Good Summary so thought it needed to be posed !!, Enjoy
"Jan. 19 (Bloomberg) -- Asian stocks rose, spurring a record start to the year for the MSCI Asia Pacific Index, while copper gained and South Korea’s won strengthened amid signs China will relax credit controls. Oil advanced after U.S. crude stockpiles fell the most in six weeks.
The MSCI gauge rallied 1 percent as of 12:06 p.m. in Tokyo, poised for the highest close since Nov. 9. The Hang Seng China Enterprises Index jumped 1.8 percent, while Standard & Poor’s 500 futures were little changed. Oil gained 0.8 percent to $101.44 a barrel. Copper added 1.3 percent to lead gains in base metals. South Korea’s won rose against all of its 16 major counterparts. Bond risk in Australia fell to a two-month low.
China is letting its five biggest banks boost lending and weighing a plan to relax capital requirements, according to people with knowledge of the matter, who declined to be identified. The world’s second-biggest economy expanded 8.9 percent in the fourth quarter, the slowest in two years, and banks’ reserve requirements were relaxed in December for the first time since 2008.
"The government’s major task will be maintaining stable economic growth this year," said Zhang Ling, general manager at Shanghai River Fund Management Co. in Shanghai. "We should be seeing more pro-growth measures going forward and easing restrictions on lending is a good start."
Technology Stocks
Technology stocks rallied the most among 10 industries in the MSCI Asia Pacific Index with a 1.5 percent advance. ASML Holding NV, Europe’s biggest semiconductor-equipment maker, forecast higher first-quarter orders and sales at Linear Technology Corp., a U.S. chipmaker, beat analysts’ projections.
Sumco Corp., which produces silicon wafers, surged 9.2 percent in Japan trading. Elpida Memory Inc. and Advantest Corp. climbed at least 3.7 percent.
About three stocks rose for each that fell in the MSCI Asia gauge, which has advanced 4.9 percent in 2012, the best start to any year in Bloomberg data going back to 1988. Hero Motocorp Ltd., India’s largest two-wheeler manufacturer, Bajaj Auto Ltd. and Hang Lung Properties Ltd. are among companies in the region scheduled to report earnings today.
The Shanghai Composite Index added 0.8 percent. Chinese banks can increase new loans this quarter by a maximum of about 5 percent from a year earlier, according to two people at state lenders who have knowledge of the matter.
Copper, Oil
Copper in London gained as much as 1.6 percent to $8,372 a metric ton, the highest level since Sept. 21, on the London Metal Exchange. Zinc advanced 0.6 percent to $2,013 a ton and nickel rose 0.8 percent to $19,650.
Oil futures advanced 1 percent. U.S. crude inventories dropped 4.81 million barrels last week, the most since the week ended Dec. 2, figures from the industry-funded American Petroleum Institute showed.
The cost of protecting Australian bonds against non-payment fell, according to credit-default swap traders. The Markit iTraxx Australia index declined four basis points to 169, Royal Bank of Scotland Group Plc prices show. The gauge is on track for its lowest close since Oct. 31, 2011, according to data provider CMA.
To contact the reporter on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net
To contact the editor responsible for this story: James Regan in Hong Kong at jregan19@bloomberg.net . "
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Thursday, 19 January 2012
Asia Open 19th January 2012
Good Summary from COMPASS MARKETS from AUZ
"The markets remained positive despite the World Bank cutting its global growth forecast by the most in three years. It forecasted that global growth would slow to 2.5% in 2012, down from an estimate of 3.6% in June. The Bank said that the global slowdown would pose a serious threat to emerging economies such as India and Mexico. It predicted that the euro area may contract by as much as 0.3%. Germany has also cut its 2012 economic growth forecasts. However, the EUR surged on the back of an announcement by the IMF that proposes an increase in its lending resources of as much as $500 billion after identifying a need for up to $1 trillion in financing over the next few years. The EUR surged to as high as 1.2865 this morning on the IMF news.
"The markets remained positive despite the World Bank cutting its global growth forecast by the most in three years. It forecasted that global growth would slow to 2.5% in 2012, down from an estimate of 3.6% in June. The Bank said that the global slowdown would pose a serious threat to emerging economies such as India and Mexico. It predicted that the euro area may contract by as much as 0.3%. Germany has also cut its 2012 economic growth forecasts. However, the EUR surged on the back of an announcement by the IMF that proposes an increase in its lending resources of as much as $500 billion after identifying a need for up to $1 trillion in financing over the next few years. The EUR surged to as high as 1.2865 this morning on the IMF news.
In less much less positive news, the unemployment rate in the UK rose to the highest levels in 16 years at 8.4%, up from 8.1% from the previous quarter. The number of job claimants rose for the 10th month to 1.6 million, the most since January 2010. The sobering data raises concerns that the UK is headed for another recession. If not for the IMF announcement, there would have been heavy selling of the GBP overnight. GBPUSD opens the Asian morning at 1.5431. The Australian has held steady and opens the morning at 1.0415.
