Asia Currencies Head for Best Quarter Since 2004, Led by Rupiah

Asia Currencies Head for Best Quarter Since 2004, Led by Rupiah

June 30 (Bloomberg) -- Asian currencies headed for their biggest quarterly gain since 2004, led by Indonesia’s rupiah and South Korea’s won, as optimism the global economic slump is easing fueled demand for emerging-market assets.

The rupiah extended a quarterly winning streak that started in April 2008 on optimism President Susilo Bambang Yudhoyono will win re-election next month and introduce policies to support growth in Southeast Asia’s largest economy. The won gained as the Kospi Index of equities headed for its best quarter in two years. Crude and palm oil prices rose, boosting the outlook for commodity exporters including Malaysia.

“Most countries are moving along with a refreshing recovery trend that should be good for markets,” said Yeo Chin Tiong, head of treasury at OSK Investmnent Bank Bhd. in Kuala Lumpur. “The economies are chugging along, not fantastic, but stock and currency markets are trading on feel-good sentiment.”

The rupiah strengthened 0.6 percent to 10,210 per dollar as of 9 a.m. in Jakarta, taking its three-month rally to 14.6 percent, according to data compiled by Bloomberg. The won rose 0.5 percent 1,279.60 for an 8.1 percent gain since March 31. The ringgit added 3.5 percent in the quarter to 3.5220, and Taiwan’s dollar climbed 3.3 percent to NT$32.857.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active regional currencies, rose almost 2.8 percent this quarter, the most since 2004. Investors ploughed a net $17.8 billion this year into eight Asian stock markets outside Japan, according Bloomberg data. The MSCI Asia Pacific index of regional stocks rallied 29 percent since the end of March.

Korean Confidence

The dollar weakened 0.2 percent to 95.89 yen and fell for a fourth day against the euro to $1.4115 as investors sought higher-yielding assets. The ICE’s Dollar Index, which tracks the currency against its six major rivals, declined 6.7 percent this quarter as demand for higher yields erodes the dollar’s safe- haven appeal.

The won was poised for its biggest quarterly gain in four years as local manufacturers turned less bearish in their business outlook.

An index measuring expectations for July advanced to 78 from 76 in June, based on a survey of 1,445 producers. The index reached 44 in January, the lowest since the series began in 1991. A score of less than 100 means pessimists outnumber optimists.

“Confidence numbers have picked up certainly, but they’re not yet being matched by real activity,” said Patrick Bennett, Hong Kong-based currency strategist at Societe Generale SA. “Some of the confidence priced into equities is prone to be unwound.”

Commodity Prices

The ringgit strengthened by the most in almost three weeks as stocks rallied and commodity prices extended gains, brightening the outlook for exports.

Higher prices for palm and crude oil, which together account for 10 percent of Malaysia’s exports, may help bring an end to a seven-month drop in overseas sales. Prime Minister Najib Razak may unveil incentives to attract funds from abroad when he opens a two-day investment conference in Kuala Lumpur today, according to a report from HwangDBS Vickers Research Sdn. yesterday. Read Article... http://www.bloomberg.com/apps/news?pid=20601087&sid=aW.mLODOHEXI

Commodities Stocks Lead Declines

Commodities Stocks Lead Declines

European stocks headed lower Monday, hit by profit-taking in the oil and mining sectors.

(Source Wall Street Journal) The pan-European Stoxx 600 was down 1.6% at 210.83. London's FTSE 100 Index was off 1.8% to 4358.32, Frankfurt's DAX fell 2% to 4965.38, and the CAC-40 Index in Paris was down 1.9% at 3262.24.

The oil market has had the longest bull move with no serious retracement since January/July last year, said Simon Denham at capital Spreads, boosting oil equity stocks. "It must be mentioned that there is now room for a bit of a fall." Also gold is falling in harmony with everything else Monday morning, hitting the mining stocks.

"The weakness of the dollar has helped in recent weeks to send the precious metal higher," said Mr. Denham, "but there is a distinct feeling that investors now have more important things to worry about than getting sucked into another yellow metal bubble."

Shares in Royal Dutch Shell slid 2.9% while shares in ArcelorMittalwere 3.6% lower. The Dow Jones pan-European Stoxx 600 oil & gas index traded down 2% to 299.7, while the Dow Jones pan-European Stoxx 600 basic resource index was off 3.1% to 368.7.
Among other stocks to watch, TomTomdeclined 6.6% after the navigation-products maker said it plans to raise about $607 million by selling new shares to alleviate a heavy debt burden.

