Aug. 20 (Bloomberg) -- India’s benchmark wholesale price index extended its longest decline in three decades as central bank Governor Duvvuri Subbarao says an inflation-targeting policy isn’t enough to maintain financial and economic stability.
Wholesale prices fell 1.53 percent in the week to Aug. 8 from a year earlier, the commerce ministry said in New Delhi today. That was more than the median forecast of a 1.49 percent decline in a Bloomberg News survey of 18 economists.
Subbarao is concerned that inflation may gather speed, as evidenced by upward revisions the commerce ministry has been making to the wholesale price index in recent months. The governor told a forum in the southern Indian city of Hyderabad last week that the global financial crisis has shown an exclusive focus by central banks on inflation targeting “doesn’t work.”
“The central bank can’t detach itself from its stated objective of maintaining price stability and at the same time will have to address concerns over growth and orderly financial markets,” said D. H. Pai Panandiker, president of the RPG Foundation, an economic policy group in New Delhi.
Subbarao slashed the Reserve Bank of India’s key interest rates six times between October 2008 and April 2009 to an unprecedented low. On July 28, he left the reverse repurchase rate unchanged at 3.25 percent and kept the repurchase rate at 4.75 percent and said the central bank may have to “reverse” its expansionary measures to subdue inflation.
Weak Monsoon
Bonds were little changed. The yield on the 7.02 percent note due August 2016 was unchanged at 7.10 percent as of 12:04 p.m. in Mumbai, according to the central bank’s trading system.
Gains in wholesale prices may exceed the central bank’s forecast of 5 percent by March next year as a weak monsoon threatens to reduce harvests and push up food prices. Inflation has slowed from a 16-year high of 12.91 percent in August 2008.
The India Meteorological Department on Aug. 10 lowered its monsoon forecast for a second time this season, saying showers between June and September will be 13 percent below average, compared with a 7 percent shortfall estimated in June.
Food costs, as reflected in the consumer-price indexes, are already high. India has four consumer-price gauges and uses the wholesale-price index as the benchmark because the other inflation measures don’t capture the aggregate price picture.
‘Complicates’ Policy
Consumer prices paid by farm workers jumped 11.52 percent in June from a year earlier after gaining 10.21 percent in May. Prices paid by rural workers rose 11.26 percent in June and those paid by industrial workers climbed 9.26 percent.
Subbarao says the discrepancies between these inflation measures “complicates” monetary policy. The governor claims borrowing by Prime Minister Manmohan Singh’s government to fund the widest budget deficit in 16 years also “impedes” the transmission of central bank policy.
Finance Minister Pranab Mukherjee on July 6 unveiled plans to borrow a record 4.51 trillion rupees ($93.3 billion) to fund a budget gap estimated at 6.8 percent of gross domestic product.
The central bank is worried that high government borrowings are “literally negating the interest-rate cuts of the past months,” said the RPG Foundation’s Panandiker.
In its most recent monetary policy statement released July 28, the central bank said its medium-term objective is an inflation rate of 3 percent.
Asset-Price Bubbles
Subbarao last week said inflation targeting can’t do much to provide protection against asset-price bubbles and doesn’t necessarily deliver financial or macroeconomic stability.
“The challenge thrown up by the crisis is what should be the mandate of the central bank,” he said. “If an exclusive focus on targeting of inflation has failed, how do we rejig that mandate?”
The Reserve Bank has done a “fairly decent job” in recent years to tailor its strategy according to an evolving economic environment, said Dharmakirti Joshi, an economist at Mumbai- based Crisil Ltd., the local unit of Standard & Poor’s.
“Though the central bank will have to remain focused on inflation, strict mechanical targeting is not feasible in a country like India,” Joshi said. “One reason for that is that the RBI is juggling a lot responsibilities, including managing government debt and ensuring financial markets stability.”
Thursday, August 20, 2009
Dangerous Hurricane Bill could threaten east Canada
MIAMI (Reuters) - Powerful Hurricane Bill, a dangerous Category 4 storm with 135 mph winds, raged across the open Atlantic on Wednesday, days from land but on a path that could menace Canada's eastern provinces next week.
Sweeping past the Caribbean islands and posing no threat to U.S. oil and gas installations in the Gulf of Mexico, the first hurricane of the 2009 Atlantic season was expected to charge between the U.S. East Coast and Bermuda, well offshore.