Equity markets were buoyed by the IMF news and continued strength in US economic indicators. Confidence levels of US homebuilders rose to the highest levels more than 4 years in the month of January. Furthermore, reports that the Greek government would finalise an agreement with private creditors by the end of the week also supported markets. The S&P 500 has closed the session higher by 1.11% to 1,308. More than 40 companies on the index are due to report quarterly results this week. Earlier in Europe, the DAX rose 0.34% to 6,355 while the FTSE gained a modest 0.15% to 5,702.
Commodity prices were flat after a couple of days of gains and the CRB index closes the day 0.32 points lower at 310.51. WTI Crude is 0.4% higher at $101.10 as issues surrounding Iran continue to support the price above $100.00. Precious metals continue to consolidate in tight ranges with gold steady at $1,658 while silver gained 1.1% to $30.45. Soft commodities had a mixed session with wheat falling almost 3% while copper gained 0.7%. Today, we have the release of Australian inflation expectations and employment data. In Europe and the US, there is the European current account, US building permits, CPI, unemployment claims and a number of other indicators. "
Tuesday, 17 January 2012
China powers emerging markets to 2-month high
FIN 24.com
London - Emerging stocks leapt 2% to their highest in two months on Tuesday as better-than-expected Chinese growth numbers and a record rise in German economic sentiment revived risk appetite.
South Africa’s All Share [JSE:J203] index hit an all-time high while Hungary’s forint reversed a two-session loss, despite expectations that the European Commission will soon launch legal action against Budapest over its policies to curb the independence of its media, judiciary and central bank.
Data showing China’s gross domestic product (GDP) growing nearly 9% in the fourth quarter of 2011 overshadowed news of Standard and Poor’s downgrading the credit rating of the eurozone’s rescue fund late on Monday - a step S&P said was all but inevitable after it cut the ratings of nine eurozone member states last Friday.
Hopes that the global economy can avoid a prolonged downturn were reinforced by a monthly poll of German analyst and investor sentiment showing the largest single monthly increase since the survey started in 1991.
In afternoon trade, the key emerging equity index had jumped 2.1% while emerging sovereign debt tightened 5 basis points to trade 388 bps over US Treasuries.
“The market reaction is rather encouraging. We got the European downgrade, the downgrade of the EFSF... and then we got the data from China and the markets are rallying,” said Lars Christensen, chief emerging markets analyst at Danske Bank.
The Thomson Reuters Emerging European stock index rose 1.3% with Polish and Russian shares, denominated in both roubles and dollars, reaching over one-month highs.
All Share record
Hopes that China’s appetite for raw materials will hold up also boosted shares in South Africa, Russia’s commodity-exporting peer, helping the main index to extend gains for a second day to touch a record high.
The rand rose 1% to its highest to the dollar in a month, continuing to recover from its sharp fall on Friday when Fitch inflicted a surprise ratings outlook downgrade on the country.
Improved risk appetite also buoyed Turkish shares 1.6%, lifting the lira to its strongest level to the dollar since early December.
The Polish zloty touched a nine-week high versus the euro, though the Romanian leu snapped a five-session winning streak. The forint halted a two-session decline which saw the unit shed some 2% of its value against the euro, rising over half a percentage point.
Investors, however, are still concerned that Hungary’s centre-right government remains on a collision course with the European Union.
The European Commission, which meets later in the day, is expected to launch legal action over Hungary’s bank law, the retirement age of judges and prosecutors, and a data protection authority.
Talks between the International Monetary Fund and Hungary for a much-needed financial package have stalled over the fund’s insistence on seeing policy reform in the country.
“(Investors are) trying to gauge whether an improvement could soon be on the horizon and whether current levels actually offered an attractive entry opportunity,” Societe General said in a research note.
“We do not believe that it is the case for now... Strategy-wise, we recommend buying euro/forint,” it said. "
London - Emerging stocks leapt 2% to their highest in two months on Tuesday as better-than-expected Chinese growth numbers and a record rise in German economic sentiment revived risk appetite.
South Africa’s All Share [JSE:J203] index hit an all-time high while Hungary’s forint reversed a two-session loss, despite expectations that the European Commission will soon launch legal action against Budapest over its policies to curb the independence of its media, judiciary and central bank.
Data showing China’s gross domestic product (GDP) growing nearly 9% in the fourth quarter of 2011 overshadowed news of Standard and Poor’s downgrading the credit rating of the eurozone’s rescue fund late on Monday - a step S&P said was all but inevitable after it cut the ratings of nine eurozone member states last Friday.
Hopes that the global economy can avoid a prolonged downturn were reinforced by a monthly poll of German analyst and investor sentiment showing the largest single monthly increase since the survey started in 1991.
In afternoon trade, the key emerging equity index had jumped 2.1% while emerging sovereign debt tightened 5 basis points to trade 388 bps over US Treasuries.
