for stabilizing growth will not repeat the old way of three years ago.” In 2008, policy makers unveiled a fiscal stimulus of 4 trillion yuan ($586 billion at the time).
China stocks fell as the report damped speculation of government policy action spurred by Premier Wen Jiabao’s call last week for a greater focus on growth. Stimulus restraint may reflect concern that the record lending boom that helped the nation weather a contraction in trade in 2008-2009 raised risks of a bad-loan crisis.
“They have to strike a delicate balance between doing something to stabilize growth and not overshooting,” said Shen Jianguang, Hong Kong-based chief Asia economist for Mizuho Securities Asia Ltd., who previously worked for the International Monetary Fund and European Central Bank.
The Hang Seng China Enterprises Index dropped 2.3 percent as of 10:46 a.m. in Hong Kong, the biggest drop in two weeks. China’s benchmark Shanghai Composite Index lost 0.2 percent, following a 1.9 percent gain since Wen’s call for growth was published May 20.
Yesterday’s Xinhua article made no mention of central bank tools including interest rates and the reserve-requirement ratio, previously used to bolster growth. It carried the byline of two reporters and wasn’t labeled as opinion or commentary.
‘Not Sustainable’
Pumping in government money to achieve growth targets is “not sustainable” and China will instead focus on encouraging private investments in railways, infrastructure, energy, telecommunications, health care and education, the story said.
Wen repeated his call for stabilizing growth and reiterated that the economy faces increasing downward pressure, according to remarks published today by the Hunan Daily, citing a speech the premier gave on May 25 in the southern province.
The National Development and Reform Commission may be accelerating construction approvals as part of China’s response, with the planning agency last week saying that Baosteel Group Corp. and Wuhan Iron & Steel Group won permission to build 134 billion yuan ($21 billion) of new factories. The NDRC had delayed approving the two steel projects in 2009, citing industry overcapacity.
Production Slowing
China’s tilt toward supporting expansion followed data showing trade below forecasts in April and industrial production rising the least since 2009. Europe’s debt crisis and austerity measures are threatening exports.
Agencies including the finance ministry, agriculture ministry and the securities regulator will introduce their own measures to stabilize growth, Xinhua said.
Economists at Credit Suisse Group AG and Standard Chartered Plc said May 28 that stimulus will probably be smaller than the 2008 package. Alongside the fiscal measures, China during the credit crisis lowered interest rates, halted appreciation in the yuan against the dollar and oversaw a record credit boom of more than 17.5 trillion yuan in 2009-10.
Credit Suisse said spending on investment this time around will probably range from 1 trillion yuan to 2 trillion yuan. Standard Chartered said China is starting a “mini-me” version of the prior stimulus.
‘Measured’ Stimulus
“The State Council is introducing a measured but still significant set of stimulus measures, which should begin to affect growth in August-September,” Standard Chartered economists led by Stephen Green in Hong Kong wrote in a note to clients this week. Concern that a surge in credit would lead to faster inflation and higher property prices will be reflected in “a much more controlled pace of bank lending,” they wrote.
Bank of China Ltd. sees slower loan growth in 2012 than last year and has no plans to relax its lending policy, President Li Lihui said today at a shareholders meeting in Beijing.
Elsewhere in the Asia-Pacific region, Australian retail sales unexpectedly fell 0.2 percent in April from the prior month after a revised 1.1 percent advance in March, a report showed today. New Zealand home-building approvals fell 7.2 percent to 1,385 in April from a month earlier after a revised 19.6 percent gain in March.
Euro Area Sentiment
In the euro area, an index of executive and consumer sentiment probably fell for a second month to 91.9 in May from 92.8 in April, a Bloomberg News survey showed ahead of a report due later today.
Sweden’s economy may have expanded 0.2 percent in the first quarter from the fourth quarter, when it contracted 1.1 percent, a Bloomberg survey showed.
Pending sales of existing homes in the U.S. were probably unchanged in April from March, when they climbed 4.1 percent, according to a Bloomberg survey of 42 economists. The Mortgage Bankers Association’s weekly index of mortgage applications for the period ended May 25 is also due today.
China’s economy is forecast to expand 8.2 percent this year, based on the median estimate of analysts surveyed this month by Bloomberg News. That would be the least since 1999.
“The authorities won’t give the impression that they are repeating what they did with the massive stimulus in global financial crisis,” Mizuho’s Shen said. The government’s tone “may also partly reflect their genuine concerns about not committing the same mistakes as in the 4 trillion yuan stimulus,” he said.
Speeding up Approvals
The nation has sped up the approval process for major projects, Xinhua said May 28. The country will also encourage greater private investment in banks, according to guidelines released by the China Banking Regulatory Commission in a statement posted on its website May 26.
The People’s Bank of China on May 12 lowered banks’ reserve ratios by 50 basis points, the third cut in six months.
“Unlike in 2008 when the Chinese government rushed to spend, the new stimulus package will be small and modest,” said Zhang Xinfa, an economist with China Galaxy Securities Co. in Beijing. Bank lending will play a smaller role in the new round of investment, he said.
To contact Bloomberg News staff for this story: Bloomberg News in Beijing at xzhou68@bloomberg.net "
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Asian Summary - 30 May 2012
Asian stocks declining overnight (MSCI Asia Pacific down 1.1%) as China damped speculation of large-scale stimulus and Spanish borrowing costs rose, fuelling concern Europe’s debt crisis will worsen. S&P closing virtually unchanged and the Dow down slightly (-0.12%) after SA futures close.
Tuesday, 29 May 2012
Asian Stocks, Oil Rise on China Stimulus; Bond Risk Gains
REF Bloomberg :
"May 29 (Bloomberg) -- Asian stocks rose for a second day and oil advanced on speculation policy makers in Beijing will take steps to boost economic growth. Bond risk in Asia increased, while the euro traded near a 22-month low amid concern about the health of European banks.
The MSCI Asia Pacific Index advanced 0.6 percent as of 11:54 a.m. in Tokyo. Hong Kong’s Hang Seng China Enterprises Index of mainland stocks rallied 1.2 percent and Standard & Poor’s 500 Index futures gained 0.7 percent. The euro slid 0.1 percent to $1.2529, while Malaysia’s ringgit dropped 0.5 percent to 3.1592 per dollar. Crude rose 0.4 percent in New York, while gold declined 0.4 percent.
China’s finance ministry took steps to increase consumer demand by saying it will subsidize the use of energy-saving products, a further step in the government’s efforts stimulate the slowing economy. In Europe, at least 25 percent of leveraged buyout companies with debt due by the end of 2015 may default as the economy worsens, Moody’s Investors Service said.
“There are expectations China will introduce more stimulus to boost the economy and there’s optimism the economy will recover in the second half,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “Europe woes are still dragging on the market.”
The MSCI Asia Pacific Index is headed for a 10 percent decline in May, the most since October 2008, amid concern that Greece may exit the euro and Spanish lenders will need more financial support.
Chinese Stocks
Great Wall Motor Co. advanced 4.7 percent in Hong Kong. China’s cabinet agreed to revive financial incentives for consumers to trade in their passenger cars to help increase demand in the world’s biggest vehicle market, a government official said. Qingdao Haier Co., which makes refrigerators, gained 3 percent in Shanghai after the Ministry of Finance said China will subsidize the use of energy-saving products.
Taiwan’s Taiex Index gained 2.4 percent and Australia’s S&P/ASX 200 Index gained 0.9 percent.
The euro has fallen 5.3 percent against the dollar in May, poised for the biggest drop in eight months. Italy is scheduled to sell 3.5 billion euros ($4.4 billion) of five-year notes and 2.75 billion euros of 10-year debt tomorrow. The nation’s two- year yields jumped to a four-month high of 3.945 percent yesterday.
Europe Deteriorates
“We have a very serious and deteriorating problem in Europe,” said Peter Elston, the Singapore-based head of Asia- Pacific strategy at Aberdeen Asset Management, which oversees about $270 billion. “The more the crisis progresses the worse the situation becomes.”
The extra yield investors demand to hold Spain’s 10-year bonds instead of similar-maturity German notes soared to 5.12 percentage points yesterday, the most since 1995, according to data compiled by Bloomberg.
The cost of protecting Asian bonds from default rose, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside of Japan advanced two basis points to 196.5, Royal Bank of Scotland Group Plc prices show. The index is headed for its highest close since May 25 and poised for the biggest monthly increase since September, according to CMA.
Ten-year Treasury yields were little changed at 1.74 percent. U.S. government securities returned 2.6 percent from the end of March through May 25, according to Bank of America Merrill Lynch indexes, reflecting demand for the relative safety of the nation’s debt.
Spot gold lost as much as 0.6 percent to $1,571.43 an ounce. Bullion is 5.3 percent lower this month, poised for a fourth monthly decline. Oil for July delivery climbed as much as $1.13 to $91.99 a barrel in New York.
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net ; Weiyi Lim in Singapore at wlim26@bloomberg.net "
===
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
"May 29 (Bloomberg) -- Asian stocks rose for a second day and oil advanced on speculation policy makers in Beijing will take steps to boost economic growth. Bond risk in Asia increased, while the euro traded near a 22-month low amid concern about the health of European banks.
The MSCI Asia Pacific Index advanced 0.6 percent as of 11:54 a.m. in Tokyo. Hong Kong’s Hang Seng China Enterprises Index of mainland stocks rallied 1.2 percent and Standard & Poor’s 500 Index futures gained 0.7 percent. The euro slid 0.1 percent to $1.2529, while Malaysia’s ringgit dropped 0.5 percent to 3.1592 per dollar. Crude rose 0.4 percent in New York, while gold declined 0.4 percent.
China’s finance ministry took steps to increase consumer demand by saying it will subsidize the use of energy-saving products, a further step in the government’s efforts stimulate the slowing economy. In Europe, at least 25 percent of leveraged buyout companies with debt due by the end of 2015 may default as the economy worsens, Moody’s Investors Service said.
“There are expectations China will introduce more stimulus to boost the economy and there’s optimism the economy will recover in the second half,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “Europe woes are still dragging on the market.”
The MSCI Asia Pacific Index is headed for a 10 percent decline in May, the most since October 2008, amid concern that Greece may exit the euro and Spanish lenders will need more financial support.
Chinese Stocks
Great Wall Motor Co. advanced 4.7 percent in Hong Kong. China’s cabinet agreed to revive financial incentives for consumers to trade in their passenger cars to help increase demand in the world’s biggest vehicle market, a government official said. Qingdao Haier Co., which makes refrigerators, gained 3 percent in Shanghai after the Ministry of Finance said China will subsidize the use of energy-saving products.
Taiwan’s Taiex Index gained 2.4 percent and Australia’s S&P/ASX 200 Index gained 0.9 percent.
The euro has fallen 5.3 percent against the dollar in May, poised for the biggest drop in eight months. Italy is scheduled to sell 3.5 billion euros ($4.4 billion) of five-year notes and 2.75 billion euros of 10-year debt tomorrow. The nation’s two- year yields jumped to a four-month high of 3.945 percent yesterday.
Europe Deteriorates
“We have a very serious and deteriorating problem in Europe,” said Peter Elston, the Singapore-based head of Asia- Pacific strategy at Aberdeen Asset Management, which oversees about $270 billion. “The more the crisis progresses the worse the situation becomes.”
