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

Deflation fears spread in Japan after consumer prices fall at record pace

Record fall in Japan prices fuel deflation fears
Deflation fears spread in Japan after consumer prices fall at record pace

TOKYO (AP) -- Deflation is clawing its way back in Japan, and that's not good news for an economy trying to recover from its worst recession since World War II.

Japan's key consumer price index tumbled at a record pace in May, the government said Friday. The core nationwide CPI, which excludes volatile fresh food prices, fell 1.1 percent from the previous year in the third straight month of decline.

The result marked the biggest fall since the government began releasing comparable data in 1971.

Japan appears to be "heading for another lengthy period of deflation," said Richard Jerram, chief economist at Macquarie Securities in Tokyo.

Lower prices may seem like a good thing, but deflation can hamper growth by depressing company profits and causing consumers to postpone purchases, leading to production and wage cuts. It can also increase debt burdens.

The drop in underlying prices is "set to be persistent" and can lead to various problems for companies and individuals because interest rates will "be too high for prevailing economic conditions," Jerram said in a note to clients.

Japan underwent a destabilizing bout of deflation during the 1990s, and again earlier this decade, when the world's second-largest economy struggled to escape from a real estate and banking crisis.

After the results, Japan's finance minister Kaoru Yosano expressed concerns about a significant slowdown in demand.
"We continue to monitor price movements, and need to carefully implement economic management to avoid...a deflationary spiral," Yosano said at a news conference, according to Kyodo news agency.
With crude oil prices down dramatically from record highs a year earlier, energy and transportation prices fell sharply in May. Fuel, light and water charges were down 3 percent, and private transportation costs tumbled 9.2 percent.
But analysts point to the 0.5 percent decline in so-called "core-core CPI," which excludes food and energy, as a more troubling sign of weakness in underlying prices.
Prices for household durables fell 4.9 percent, and those for clothing slipped 0.5 percent.
The core CPI for Tokyo dropped 1.3 percent in June, suggesting that prices nationwide are headed further south. Prices in the nation's capital are considered a leading barometer of price trends across Japan.
"This is consistent with media reports that large supermarkets are marking such goods down as households turn increasingly defensive amid severe employment and income conditions," said Kyohei Morita, chief economist at Barclays Capital in Tokyo.
Japan's central bank predicts that prices will keep falling for at least two years. In its latest economic outlook report in May, it forecast core CPI to drop 1.5 percent this fiscal year ending March 2010 and another 1 percent the following year.

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.

China And Commodities: A Discussion

China And Commodities: A Discussion
China is buying up raw materials at a feverish pace, motivated by fear of a falling dollar. What does this mean for the U.S.?

(Source Forbes) Forbes gathered a panel of industry observers to discuss recent actions by China as it goes on a commodities buying spree. Our industry observers include David Joy, chief market strategist for Riversource Investments, Liz Ann Sonders, chief investment strategist for Charles Schwab & Co., and Bill Singer, shareholder in the Securities Practice Group of the law firm Stark & Stark.

Some background on China's recent commodities boom. Recent figures show it holds 1,054 tons of gold, up from 600 tons in 2003; it upped its imports of iron ore to 57 metric tons in April and also increased its imports of other commodities including copper and oil. Specifically, China purchased 399,833 tons of copper in April, a record, vs. 374,957 in March.
http://www.forbes.com/2009/06/04/china-commodities-dollar-intelligent-investing-debt.html

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

India shines among weaker bourses

LONDON (Reuters) - Equities in Europe and Japan fell on Monday although emerging markets got a big boost from Indian elections which raised hopes of a stable, pro-economic reform government.
The dollar strengthened slightly against major currencies after last's week four-month low.
India was a bright spot for equity investors with the benchmark 30-share BSE index .BSESN surging more than 17 percent before trading was halted for the day.
Prime Minister Manmohan Singh's coalition defied predictions of a tight election result and was only about 11 seats short of an outright majority following the vote count.
A strong Indian coalition, free of the pressures from its former communist partners, has boosted the prospect of reforms to encourage growth in Asia's third-largest economy.
http://www.reuters.com/article/hotStocksNews/idUSTRE54B01U20090518

World stock markets rebound on Chinese stimulus hopes, Shanghai leads recovery

World stocks rebound on China stimulus hopes
Wednesday March 4, 6:43 am ET

World stock markets rebound on Chinese stimulus hopes, Shanghai leads recovery

LONDON (AP) --(From Yahoo Finance) Stock markets in Europe and Asia rebounded Wednesday amid mounting hopes that China will soon announce a big stimulus package that could help limit the length and depth of the recession in the industrialized world.
A legislative meeting starts Thursday in China and top of the agenda is what the government can do to lift growth rates, which have fallen in the wake of the global economic downturn. As one of the few major economies still expanding, China is being closely watched amid hopes its demand and trade can help the world weather the most severe global slowdown in decades.

Chinese shares led Wednesday's advance, with Shanghai's index jumping more than 6 percent to close at 2,198.11.
"Obviously, this unusual rally suggests that investors are overly optimistic about what to expect from the legislature. They think the government will do more to boost spending to stimulate the economy," said Peng Yunliang, an analyst with Shanghai Securities in Shanghai.

Elsewhere in Asia, Japan's Nikkei 225 stock average was up 61.24 points, or 0.9 percent, to 7,290.96, while Hong Kong's Hang Seng added 297.27, or 2.5 percent, to 12,331.15. South Korea's Kospi climbed 3.3 percent to 1,059.26.
Markets in Singapore, Taiwan and New Zealand also gained. Australia's index shed 1.6 percent.
In Europe, the FTSE 100 index of leading British shares recovered from six-year lows to rise 66.42 points, or 1.9 percent, to 3,578.51, while Germany's DAX was up 99.38 points, or 2.7 percent, at 3,790.10. The CAC-40 in France was 54.05 points, or 2.1 percent, higher at 2,608.60.

The Markets today (March 3, 2009, 19.00 CET)

Asian Markets closed slightly down with the exception of the Shanghai market (minus 2.30 percent).
European Markets were in the green most of the day but turned red after Wall Street 's opening. However the losses were limited except for the Footsie with a more than 3 percent loss.
In Amsterdam the AEX closed just above the 200 points level at 202.57 with a 3 percent loss.
Wallstreet was up at the beginning of the morning session, than turned negative and is now (19.00 CET, Amsterdam) hoovering around yesterday's close and going down again.
Ford came out with a dismal report about the February U.S. car sales which fell 48 percent despite huge rebates and low-interest financing.

Murdoch: China, India will reshape the world

Murdoch: China, India will reshape the world
By ROHAN SULLIVAN, Associated Press Writer Rohan Sullivan, Associated Press
SYDNEY, Australia – Media tycoon Rupert Murdoch says the ongoing metamorphosis of China and India from historic backwaters into economic powers will help reshape the world in the next few decades.
The News Corp. chief gave an upbeat assessment of the future and made a vigorous case for free markets despite troubled economic times and what he called "naked, heartless aggression" in the world.
In the first of a series of speeches in his birth country of Australia, Murdoch spoke Sunday of "the great transformation we've seen in the past few decades, the unleashing of human talent and ability across our world, and the golden age for humankind that I see just around the corner."