“The market reaction is rather encouraging. We got the European downgrade, the downgrade of the EFSF... and then we got the data from China and the markets are rallying,” said Lars Christensen, chief emerging markets analyst at Danske Bank.
The Thomson Reuters Emerging European stock index rose 1.3% with Polish and Russian shares, denominated in both roubles and dollars, reaching over one-month highs.
All Share record
Hopes that China’s appetite for raw materials will hold up also boosted shares in South Africa, Russia’s commodity-exporting peer, helping the main index to extend gains for a second day to touch a record high.
The rand rose 1% to its highest to the dollar in a month, continuing to recover from its sharp fall on Friday when Fitch inflicted a surprise ratings outlook downgrade on the country.
Improved risk appetite also buoyed Turkish shares 1.6%, lifting the lira to its strongest level to the dollar since early December.
The Polish zloty touched a nine-week high versus the euro, though the Romanian leu snapped a five-session winning streak. The forint halted a two-session decline which saw the unit shed some 2% of its value against the euro, rising over half a percentage point.
Investors, however, are still concerned that Hungary’s centre-right government remains on a collision course with the European Union.
The European Commission, which meets later in the day, is expected to launch legal action over Hungary’s bank law, the retirement age of judges and prosecutors, and a data protection authority.
Talks between the International Monetary Fund and Hungary for a much-needed financial package have stalled over the fund’s insistence on seeing policy reform in the country.
“(Investors are) trying to gauge whether an improvement could soon be on the horizon and whether current levels actually offered an attractive entry opportunity,” Societe General said in a research note.
“We do not believe that it is the case for now... Strategy-wise, we recommend buying euro/forint,” it said. "
China Economic Growth Slows, May Prompt Wen to Ease Policies (2)
Another Good Article from Bloomberg News :
"China Economic Growth Slows, May Prompt Wen to Ease Policies (2)
2012-01-17 02:51:33.263 GMT
(Updates with economist’s comment in the fourth paragraph.)
By Bloomberg News
Jan. 17 (Bloomberg) -- China’s economy expanded at the slowest pace in 10 quarters as export demand moderated and a prolonged campaign against consumer and property-price gains cooled growth.
Gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said in Beijing today. Growth fell below 9 percent for the first time since mid-2009, based on previously reported data, and compared with the 8.7 percent median forecast in a Bloomberg News survey of 26 economists. Industrial production in December increased
12.8 percent from a year earlier, it said.
The report may increase pressure on Premier Wen Jiabao to tilt policies toward sustaining growth in the world’s second- biggest economy, as policy makers predict a "grim" outlook for exports and inflation concerns diminish. Liang Wengen, China’s richest man and chairman of equipment maker Sany Heavy Industry Co., told Wen this month that construction-machinery demand is weak and called for an increase in infrastructure investment.
"Decelerating GDP growth will provide more room for policy makers to shift towards a pro-growth bias after an extended tightening cycle," Jing Ulrich, chairman of global markets for China at JPMorgan Chase & Co., said in a note after the data.
"At this juncture, the challenge for policy makers is to implement measures that boost domestic demand without setting back progress made in curbing inflation."
Stocks Fall
The Shanghai Composite Index was little changed at 10:49 a.m. local time, after gaining as much as 0.7 percent before the data was announced. Asian stocks rose after the report boosted speculation the government may take extra measures to spur growth amid concerns about Europe’s debt crisis. The MSCI Asia Pacific Index gained 1 percent.
Full-year economic growth slowed to 9.2 percent from 10.4 percent in 2010, today’s report showed. The gain in industrial production compared with the median estimate of 12.3 percent in a Bloomberg survey and a 12.4 percent increase in November.
"The data confirmed no hard landing is likely, more so given the loosening stance already adopted by the policy makers," said Shen Jianguang, Hong Kong-based chief greater China economist for Mizuho Securities Asia Ltd. Still, there is "no room for complacency, given the risks of property sector meltdown and global crises," said Shen, who expects more loosening in credit, an expansionary fiscal policy and loosening in the property sector in the second quarter.
Europe Downgrades
China’s benchmark stock index fell the most in a month yesterday, capping a four-day 3.5 percent decline, on concern Europe’s worsening debt crisis will hurt exports to the nation’s biggest market and as expectations waned of an imminent cut to banks’ reserve requirement ratios.
The yuan dropped the most in more than two months yesterday after Standard & Poor’s stripped France of its top credit rating and downgraded eight other euro-area nations. Twelve-month non- deliverable yuan forwards have traded at a discount to the onshore spot rate since Nov. 20, apart from one day, reflecting increased bets the Chinese currency will weaken against the U.S.
dollar as the economy cools.
Banks including BNP, Nomura Holdings Inc. and UBS AG forecast weaker economic expansion this quarter as overseas sales moderate further and government measures to rein in property prices hurts demand for goods including steel, cement and home appliances. UBS’s Hong Kong-based economist Wang Tao estimates growth will ease to 7.7 percent, while Nomura’s chief China economist Zhang Zhiwei forecasts 7.5 percent or lower.