The extra yield investors demand to hold Spain’s 10-year bonds instead of similar-maturity German notes soared to 5.12 percentage points yesterday, the most since 1995, according to data compiled by Bloomberg.
The cost of protecting Asian bonds from default rose, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside of Japan advanced two basis points to 196.5, Royal Bank of Scotland Group Plc prices show. The index is headed for its highest close since May 25 and poised for the biggest monthly increase since September, according to CMA.
Ten-year Treasury yields were little changed at 1.74 percent. U.S. government securities returned 2.6 percent from the end of March through May 25, according to Bank of America Merrill Lynch indexes, reflecting demand for the relative safety of the nation’s debt.
Spot gold lost as much as 0.6 percent to $1,571.43 an ounce. Bullion is 5.3 percent lower this month, poised for a fourth monthly decline. Oil for July delivery climbed as much as $1.13 to $91.99 a barrel in New York.
To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net ; Weiyi Lim in Singapore at wlim26@bloomberg.net "
===
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Monday, 28 May 2012
John Paulson’s Detailed Case for his Favorite Gold Stocks
John Paulson’s Case for his Favorite Gold Stocks
Aryticle from Man who made billions from the sub prime crisis believes gold shares cheapest they've been in 10 years. Pay heed. !!
"May 22, 2012 By Jacob Wolinsky
We have obtained John Paulson’s latest letter to investors. Paulson’s letters are great because he goes into great detail. For example, a letter to investors dated February 2012, was 102 pages, the latest letter for Q1 is 44 pages, and mostly text, not legal jargon. Almost no other hedge fund managers write letters as long as Paulson’s.
Below is Paulson’s macro overview followed by his gold fund holdings:
Macro Overview
While the U.S. economy appears to be doing better than expected and equity markets appear moderately priced, significant risks exist. At the global level, the Euro crisis remains the biggest risk to global activity and global markets. While the ECB has stabilized European credit markets in the short term through the injection of massive liquidity, the ECB maneuvers do not address the fundamental flaw of the Eurozone, a monetary union without a fiscal and political union. An unraveling of the Euro would affect not only European markets but also all markets in which we operate. We are also monitoring other risks, such as rising tensions in the Middle East, the rise in oil prices, and a potential slowdown in China.
In the short term, risks remain with Greece, Portugal, France and Spain.
A Greek exit from the Eurozone remains a concern. Portugal also remains an unresolved issue, which despite its government’s recent positive statements, is likely to need a second bailout program to avoid a default.
New risks would present themselves if a new French government took a radically different approach to European policy. The benefits of the LTRO are starting to wear off as Spanish CDS spreads are at all-time highs. Spanish banking stocks are also falling due to concerns about both Spanish sovereign and private sector credit risk. In the intermediate term, Spain will likely require bailout assistance as its deficit remains high, its economy continues to shrink, its unemployment rate continues to rise, and its debt to GDP continues to climb. Spanish Five Year CDS Spreads Above Peak Levels of November 2011 and Spanish Banks Stocks Plummeting Due to Increasing Sovereign Exposure.
Gold Price
The first quarter of 2012 was characterized by continuing volatility in gold and gold equities. Gold started the year at US$1,564/oz, and had risen to US$1,738/oz. by the end of January, driven by news that gold imports into China in the final quarter of 2011 were extremely robust. The rally continued into February, and by February 28th the metal reached US$1,784/oz, a gain of 14.1%. The following day, however, gold lost almost $90/oz. on the back of comments from Fed Chairman Bernanke suggesting that no further quantitative easing would be required. After starting out strongly, gold shed 2.3% in February and a further 1.7% in March but still posted a positive return of 6.7% for the quarter.
Gold Equities
Although gold prices rose, gold equities fell during the quarter. After rising along with the gold price through February 28, they fell at a more rapid pace for the rest of the quarter, with the gold mining index finishing down 3.7% for the quarter. In fact, the divergence of gold miner equity performance from the gold price has continued to widen since the fund was formed. Since the inception of Paulson Gold, the gold price is up 49%, the Gold Miners Index Market Vectors Etf Trust (NYSE:GDX) is flat and the Junior Gold Miners Index, Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) is down 12%.
Gold equities have been lagging the price of gold since January 2010. After rising 13.5% in January, the gold fund dropped 4.8% in February and 13.5% in March, closing the quarter down 6.5%.
Outlook
Despite recent negative performance, we believe that the outlook for gold and gold equities remains positive. The improved performance of the U.S. economy is consistent with our view that the Fed’s massive stimulus program is beginning to take effect, and that the effects of quantitative easing will eventually result in higher levels of inflation. We believe this will ultimately be very positive for gold, even though we are currently in a low-inflation environment. Gold equities are now at historically low valuation levels. An analysis of the trailing 12-month EV/EBITDA ratio for the NYSE ARCA GOLD BUGS INDEX (NYSE:HUI) shows that the gold equities are trading at their lowest valuation level in ten years, on par with the low point in valuation that prevailed following the failure of Lehman Brothers.
Given the financial performance of the gold mining companies in the current gold price environment, we believe the equities are substantially undervalued and poised for a revaluation. During 2011 the gold producers delivered EPS growth of approximately 50%, compared to an average year-over-year increase in the gold price of 28.2%. In the first quarter of 2012 the gold price averaged 21.9% more than it did in 1Q2011, and we anticipate further growth in earnings and cash flows when the industry begins reporting its quarterly results. In our view, this is a compelling entry point.
Paulson Gold Fund Equities
The gold equities in the Paulson Gold Funds delivered mixed results in 1Q2012. Randgold Resources Ltd. (NYSE:GOLD) (LON:RRS), which was one of the best performing gold equities during 2011, sold off towards the end of March following news that a group of junior officers had staged an unexpected coup in the West African nation of Mali. This country accounts for approximately 45% of Randgold’s gold reserves and 65% of this year’s production. Recently, the leaders of the coup and the Economic Community of West African States (ECOWAS) have brokered a resolution providing for a quick return to democracy. Randgold’s operations were not materially affected by these events, and the company has reaffirmed its
2012 production guidance.
Centerra Gold Inc. (TSE:CG) also suffered a setback when it announced that its production for 2011 would be impacted by the unexpected movement of waste sitting on the south end of its current production pit. Due to this movement, the company will have to devote its fleet to advancing the removal of waste, and will therefore not be able to access high grade ore that was scheduled for production in the fourth quarter of 2012. The shares sold off sharply before recovering the majority of its losses, once the market recognized that this was a timing issue and production is expected to recover in 2013.
On the positive front, NovaGold Resources Inc. (NYSE:NG) (TSE:NG) shareholders approved the corporate restructuring that was announced in November of 2011. The company will be spinning out a new company called NovaCopper, which has as its sole asset the Ambler project in Alaska, an exciting copper exploration project. NovaGold will sell the Galore Creek copper project, focusing solely on its flagship Donlin Creek gold project in joint venture with Barrick Gold. The company has recently appointed a seasoned and highly regarded executive to lead the company. As a pure play gold company, we believe NovaGold will be attractive to investors and corporate buyers.
Detour Gold Corporation (TSE:DGC) continues to move forward with the development of the Detour Lake gold project. At the end of March, the project was 60% complete and is advancing at about 5% per month. Mining activities have commenced, allowing the company to build a stockpile of ore ahead of the completion of the processing plant. The main critical path item, the connection of the high tension power line, is now scheduled for early August, which should allow commissioning of the plant in the fourth quarter of 2012. When fully complete, Detour Lake will be Canada’s largest gold mine, and we believe that the shares have significant upside potential.
The shares of Osisko Mining Corp. (TSE:OSK) recovered during 1Q2012 as the market recognized that the modifications to the processing plant at the Canadian Malartic mine were being implemented. The first of two secondary crushers began commissioning in mid-March, and the second remains on schedule for delivery in June of this year. This should allow the company to meet its production guidance for 2012 of 600,000oz
Conclusion
Gold equity prices are currently trading at very depressed levels, with the sector now on a valuation not seen since the fall of Lehman. The gold mining companies, however, continue to grow their earnings with the higher gold price, and we believe that it is only a matter of time before the sector re-values. The Paulson Gold Funds are poised to benefit in such an environment."
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
Summary Asia - 28 May 2012
Asian stocks gain overnight (MSCI Asia pacific up 0.4%) after opinion polls of Greek voters eased concern that the country will exit the Euro zone. Commodities also climb with Oil rising 0.8 and copper up 1%. US markets closed today (Memorial Day) !!
Summary from Compass Directions for 28 May 2012
"The European debt crisis continued to dominate headlines as the Euro slumped to record its biggest weekly fall this year. The crisis deepened as Greece's anti- international bailout party gained in opinion polls and the situation in Spain deteriorated. The Commodity Futures Trading Commission released figures that showed that hedge funds and other speculators increased their new short positions to a record high last week of 195,361 contracts compared to a figure of 173,869 for the previous week. The common currency was dragged lower as Standard and Poor's cut the credit rating of 5 Spanish banks and the Bankia group sought almost $24 billion in government aid. The Euro fell more than 2% in the course of the week to trade below 1.2500 and opens the week at 1.2570.
More evidence of a slowing in China heavily impacted on the fortunes of currencies of countries linked to growth in the world's second largest economy. The Australian dollar and the New Zealand dollar were heavily impacted with the Australian dollar falling below 0.9700 at one stage to record a six month low as Chinese banks may miss their loan targets for the first time in 7 years. The USD continued to surge with the Dollar Index hitting its highest levels since September 2010 at 82.46. The Swiss France fell more than 2% against the Dollar on speculation that the Swiss National Bank would move to increase taxes on deposits to further devalue the nation's currency. The Brazilian real rose against the Dollar as the central bank intervened to arrest the fall in the worst performing currency this year and the yen depreciated as Fitch cut the nation's credit rating.
US equity markets were dominated by the disastrous listing of the social network Facebook. The company's shares closed the week below $32.00 after having listed at $38.00 and is now the worst performer, after the first five days of trading, for the 10 largest deals of the past decade. The S&P 500 index closed 0.2% lower in Friday at 1,317 but managed its first weekly gain since April. European markets closed up by around 0.25% on Friday. Asian markets fell for the fourth consecutive week, recording their longest streak of falls in six months as the MSCI Asia Pacific looks headed for a monthly loss of more than 10%. The Topix recorded it longest run of weekly losses since 1977.
Commodity prices closed the week flat on Friday with the CRB unchanged for the day at 281.95. WTI crude gained by 0.2% to $90.86 as consumer confidence in the US gained. Precious metals held firm with gold rising 0.73% to $1,571 while silver gained 0.8% to $28.28. Soft commodities were broadly higher with wheat continuing to gain while copper rose 0.6%."
Summary from Compass Directions for 28 May 2012
"The European debt crisis continued to dominate headlines as the Euro slumped to record its biggest weekly fall this year. The crisis deepened as Greece's anti- international bailout party gained in opinion polls and the situation in Spain deteriorated. The Commodity Futures Trading Commission released figures that showed that hedge funds and other speculators increased their new short positions to a record high last week of 195,361 contracts compared to a figure of 173,869 for the previous week. The common currency was dragged lower as Standard and Poor's cut the credit rating of 5 Spanish banks and the Bankia group sought almost $24 billion in government aid. The Euro fell more than 2% in the course of the week to trade below 1.2500 and opens the week at 1.2570.