Residents of Bermuda, a mid-Atlantic British territory and reinsurance capital, were warned to prepare for the storm. The latest forecast track issued by the U.S. National Hurricane Center would take Bill more than 100 miles to the west.
But Bill's massive size -- tropical storm force winds of 39 to 73 mph extend up to 230 miles from its center -- meant Bermuda would get a good dose of heavy weather, forecasters said.
"All (computer) models keep the storm between the United States and Bermuda. Exactly how close it comes to either of those is up for debate," said National Hurricane Center forecaster Eric Blake. "The average error (in the forecast track) is 200 miles at about 3 days."
"Bermuda is expected to see large swells and areas of heavy rain and high winds. Hopefully the core of the hurricane will stay offshore," he said.
The Bermuda Sun newspaper reported that U.S. Secretary of State Hillary Clinton and her husband, former President Bill Clinton, planned to fly to Bermuda on Wednesday for a private vacation of three to four days at a beach resort. The State Department declined to officially confirm where Clinton was.
HEAVY SURF EXPECTED ON U.S. EAST COAST
Forecasters said Bill might get stronger. Its top winds were expected to peak at about 145 mph on Thursday.
Hurricanes of Category 3 or higher on the five-step Saffir-Simpson intensity scale are considered "major" storms and are the most destructive type.
The well-defined eye of Bill was located about 970 miles south-southeast of Bermuda at 5 p.m. EDT (2100 GMT) on Wednesday and the system was moving toward the northwest at 20 mph, the hurricane center said.
Its curving forecast track would take it to a position hundreds of miles (km) east of Miami by early Friday, and well off New York by Sunday.
"How close it gets to the New England coast, there's still the usual uncertainty in that long time period," former NHC director Max Mayfield said. "But the core of the hurricane, most of the models indicate it's going to remain off the coast."
Forecasters said dangerous swells and life-threatening rip currents could affect the northern Caribbean islands, the Bahamas, Bermuda and the U.S. East Coast in the next few days.
The latest forecast track from the hurricane center would take Bill slightly closer to the U.S. East. It shows the storm just south of Nova Scotia by Sunday afternoon as a Category 2 hurricane and moving directly over Newfoundland after that. But five days in advance, the forecast has an average error of several hundred miles.
Asian Stocks Advance on Crude Oil, QBE Earnings; CSL Declines
Aug. 20 (Bloomberg) -- Asian stocks gained, led by energy and finance companies, as oil prices rallied and QBE Insurance Group Ltd. reported higher first-half profit.
Woodside Petroleum Ltd., Australia’s No. 2 oil producer, climbed 4.3 percent in Sydney. QBE, Australia’s largest property and casualty insurer, advanced 7 percent. Isuzu Motors Ltd., Japan’s third-biggest maker of commercial vehicles, rallied 5.4 percent as brokerages recommended buying Japanese automakers. CSL Ltd., the world’s second-largest maker of blood plasma products, slumped 3.4 percent after Citigroup Inc. cut its recommendation on the stock.
“The consensus remains among investors that the global economy is on course for a recovery, but we have to see further improvement in the economy and company earnings for markets to go up higher,” said Kiyoshi Ishigane, a strategist at Mitsubishi UFJ Asset Management Co., which oversees about $53 billion.
The MSCI Asia Pacific Index added 0.6 percent to 110.99 as of 11:14 a.m. in Tokyo. The gauge has rallied 57 percent from a more than five-year low on March 9 amid speculation the global economy is recovering.
Japan’s Nikkei 225 Stock Average advanced 0.7 percent to 10,279.19. Australia’s S&P/ASX 200 Index gained 0.4 percent, while South Korea’s Kospi Index added 0.7 percent.
Futures on the Standard & Poor’s 500 Index rose 0.1 percent. The U.S. gauge advanced 0.7 percent yesterday as energy stocks gained, while Merck & Co. led drugmakers higher after a judge upheld a patent.
Rising Valuations
The MSCI Asia Pacific Index rally since March has lifted the average valuation of shares in the gauge to 24 times estimated earnings, compared with 17 times for the S&P 500 and 14 times for the Dow Jones Stoxx 600 Index in Europe.
Woodside Petroleum advanced 5.6 percent to A$46.75 in Sydney. Inpex Corp., Japan’s largest oil explorer, gained 2.3 percent to 717,000 yen in Tokyo.