Their projections were made before today’s release.
Lack of Credit
Sany’s Liang, who topped Forbes Asia’s 2011 China rich list with an estimated wealth of $9.3 billion, was among business leaders who met Wen during his visit to Hunan province earlier this month. Zhan Chunxin, chairman of competitor Zoomlion Heavy Industry Science & Technology Co., who was also at the meeting, complained a lack of access to credit was hurting customers and suppliers.
Fixed-asset investment excluding rural households expanded
23.8 percent last year, compared with the median 24.1 percent estimate in a Bloomberg survey. Retail sales rose 18.1 percent in December from a year earlier, today’s report showed.
The People’s Bank of China last month allowed banks to set aside less of their deposits as reserves and December’s new loans were the highest since April, signs the government is loosening monetary policy to encourage lending even as it maintains curbs on the residential real-estate market to bring down home prices.
Adding Cash
Expectations of another reduction before the weeklong Lunar New Year holiday that starts Jan. 23 are receding. The PBOC halted sales of bills and repurchase contracts at the end of December to add funds to the financial system. It will inject more cash through 14-day reverse repurchase operations today and Jan. 19, two traders who declined to be identified said yesterday, after the seven-day repurchase rate, which measures interbank funding availability, surged to the highest since July.
The central bank may "front-load" policy easing into the first half, with one interest-rate cut in March and three reductions in banks’ reserve requirements, according to Nomura’s Zhang. Peng from BNP estimates four to five reductions in the ratio through the year.
"Any easing won’t be as aggressive as after the 2008 global financial crisis," said BNP’s Peng. Officials will remain wary of inflation, which remained above the government’s
4 percent in 2011 and may rebound later this year, he said.
Biggest Risks
Consumer-price gains averaged 5.4 percent last year, exceeding the government’s 4 percent target every month, even as the pace slowed to 4.1 percent in December from a year earlier.
A deeper recession in Europe, which may cause a sharper slump in demand for China’s exports, and a "disorderly correction" in the property market are the biggest risks to the economy this year, said Chang Jian , a Hong Kong-based economist at Barclays Capital Asia Ltd.
The world’s largest exporter may see shipment growth halve this year from a 20 percent pace in 2011, while property investment, which accounts for about a fifth of the nation’s fixed-asset spending, may expand at half last year’s rate, according to Chang. " "
"China Economic Growth Slows, May Prompt Wen to Ease Policies (2)
2012-01-17 02:51:33.263 GMT
(Updates with economist’s comment in the fourth paragraph.)
By Bloomberg News
Jan. 17 (Bloomberg) -- China’s economy expanded at the slowest pace in 10 quarters as export demand moderated and a prolonged campaign against consumer and property-price gains cooled growth.
Gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said in Beijing today. Growth fell below 9 percent for the first time since mid-2009, based on previously reported data, and compared with the 8.7 percent median forecast in a Bloomberg News survey of 26 economists. Industrial production in December increased
12.8 percent from a year earlier, it said.
The report may increase pressure on Premier Wen Jiabao to tilt policies toward sustaining growth in the world’s second- biggest economy, as policy makers predict a "grim" outlook for exports and inflation concerns diminish. Liang Wengen, China’s richest man and chairman of equipment maker Sany Heavy Industry Co., told Wen this month that construction-machinery demand is weak and called for an increase in infrastructure investment.
"Decelerating GDP growth will provide more room for policy makers to shift towards a pro-growth bias after an extended tightening cycle," Jing Ulrich, chairman of global markets for China at JPMorgan Chase & Co., said in a note after the data.
"At this juncture, the challenge for policy makers is to implement measures that boost domestic demand without setting back progress made in curbing inflation."
Stocks Fall
The Shanghai Composite Index was little changed at 10:49 a.m. local time, after gaining as much as 0.7 percent before the data was announced. Asian stocks rose after the report boosted speculation the government may take extra measures to spur growth amid concerns about Europe’s debt crisis. The MSCI Asia Pacific Index gained 1 percent.
Full-year economic growth slowed to 9.2 percent from 10.4 percent in 2010, today’s report showed. The gain in industrial production compared with the median estimate of 12.3 percent in a Bloomberg survey and a 12.4 percent increase in November.
"The data confirmed no hard landing is likely, more so given the loosening stance already adopted by the policy makers," said Shen Jianguang, Hong Kong-based chief greater China economist for Mizuho Securities Asia Ltd. Still, there is "no room for complacency, given the risks of property sector meltdown and global crises," said Shen, who expects more loosening in credit, an expansionary fiscal policy and loosening in the property sector in the second quarter.
Europe Downgrades
China’s benchmark stock index fell the most in a month yesterday, capping a four-day 3.5 percent decline, on concern Europe’s worsening debt crisis will hurt exports to the nation’s biggest market and as expectations waned of an imminent cut to banks’ reserve requirement ratios.