More evidence of a slowing in China heavily impacted on the fortunes of currencies of countries linked to growth in the world's second largest economy. The Australian dollar and the New Zealand dollar were heavily impacted with the Australian dollar falling below 0.9700 at one stage to record a six month low as Chinese banks may miss their loan targets for the first time in 7 years. The USD continued to surge with the Dollar Index hitting its highest levels since September 2010 at 82.46. The Swiss France fell more than 2% against the Dollar on speculation that the Swiss National Bank would move to increase taxes on deposits to further devalue the nation's currency. The Brazilian real rose against the Dollar as the central bank intervened to arrest the fall in the worst performing currency this year and the yen depreciated as Fitch cut the nation's credit rating.
US equity markets were dominated by the disastrous listing of the social network Facebook. The company's shares closed the week below $32.00 after having listed at $38.00 and is now the worst performer, after the first five days of trading, for the 10 largest deals of the past decade. The S&P 500 index closed 0.2% lower in Friday at 1,317 but managed its first weekly gain since April. European markets closed up by around 0.25% on Friday. Asian markets fell for the fourth consecutive week, recording their longest streak of falls in six months as the MSCI Asia Pacific looks headed for a monthly loss of more than 10%. The Topix recorded it longest run of weekly losses since 1977.
Commodity prices closed the week flat on Friday with the CRB unchanged for the day at 281.95. WTI crude gained by 0.2% to $90.86 as consumer confidence in the US gained. Precious metals held firm with gold rising 0.73% to $1,571 while silver gained 0.8% to $28.28. Soft commodities were broadly higher with wheat continuing to gain while copper rose 0.6%."
Contrarian View - ING Group - Value ?
A Great Article on Investment view from PSG.
"In this Angle we have often dwelled on our equity investment approach. Most of our readers will know by now that we hunt tirelessly for wide moats, strong management teams and a margin of safety. We have, however, not written much about our philosophy. The term “investment philosophy” is often used in marketing material, possibly because it creates an impression of a mysterious wealth of investment knowledge which has been distilled into the Holy Grail. We see it more practically as our “non-executive board of directors” - offering firm direction but not detail. We summarise our philosophy into three words, Consistent, Conservative and Contrarian. Consistent refers to our methodology, conservative to our assumptions when we value companies and contrarian to where and when we look for opportunities. The first two are relatively easy, the third is not. Consistent and conservative instil discipline in our thinking and methodologies; contrarian instils courage, guts.
In investing “contrarian” simply means to buy an undervalued Microsoft when Apple’s profit and share price is soaring. Or perhaps one of the best examples of our contrarian approach is acquiring ING Group when the very existence of the European Monetary Union is uncertain. Listed in Amsterdam and with most of its assets being European, the Group is caught in the teeth of the gale. The share price tells the tale.
Are we being brave or ignorant?
ING Group is a Dutch financial services giant with total assets of €1.2 trillion. The Group generates approximately 70% of profits from banking activities and the remainder from insurance services. Roughly 80% of banking profits are generated in Europe, mostly in the Netherlands, Belgium and Germany. ING’s banking subsidiaries includes ING Direct, the World’s largest direct bank, whose operational efficiency makes it a lethal competitor and also a valuable asset for the Group. ING Insurance generates approximately 25% of profits in the Asia/Pacific region and the remainder about equally in Europe and North America.
Why do we like this business? In short, it is a strong brand with wide distribution and a number of dominant market positions. The bank as well as the insurance business is well capitalised. Despite the tremendous turmoil in Western Europe, ING has been performing well operationally. In 2011 the Group made €4.5bn profit, up from €3.9bn in the previous year.
We added the share to our buy list when it was trading at €9.20; the price is currently €4.80. How did we make such a mistake?
At that stage the company was trading at a 4% discount to tangible net asset value which is generally an attractive entry point for a profitable business. Since then the tangible net asset value has grown by 21% but the share price has dropped by 47%, the result is that the company currently trades at 40% of net tangible assets. Sometimes cheap stocks just get cheaper, and sometimes they get much cheaper.
Naturally we cannot ignore the current uncertainty with regards to the value of European assets; nobody knows how big the hole is. We don’t know either, but we think we know how big the hole is not.
Consider ING Group’s total exposure to the so called “PIIGS” countries:
The Group’s tangible net assets currently exceed its market capitalization by €26bn. This is roughly equal to 40% of the total PIIGS assets on ING’s balance sheet. In our view, it is unlikely that ING will only receive 60% of its entitled cash flows from these countries. Naturally there are many other possible risks, like a contagious banking crisis or large losses in other areas where ING operates, but being contrarian is not risk free. We think the margin of safety is wide enough for our clients to have some exposure to this particular financial services group. If anything but the worst case scenario materialises, our clients should make money."
REF : PAUL BOSMAN
"The PSG Angle is an electronic newsletter of PSG Asset Management."
"In this Angle we have often dwelled on our equity investment approach. Most of our readers will know by now that we hunt tirelessly for wide moats, strong management teams and a margin of safety. We have, however, not written much about our philosophy. The term “investment philosophy” is often used in marketing material, possibly because it creates an impression of a mysterious wealth of investment knowledge which has been distilled into the Holy Grail. We see it more practically as our “non-executive board of directors” - offering firm direction but not detail. We summarise our philosophy into three words, Consistent, Conservative and Contrarian. Consistent refers to our methodology, conservative to our assumptions when we value companies and contrarian to where and when we look for opportunities. The first two are relatively easy, the third is not. Consistent and conservative instil discipline in our thinking and methodologies; contrarian instils courage, guts.
In investing “contrarian” simply means to buy an undervalued Microsoft when Apple’s profit and share price is soaring. Or perhaps one of the best examples of our contrarian approach is acquiring ING Group when the very existence of the European Monetary Union is uncertain. Listed in Amsterdam and with most of its assets being European, the Group is caught in the teeth of the gale. The share price tells the tale.
ING Group is a Dutch financial services giant with total assets of €1.2 trillion. The Group generates approximately 70% of profits from banking activities and the remainder from insurance services. Roughly 80% of banking profits are generated in Europe, mostly in the Netherlands, Belgium and Germany. ING’s banking subsidiaries includes ING Direct, the World’s largest direct bank, whose operational efficiency makes it a lethal competitor and also a valuable asset for the Group. ING Insurance generates approximately 25% of profits in the Asia/Pacific region and the remainder about equally in Europe and North America.
Why do we like this business? In short, it is a strong brand with wide distribution and a number of dominant market positions. The bank as well as the insurance business is well capitalised. Despite the tremendous turmoil in Western Europe, ING has been performing well operationally. In 2011 the Group made €4.5bn profit, up from €3.9bn in the previous year.
We added the share to our buy list when it was trading at €9.20; the price is currently €4.80. How did we make such a mistake?
At that stage the company was trading at a 4% discount to tangible net asset value which is generally an attractive entry point for a profitable business. Since then the tangible net asset value has grown by 21% but the share price has dropped by 47%, the result is that the company currently trades at 40% of net tangible assets. Sometimes cheap stocks just get cheaper, and sometimes they get much cheaper.
Naturally we cannot ignore the current uncertainty with regards to the value of European assets; nobody knows how big the hole is. We don’t know either, but we think we know how big the hole is not.
Consider ING Group’s total exposure to the so called “PIIGS” countries:
The Group’s tangible net assets currently exceed its market capitalization by €26bn. This is roughly equal to 40% of the total PIIGS assets on ING’s balance sheet. In our view, it is unlikely that ING will only receive 60% of its entitled cash flows from these countries. Naturally there are many other possible risks, like a contagious banking crisis or large losses in other areas where ING operates, but being contrarian is not risk free. We think the margin of safety is wide enough for our clients to have some exposure to this particular financial services group. If anything but the worst case scenario materialises, our clients should make money."
REF : PAUL BOSMAN
"The PSG Angle is an electronic newsletter of PSG Asset Management."
Friday, 25 May 2012
SARS DEADLINE - PAYE & UIF recon's - 31 May 2012
Take note !!
All employers who are registered with SARS for PAYE & UIF are required to submitt -
Annual -
EMP501 PAYE and; UIF recon's to SARS electronically and; generate IRP5's or IT3's for all Employee's for the period 1 March 2011 to 29 February 2012 by 31 May 2012.
Also generate EMP501 reconciliations.
If this is not done a penalty & Interest calculated on non submission could be levied.
If you have any queries feel free to contact me as per :
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
All employers who are registered with SARS for PAYE & UIF are required to submitt -
Annual -
EMP501 PAYE and; UIF recon's to SARS electronically and; generate IRP5's or IT3's for all Employee's for the period 1 March 2011 to 29 February 2012 by 31 May 2012.
Also generate EMP501 reconciliations.
If this is not done a penalty & Interest calculated on non submission could be levied.
If you have any queries feel free to contact me as per :
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
Asian Stocks Fall on China Loan Concern; Metals Decline
May 25 (Bloomberg) --
"Asian stocks declined, heading for a fourth week of losses, as bank officials said China’s biggest lenders may fall short of loan targets for the first time in at least seven years. Commodities and the Australian dollar slid.
The MSCI Asia Pacific Index retreated 0.7 percent as of 12:47 p.m. in Tokyo. Standard & Poor’s 500 Index futures dropped 0.4 percent. Japan’s Topix Index slipped 0.2 percent, poised for its longest weekly losing streak since November 1977. The so- called Aussie lost 0.3 percent. The S&P GSCI Index of 24 raw materials declined 0.2 percent. Oil fell 0.4 percent to $90.34 a barrel in New York.
China’s largest banks may miss their lending targets as the economic slowdown crimps demand for credit, according to three bank officials with knowledge of the matter. Stocks rose earlier after Italian Prime Minister Mario Monti said Greece is likely to stay in the euro and that a majority of the region’s leaders support issuing a joint bond to fight the debt crisis.
In China, “there’s very little demand for borrowing because you still have this restraint on property development,” said Pauline Dan, chief investment officer at Samsung Asset Management Co.’s Hong Kong division. The firm oversees $100 billion globally. “There’s continuous concern about what happens in the euro zone, and this is causing people to stay off the market.”
The MSCI Asia Pacific Index has fallen 1.2 percent this week and is heading for its longest weekly losing streak since November. The equity gauge has lost 2.4 percent in 2012.
China Banks
The Hang Seng China Enterprises Index sank 1.1 percent today, bringing its drop since this year’s high on Feb. 29 to more than 20 percent. Agricultural Bank of China Ltd. sank 2.2 percent in Hong Kong and Industrial & Commercial Bank of China Ltd. dropped 1.9 percent.
A decline in Chinese lending in April and May means it’s likely the banks’ total new loans for 2012 will be about 7 trillion yuan, less than the government goal of 8 trillion yuan to 8.5 trillion yuan, said one bank official.
“Chinese policy makers are reluctant to cut interest rates just yet,” said Puru Saxena, who oversees about $350 million as chief executive officer of Puru Saxena Wealth Management in Hong Kong. “They are stuck and the economy is suffering.”
Japan Tobacco Inc. advanced 5.1 percent. The maker of Camel and Mild Seven cigarettes agreed to pay 475 million euros ($597 million) for Belgium-based Gryson NV to boost growth in Europe’s roll-your-own cigarette market in the biggest purchase by a tobacco company since 2009.
Consumer Confidence
The euro headed for its biggest five-day decline in seven weeks as signs that Europe’s debt crisis is damping growth curbed demand for the currency. The Aussie traded near a six- month low and is poised to drop for a fourth week.
