India's central bank deepened a cut in the amount of cash lenders need to set aside as reserves to cushion Asia's third-largest economy from a global slowdown.
The Reserve Bank of India reduced the cash reserve ratio to 7.5 percent from 9 percent effective tomorrow. The measure will release 600 billion rupees ($12.2 billion) into the financial system, the bank said in a statement in Mumbai.
The move by Governor Duvvuri Subbarao comes after the Federal Reserve, the European Central Bank, the People's Bank of China and other monetary authorities slashed rates this week to avert a global recession. India's bonds rallied while the benchmark Sensitive index, which fell as much as 9.6 percent today, pared losses, after the announcement.
Today's cut extends the 50 basis point reduction in cash reserves the Reserve Bank announced on Oct. 6, the first reduction in five years.
Friday, October 10, 2008
Stock funds lose $43 billion so far in Oct: TrimTabs
Investors pulled a net $43.3 billion from all equity mutual funds so far in October, extending the record outflows experienced during September, TrimTabs Investment Research said on Thursday.
Funds investing mostly in US stocks had a net outflow of $27.3 billion so far this month, while funds investing mostly in non-US stocks had an outflow of $16 billion. In September, stock funds suffered net outflows of $43.5 billion. In addition, bond funds had a net outflow of $8.8 billion so far in October, following net outflows of $8.1 billion the previous week.
"It is extremely unusual to see this drawdown, not only in stock funds but bond funds," Conrad Gann, TrimTabs' president and chief operating officer, said in an interview. "Investors are putting their money in savings accounts, insured checking deposits and any fund that has a 'Treasury sticker' on it -- anything else isn't being considered," he added.
In September, investors pulled a record $72 billion from U.S.-managed stock and bond mutual funds, as shareholders took $43.5 billion from stock funds last month and $28.8 billion from bond funds, according TrimTabs. TrimTabs, which reports exchange-traded fund activity separately, said that ETFs investing in US stocks had inflows of $4 billion in the latest week ending Wednesday, following inflows of $15 billion in the previous week.
TrimTabs is a research firm headquartered in Sausalito, California.
Funds investing mostly in US stocks had a net outflow of $27.3 billion so far this month, while funds investing mostly in non-US stocks had an outflow of $16 billion. In September, stock funds suffered net outflows of $43.5 billion. In addition, bond funds had a net outflow of $8.8 billion so far in October, following net outflows of $8.1 billion the previous week.
"It is extremely unusual to see this drawdown, not only in stock funds but bond funds," Conrad Gann, TrimTabs' president and chief operating officer, said in an interview. "Investors are putting their money in savings accounts, insured checking deposits and any fund that has a 'Treasury sticker' on it -- anything else isn't being considered," he added.
In September, investors pulled a record $72 billion from U.S.-managed stock and bond mutual funds, as shareholders took $43.5 billion from stock funds last month and $28.8 billion from bond funds, according TrimTabs. TrimTabs, which reports exchange-traded fund activity separately, said that ETFs investing in US stocks had inflows of $4 billion in the latest week ending Wednesday, following inflows of $15 billion in the previous week.
TrimTabs is a research firm headquartered in Sausalito, California.
Singapore, in Recession, Ends Currency Gain Policy
Singapore fell into the first recession since 2002 as manufacturing slumped, prompting the central bank to end a policy favoring gains in its currency in an effort to support the economy.
The Monetary Authority of Singapore, which relies on the currency rather than interest rates as its policy tool, said today it's shifting to a ``zero-percent appreciation'' stance. Gross domestic product contracted an annualized 6.3 percent in the third quarter from the previous three months, after shrinking a revised 5.7 percent between April and June.
A weaker Singapore dollar, which fell today, would help electronics exporters such as Venture Corp. and Chartered Semiconductor Manufacturing Ltd. by making their products cheaper overseas. Central banks around the world are loosening monetary policy and cutting interest rates as a worsening global credit crisis saps growth.
``The whole world has gone on an easing policy and Singapore is no different,'' said Song Seng Wun, an economist at CIMB-GK Securities Pte in Singapore. ``We are likely to face a prolonged period of slow growth or recession, maybe for the next two years. This downturn is unlike previous downturns.''
The Singapore currency slid 0.6 percent to 1.4769 against the U.S. dollar as at 11:01 a.m. local time.
The trade ministry said today the city's economy will grow about 3 percent in 2008 from a year earlier, slower than a previous estimate of as much as 5 percent. That would be the weakest pace in seven years.