The yuan dropped the most in more than two months yesterday after Standard & Poor’s stripped France of its top credit rating and downgraded eight other euro-area nations. Twelve-month non- deliverable yuan forwards have traded at a discount to the onshore spot rate since Nov. 20, apart from one day, reflecting increased bets the Chinese currency will weaken against the U.S.
dollar as the economy cools.
Banks including BNP, Nomura Holdings Inc. and UBS AG forecast weaker economic expansion this quarter as overseas sales moderate further and government measures to rein in property prices hurts demand for goods including steel, cement and home appliances. UBS’s Hong Kong-based economist Wang Tao estimates growth will ease to 7.7 percent, while Nomura’s chief China economist Zhang Zhiwei forecasts 7.5 percent or lower.
Their projections were made before today’s release.
Lack of Credit
Sany’s Liang, who topped Forbes Asia’s 2011 China rich list with an estimated wealth of $9.3 billion, was among business leaders who met Wen during his visit to Hunan province earlier this month. Zhan Chunxin, chairman of competitor Zoomlion Heavy Industry Science & Technology Co., who was also at the meeting, complained a lack of access to credit was hurting customers and suppliers.
Fixed-asset investment excluding rural households expanded
23.8 percent last year, compared with the median 24.1 percent estimate in a Bloomberg survey. Retail sales rose 18.1 percent in December from a year earlier, today’s report showed.
The People’s Bank of China last month allowed banks to set aside less of their deposits as reserves and December’s new loans were the highest since April, signs the government is loosening monetary policy to encourage lending even as it maintains curbs on the residential real-estate market to bring down home prices.
Adding Cash
Expectations of another reduction before the weeklong Lunar New Year holiday that starts Jan. 23 are receding. The PBOC halted sales of bills and repurchase contracts at the end of December to add funds to the financial system. It will inject more cash through 14-day reverse repurchase operations today and Jan. 19, two traders who declined to be identified said yesterday, after the seven-day repurchase rate, which measures interbank funding availability, surged to the highest since July.
The central bank may "front-load" policy easing into the first half, with one interest-rate cut in March and three reductions in banks’ reserve requirements, according to Nomura’s Zhang. Peng from BNP estimates four to five reductions in the ratio through the year.
"Any easing won’t be as aggressive as after the 2008 global financial crisis," said BNP’s Peng. Officials will remain wary of inflation, which remained above the government’s
4 percent in 2011 and may rebound later this year, he said.
Biggest Risks
Consumer-price gains averaged 5.4 percent last year, exceeding the government’s 4 percent target every month, even as the pace slowed to 4.1 percent in December from a year earlier.
A deeper recession in Europe, which may cause a sharper slump in demand for China’s exports, and a "disorderly correction" in the property market are the biggest risks to the economy this year, said Chang Jian , a Hong Kong-based economist at Barclays Capital Asia Ltd.
The world’s largest exporter may see shipment growth halve this year from a 20 percent pace in 2011, while property investment, which accounts for about a fifth of the nation’s fixed-asset spending, may expand at half last year’s rate, according to Chang. " "
Gold to Gain, Copper ‘Favored’ in 2012, Morgan Stanley Says
Per Morgan Stanley :
Interesting reading !!
"Gold to Gain, Copper ‘Favored’ in 2012, Morgan Stanley Says (1)
2012-01-17 05:36:03.718 GMT
(Adds China’s full-year growth in penultimate graph.)
By Chanyaporn Chanjaroen and Glenys Sim
Jan. 17 (Bloomberg) -- Gold may climb and copper is the most-favored base metal for 2012, according to Morgan Stanley, which said that investment demand will bolster bullion, while a deficit will benefit the raw material used in pipes and wires.
Gold will average $1,845 an ounce, Melbourne-based analysts Peter Richardson and Joel Crane said in a report today. While that’s 16 percent below their earlier forecast, it compares with today’s spot price of $1,657.98 an ounce at 5:28 a.m. in London.
Copper may average $3.70 per pound ($8,157 per metric ton), 3 percent less than an earlier prediction. Morgan Stanley is bearish on lead, nickel, aluminum and zinc amid surpluses.
Morgan Stanley’s outlook compares with that from Goldman Sachs Group Inc., which is bullish on aluminum and zinc as well as copper and gold. Global industrial output may grow 4.78 percent this year, down from 5.3 percent in 2011, with manufacturing is set to shrink in Germany, France and Italy amid the debt crisis, Morgan Stanley said.
"Commodity markets continue to confront the twin macro risks of a European recession and a hard landing in China in 2012," the analysts said. "A continuing recovery in the value of the U.S. dollar is proving to be an additional headwind."
Gold’s gains would continue to driven by rising investment demand, central-bank purchases and less hedging by producers, they wrote. The revised forecast represents a 17 percent climb from last year’s average of $1,572.28 an ounce. Bullion, which has rallied for 11 years, may also benefit from constrained growth in mine supply, they wrote.
Worldwide Deficit
Copper may be supported by restocking in China, the world’s largest user, Morgan Stanley said. There would be a refined- metal deficit of 300,000 tons this year, the third straight annual shortfall, the analysts forecast. Three-month copper rose to $8,225 per ton today, the highest level since Oct. 28.