The 17-nation euro has fallen versus all its 16 major counterparts except the Swiss franc since May 18. Figures next week may show consumer confidence in the currency bloc was little changed this month, while the jobless rate climbed in April to the highest in 21 years. The dollar advanced against all of its most-traded peers this week as Europe’s weakening economy boosted demand for the relative safety of the currency.
The cost of protecting Asia-Pacific bonds from default dropped, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 2 basis points to 196 basis points, Royal Bank of Scotland Group Plc prices show. The index is headed for its lowest closing level since May 22, according to CMA. "
To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net ; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
"Asian stocks declined, heading for a fourth week of losses, as bank officials said China’s biggest lenders may fall short of loan targets for the first time in at least seven years. Commodities and the Australian dollar slid.
The MSCI Asia Pacific Index retreated 0.7 percent as of 12:47 p.m. in Tokyo. Standard & Poor’s 500 Index futures dropped 0.4 percent. Japan’s Topix Index slipped 0.2 percent, poised for its longest weekly losing streak since November 1977. The so- called Aussie lost 0.3 percent. The S&P GSCI Index of 24 raw materials declined 0.2 percent. Oil fell 0.4 percent to $90.34 a barrel in New York.
China’s largest banks may miss their lending targets as the economic slowdown crimps demand for credit, according to three bank officials with knowledge of the matter. Stocks rose earlier after Italian Prime Minister Mario Monti said Greece is likely to stay in the euro and that a majority of the region’s leaders support issuing a joint bond to fight the debt crisis.
In China, “there’s very little demand for borrowing because you still have this restraint on property development,” said Pauline Dan, chief investment officer at Samsung Asset Management Co.’s Hong Kong division. The firm oversees $100 billion globally. “There’s continuous concern about what happens in the euro zone, and this is causing people to stay off the market.”
The MSCI Asia Pacific Index has fallen 1.2 percent this week and is heading for its longest weekly losing streak since November. The equity gauge has lost 2.4 percent in 2012.
China Banks
The Hang Seng China Enterprises Index sank 1.1 percent today, bringing its drop since this year’s high on Feb. 29 to more than 20 percent. Agricultural Bank of China Ltd. sank 2.2 percent in Hong Kong and Industrial & Commercial Bank of China Ltd. dropped 1.9 percent.
A decline in Chinese lending in April and May means it’s likely the banks’ total new loans for 2012 will be about 7 trillion yuan, less than the government goal of 8 trillion yuan to 8.5 trillion yuan, said one bank official.
“Chinese policy makers are reluctant to cut interest rates just yet,” said Puru Saxena, who oversees about $350 million as chief executive officer of Puru Saxena Wealth Management in Hong Kong. “They are stuck and the economy is suffering.”
Japan Tobacco Inc. advanced 5.1 percent. The maker of Camel and Mild Seven cigarettes agreed to pay 475 million euros ($597 million) for Belgium-based Gryson NV to boost growth in Europe’s roll-your-own cigarette market in the biggest purchase by a tobacco company since 2009.
Consumer Confidence
The euro headed for its biggest five-day decline in seven weeks as signs that Europe’s debt crisis is damping growth curbed demand for the currency. The Aussie traded near a six- month low and is poised to drop for a fourth week.
The 17-nation euro has fallen versus all its 16 major counterparts except the Swiss franc since May 18. Figures next week may show consumer confidence in the currency bloc was little changed this month, while the jobless rate climbed in April to the highest in 21 years. The dollar advanced against all of its most-traded peers this week as Europe’s weakening economy boosted demand for the relative safety of the currency.
The cost of protecting Asia-Pacific bonds from default dropped, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 2 basis points to 196 basis points, Royal Bank of Scotland Group Plc prices show. The index is headed for its lowest closing level since May 22, according to CMA. "
To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net ; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Italy's Optimism on Euro Zone !!
REF : Compass Global Markets - Friday 25th May 2012
"Italian Prime Minister Mario Monti could well receive the award for most optimistic European leader as he told viewers on Italian TV that most participants at the latest European Union Summit supported the concept of a joint Eurobond and that Greece would not be leaving the eurozone. The comments have seen US equity markets pare losses late in the New York trading session. Monti went as far as to say that Italy could convince Germany to accept the idea of collective debt for the “common good” of Europe. We wish Monti all the best of luck in his quest but fear that he has a greater chance of finding El Dorado and solving the European debt crisis with the legendary treasure than he has with getting Germany to assume the debt of her not so economically sound cousins. The EUR continues to plunge and has opened the morning at 1.2535.
As opinion polls in Greece showed that the Syriza Party, which is opposed to the implementation of Greece's international rescue, is extending its lead in the prelude to the new elections to be held on June 17, more data releases point to a worsening slump across Europe. Manufacturing and services output dropped in May across the euro zone and Germany business confidence fell. All the recent data releases are pointing to a second quarter GDP contraction in the eurozone. Furthermore, the news was also sobering in the UK with the gross domestic product falling more than expected by 0.3% in the first quarter. Slowing manufacturing in China and worst than expected data releases from Japan have also weighed on markets. The Australian dollar has held up remarkable well and opens the morning at 0.9760.
US share markets staged a late recovery to reverse loses of as much as 0.6% on the back of the Italian Prime Minister's wishful thinking. Earlier, markets had fallen as reports surfaced that China's biggest banks would fall short of loan targets for the first time in seven years as the economy slows. After falling below its 150 day average, the S&P 500 may finally stabilise as it closes 0.14% higher at 1,321. Earlier in Europe, bourses recovered from recent heavy losses to close higher with the DAX gaining 0.48% while the FTSE rose 1.58%. The Hang Seng and the ASX 200 closed lower.
Commodity prices have arrested recent heavy falls with the CRB index gaining 0.48 points to 281.92. WTI has recovered to hold above $90 as international negotiators begin discussions with Iran over its nuclear programme. WTI opens the morning at $90.90. Precious metals have gained even as the Dollar continues to rise against the EUR. Gold has risen 0.7% to $1,562 while silver surged 2.7% to $28.25. Soft commodities are broadly higher while copper has gained 1.22%."
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
"Italian Prime Minister Mario Monti could well receive the award for most optimistic European leader as he told viewers on Italian TV that most participants at the latest European Union Summit supported the concept of a joint Eurobond and that Greece would not be leaving the eurozone. The comments have seen US equity markets pare losses late in the New York trading session. Monti went as far as to say that Italy could convince Germany to accept the idea of collective debt for the “common good” of Europe. We wish Monti all the best of luck in his quest but fear that he has a greater chance of finding El Dorado and solving the European debt crisis with the legendary treasure than he has with getting Germany to assume the debt of her not so economically sound cousins. The EUR continues to plunge and has opened the morning at 1.2535.
As opinion polls in Greece showed that the Syriza Party, which is opposed to the implementation of Greece's international rescue, is extending its lead in the prelude to the new elections to be held on June 17, more data releases point to a worsening slump across Europe. Manufacturing and services output dropped in May across the euro zone and Germany business confidence fell. All the recent data releases are pointing to a second quarter GDP contraction in the eurozone. Furthermore, the news was also sobering in the UK with the gross domestic product falling more than expected by 0.3% in the first quarter. Slowing manufacturing in China and worst than expected data releases from Japan have also weighed on markets. The Australian dollar has held up remarkable well and opens the morning at 0.9760.
US share markets staged a late recovery to reverse loses of as much as 0.6% on the back of the Italian Prime Minister's wishful thinking. Earlier, markets had fallen as reports surfaced that China's biggest banks would fall short of loan targets for the first time in seven years as the economy slows. After falling below its 150 day average, the S&P 500 may finally stabilise as it closes 0.14% higher at 1,321. Earlier in Europe, bourses recovered from recent heavy losses to close higher with the DAX gaining 0.48% while the FTSE rose 1.58%. The Hang Seng and the ASX 200 closed lower.
Commodity prices have arrested recent heavy falls with the CRB index gaining 0.48 points to 281.92. WTI has recovered to hold above $90 as international negotiators begin discussions with Iran over its nuclear programme. WTI opens the morning at $90.90. Precious metals have gained even as the Dollar continues to rise against the EUR. Gold has risen 0.7% to $1,562 while silver surged 2.7% to $28.25. Soft commodities are broadly higher while copper has gained 1.22%."
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
Asia Close - 25 May 2012
Asian stocks falling overnight (MSCI Asia Pacific declining 0.7%) as bank officials said China’s biggest lenders may fall short of loan targets for the first time ion 7 years. European stocks fell as investors sought clarity on how Greece's financial system would be kept alive. Dow closing virtually unchanged and the S&P up 0.1% after SA futures close.
Thursday, 24 May 2012
Asia Summary - 24 May 2012
Asian stocks dropping overnight (MSCI Asia Pacific down 0.6%) after a survey in China showed manufacturing may decline for a 7th month. Commodities bounced back seeing Oil climb 0.5% and Copper adding the same. Chancellor Angela Merkel reported that Germany has huge difficulties with France’s call for joint borrowing by Euro governments. Dow closing up 1.07% and the S&P gaining 1.21% after SA futures close.
Wednesday, 23 May 2012
Wal-Mart Is on Safari for Customers in South Africa
REF: The Mad Hedge Fund Trader May 2012
"It looks like the next "blue light special" will be offered in South Africa, Apparently the retail giant, Wal-Mart, got the memo that the country is a great place to invest. Its $4.3billion did for retailer Massmart is a huge vote of confidence for that emerging nation.
My old friend, Carl Van Horn, former chairman of JP Morgan Investment Management, taught me the golden rule that has proved invaluable over the decades. Follow the money.
Go to the Industries and countries where the big companies are making direct investments, because stock market always follows.
What is Wal-mart seeing in SA, with unemployment at 25%, and a simmering race war peculating below the surface ?
Perhaps the skyrocketing prices fro gold & diamonds, the country exports will trickle down to the main economy, cutting the jobless ranks and accelerating development.
Booming economies tend to have a salving effect on social problems too.
That would be a boon for retailers selling not only to a rising middle class, but to the rest of Emerging Africa !!
Wal-Mart is not alone in this leap of Faith. Check out the ETF for this fascinating country and consider scaling in on the current big dip."
Enjoy reading this as much as I did
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
"It looks like the next "blue light special" will be offered in South Africa, Apparently the retail giant, Wal-Mart, got the memo that the country is a great place to invest. Its $4.3billion did for retailer Massmart is a huge vote of confidence for that emerging nation.
My old friend, Carl Van Horn, former chairman of JP Morgan Investment Management, taught me the golden rule that has proved invaluable over the decades. Follow the money.
Go to the Industries and countries where the big companies are making direct investments, because stock market always follows.
What is Wal-mart seeing in SA, with unemployment at 25%, and a simmering race war peculating below the surface ?
Perhaps the skyrocketing prices fro gold & diamonds, the country exports will trickle down to the main economy, cutting the jobless ranks and accelerating development.
Booming economies tend to have a salving effect on social problems too.
That would be a boon for retailers selling not only to a rising middle class, but to the rest of Emerging Africa !!
Wal-Mart is not alone in this leap of Faith. Check out the ETF for this fascinating country and consider scaling in on the current big dip."