In Asia, share markets were mostly lower in subdued Monday trade, with energy and mining stocks falling. Japan's Nikkei index closed down 1%, while South Korea's Kospi Composite closed 1.1% lower. The Hang Seng index in Hong Kong was last seen 1.9% lower. Read Article... http://online.wsj.com/article/SB124504751817214641.html

World markets rise strongly as oil prices hit new 2009 high; Hong Kong jumps 4 percent

World markets rise as oil prices hit new 2009 high
World markets rise strongly as oil prices hit new 2009 high; Hong Kong jumps 4 percent

HONG KONG (AP) -- World stock markets shot up Wednesday as oil prices touched a new high for the year above $71 a barrel and fears of inflation eased in China.
Major indexes in Asia and Europe gained nearly 2 percent or more as buyers returned after two days of losing sessions, with strengthening commodity prices boosting resource producers like miner BHP Billiton and energy giant PetroChina.

After a three-month advance, global markets have showed a lack of direction in recent days amid worries that the rally was getting too far ahead of any real economic improvements.
But some investors found more reason for optimism after China reported prices fell in May for a fourth month, moderating the threat of inflation and possibly giving Beijing more room to carry out its giant stimulus plan.
The news also raised expectations other figures about Chinese industrial production and retail sales, due later this week, would be similarly upbeat -- raising hopes that Chinese demand could help lift other Asian economies.

Speculation that China's appetite for raw materials will stay robust have helped pulled commodity prices higher of late, a trajectory that continued Wednesday. Oil prices rose, with benchmark crude for July delivery up $1.41 at $71.42 a barrel.

While taken by some as a sign economic activity will pick up, the rise in oil and commodity prices is also being driven by worries about a weaker U.S. dollar and inflation, as well as massive liquidity, analysts said.

"There's an overriding hope that the commodity rally is signaling a recovery," said Kirby Daley, senior strategist at Newedge Group in Hong Kong. "But some of the fundamental decay at the core of the economy is still there, so I think investors may be getting ahead of themselves."

Hong Kong's Hang Seng surged 727.17, or 4 percent, to 18,785.66.
Japan's Nikkei 225 stock average gained 204.67 points, or 2.1 percent, to 9,991.49, as investors shrugged of news that core machinery orders, a closely watched indicator of corporate capital spending, tumbled to a 22-year low in April as uncertainty about an economic recovery kept companies cautious.
In South Korea, the Kospi advanced 3.1 percent to 1,414.88, Australia's benchmark climbed about 2.3 percent, while Shanghai's main index rose 1 percent. India's Sensex was up 2.5 percent in afternoon trading.
Europe followed Asian shares higher, with indexes in Britain, Germany and France up nearly 2 percent.
Wall Street futures gained, suggesting a stronger session in the U.S. Dow futures rose 86, or 1 percent, to 8,823 and S&P futures climbed 10.4, or 1.1 percent, to 949.90.

Shanghai Surprise China backs its own global market.

Shanghai Surprise
China backs its own global market.

(Source Newsweek)
There has been buzz lately in Asia that Hong Kong may become a has-been. As the global financial crisis gathered speed last year, Hong Kong looked relatively well insulated from the crashing markets because its banks were not heavily exposed to credit default swaps and all those other funky instruments. But the buzz is about changing politics, not markets. In April, Chinese officials announced firmly that they would like to see Shanghai become a global financial center by 2020; in the same month, Premier Wen Jiabao warned that Hong Kong must raise its game or face decline. The news was chilling for many in Hong Kong, which serves as a gateway to China for investors and is almost entirely dependent on financial services. Some 60 percent of the market capitalization of the Hong Kong Stock Exchange and more than 70 percent of its daily trading is in shares of Chinese mainland firms. Many of these are large state-run enterprises—the sort that leaders in Beijing could very easily order to trade in Shanghai instead.

Beijing pushed for Shanghai to play a bigger role as a financial center back in the early 1990s. But it didn't take off then because Chinese financial capitalism was still relatively immature. Now the mainland markets in Shanghai as well as Shenzhen are more developed, major Shanghai banks having learned a lot from the experience of Hong Kong.

Shares in state-owned firms can be more freely traded, and the government is looking to create new kinds of securities. In the coming years, Beijing is expected to allow the yuan to trade more freely, which could give it a major role in international currency trading. But to allow markets to mature without completely losing control over them, Beijing needs traders that are competent, but also compliant—the sort it can reach and influence more easily in Shanghai than in Hong Kong, where market rules are still based on foreign law. Read Article...
http://www.newsweek.com/id/200665