China’s economy expanded 8.9 percent in the fourth quarter from a year earlier, the slowest pace in 10 quarters, as export demand moderated, according to data released today. A so-called hard landing in China, defined by the bank as two successive quarters of expansion of less than 7 percent, "still seems a low probability," the Morgan Stanley analysts wrote.
"We are most bullish on copper, moderately bullish on aluminum and zinc, and bearish on nickel" over six to 12 months," Goldman Sachs said in a report yesterday. While the bank’s 12-month estimate for copper was cut 5.3 percent to $9,000, "current prices generally present value to consumers,"
according to Max Layton, a London-based analyst.
Dollar Rally
The Dollar Index, a measure against the currencies of six trading partners, has gained 1.1 percent this month, extending last year’s 1.5 percent rise. The currency has gained as the sovereign-debt crisis in the euro zone has intensified.
Standard & Poor’s yesterday removed the AAA rating of the European Financial Stability Facility, which is designed to fund rescue packages for Greece, Ireland and Portugal, after reducing the top grades of France and Austria by one level on Jan. 13.
The company also downgraded Italy, Portugal and Spain.
Morgan Stanley said it’s bearish on nickel, aluminum, lead and zinc, where there may be "sizeable surpluses." The average forecast for nickel for 2012 was cut 10 percent to $9 per pound
($19,842 per ton), the biggest reduction among base metals, according to the report. Nickel futures traded at $19,598.
The Chinese economy will grow 8.4 percent this year, Morgan Stanley said, after revising the number from 8.7 percent. Growth last year was 9.2 percent, down from 10.4 percent in 2010, today’s data showed. Consumer price inflation cooled to 4.1 percent in December, the slowest pace in 15 months.
"Importantly, an anticipated easing in CPI inflation to
3.4 percent in 2012 is providing increased scope for selective and targeted policy easing, with the likely outcome of lower but sustainable growth," Morgan Stanley said. "
Interesting reading !!
"Gold to Gain, Copper ‘Favored’ in 2012, Morgan Stanley Says (1)
2012-01-17 05:36:03.718 GMT
(Adds China’s full-year growth in penultimate graph.)
By Chanyaporn Chanjaroen and Glenys Sim
Jan. 17 (Bloomberg) -- Gold may climb and copper is the most-favored base metal for 2012, according to Morgan Stanley, which said that investment demand will bolster bullion, while a deficit will benefit the raw material used in pipes and wires.
Gold will average $1,845 an ounce, Melbourne-based analysts Peter Richardson and Joel Crane said in a report today. While that’s 16 percent below their earlier forecast, it compares with today’s spot price of $1,657.98 an ounce at 5:28 a.m. in London.
Copper may average $3.70 per pound ($8,157 per metric ton), 3 percent less than an earlier prediction. Morgan Stanley is bearish on lead, nickel, aluminum and zinc amid surpluses.
Morgan Stanley’s outlook compares with that from Goldman Sachs Group Inc., which is bullish on aluminum and zinc as well as copper and gold. Global industrial output may grow 4.78 percent this year, down from 5.3 percent in 2011, with manufacturing is set to shrink in Germany, France and Italy amid the debt crisis, Morgan Stanley said.
"Commodity markets continue to confront the twin macro risks of a European recession and a hard landing in China in 2012," the analysts said. "A continuing recovery in the value of the U.S. dollar is proving to be an additional headwind."
Gold’s gains would continue to driven by rising investment demand, central-bank purchases and less hedging by producers, they wrote. The revised forecast represents a 17 percent climb from last year’s average of $1,572.28 an ounce. Bullion, which has rallied for 11 years, may also benefit from constrained growth in mine supply, they wrote.
Worldwide Deficit
Copper may be supported by restocking in China, the world’s largest user, Morgan Stanley said. There would be a refined- metal deficit of 300,000 tons this year, the third straight annual shortfall, the analysts forecast. Three-month copper rose to $8,225 per ton today, the highest level since Oct. 28.
China’s economy expanded 8.9 percent in the fourth quarter from a year earlier, the slowest pace in 10 quarters, as export demand moderated, according to data released today. A so-called hard landing in China, defined by the bank as two successive quarters of expansion of less than 7 percent, "still seems a low probability," the Morgan Stanley analysts wrote.
"We are most bullish on copper, moderately bullish on aluminum and zinc, and bearish on nickel" over six to 12 months," Goldman Sachs said in a report yesterday. While the bank’s 12-month estimate for copper was cut 5.3 percent to $9,000, "current prices generally present value to consumers,"
according to Max Layton, a London-based analyst.
Dollar Rally
The Dollar Index, a measure against the currencies of six trading partners, has gained 1.1 percent this month, extending last year’s 1.5 percent rise. The currency has gained as the sovereign-debt crisis in the euro zone has intensified.