Crude oil for September delivery rallied 4.7 percent to $72.42 a barrel in New York. U.S. oil stockpiles dropped 8.4 million barrels last week, the most since the week ended May 23, 2008, a report from the Energy Department showed.
QBE Insurance surged 7 percent to A$22.20 in Sydney. The company said first-half profit climbed 19 percent on premium growth and foreign exchange gains.
Isuzu rallied 5.4 percent to 197 yen after Nikko Citigroup raised its recommendation to “hold” from “sell.” Hino Motors Ltd. advanced 2.7 percent to 382 yen after upgrades at Nikko Citigroup and Daiwa Securities.
CSL slumped 3.3 percent to A$32.02. The stock was cut to “hold” from “buy” at Citigroup.
Woodside Petroleum Ltd., Australia’s No. 2 oil producer, climbed 4.3 percent in Sydney. QBE, Australia’s largest property and casualty insurer, advanced 7 percent. Isuzu Motors Ltd., Japan’s third-biggest maker of commercial vehicles, rallied 5.4 percent as brokerages recommended buying Japanese automakers. CSL Ltd., the world’s second-largest maker of blood plasma products, slumped 3.4 percent after Citigroup Inc. cut its recommendation on the stock.
“The consensus remains among investors that the global economy is on course for a recovery, but we have to see further improvement in the economy and company earnings for markets to go up higher,” said Kiyoshi Ishigane, a strategist at Mitsubishi UFJ Asset Management Co., which oversees about $53 billion.
The MSCI Asia Pacific Index added 0.6 percent to 110.99 as of 11:14 a.m. in Tokyo. The gauge has rallied 57 percent from a more than five-year low on March 9 amid speculation the global economy is recovering.
Japan’s Nikkei 225 Stock Average advanced 0.7 percent to 10,279.19. Australia’s S&P/ASX 200 Index gained 0.4 percent, while South Korea’s Kospi Index added 0.7 percent.
Futures on the Standard & Poor’s 500 Index rose 0.1 percent. The U.S. gauge advanced 0.7 percent yesterday as energy stocks gained, while Merck & Co. led drugmakers higher after a judge upheld a patent.
Rising Valuations
The MSCI Asia Pacific Index rally since March has lifted the average valuation of shares in the gauge to 24 times estimated earnings, compared with 17 times for the S&P 500 and 14 times for the Dow Jones Stoxx 600 Index in Europe.
Woodside Petroleum advanced 5.6 percent to A$46.75 in Sydney. Inpex Corp., Japan’s largest oil explorer, gained 2.3 percent to 717,000 yen in Tokyo.
Crude oil for September delivery rallied 4.7 percent to $72.42 a barrel in New York. U.S. oil stockpiles dropped 8.4 million barrels last week, the most since the week ended May 23, 2008, a report from the Energy Department showed.
QBE Insurance surged 7 percent to A$22.20 in Sydney. The company said first-half profit climbed 19 percent on premium growth and foreign exchange gains.
Isuzu rallied 5.4 percent to 197 yen after Nikko Citigroup raised its recommendation to “hold” from “sell.” Hino Motors Ltd. advanced 2.7 percent to 382 yen after upgrades at Nikko Citigroup and Daiwa Securities.
CSL slumped 3.3 percent to A$32.02. The stock was cut to “hold” from “buy” at Citigroup.
Wednesday, August 19, 2009
Indian Stocks Fall on Monsoon, China Concerns; Mahindra Drops
Aug. 19 (Bloomberg) -- India’s benchmark stock index fell after the nation’s agriculture minister said farm output may decline because of low monsoon rains. Metal producers declined after their Chinese counterparts plunged.
Mahindra & Mahindra Ltd., India’s largest tractor maker, sank 3.7 percent after Farm Minister Sharad Pawar today said monsoon-sown rice production may decline by 10 million metric tons this year as a result of drought in a third of the country’s 626 districts. Tata Steel Ltd., the biggest producer of the alloy, slid 4 percent.
“There is uncertainty in the minds of investors how the government will overcome the drought situation,” said A.N. Sridhar, a fund manager at Sahara Asset Management Co. in Mumbai. “The rally in commodities seems to have come off as there is uncertainty over demand in China.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 225.62, or 1.5 percent, to 14,809.64. The measure has lost 5.5 percent this month on concern monsoon rainfall will be deficient. The S&P CNX Nifty Index on the National Stock Exchange lost 1.5 percent to 4,394.1. The BSE 200 Index declined 1.6 percent to 1,815.11.