Enjoy reading this as much as I did
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
Asian Stocks, Euro Fall on Greece Exit Concerns
May 23 (Bloomberg) --
"Asian stocks and commodities fell, while the Dollar Index rose to a 20-month high amid speculation that Greece may leave the euro and slower-than-estimated growth in Japan underscored weakness in global demand. The yen gained after the Bank of Japan refrained from adding monetary stimulus.
The MSCI Asia Pacific Index dropped 1.5 percent by 12:31 p.m. in Tokyo, erasing gains in the past two days. Standard & Poor’s 500 Index futures lost 0.5 percent. The Dollar index advanced 0.3 percent. The yen climbed against all of its major counterparts, while gold and oil both fell 0.6 percent and copper declined 0.9 percent.
Greece’s former Prime Minister Lucas Papademos said that while it is unlikely the nation will leave the euro, it’s still a risk, according to a report in the Wall Street Journal yesterday. European leaders are meeting in Brussels today to discuss the region’s debt crisis that has wiped more than $4 trillion from equity markets worldwide this month. Japan’s exports in April trailed economists estimates, underscoring the risk that weakness in global demand may limit the rebound in the world’s third-biggest economy.
“The comments watered down optimism ahead of the European summit,” said Kim Young Sung, a fund manager in Seoul at Samsung Asset Management, which manages $98.3 billion. “There is uncertainty whether the actions being offered by the EU today will prevent the Greek exit.”
Technology Stocks
Five stocks fell for every one that gained on the MSCI Asia Pacific Index. Technology-related companies fell 2 percent, leading losses in all 10 industry groups in the equity benchmark after Dell Inc. forecast fiscal second-quarter revenue thatmissed analysts’ estimates. Compal Electronics Inc., a laptop maker for Dell, sank 3.6 percent to NT$30.85 in Taipei. Wistron Corp. slid 2.8 percent to NT$39.90.
Hong Kong’s Hang Seng Index declined 1.7 percent, Australia’s S&P/ASX 200 fell 1.1 percent and South Korea’s Kospi Index lost 1.3 percent. Myer Holdings Ltd., Australia’s largest department-store chain, tumbled 6.2 percent in Sydney trading after cutting its profit forecast.
In Japan, exports grew 7.9 percent last month from a year earlier, compared with the median estimate for an 11.8 percent gain in a Bloomberg News survey. Fitch Ratings cut the nation’s rating to A+ yesterday with negative outlook, citing “high and rising public debt” burden.
Japan’s currency gained 0.5 percent to 79.53 per dollar after the central bank left the fund at 40 trillion yen ($501 billion) and a credit-lending program at 30 trillion yen. All 14 economists surveyed by Bloomberg News forecast that outcome. The policy board kept the key overnight lending rate between zero and 0.1 percent.
Aussie, Kiwi
The Australian dollar traded at a six-month low of 97.63 cents and the so-called kiwi reached 75.16 cents, a level not seen since mid-December. South Korea’s won retreated 0.8 percent to 1,172.18 per dollar.
The cost of insuring Asia-Pacific corporate and sovereign bonds from default rose, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 5.5 basis points to 198 basis points, Credit Agricole SA prices show. The index reached a four-month high of 200.3 on May 18, according to data provider CMA. "
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
"Asian stocks and commodities fell, while the Dollar Index rose to a 20-month high amid speculation that Greece may leave the euro and slower-than-estimated growth in Japan underscored weakness in global demand. The yen gained after the Bank of Japan refrained from adding monetary stimulus.
The MSCI Asia Pacific Index dropped 1.5 percent by 12:31 p.m. in Tokyo, erasing gains in the past two days. Standard & Poor’s 500 Index futures lost 0.5 percent. The Dollar index advanced 0.3 percent. The yen climbed against all of its major counterparts, while gold and oil both fell 0.6 percent and copper declined 0.9 percent.
Greece’s former Prime Minister Lucas Papademos said that while it is unlikely the nation will leave the euro, it’s still a risk, according to a report in the Wall Street Journal yesterday. European leaders are meeting in Brussels today to discuss the region’s debt crisis that has wiped more than $4 trillion from equity markets worldwide this month. Japan’s exports in April trailed economists estimates, underscoring the risk that weakness in global demand may limit the rebound in the world’s third-biggest economy.
“The comments watered down optimism ahead of the European summit,” said Kim Young Sung, a fund manager in Seoul at Samsung Asset Management, which manages $98.3 billion. “There is uncertainty whether the actions being offered by the EU today will prevent the Greek exit.”
Technology Stocks
Five stocks fell for every one that gained on the MSCI Asia Pacific Index. Technology-related companies fell 2 percent, leading losses in all 10 industry groups in the equity benchmark after Dell Inc. forecast fiscal second-quarter revenue thatmissed analysts’ estimates. Compal Electronics Inc., a laptop maker for Dell, sank 3.6 percent to NT$30.85 in Taipei. Wistron Corp. slid 2.8 percent to NT$39.90.
Hong Kong’s Hang Seng Index declined 1.7 percent, Australia’s S&P/ASX 200 fell 1.1 percent and South Korea’s Kospi Index lost 1.3 percent. Myer Holdings Ltd., Australia’s largest department-store chain, tumbled 6.2 percent in Sydney trading after cutting its profit forecast.
In Japan, exports grew 7.9 percent last month from a year earlier, compared with the median estimate for an 11.8 percent gain in a Bloomberg News survey. Fitch Ratings cut the nation’s rating to A+ yesterday with negative outlook, citing “high and rising public debt” burden.
Japan’s currency gained 0.5 percent to 79.53 per dollar after the central bank left the fund at 40 trillion yen ($501 billion) and a credit-lending program at 30 trillion yen. All 14 economists surveyed by Bloomberg News forecast that outcome. The policy board kept the key overnight lending rate between zero and 0.1 percent.
Aussie, Kiwi
The Australian dollar traded at a six-month low of 97.63 cents and the so-called kiwi reached 75.16 cents, a level not seen since mid-December. South Korea’s won retreated 0.8 percent to 1,172.18 per dollar.
The cost of insuring Asia-Pacific corporate and sovereign bonds from default rose, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 5.5 basis points to 198 basis points, Credit Agricole SA prices show. The index reached a four-month high of 200.3 on May 18, according to data provider CMA. "
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
West shifts stance on Iranian sanctions !!
West shifts stance on Iranian sanctions
From FT.com
Western powers are prepared to offer Iran an “oil carrot” that would allow it to continue supplying crude to Asian customers in exchange for guarantees it is not building an atomic bomb
http://link.ft.com/r/19JYUU/XHQOLL/D4SJ4O/62EW65/TUYELZ/SN/h?a1=2012&a2=5&a3=22
From FT.com
Western powers are prepared to offer Iran an “oil carrot” that would allow it to continue supplying crude to Asian customers in exchange for guarantees it is not building an atomic bomb
http://link.ft.com/r/19JYUU/XHQOLL/D4SJ4O/62EW65/TUYELZ/SN/h?a1=2012&a2=5&a3=22
Asia - 23 May 2012
Asian stocks declining overnight (MSCI Asia Pacific falling 1.8%) after more concern that Greece will leave the Euro and date from Japan showed lower than estimated export growth. Commodities also down as Oil loses 0.6% and Copper dropping 1.2%. European leaders meet in Brussels today to discuss the region’s debt crisis that has shed more than $4 trillion from equity markets worldwide this month. S&P closing down 0.81% and Dow 0.52% after SA futures close.
Tuesday, 22 May 2012
Pilgrimage to Omaha - 2012
A Great articel I read from Henno Vermark from PSG Asset Managment about his Pilgrimage to Omaha to hear from the "Sage" Warren Buffet regarding his view ahead.
Enjoy it as much as I enjoyed reading this !!
"I had the absolute privilege earlier this month to attend my second Berkshire Hathaway shareholders meeting in Omaha, Nebraska. I have to thank my team, for allowing me to attend, as well as Kokkie Kooyman and Nora Geldenhuys for organising an unforgettable weekend for the group of South African travellers.
As you are no doubt aware, the main reason why 35,000 people make their way to the meeting is the six hour question and answer session with Warren Buffett and Charlie Munger, the leaders of the company. To listen to the Oracle of Omaha and his vice chairman speak their minds is simply a treat!
Succession and health
A few weeks before the meeting, Warren Buffett announced that he has been diagnosed with stage one prostate cancer and the health of the world’s greatest investors was high on the agenda. According to Buffett, he feels terrific. He loves his job and he doesn’t expect the treatment to affect his ability to continue with his work. It is quite telling that Buffett knows that some of his doctors own Berkshire stock – always have your interests aligned!
As I remarked in a previous Angle, if a sense of humour is any indication of mental capacity, then these two men have not lost anything to old age. I maintain this view and think that Charlie Munger showed even better form this year. Munger specifically resented the fact that Buffett is receiving so much attention due to his illness and Charlie added that he doesn’t even know if he has the same condition - doesn’t allow doctors to test for it! In his opinion, Buffett’s illness is a non-event.
Without Buffett, Berkshire would still have the balance sheet and culture to attract deals from people and organisations looking to join the fray. The company will have the ability to commit large amounts of capital in quick response to opportunities and while Buffett’s successor might not have the network to attract some of the deals done recently, he or she might very well be more energetic in finding deals. It is worth noting that the main source of investment return at the company was generated from large purchases over periods (Coca-Cola, IBM, Wells Fargo, IBM, Geico, BNSF) and not from ad hoc deals. In essence, Berkshire has a moat even without Buffett or Munger around.
My key messages
Below I have summarised some of the main ideas that I found interesting at the meeting. For those interested in a more complete account, I recommend following this link to Peter Boodell’s notes. His notes are more comprehensive than my own shorthand.
What you should know in investments
Keep learning. Learn from other people’s mistakes. Learn from history.
Some of the investment courses taught at business schools do more harm than good. If these two men designed an investment course it would cover three topics:
How to value businesses
How to think about markets
Knowing the difference between the businesses you can value and the ones you can’t
The great advice is to keep things simple: If you continue to buy businesses for less than they are worth, you will make money. They do not spend time considering macro issues when deciding on investment opportunities.
Stay away from new issues and don’t read any proposal that is sold with high commission structures! It is, however, wise to look where people you admire are investing. It makes sense to utilise smart people to generate research ideas.
It struck me that a significant part of their investment decision revolves around assessing the people involved. Both Buffett and Munger have over the years made a study of understanding people and feel that they are now better judges of character as a result. They accept that they are never going to agree with everything management does, but Berkshire rarely vote against management’s proposals. Some exceptions might be egregious stock issues or stupid purchases.
Buffett is more interested in how someone’s track record was earned, rather than what the record was. This was my most important quote of the meeting.
Lastly, it is crucial to focus on the worst case scenario to ensure that you are able to be in the game tomorrow, no matter what happens today.
Risk
A significant part of this year’s meeting was allocated to a discussion on risk. In Buffett’s view, the management of risk in any organisation is not a role that can be delegated; the chief executive officer should also be the chief risk officer. Controlling risk cannot be done by selecting a committee or by performing complex measurements. Rather, there should be a focus on a deep understanding of the business, on evaluating the worst case scenario and considering the potential aggregation of exposure to unexpected events.
Related to risk, they feel that there are more risks in the European banks compared to their American counterparts. US banks are in a much stronger position than a few years ago and the Federal Reserve/Treasury were able to deliver when they say that they will “do whatever it takes”. As the EU doesn’t have a full federal union, it is difficult to deliver the same response in a quick fashion. Berkshire is more comfortable with the risk profile of banks in the US.