Standard & Poor’s yesterday removed the AAA rating of the European Financial Stability Facility, which is designed to fund rescue packages for Greece, Ireland and Portugal, after reducing the top grades of France and Austria by one level on Jan. 13.
The company also downgraded Italy, Portugal and Spain.
Morgan Stanley said it’s bearish on nickel, aluminum, lead and zinc, where there may be "sizeable surpluses." The average forecast for nickel for 2012 was cut 10 percent to $9 per pound
($19,842 per ton), the biggest reduction among base metals, according to the report. Nickel futures traded at $19,598.
The Chinese economy will grow 8.4 percent this year, Morgan Stanley said, after revising the number from 8.7 percent. Growth last year was 9.2 percent, down from 10.4 percent in 2010, today’s data showed. Consumer price inflation cooled to 4.1 percent in December, the slowest pace in 15 months.
"Importantly, an anticipated easing in CPI inflation to
3.4 percent in 2012 is providing increased scope for selective and targeted policy easing, with the likely outcome of lower but sustainable growth," Morgan Stanley said. "
Wednesday, 11 January 2012
Euro Fears on Emerging Markets
LONDON, Jan 11 (Reuters) - Emerging markets were flat on Wednesday as concerns about the euro zone returned to the fore while the Turkish lira rose to its strongest level since the start of the year, emboldened by a smaller-than-forecast November current account deficit.
Hungary's forint eased against the euro after recovering nearly 4 percent from Thursday's record low even as its government struck a more conciliatory note in talks with international lenders while the Egyptian pound sank to new lows despite the expected start of talks with the International Monetary Fund this week.
Data showing Germany gross domestic product shrinking quarter-on-quarter in last three months of 2011 refocused investor attention on the depth of the challenges faced by the euro zone, eroding some of the recent market gains prompted by signs of economic revival in the U.S. [ID:nL6E8CB1DY]
"We are still in fairly illiquid markets and a lot of investors are being quite tentative at this point. Europe is still the epicentre of the market's concerns," said UBS strategist Manik Narain.
"The market is concerned ahead of the bond redemption that the Greek government will face in March. There is risk of a coercive debt restructuring. It's a sword of Damocles hanging over Europe and people are being quite cautious," he said.
After a nearly two-percent gain in the previous session, the key emerging equity benchmark <.MSCIEF> stayed near Tuesday's one-month highs, easing 0.1 percent by 1200 GMT while emerging hard-currency debt <11EMJ> tightened two basis points.
Emerging European shares <.TRXFLDEEPU> were mostly unchanged though Russian shares <.IRTS> dipped over 1 percent after a three-session advance that took them to a month's high.
Turkish shares <.XU100> rose for their second straight session while Hungarian stocks slipped 1.3 percent <.BUX> after rising some five percent in last two sessions.
TURKISH SURPRISE
The lira firmed to its strongest level versus the dollar <TRY=> since the end of last year, with data showing Turkey's current account deficit falling year-on-year in November for the first time since 2009 offering the currency a fillip.
Central and eastern European currencies were weaker against the euro with the Polish zloty down a touch after rising three consecutive sessions <EURPLN=>.
Hungary's forint slipped nearly 1 percent from Tuesday's two-week peaks <EURHUF=>. The unit has recovering nearly 4 pct since Thursday's record low but investors remain wary despite a slightly more conciliatory stance taken by Budapest towards talks with the European Commission and the IMF for funding assistance. [ID:nB3E7NG01E]
The EC said it would take steps against Hungary as it has not made sufficient progress in tackling its excessive deficit. [ID:nB5E7NR00P]
"Today and tomorrow we are looking for comments from the IMF and EC regarding potential comments about conditionality of the external assistance. We stick to our view that forint will likely benefit the most as the market is still short," said UniCredit in a note.
Meanwhile, the start of IMF talks did little to aid the Egyptian pound, which traded at yet another record low against the dollar <EGP=>.
Talks are expected to begin in Cairo this week on a possible 18-month $3 billion loan to ease immediate balance of payment needs after months of political turmoil. [ID:nL1E8CA5DV]
"Expect further weakness in the foreign-exchange market until more foreign funds begin to flow. Meanwhile, the currency is coming under increasing pressure. While it has only lost 1.1 percent since mid-Q4 2011, this compares to a fairly flat performance after the initial shock of the uprising in Feb 2011, given intervention by the Central Bank of Egypt," said Societe Generale in a note.
"Such intervention in the forex market coupled with a deteriorating balance of payments position has lead to a large slide of $18 billion in reserves, leaving import cover now at only 3.7 months," it added.
Wednesday, 21 December 2011
ECB Lends 489 Billion Euros for Three Years, Exceeding Forecast
It seems alot but from below it seems this will not bring a turning point to the problems !!
Still a lot of uncertainty !!
Per Bloomberg.com :
"Dec. 21 (Bloomberg) -- The European Central Bank will lend euro-area banks more than economists forecast for three years in its latest attempt to keep credit flowing to the economy during the sovereign debt crisis.