Mahindra lost 3.7 percent to 740.15 rupees. Jaiprakash Associates Ltd., the nation’s biggest maker of dams, slid 2.7 percent to 206.7 rupees.
Hero Honda Motors Ltd., the nation’s biggest motorcycle maker, lost 2.3 percent to 1,359.2 rupees on concern that the weak monsoon will slash spending in agricultural regions. Forty percent of Hero Honda’s sales come from rural demand.
Farm Output
ACC Ltd., India’s biggest cement maker, lost 5.2 percent to 756.3 rupees. Reliance Communications Ltd., India’s second- largest mobile-phone services operator, lost 4.6 percent to 240.2 rupees.
The monsoon season, which brings about three-quarters of India’s annual rainfall, may be the driest in seven years, the weather bureau said last week, hurting farm output in the world’s second-biggest producer of rice, sugar and wheat.
Rain in the June-September season will be 87 percent of the 50-year average, compared with 93 percent forecast in June, the India Meteorological Department said last week.
Production of oilseeds and sugar cane may also drop, Pawar said, without providing a forecast. Monsoon-sown oilseeds were planted in 15.2 million hectares compared with 16.4 million hectares a year earlier, the farm ministry said.
The government will extend a 15 rupees-a-liter subsidy on imported edible oils until March 2010, Pawar said.
China Stocks
Tata Steel lost 4 percent to 433.75 rupees. Hindalco Industries Ltd., the biggest aluminum producer, slid 3.6 percent to 102.7 rupees. Sterlite Industries (India) Ltd., the nation’s biggest copper producer, declined 1.4 percent to 610.2 rupees.
China’s stocks tumbled, briefly driving the benchmark index into a so-called bear market, on concern economic growth will falter as banks rein in lending.
The Shanghai Composite Index lost 4.3 percent to 2,785.58. The gauge has slumped 19.8 percent since Aug. 4, after more than doubling from November as China rolled out a 4 trillion yuan ($585 billion) stimulus package.
A measure of Chinese metals and materials producers dropped 6.6 percent, the worst performer among 10 industry groups on the CSI 300 Index that covers the Shanghai and Shenzhen markets.
Overseas funds sold a net 9.74 billion rupees ($200.1 million) of Indian stocks on Aug. 17, the Securities & Exchange Board of India said on its Web site. The funds have bought 366.3 billion rupees of Indian stocks this year, compared with record net sales of 530 billion rupees for the whole of 2008.
The following stocks were among the most active on the exchange:
Glenmark Pharmaceuticals Ltd. (GNP IN) plunged 15 percent to 223.25 rupees. The Indian pharmaceutical company fell the most in six months after saying its drug for lung disease wasn’t effective in a patient study.
Maruti Suzuki India Ltd. (MSIL IN) climbed 0.1 percent to 1,301.85 rupees. The maker of half the cars sold in India was raised to “buy” from “hold” at Citigroup Inc., which said the company is best positioned to benefit from a recovery in urban consumption.
Reliance Industries Ltd. (RIL IN) lost 2.9 percent to 1,885.85 rupees. India’s most valuable company is looking to sell a stake of as much in 15 percent in the Rewas port project, Mint reported, citing two people briefed on the matter. Reliance needs to sell the stake both to fund the project and to bring in specialists because it does not have expertise in handling cargo such as containers, according to the report.
Unitech Ltd. (UT IN) fell 3.2 percent to 82.5 rupees. The nation’s second-biggest real estate developer said its telecom unit, Unitech Wireless Ltd., has got a 50 billion rupee-loan from State Bank of India.
Mahindra & Mahindra Ltd., India’s largest tractor maker, sank 3.7 percent after Farm Minister Sharad Pawar today said monsoon-sown rice production may decline by 10 million metric tons this year as a result of drought in a third of the country’s 626 districts. Tata Steel Ltd., the biggest producer of the alloy, slid 4 percent.
“There is uncertainty in the minds of investors how the government will overcome the drought situation,” said A.N. Sridhar, a fund manager at Sahara Asset Management Co. in Mumbai. “The rally in commodities seems to have come off as there is uncertainty over demand in China.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 225.62, or 1.5 percent, to 14,809.64. The measure has lost 5.5 percent this month on concern monsoon rainfall will be deficient. The S&P CNX Nifty Index on the National Stock Exchange lost 1.5 percent to 4,394.1. The BSE 200 Index declined 1.6 percent to 1,815.11.