Remuneration
It seems to me that Berkshire has been designed to attract people who are not incentivised by money alone. They pay their managers well (no-one wants to feel that they are being ripped off) but more importantly they allow them to paint their own canvas and rid them of issues they don’t like. Many of them (including Buffett and Munger) do not need to work and would be able to earn substantially larger compensation at other firms. However, they choose to spend their time doing what they love at Berkshire and from management’s side, they try not to mess up that what is already good! This is a very strong competitive advantage. When designing incentive schemes, realise that you can’t put passion into anyone with a salary cheque.
Reinsurance rates
Catastrophic reinsurance rates have picked up and Berkshire is writing more business, especially in Australasia. As an example, the second quake in Christchurch in 2011 caused damages of $12bn which is enormous for a country of their size. Many businesses in the region (Australia, New Zealand, Japan, Thailand etc) realised that they had insufficient insurance coverage and there is currently an increased demand for cat cover in the region. Berkshire has proposal for around $10bn of coverage and they are willing to write the business if they are able to negotiate acceptable premium rates. One of the benefits of an insurance operation the size of Berkshire is that because of its scale and scope, it might be able to take on large, individual risks that other insurers might not be interested in. Interestingly, the more of these individual large risks they accept around the world, the more diversified they become.
Share price and buy-backs
A number of the questions concerned the current (depressed) share price, the recent (uninspiring) share price performance and the announced willingness to buy back shares at a 1.1x price-to-book valuation. In my opinion, it is not part of management’s responsibility to manage share prices or expectations. One of the questions suggested that the company should increase the price it is willing to pay to buy back its own shares. Buffett seemed to agree with the idea as it would immediately increase the true value per share, the only justification for share buy-backs. However, he stressed that they want all offering shareholders to know that he thinks the shares are selling too cheaply. The company is willing and able to commit significant amounts of capital to repurchases if and when the share price falls below the advertised buying level.
At the current share price, Berkshire does not intend issuing more stock and this would limit the size of the deals they can accommodate at the moment. For $20bn deals, they would still be able to fund it by using cash and selling securities out of their portfolio, but larger deals would be more difficult without issuing shares.
If there is anything to take away from the share price discussions, it is to remember that there will always be periods during which Mr Market offers you opportunities. In Buffett’s view the intrinsic value of a Berkshire Hathaway share is significantly higher than the current price."
"The PSG Angle is an electronic newsletter of PSG Asset Management.
Asia - Summary 22 May 2012
Asian stocks climbing overnight (MSCI Asia Pacific rising 1.2%) on speculation China and Europe will take steps to bolster economic growth. Metals led the way in commodities seeing Copper advance 0.6% and Tin rebound 1%. Dow closing up 0.4% and the S&P up 0.59% after SA futures close.
Monday, 21 May 2012
Asia 21 May 2010 - Summary
Asian stocks climbing overnight (MSCI Asia Pacific up 0.5%) on speculation China and Japan may take steps to boost economic growth. Commodities also rising, Wheat rallied 2.4% as dry weather threatened harvests and oil rose 0.4%. The Bank of Japan holds a 2-day meeting from tomorrow, while German and French leaders meet today before a EU summit on May 23.
Friday, 18 May 2012
Facebook lists at $43 per share !!
After a more than 30-minute delay, Facebook shares opened at $43 on its first day of trading on the Nasdaq exchange on Friday morning. The IPO price was $38 per share on Thursday evening, which valued the social networking company at $104bn.
Lesson's of LIFE !!
One evening an old Cherokee told his grandson about a battle that goes on inside people.
He said, "My son, the battle is between two wolves inside us all.
"One is Evil - It is anger, envy, jealousy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego.
"The other is Good - It is joy, peace, love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth, compassion and faith."
The grandson thought about it for a minute and then asked his grandfather: "Which wolf wins?"
The old Cherokee simply replied, "The one you feed."
He said, "My son, the battle is between two wolves inside us all.
"One is Evil - It is anger, envy, jealousy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego.
"The other is Good - It is joy, peace, love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth, compassion and faith."
The grandson thought about it for a minute and then asked his grandfather: "Which wolf wins?"
The old Cherokee simply replied, "The one you feed."
Asia - 18 May 2012
Asian stocks tumbling overnight (MSCI Asia Pacific down 2.2%) as Europe’s debt crisis worsened and a U.S. factory gauge contracted.
Moody’s lowered debt ratings of 16 Spanish banks and Greece’s credit rating was reduced from B- to CCC by Fitch Ratings.
Dow closing down 0.79% and S&P down 0.92% after SA futures close.
Facebook to start trading today after IPO seals $104 Billion value.
Moody’s lowered debt ratings of 16 Spanish banks and Greece’s credit rating was reduced from B- to CCC by Fitch Ratings.
Dow closing down 0.79% and S&P down 0.92% after SA futures close.
Facebook to start trading today after IPO seals $104 Billion value.
Thursday, 17 May 2012
Breaking News: Facebook IPO at $38 per share
Facebook prices IPO at $38 per share
Facebook has raised $16bn in an initial public offering that values the world’s largest social networking group at $104bn, vaulting the eight-year-old company to among the 25 most valuable public groups in the US.
Facebook has raised $16bn in an initial public offering that values the world’s largest social networking group at $104bn, vaulting the eight-year-old company to among the 25 most valuable public groups in the US.
Stocks Drop on Europe, Manufacturing Data as Gold Rallies
Per Bloomberg on line :
"May 17 (Bloomberg) -- Stocks fell, dragging the Standard & Poor’s 500 Index to the lowest level since January, as investors speculated Spanish banks may have their credit ratings lowered and an American gauge of manufacturing trailed projections. Gold rebounded from its lowest level of the year.
The S&P 500 slipped 0.7 percent to 1,316.09 at 11:55 a.m. New York time and the Stoxx Europe 600 Index lost 1.1 percent to the lowest level since December. The yield on two-year Spanish debt jumped 10 basis points to 4.19 percent as borrowing costs increased at a debt auction. The Dollar Index advanced for a record 14th day. Oil was little changed near a six-month low, while gold futures surged 2.8 percent, the most since October.
Moody’s Investors Service is set to downgrade the credit ratings of Spanish banks later today, said two people with knowledge of the situation, who asked not to be identified because the decision hasn’t been announced. The Federal Reserve Bank of Philadelphia’s general economic index decreased to minus 5.8 in May. Economists said the gauge would rise to 10.
“It’s a double whammy,” James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, said in a telephone interview. His firm oversees about $333 billion of assets. “Not only do we have continued scary European news, we’ve got weak economic data in the U.S. today. We’re going to bounce around for a while.”
$3 Trillion Slump
The MSCI All-Country World Index lost as much as 0.7 percent to extend its retreat from this year’s peak to 10 percent.
More than $3 trillion has been erased from the value of equities worldwide this month as concern Greece will exit the euro curbed demand for riskier assets. The country faces a fresh election on June 17 that may boost parties opposed to the conditions of its international bailouts.
Other economic reports today showed U.S. jobless claims were unchanged at 370,000 in the week ended May 12, compared with the median forecast of 48 economists surveyed by Bloomberg News for a drop in claims to 365,000. The Bloomberg Consumer Comfort Index fell in the week ended May 13 to minus 43.6, a level associated with recessions or their aftermaths, from minus 40.4 in the previous period.
The S&P 500 has tumbled 7.1 percent from a four-year high in April as Greece’s failure to form a government returned investors’ focus to Europe’s debt crisis, while economic data trails estimates by the most in seven months. The Citigroup Economic Surprise Index for the U.S., which measures how much data is missing or beating the median estimates in Bloomberg surveys, slipped to minus 25.1 today and was minus 25.6 on May 10, the lowest since September 30.
Market Leaders
Caterpillar Inc., JPMorgan Chase & Co. and Home Depot Inc. fell at least 2.5 percent to lead declines in the Dow Jones Industrial Average, which slipped to its lowest level since Jan. 17.
Limited Brands Inc., owner of the Victoria’s Secret lingerie chain, fell 3 percent after forecasts disappointed investors. Wal-Mart Stores Inc., the world’s largest retailer, rose 5.1 percent after lower prices increased customer traffic. Sears Holdings Corp., the retailer controlled by hedge fund manager Edward Lampert, rallied 8.3 percent after reporting a profit.
Gold jumped the most since October as a four-day slump and speculation that the Federal Reserve will announce more stimulus for the U.S. economy boosted demand for the precious metal. The metal tumbled 3.7 percent in the past four sessions
Gold futures for June delivery rose 2.7 percent to $1,578.50 an ounce. A close at that level would mark the biggest gain for a most-active contract since Jan. 25. Yesterday, prices retreated to as low as $1,526.70, the lowest since Dec. 29.
The 10-year U.S. Treasury note yield decreased four basis points to 1.73 percent before the government sells $13 billion of similar-maturity inflation-protected debt. Minutes from the last Fed meeting showed yesterday some policy makers said further easing may be needed should the U.S. economy slow.
European Shares
Almost five shares dropped for each that gained in the Stoxx 600, which extended declines to the lowest level this year. Bankia SA plunged 14 percent, bringing this week’s decline to 31 percent, as El Mundo reported that customers have withdrawn 1 billion euros from accounts since the government took over the lender on May 9.
Markets in Switzerland, Norway, Sweden, Denmark, Finland, Austria and Luxembourg are among those closed today for the Ascension holiday.
The MSCI Emerging Markets Index was little changed near a four-month low, paring earlier gains of as much as 1 percent. The Shanghai Composite Index jumped 1.4 percent and Taiwan’s Taiex Index advanced 1.7 percent. Russia’s Micex Index lost 3.7 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net "
Regards
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
"May 17 (Bloomberg) -- Stocks fell, dragging the Standard & Poor’s 500 Index to the lowest level since January, as investors speculated Spanish banks may have their credit ratings lowered and an American gauge of manufacturing trailed projections. Gold rebounded from its lowest level of the year.
The S&P 500 slipped 0.7 percent to 1,316.09 at 11:55 a.m. New York time and the Stoxx Europe 600 Index lost 1.1 percent to the lowest level since December. The yield on two-year Spanish debt jumped 10 basis points to 4.19 percent as borrowing costs increased at a debt auction. The Dollar Index advanced for a record 14th day. Oil was little changed near a six-month low, while gold futures surged 2.8 percent, the most since October.
Moody’s Investors Service is set to downgrade the credit ratings of Spanish banks later today, said two people with knowledge of the situation, who asked not to be identified because the decision hasn’t been announced. The Federal Reserve Bank of Philadelphia’s general economic index decreased to minus 5.8 in May. Economists said the gauge would rise to 10.
“It’s a double whammy,” James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, said in a telephone interview. His firm oversees about $333 billion of assets. “Not only do we have continued scary European news, we’ve got weak economic data in the U.S. today. We’re going to bounce around for a while.”
$3 Trillion Slump
The MSCI All-Country World Index lost as much as 0.7 percent to extend its retreat from this year’s peak to 10 percent.
More than $3 trillion has been erased from the value of equities worldwide this month as concern Greece will exit the euro curbed demand for riskier assets. The country faces a fresh election on June 17 that may boost parties opposed to the conditions of its international bailouts.