The Frankfurt-based ECB awarded 489 billion euros ($645 billion) in 1,134-day loans, more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The ECB said 523 banks asked for the funds, which will be lent at the average of its benchmark rate -- currently 1 percent -- over the period of the loans. They start tomorrow.
Government bond markets may continue to rally if demand for the three-year loans exceeds 250 billion euros, Steven Barrow, head of Group of 10 currency strategy at Standard Bank Plc in London, said before the ECB announced the results.
Europe’s debt crisis has increased the risk of government and bank defaults, making institutions wary of lending to each other and driving up the cost of credit. The ECB is trying to ensure that banks have access to cheap cash for the medium term so that they can keep lending to companies and households. In addition to the longer-term loans, the ECB has widened the pool of collateral banks can use to secure the funds.
Italian and Spanish government bond yields have dropped since the ECB announced the loans on Dec. 8 as banks buy the securities to use them as collateral. French President Nicolas Sarkozy has suggested banks could use the loans to buy even more government debt.
‘Carry Trades’
"What the ECB wants is that the funds be used by banks to keep handing out loans," said Michael Schubert, an economist at Commerzbank AG in Frankfurt. "But there’s a second argument, which is to do carry trades by borrowing on the cheap at the ECB and buying sovereign bonds. We don’t know what the banks are using the money for."
ECB Vice President Vitor Constancio in a Dec. 19 interview predicted "significant" demand for the loans as banks face "very high refinancing needs early next year."
Some 230 billion euros of bank bonds mature in the first quarter of 2012 alone, ECB President Mario Draghi told the European Parliament this week.
"Banks represent about 80 percent of lending to the euro area," Draghi said. "The banking channel is crucial to the supply of credit." He predicted banks will experience "very significant funding constraints" for the "whole" of 2012.
No Turning Point
Banks from the euro region need to refinance 35 percent more debt next year than they did this year, according to a Bank of England study. Lenders have more than 600 billion euros of debt maturing in 2012, around three quarters of which is unsecured, the study says.
The ECB is focusing on greasing the banking system to fight the debt crisis as it resists calls to increase its bond purchases to reduce governments’ borrowing costs. It will offer a second three-year loan in February and banks have the option of repaying them after a year.
"It’s very significant and very helpful for the banks," Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London, told Bloomberg Television. "But it’s not going to bring about a turning point in this crisis."
Still a lot of uncertainty !!
Per Bloomberg.com :
"Dec. 21 (Bloomberg) -- The European Central Bank will lend euro-area banks more than economists forecast for three years in its latest attempt to keep credit flowing to the economy during the sovereign debt crisis.
The Frankfurt-based ECB awarded 489 billion euros ($645 billion) in 1,134-day loans, more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The ECB said 523 banks asked for the funds, which will be lent at the average of its benchmark rate -- currently 1 percent -- over the period of the loans. They start tomorrow.
Government bond markets may continue to rally if demand for the three-year loans exceeds 250 billion euros, Steven Barrow, head of Group of 10 currency strategy at Standard Bank Plc in London, said before the ECB announced the results.
Europe’s debt crisis has increased the risk of government and bank defaults, making institutions wary of lending to each other and driving up the cost of credit. The ECB is trying to ensure that banks have access to cheap cash for the medium term so that they can keep lending to companies and households. In addition to the longer-term loans, the ECB has widened the pool of collateral banks can use to secure the funds.
Italian and Spanish government bond yields have dropped since the ECB announced the loans on Dec. 8 as banks buy the securities to use them as collateral. French President Nicolas Sarkozy has suggested banks could use the loans to buy even more government debt.
‘Carry Trades’
"What the ECB wants is that the funds be used by banks to keep handing out loans," said Michael Schubert, an economist at Commerzbank AG in Frankfurt. "But there’s a second argument, which is to do carry trades by borrowing on the cheap at the ECB and buying sovereign bonds. We don’t know what the banks are using the money for."
ECB Vice President Vitor Constancio in a Dec. 19 interview predicted "significant" demand for the loans as banks face "very high refinancing needs early next year."
Some 230 billion euros of bank bonds mature in the first quarter of 2012 alone, ECB President Mario Draghi told the European Parliament this week.
"Banks represent about 80 percent of lending to the euro area," Draghi said. "The banking channel is crucial to the supply of credit." He predicted banks will experience "very significant funding constraints" for the "whole" of 2012.
No Turning Point
Banks from the euro region need to refinance 35 percent more debt next year than they did this year, according to a Bank of England study. Lenders have more than 600 billion euros of debt maturing in 2012, around three quarters of which is unsecured, the study says.
The ECB is focusing on greasing the banking system to fight the debt crisis as it resists calls to increase its bond purchases to reduce governments’ borrowing costs. It will offer a second three-year loan in February and banks have the option of repaying them after a year.
"It’s very significant and very helpful for the banks," Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London, told Bloomberg Television. "But it’s not going to bring about a turning point in this crisis."
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