Mahindra lost 3.7 percent to 740.15 rupees. Jaiprakash Associates Ltd., the nation’s biggest maker of dams, slid 2.7 percent to 206.7 rupees.
Hero Honda Motors Ltd., the nation’s biggest motorcycle maker, lost 2.3 percent to 1,359.2 rupees on concern that the weak monsoon will slash spending in agricultural regions. Forty percent of Hero Honda’s sales come from rural demand.
Farm Output
ACC Ltd., India’s biggest cement maker, lost 5.2 percent to 756.3 rupees. Reliance Communications Ltd., India’s second- largest mobile-phone services operator, lost 4.6 percent to 240.2 rupees.
The monsoon season, which brings about three-quarters of India’s annual rainfall, may be the driest in seven years, the weather bureau said last week, hurting farm output in the world’s second-biggest producer of rice, sugar and wheat.
Rain in the June-September season will be 87 percent of the 50-year average, compared with 93 percent forecast in June, the India Meteorological Department said last week.
Production of oilseeds and sugar cane may also drop, Pawar said, without providing a forecast. Monsoon-sown oilseeds were planted in 15.2 million hectares compared with 16.4 million hectares a year earlier, the farm ministry said.
The government will extend a 15 rupees-a-liter subsidy on imported edible oils until March 2010, Pawar said.
China Stocks
Tata Steel lost 4 percent to 433.75 rupees. Hindalco Industries Ltd., the biggest aluminum producer, slid 3.6 percent to 102.7 rupees. Sterlite Industries (India) Ltd., the nation’s biggest copper producer, declined 1.4 percent to 610.2 rupees.
China’s stocks tumbled, briefly driving the benchmark index into a so-called bear market, on concern economic growth will falter as banks rein in lending.
The Shanghai Composite Index lost 4.3 percent to 2,785.58. The gauge has slumped 19.8 percent since Aug. 4, after more than doubling from November as China rolled out a 4 trillion yuan ($585 billion) stimulus package.
A measure of Chinese metals and materials producers dropped 6.6 percent, the worst performer among 10 industry groups on the CSI 300 Index that covers the Shanghai and Shenzhen markets.
Overseas funds sold a net 9.74 billion rupees ($200.1 million) of Indian stocks on Aug. 17, the Securities & Exchange Board of India said on its Web site. The funds have bought 366.3 billion rupees of Indian stocks this year, compared with record net sales of 530 billion rupees for the whole of 2008.
The following stocks were among the most active on the exchange:
Glenmark Pharmaceuticals Ltd. (GNP IN) plunged 15 percent to 223.25 rupees. The Indian pharmaceutical company fell the most in six months after saying its drug for lung disease wasn’t effective in a patient study.
Maruti Suzuki India Ltd. (MSIL IN) climbed 0.1 percent to 1,301.85 rupees. The maker of half the cars sold in India was raised to “buy” from “hold” at Citigroup Inc., which said the company is best positioned to benefit from a recovery in urban consumption.
Reliance Industries Ltd. (RIL IN) lost 2.9 percent to 1,885.85 rupees. India’s most valuable company is looking to sell a stake of as much in 15 percent in the Rewas port project, Mint reported, citing two people briefed on the matter. Reliance needs to sell the stake both to fund the project and to bring in specialists because it does not have expertise in handling cargo such as containers, according to the report.
Unitech Ltd. (UT IN) fell 3.2 percent to 82.5 rupees. The nation’s second-biggest real estate developer said its telecom unit, Unitech Wireless Ltd., has got a 50 billion rupee-loan from State Bank of India.
World emerges from recession, IMF claims
It's official: the recovery has begun – although recovery will be unpredictable and protracted, according to the International Monetary Fund's chief economist.
"The recovery has started," claims Olivier Blanchard in a paper to be published by the IMF on Wednesday. "Sustaining it will require delicate rebalancing acts, both within and across countries."
He warned that recovery would be slow and complicated: "The world is not in a run-of-the mill recession. The turnaround will not be simple. The crisis has left deep scars, which will affect both supply and demand for many years to come," he said.
His comments followed the news on Monday that Japan became the latest major economy to return to growth in the second quarter, following a recovery in German and French GDP. The British economy shrank by 0.8pc in the second quarter according to the Office for National Statistics (ONS). Adam Posen, who will join the Bank of England's Monetary Policy Committee next month, conceded yesterday that the UK, along with the US, Italy and Spain, was "lagging" in economic recovery. He added he was "surprised" by news of recovery in Germany and France.