Inflation Peaks
``Asian countries cannot avoid the impact of weakening U.S., European and Japanese economies,'' Singapore Prime Minister Lee Hsien Loong said today. ``We must prepare for a rough ride at least over the next year, and quite possibly longer.''
The Monetary Authority of Singapore's new policy is a reversal of its stance six months ago when it called for faster exchange-rate appreciation to damp inflation. The Singapore currency has dropped 8.1 percent against the U.S. dollar in that period. Singapore manages its dollar against an undisclosed basket of currencies.
Inflation, which reached a 26-year high earlier this year, has peaked, the central bank said. Consumer prices will increase between 6 percent and 7 percent this year, and gains will ease to between 2.5 percent and 3.5 percent in 2009, it predicted.
``Against the backdrop of a weakening external economic environment and continuing stresses in global financial markets, the growth of the Singapore economy is expected to remain below potential in the period ahead,'' the monetary authority said. ``Inflation is expected to trend down in 2009 as the global and domestic economies slow.''
Rate Cuts
The Federal Reserve, European Central Bank and four other central banks lowered interest rates on Oct. 8 in an emergency coordination that was followed in Asia by China, Taiwan and South Korea. Australia cut its key rate by one percentage point on Oct. 7, the most since a recession in 1992.
Singapore's $161 billion economy declined 0.5 percent last quarter from a year earlier, compared with a revised 2.3 percent gain between April and June.
Growth has deteriorated as a slump in export demand forced factories to cut production, tourist arrivals faltered and a real-estate boom ended.
The island's manufacturing industry, which accounts for a quarter of the economy, contracted 11.5 percent last quarter from a year earlier, compared with a revised 4.9 percent drop in the previous three months, according to today's report.
Exports Slump
Singapore's government expects exports to decline as much as 4 percent this year, and the island's shipments of electronics goods have fallen for 19 consecutive months. That's hurting profits at companies including Venture Corp., the city's biggest publicly traded electronics maker.
Services climbed 6.1 percent in the third quarter from a year earlier, slowing from a 7 percent pace in the previous three months. Singapore will probably miss a government target of 10.8 million visitors in 2008, the tourism board said on Sept. 23, after visitor arrivals dropped 7.7 percent in August.
``The financial services sector is likely to see slower growth in the coming months as the ongoing global financial crisis has heightened uncertainties for sentiment-sensitive segments such as stocks-trading and fund-management activities,'' the government said in today's report.
The construction industry grew 7.8 percent, easing from a revised rate of 19.8 percent in the previous quarter.
The annualized 6.3 percent economic contraction in the third quarter compares with the median forecast of 0.3 percent growth in a Bloomberg News survey. The figures today are computed from data for July and August. Revised numbers will be released next month.
The Monetary Authority of Singapore, which relies on the currency rather than interest rates as its policy tool, said today it's shifting to a ``zero-percent appreciation'' stance. Gross domestic product contracted an annualized 6.3 percent in the third quarter from the previous three months, after shrinking a revised 5.7 percent between April and June.
A weaker Singapore dollar, which fell today, would help electronics exporters such as Venture Corp. and Chartered Semiconductor Manufacturing Ltd. by making their products cheaper overseas. Central banks around the world are loosening monetary policy and cutting interest rates as a worsening global credit crisis saps growth.
``The whole world has gone on an easing policy and Singapore is no different,'' said Song Seng Wun, an economist at CIMB-GK Securities Pte in Singapore. ``We are likely to face a prolonged period of slow growth or recession, maybe for the next two years. This downturn is unlike previous downturns.''
The Singapore currency slid 0.6 percent to 1.4769 against the U.S. dollar as at 11:01 a.m. local time.
The trade ministry said today the city's economy will grow about 3 percent in 2008 from a year earlier, slower than a previous estimate of as much as 5 percent. That would be the weakest pace in seven years.
Inflation Peaks
``Asian countries cannot avoid the impact of weakening U.S., European and Japanese economies,'' Singapore Prime Minister Lee Hsien Loong said today. ``We must prepare for a rough ride at least over the next year, and quite possibly longer.''
The Monetary Authority of Singapore's new policy is a reversal of its stance six months ago when it called for faster exchange-rate appreciation to damp inflation. The Singapore currency has dropped 8.1 percent against the U.S. dollar in that period. Singapore manages its dollar against an undisclosed basket of currencies.