Other economic reports today showed U.S. jobless claims were unchanged at 370,000 in the week ended May 12, compared with the median forecast of 48 economists surveyed by Bloomberg News for a drop in claims to 365,000. The Bloomberg Consumer Comfort Index fell in the week ended May 13 to minus 43.6, a level associated with recessions or their aftermaths, from minus 40.4 in the previous period.
The S&P 500 has tumbled 7.1 percent from a four-year high in April as Greece’s failure to form a government returned investors’ focus to Europe’s debt crisis, while economic data trails estimates by the most in seven months. The Citigroup Economic Surprise Index for the U.S., which measures how much data is missing or beating the median estimates in Bloomberg surveys, slipped to minus 25.1 today and was minus 25.6 on May 10, the lowest since September 30.
Market Leaders
Caterpillar Inc., JPMorgan Chase & Co. and Home Depot Inc. fell at least 2.5 percent to lead declines in the Dow Jones Industrial Average, which slipped to its lowest level since Jan. 17.
Limited Brands Inc., owner of the Victoria’s Secret lingerie chain, fell 3 percent after forecasts disappointed investors. Wal-Mart Stores Inc., the world’s largest retailer, rose 5.1 percent after lower prices increased customer traffic. Sears Holdings Corp., the retailer controlled by hedge fund manager Edward Lampert, rallied 8.3 percent after reporting a profit.
Gold jumped the most since October as a four-day slump and speculation that the Federal Reserve will announce more stimulus for the U.S. economy boosted demand for the precious metal. The metal tumbled 3.7 percent in the past four sessions
Gold futures for June delivery rose 2.7 percent to $1,578.50 an ounce. A close at that level would mark the biggest gain for a most-active contract since Jan. 25. Yesterday, prices retreated to as low as $1,526.70, the lowest since Dec. 29.
The 10-year U.S. Treasury note yield decreased four basis points to 1.73 percent before the government sells $13 billion of similar-maturity inflation-protected debt. Minutes from the last Fed meeting showed yesterday some policy makers said further easing may be needed should the U.S. economy slow.
European Shares
Almost five shares dropped for each that gained in the Stoxx 600, which extended declines to the lowest level this year. Bankia SA plunged 14 percent, bringing this week’s decline to 31 percent, as El Mundo reported that customers have withdrawn 1 billion euros from accounts since the government took over the lender on May 9.
Markets in Switzerland, Norway, Sweden, Denmark, Finland, Austria and Luxembourg are among those closed today for the Ascension holiday.
The MSCI Emerging Markets Index was little changed near a four-month low, paring earlier gains of as much as 1 percent. The Shanghai Composite Index jumped 1.4 percent and Taiwan’s Taiex Index advanced 1.7 percent. Russia’s Micex Index lost 3.7 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net "
Regards
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Asia - 17 May 2012
Asian stocks climbing overnight (MSCI Asia Pacific up 1%) after Federal Reserve policy makers said more monetary easing may be needed and economic growth in Japan and Singapore exceeded estimates. Commodities gained seeing Oil rebound from 6-month lows and Copper adding 1.2%. Greece will schedule fresh elections today after political leaders failed to form a coalition government following a May 6 vote and the ECB said it will temporarily stop lending to some Greek banks to limit its risk. Dow closing down 0.51% and S&P down 0.73% after SA futures close.
Wednesday, 16 May 2012
The global economy faces significant challenges
A great Article I just read from PSG Asset Managment giving a good summary of what is happening on the global front.
They are a good operation and have the ears close to the ground.
Enjoy !!
"The global economy faces significant challenges and, as a result, investment markets are likely to continue to be clouded by significant uncertainty and large swings in sentiment.
Europe and China are likely to be centre stage for a while and the scale of their issues and importance of their economies will see newsflow from these parts continuing to impact short term stock market direction. Whilst we have always acknowledged that the risks are significant, we continue to point out that central banks are actively countering this by increasing their monetary base.
Economic uncertainty usually creates good buying opportunities and it is our view that this time is no different.
During the course of the past twelve to eighteen months we have sold almost all of our large cap higher quality industrial compounders but have taken opportunity of our relative size advantage to build positions in some of our smaller cap high conviction names.
We also expect our conviction offshore stock picks to add significant value over the years ahead; not only have we managed to extend our investment universe but see materially better value in blue chip global companies than their SA peers.
April proved to be a very strange month for asset class performances globally, one where extreme divergences occurred in performances across regions, within regions and within sectors of the market.
On the Fixed Income front, we have held sizeable positions in inflation linkers which have performed superbly.
We have large stock piles of cash which we intend to deploy during serious bouts of negativism towards companies where intrinsic, long-term value exceeds the current share price. Having been underweight Resources for a while, we are beginning to feel that valuations are more compelling at present and we are building positions in this area on a very selective basis."
"The PSG Angle is an electronic newsletter of PSG Asset Management. "
They are a good operation and have the ears close to the ground.
Enjoy !!
"The global economy faces significant challenges and, as a result, investment markets are likely to continue to be clouded by significant uncertainty and large swings in sentiment.
Europe and China are likely to be centre stage for a while and the scale of their issues and importance of their economies will see newsflow from these parts continuing to impact short term stock market direction. Whilst we have always acknowledged that the risks are significant, we continue to point out that central banks are actively countering this by increasing their monetary base.
Economic uncertainty usually creates good buying opportunities and it is our view that this time is no different.
During the course of the past twelve to eighteen months we have sold almost all of our large cap higher quality industrial compounders but have taken opportunity of our relative size advantage to build positions in some of our smaller cap high conviction names.
We also expect our conviction offshore stock picks to add significant value over the years ahead; not only have we managed to extend our investment universe but see materially better value in blue chip global companies than their SA peers.
April proved to be a very strange month for asset class performances globally, one where extreme divergences occurred in performances across regions, within regions and within sectors of the market.
On the Fixed Income front, we have held sizeable positions in inflation linkers which have performed superbly.
We have large stock piles of cash which we intend to deploy during serious bouts of negativism towards companies where intrinsic, long-term value exceeds the current share price. Having been underweight Resources for a while, we are beginning to feel that valuations are more compelling at present and we are building positions in this area on a very selective basis."
"The PSG Angle is an electronic newsletter of PSG Asset Management. "
Tuesday, 15 May 2012
Asian Stocks - 15 May 2012
"Asian stocks fell, (MSCI Asia Pacific slid 1.2%) commodities headed for their longest slump in 14 years and bond risk climbed on evidence of slowing growth in China. Reports show that Europe's economy sank for the firs time since 2009, Euro trading close to 4 month low. The Dow closed down 0.45% and the S&P down 0.5% from the SA Futures close. A number of economic releases in the US this afternoon."
Monday, 14 May 2012
Greece's Stock Market Collapse Vs. Crash of 1929
Great take on this :
"It's 1929 all over again, but not in the U.S.
As Greek markets hit levels not seen since the 90s, we thought it appropriate to look at how the Dow performed during the Great Depression.
The results, both suffered huge declines. But the big difference: where as the U.S. began to pick back up five years after its fall, Greece continues to tumble lower.
Below, Athex performance from the 2007 peak compared to the Dow Jones Industrial Average and its 1929 peak."
Recession is in full Swing
(Note: We think we saw someone else made this chart recently as well, but are unsure where that was).
REF : Business Insider.com
Read more: http://www.businessinsider.com/chart-of-the-day-its-1929-all-over-again-in-greece-2012-5#ixzz1urib7F4L
Digging for value in a two-faced market
"There is a strong school of thought and much commentary in the financial press that global investment sentiment is currently bullish and stock markets are expensive. We would contend that it is difficult to make this assertion categorically and especially when one looks at the very attractive valuations in the unloved parts of the market. However, it is clear to us that some stocks have become extremely expensive and we anticipate very poor medium term returns for investors that are chasing the darlings of the market. Domestic retail stocks provide very good examples of how much the stock market is currently prepared to pay up for earnings visibility and growth over the immediate future. Given the massive discrepancy in sentiment and valuations for different stocks, we continue to caution investors against making an assessment as to whether the stock market is over or under-valued at an index level.
Examples of very unloved and hence contrarian investment opportunities include global financials and raw material shares. We remain of the view that carefully selected resource stocks currently provide a very good opportunity on a risk-return basis for patient investors with a long investment horizon.
We have high conviction in the likes of Anglo, Sasol and Billiton at these share prices.
Within Resources, our process sees us favouring the higher quality cash-generators. We focus carefully on strength and track record of management. As we do not attempt to forecast commodity prices we strongly prefer low cost producers with high quality assets which trade at a healthy discount to what we think those assets are worth.
Anglo’s share price had declined by 30% since February of last year. Commodity prices have fallen sharply, from elevated levels, over the past twelve months and as a result consensus earnings forecasts for 2012 through 2014 for Anglo have been cut. The decline in commodity prices can largely be attributed to a slowing Chinese economy as well as general fear over global growth amidst the European crisis. It is these fears that present the opportunity to acquire quality resource stocks, like Anglo, Billiton and Sasol, at very attractive prices.
As the chart below shows, the Resource Index has been a material under-performer of the ALSI since the end of 2001, and once again in recent months."
"The PSG Angle is an electronic newsletter of PSG Asset Management.
Examples of very unloved and hence contrarian investment opportunities include global financials and raw material shares. We remain of the view that carefully selected resource stocks currently provide a very good opportunity on a risk-return basis for patient investors with a long investment horizon.
We have high conviction in the likes of Anglo, Sasol and Billiton at these share prices.
Within Resources, our process sees us favouring the higher quality cash-generators. We focus carefully on strength and track record of management. As we do not attempt to forecast commodity prices we strongly prefer low cost producers with high quality assets which trade at a healthy discount to what we think those assets are worth.
Anglo’s share price had declined by 30% since February of last year. Commodity prices have fallen sharply, from elevated levels, over the past twelve months and as a result consensus earnings forecasts for 2012 through 2014 for Anglo have been cut. The decline in commodity prices can largely be attributed to a slowing Chinese economy as well as general fear over global growth amidst the European crisis. It is these fears that present the opportunity to acquire quality resource stocks, like Anglo, Billiton and Sasol, at very attractive prices.
As the chart below shows, the Resource Index has been a material under-performer of the ALSI since the end of 2001, and once again in recent months."
Sunday, 13 May 2012
Dubai Shares Slump to Lowest in Three Months on Greece, Oil Drop
"May 13 (Bloomberg) -- Dubai stocks led a drop in the Persian Gulf, sinking to the lowest in three months, after oil slumped on concern that Europe’s debt crisis will worsen and on speculation Arabtec Holding Co. may de-list its shares.
Arabtec fell 5.8 percent after Alrroya reported Aabar Investments PJSC and its units bought 53 percent of the United Arab Emirates’ biggest builder by market value. Emaar Properties PJSC, developer of the world’s tallest skyscraper, dropped for the eighth time in nine days. Dubai’s DFM General Index lost 1.8 percent to 1,488.24, the lowest since Feb. 9, at the 2 p.m. close in the emirate. The Bloomberg GCC 200 Index slipped 0.5 percent, while Egypt’s benchmark gained.
“Investors have shifted their focus from corporate earnings to other issues such as oil prices falling quickly and sharply to the lows of the year and the turmoil in the euro zone,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “There is also some speculation Arabtec will be taken off the market like its parent company.”