Official figures released yesterday showed that inflation remained at 1.8pc in July for the second month in a row, close to the 2pc target. Economists had predicted a fall to 1.5pc. The figures underlined unexpected resilience to deflationary pressures,
The ONS data suggested that the relative weakness of the pound was responsible, pushing up the price of imported goods and keeping inflation in positive territory despite the recession.
Charles Davis, economist at the Centre for Economics and Business Research, said: "Part of this is due to the sterling depreciation which, despite gains over the last month, is significantly weaker than a year ago."
It means the UK is the only one of the world's six biggest economies to avoid deflation. The pound rose more than
2 cents against the dollar after the inflation figures were published, closing at $1.653.
In July, price rises in games, toys, and hobby-related items – which are largely imported – helped to keep inflation at 1.8pc, offsetting falls in food inflation. Kerri Maddock at Barclays Capital said that the trend should "steer the economy away from the tail risk of outright deflation".
Although falling prices provide some relief for struggling households during recession, a sustained period of deflation in the UK caused by weak demand would likely damage the economy further, prompting businesses to produce less and therefore shed jobs, leading to higher unemployment which would in turn hit spending even further.
The continued strength of the CPI has taken the Bank of England by surprise. Governor Mervyn King said last week that despite the so-called "stickiness" shown by UK prices, the CPI rate was "more likely than not" to fall below 1pc in the coming months.
Despite the figures, economists said that inflation should start to fall again in the coming months as the impact of the weaker pound fades, while electricity and gas bills fall, food inflation drops and the full disinflationary impact of the spare capacity in the economy feeds through.
In a further surprise, the broader retail prices index (RPI), which also includes housing and mortgage costs, actually rose to -1.4pc in July from -1.6pc.
"The recovery has started," claims Olivier Blanchard in a paper to be published by the IMF on Wednesday. "Sustaining it will require delicate rebalancing acts, both within and across countries."
He warned that recovery would be slow and complicated: "The world is not in a run-of-the mill recession. The turnaround will not be simple. The crisis has left deep scars, which will affect both supply and demand for many years to come," he said.
His comments followed the news on Monday that Japan became the latest major economy to return to growth in the second quarter, following a recovery in German and French GDP. The British economy shrank by 0.8pc in the second quarter according to the Office for National Statistics (ONS). Adam Posen, who will join the Bank of England's Monetary Policy Committee next month, conceded yesterday that the UK, along with the US, Italy and Spain, was "lagging" in economic recovery. He added he was "surprised" by news of recovery in Germany and France.
Official figures released yesterday showed that inflation remained at 1.8pc in July for the second month in a row, close to the 2pc target. Economists had predicted a fall to 1.5pc. The figures underlined unexpected resilience to deflationary pressures,
The ONS data suggested that the relative weakness of the pound was responsible, pushing up the price of imported goods and keeping inflation in positive territory despite the recession.
Charles Davis, economist at the Centre for Economics and Business Research, said: "Part of this is due to the sterling depreciation which, despite gains over the last month, is significantly weaker than a year ago."
It means the UK is the only one of the world's six biggest economies to avoid deflation. The pound rose more than
2 cents against the dollar after the inflation figures were published, closing at $1.653.
In July, price rises in games, toys, and hobby-related items – which are largely imported – helped to keep inflation at 1.8pc, offsetting falls in food inflation. Kerri Maddock at Barclays Capital said that the trend should "steer the economy away from the tail risk of outright deflation".
Although falling prices provide some relief for struggling households during recession, a sustained period of deflation in the UK caused by weak demand would likely damage the economy further, prompting businesses to produce less and therefore shed jobs, leading to higher unemployment which would in turn hit spending even further.
The continued strength of the CPI has taken the Bank of England by surprise. Governor Mervyn King said last week that despite the so-called "stickiness" shown by UK prices, the CPI rate was "more likely than not" to fall below 1pc in the coming months.
Despite the figures, economists said that inflation should start to fall again in the coming months as the impact of the weaker pound fades, while electricity and gas bills fall, food inflation drops and the full disinflationary impact of the spare capacity in the economy feeds through.
In a further surprise, the broader retail prices index (RPI), which also includes housing and mortgage costs, actually rose to -1.4pc in July from -1.6pc.