Inflation, which reached a 26-year high earlier this year, has peaked, the central bank said. Consumer prices will increase between 6 percent and 7 percent this year, and gains will ease to between 2.5 percent and 3.5 percent in 2009, it predicted.
``Against the backdrop of a weakening external economic environment and continuing stresses in global financial markets, the growth of the Singapore economy is expected to remain below potential in the period ahead,'' the monetary authority said. ``Inflation is expected to trend down in 2009 as the global and domestic economies slow.''
Rate Cuts
The Federal Reserve, European Central Bank and four other central banks lowered interest rates on Oct. 8 in an emergency coordination that was followed in Asia by China, Taiwan and South Korea. Australia cut its key rate by one percentage point on Oct. 7, the most since a recession in 1992.
Singapore's $161 billion economy declined 0.5 percent last quarter from a year earlier, compared with a revised 2.3 percent gain between April and June.
Growth has deteriorated as a slump in export demand forced factories to cut production, tourist arrivals faltered and a real-estate boom ended.
The island's manufacturing industry, which accounts for a quarter of the economy, contracted 11.5 percent last quarter from a year earlier, compared with a revised 4.9 percent drop in the previous three months, according to today's report.
Exports Slump
Singapore's government expects exports to decline as much as 4 percent this year, and the island's shipments of electronics goods have fallen for 19 consecutive months. That's hurting profits at companies including Venture Corp., the city's biggest publicly traded electronics maker.
Services climbed 6.1 percent in the third quarter from a year earlier, slowing from a 7 percent pace in the previous three months. Singapore will probably miss a government target of 10.8 million visitors in 2008, the tourism board said on Sept. 23, after visitor arrivals dropped 7.7 percent in August.
``The financial services sector is likely to see slower growth in the coming months as the ongoing global financial crisis has heightened uncertainties for sentiment-sensitive segments such as stocks-trading and fund-management activities,'' the government said in today's report.
The construction industry grew 7.8 percent, easing from a revised rate of 19.8 percent in the previous quarter.
The annualized 6.3 percent economic contraction in the third quarter compares with the median forecast of 0.3 percent growth in a Bloomberg News survey. The figures today are computed from data for July and August. Revised numbers will be released next month.
Nikkei dives more than 11%, eyeing biggest fall since '87 crash
The Nikkei average tumbled more than 11 percent on Friday, poised for its biggest one-day drop since the 1987 stock market crash, on fears of a global recession despite moves by global authorities to thaw frozen credit markets.
The stock sell-off led the Osaka Stock Exchange to trigger a circuit-breaker and briefly halt trade in the Nikkei futures. "No one is buying. Fundamentals don't matter any more and there's no explanation for such a plunge," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.
"Fears about the US financial system have been rekindled. The US government is still debating whether it would inject money into financial institutions. It needs to act now even if that would be beyond the current law."
As of 0100 GMT, the benchmark Nikkei had recovered a little to be down 9.6 percent or 874.45 points at 8,283.04. If the fall is sustained until the end of Friday, it will surpass a 9.4 percent fall in the Nikkei earlier this week, which is the biggest fall since a 14.9 percent one-day slide during the 1987 stock market crash.
The broader Topix lost 7 percent to 841.98. The Dow Jones industrial average dropped 7.3 percent to 8,579.19 on Thursday, with bank and insurance stocks hammered again, as the previous day's coordinated global interest-rate cuts and myriad other official measures to unfreeze money markets did little to boost confidence in the financial sector.
The stock sell-off led the Osaka Stock Exchange to trigger a circuit-breaker and briefly halt trade in the Nikkei futures. "No one is buying. Fundamentals don't matter any more and there's no explanation for such a plunge," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.
"Fears about the US financial system have been rekindled. The US government is still debating whether it would inject money into financial institutions. It needs to act now even if that would be beyond the current law."
As of 0100 GMT, the benchmark Nikkei had recovered a little to be down 9.6 percent or 874.45 points at 8,283.04. If the fall is sustained until the end of Friday, it will surpass a 9.4 percent fall in the Nikkei earlier this week, which is the biggest fall since a 14.9 percent one-day slide during the 1987 stock market crash.
The broader Topix lost 7 percent to 841.98. The Dow Jones industrial average dropped 7.3 percent to 8,579.19 on Thursday, with bank and insurance stocks hammered again, as the previous day's coordinated global interest-rate cuts and myriad other official measures to unfreeze money markets did little to boost confidence in the financial sector.
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