Crude for June delivery retreated 2.4 percent last week to $96.13 a barrel on the New York Mercantile Exchange, a 2012 low, after Chinese factory output in April missed estimates. Gulf Arab oil exporters, including Saudi Arabia and the U.A.E. supply about a fifth of the world’s oil. About 89 million shares traded in Dubai today, compared with this year’s peak of 835 million.
Abu Dhabi’s benchmark index lost 0.2 percent in its seventh day of declines, the longest stretch of losses since December.
U.S. Stocks Fall
Global equities declined last week as an inconclusive election in Greece left political parties struggling to form a government. The impasse reignited concern over Greece’s ability to meet terms of its two bailouts and the possibility the country will leave the euro. U.S. stocks also tumbled, with the Standard & Poor’s 500 Index slumping 1.2 percent in its second weekly retreat after U.S. banks sank following JPMorgan Chase & Co.’s $2 billion trading loss.
Arabtec tumbled to 2.78 dirhams, the lowest close since March 27. Abu Dhabi government-controlled Aabar directly owns 23 percent of Arabtec and affiliates have 30 percent, Alrroya said, citing Aabar Chairman Khadem Al Qubaisi. Aabar dropped a $1.74 billion offer for Arabtec two years ago and took its business private in the same year.
Calls to Kamal’s cellular phone weren’t answered and Aabar declined to comment when contacted by Bloomberg news.
Emaar slid 1.3 percent to 2.94 dirhams, the lowest close since March 8.
Egypt’s Gain
Elsewhere in the Gulf Cooperation Council, Qatar’s QE Index retreated 0.1 percent and Oman’s benchmark stock index slipped 0.2 percent. Bahrain’s measure and Kuwait’s gauge were little changed. Saudi Arabia’s Tadawul All Share Index lost 0.7 percent.
In North Africa, the EGX 30 Index rallied 1.4 percent to 5,083.26, the highest close since March 22, after the country televised its first presidential debate and voting abroad started.
“Positivity from the political scene is the main driver, over the weekend Egyptians abroad started voting, that’s in addition to the presidential debate,” said Wafik Dawood, director of institutional sales at Cairo-based Mega Investments Securities. “The outcome of the debate is not significant, but there’s the fact that most Egyptians didn’t expect to live to see that day.”
Egypt’s presidential election must start as scheduled on May 23, the country’s highest administrative court said yesterday. The Supreme Administrative Court made the ruling, overturning a lower-court decision that had suspended procedures for the vote.
In Israel, the TA-25 Index fell 0.6 percent. The yield on the country’s 5.5 percent notes due January 2022 dropped one basis points, or 0.01 percentage point, to 4.53 percent.
To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Arabtec fell 5.8 percent after Alrroya reported Aabar Investments PJSC and its units bought 53 percent of the United Arab Emirates’ biggest builder by market value. Emaar Properties PJSC, developer of the world’s tallest skyscraper, dropped for the eighth time in nine days. Dubai’s DFM General Index lost 1.8 percent to 1,488.24, the lowest since Feb. 9, at the 2 p.m. close in the emirate. The Bloomberg GCC 200 Index slipped 0.5 percent, while Egypt’s benchmark gained.
“Investors have shifted their focus from corporate earnings to other issues such as oil prices falling quickly and sharply to the lows of the year and the turmoil in the euro zone,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “There is also some speculation Arabtec will be taken off the market like its parent company.”
Crude for June delivery retreated 2.4 percent last week to $96.13 a barrel on the New York Mercantile Exchange, a 2012 low, after Chinese factory output in April missed estimates. Gulf Arab oil exporters, including Saudi Arabia and the U.A.E. supply about a fifth of the world’s oil. About 89 million shares traded in Dubai today, compared with this year’s peak of 835 million.
Abu Dhabi’s benchmark index lost 0.2 percent in its seventh day of declines, the longest stretch of losses since December.
U.S. Stocks Fall
Global equities declined last week as an inconclusive election in Greece left political parties struggling to form a government. The impasse reignited concern over Greece’s ability to meet terms of its two bailouts and the possibility the country will leave the euro. U.S. stocks also tumbled, with the Standard & Poor’s 500 Index slumping 1.2 percent in its second weekly retreat after U.S. banks sank following JPMorgan Chase & Co.’s $2 billion trading loss.
Arabtec tumbled to 2.78 dirhams, the lowest close since March 27. Abu Dhabi government-controlled Aabar directly owns 23 percent of Arabtec and affiliates have 30 percent, Alrroya said, citing Aabar Chairman Khadem Al Qubaisi. Aabar dropped a $1.74 billion offer for Arabtec two years ago and took its business private in the same year.
Calls to Kamal’s cellular phone weren’t answered and Aabar declined to comment when contacted by Bloomberg news.
Emaar slid 1.3 percent to 2.94 dirhams, the lowest close since March 8.
Egypt’s Gain
Elsewhere in the Gulf Cooperation Council, Qatar’s QE Index retreated 0.1 percent and Oman’s benchmark stock index slipped 0.2 percent. Bahrain’s measure and Kuwait’s gauge were little changed. Saudi Arabia’s Tadawul All Share Index lost 0.7 percent.
In North Africa, the EGX 30 Index rallied 1.4 percent to 5,083.26, the highest close since March 22, after the country televised its first presidential debate and voting abroad started.
“Positivity from the political scene is the main driver, over the weekend Egyptians abroad started voting, that’s in addition to the presidential debate,” said Wafik Dawood, director of institutional sales at Cairo-based Mega Investments Securities. “The outcome of the debate is not significant, but there’s the fact that most Egyptians didn’t expect to live to see that day.”
Egypt’s presidential election must start as scheduled on May 23, the country’s highest administrative court said yesterday. The Supreme Administrative Court made the ruling, overturning a lower-court decision that had suspended procedures for the vote.
In Israel, the TA-25 Index fell 0.6 percent. The yield on the country’s 5.5 percent notes due January 2022 dropped one basis points, or 0.01 percentage point, to 4.53 percent.
To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
China Lowers Banks’ Reserve Requirements to Support Growth
"May 13 (Bloomberg) -- China cut the amount of cash that banks must set aside as reserves for the third time in six months, pumping money into the financial system to support lending after data showed a slowdown in growth is deepening.
Reserve ratios will fall 50 basis points, effective May 18, the People’s Bank of China said on its website yesterday. The level for the nation’s largest lenders will decline to 20 percent based on previous statements.
Premier Wen Jiabao is increasingly shifting to supporting the nation’s expansion from fighting inflation and containing property prices. China’s import gains stalled in April while industrial output rose at the slowest pace since 2009 and new yuan loans were the lowest this year, adding to global growth concerns just as Europe’s debt crisis reignites.
“Growth momentum is still weak and external risk has risen sharply,” Liu Li-Gang, chief China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, said by e-mail yesterday. “We think another cut could be in mid-June.”
The slowdown in China, the world’s second-biggest economy, underscores risks to the global recovery as job growth in the U.S. slumps. Central bankers across Europe have started discussing the possibility of a Greek exit from the euro area and how to handle the fallout, Swedish Riksbank Deputy Governor Per Jansson said May 11.
Extra Cash
A 50 basis-point cut in the reserve requirement in February probably added 400 billion yuan ($63.4 billion) to the financial system, according to ANZ estimates. UBS AG put the figure at 350 billion yuan.
“A more assertive monetary policy is needed and the government should step up stimulus efforts even as concerns remain about the real possibility of over-stimulating,” Alistair Thornton, an economist in Beijing at IHS Global Insight, said before the announcement.
Europe’s more than two-year-old debt crisis flared again this month after voters in Greece and France backed candidates opposed to austerity measures. Gross domestic product in the 17- nation region is set to drop 0.3 percent this year, according to the European Commission.
China’s economic performance is facing downward pressure and the domestic and external situations are still “grim,” the Ministry of Industry and Information Technology said April 25. Exports rose by less than estimated in April, a customs bureau report showed on May 10.
Decline in New Loans
Bank of China Ltd., the country’s third-biggest lender by assets, said April 26 that new loans dropped 17 percent to 247 billion yuan in the first quarter from a year earlier. Profit growth decelerated to 10 percent from 10.8 percent in the previous period.
The pace of China’s expansion has moderated for the past five quarters as Europe’s debt crisis crimped exports and government curbs on lending and home purchases damped domestic demand. GDP increased 8.1 percent in the first three months of 2012 from a year earlier, down from an 8.9 percent pace in the fourth quarter.
Bank of America Corp. on May 11 cut its estimate for China’s second-quarter expansion to 7.6 percent from 8.5 percent and reduced its full-year growth forecast to 8 percent from 8.6 percent. Wang Tao, China economist at UBS, also lowered her GDP estimates and cut her export growth projection for this year to 7 percent from 10 percent.
To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net ; Zheng Lifei in Beijing at lzheng32@bloomberg.net "
Enjoy !!
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Reserve ratios will fall 50 basis points, effective May 18, the People’s Bank of China said on its website yesterday. The level for the nation’s largest lenders will decline to 20 percent based on previous statements.
Premier Wen Jiabao is increasingly shifting to supporting the nation’s expansion from fighting inflation and containing property prices. China’s import gains stalled in April while industrial output rose at the slowest pace since 2009 and new yuan loans were the lowest this year, adding to global growth concerns just as Europe’s debt crisis reignites.
“Growth momentum is still weak and external risk has risen sharply,” Liu Li-Gang, chief China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, said by e-mail yesterday. “We think another cut could be in mid-June.”
The slowdown in China, the world’s second-biggest economy, underscores risks to the global recovery as job growth in the U.S. slumps. Central bankers across Europe have started discussing the possibility of a Greek exit from the euro area and how to handle the fallout, Swedish Riksbank Deputy Governor Per Jansson said May 11.
Extra Cash
A 50 basis-point cut in the reserve requirement in February probably added 400 billion yuan ($63.4 billion) to the financial system, according to ANZ estimates. UBS AG put the figure at 350 billion yuan.
“A more assertive monetary policy is needed and the government should step up stimulus efforts even as concerns remain about the real possibility of over-stimulating,” Alistair Thornton, an economist in Beijing at IHS Global Insight, said before the announcement.
Europe’s more than two-year-old debt crisis flared again this month after voters in Greece and France backed candidates opposed to austerity measures. Gross domestic product in the 17- nation region is set to drop 0.3 percent this year, according to the European Commission.
China’s economic performance is facing downward pressure and the domestic and external situations are still “grim,” the Ministry of Industry and Information Technology said April 25. Exports rose by less than estimated in April, a customs bureau report showed on May 10.
Decline in New Loans
Bank of China Ltd., the country’s third-biggest lender by assets, said April 26 that new loans dropped 17 percent to 247 billion yuan in the first quarter from a year earlier. Profit growth decelerated to 10 percent from 10.8 percent in the previous period.
The pace of China’s expansion has moderated for the past five quarters as Europe’s debt crisis crimped exports and government curbs on lending and home purchases damped domestic demand. GDP increased 8.1 percent in the first three months of 2012 from a year earlier, down from an 8.9 percent pace in the fourth quarter.
Bank of America Corp. on May 11 cut its estimate for China’s second-quarter expansion to 7.6 percent from 8.5 percent and reduced its full-year growth forecast to 8 percent from 8.6 percent. Wang Tao, China economist at UBS, also lowered her GDP estimates and cut her export growth projection for this year to 7 percent from 10 percent.
To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net ; Zheng Lifei in Beijing at lzheng32@bloomberg.net "
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