Key Financial Ratios – EBITA, PAT, EPS, PE Ratio
What Does EBITDA Margin Mean?
Formula: Operating Profits/ Net sales.
EBITDA Margin is also known as operating margin. It is a ratio which is used to determine operating efficiency of the company. The ratio is used to measure company’s operating profits i.e. what would be the earnings of the company after paying of fixed and variable costs of production. The higher the operating margins its good for the company as it has a higher income available to take care of its other fixed cost such as interest on debt. One must look at the operating margin ratio on Y-O-Y and Q-O-Q basis and also compare the same with the peer group.
What Does PAT Margin Mean?
Formula: PAT/ Net sales.
PAT margin is also known as net margins. It is a ratio which is used to determine the final earnings of the company on every one Rupee of sales generated. It is used to determine the net earnings of the company after paying the production as well as finance expenses. It is a useful tool in analyzing the company’s earnings after tax. For example, a company’s sales could rise, but if costs also rise, that leads to a lower profit margin than what the company had when it had lower profits. This is an indication that the company needs to curb its expenses.
What Does Earnings Per Share (EPS) Mean?
Formula: (PAT – Preference Share Dividend) / Total outstanding equity shares
EPS is the net earnings of the company allocated to each outstanding share of the company. An increasing trend in EPS shows that the company is performing better. While we are looking at the EPS we must also look at the Diluted EPS as it the equity may expand in future if there are convertibles or warrants outstanding in the outstanding shares number.
What Does Price-Earnings Ratio – P/E Ratio Mean?
Formula: CMP / Earnings Per Share (EPS).
PE i.e Price of earnings ratio is a valuation ratio of a company’s current share price compared to its per-share earnings. The P/E is also referred to as the "multiple", because it shows how much investors are willing to pay for per Rupee of earnings. For example, if a company is currently trading at Rs.100 a share and earnings over the last 12 months were Rs.10 per share, the P/E ratio for the stock would be 10 (100/10). EPS is usually from the last four quarters (trailing P/E), but when EPS is taken from the expected earnings of next four quarters then the PE is known as projected PE.
Formula: Operating Profits/ Net sales.
EBITDA Margin is also known as operating margin. It is a ratio which is used to determine operating efficiency of the company. The ratio is used to measure company’s operating profits i.e. what would be the earnings of the company after paying of fixed and variable costs of production. The higher the operating margins its good for the company as it has a higher income available to take care of its other fixed cost such as interest on debt. One must look at the operating margin ratio on Y-O-Y and Q-O-Q basis and also compare the same with the peer group.
What Does PAT Margin Mean?
Formula: PAT/ Net sales.
PAT margin is also known as net margins. It is a ratio which is used to determine the final earnings of the company on every one Rupee of sales generated. It is used to determine the net earnings of the company after paying the production as well as finance expenses. It is a useful tool in analyzing the company’s earnings after tax. For example, a company’s sales could rise, but if costs also rise, that leads to a lower profit margin than what the company had when it had lower profits. This is an indication that the company needs to curb its expenses.
What Does Earnings Per Share (EPS) Mean?
Formula: (PAT – Preference Share Dividend) / Total outstanding equity shares
EPS is the net earnings of the company allocated to each outstanding share of the company. An increasing trend in EPS shows that the company is performing better. While we are looking at the EPS we must also look at the Diluted EPS as it the equity may expand in future if there are convertibles or warrants outstanding in the outstanding shares number.
What Does Price-Earnings Ratio – P/E Ratio Mean?
Formula: CMP / Earnings Per Share (EPS).
PE i.e Price of earnings ratio is a valuation ratio of a company’s current share price compared to its per-share earnings. The P/E is also referred to as the "multiple", because it shows how much investors are willing to pay for per Rupee of earnings. For example, if a company is currently trading at Rs.100 a share and earnings over the last 12 months were Rs.10 per share, the P/E ratio for the stock would be 10 (100/10). EPS is usually from the last four quarters (trailing P/E), but when EPS is taken from the expected earnings of next four quarters then the PE is known as projected PE.
Asian Stocks Fall as China Approaches Bear Market; Qantas Rises
Aug. 19 (Bloomberg) -- Asian stocks fell, with China’s key index approaching levels signaling a bear market, after Maanshan Iron & Steel Co. reported losses and Japanese regulators said new guidelines will hurt insurers’ solvency ratios.
Maanshan Steel, China’s No. 4 listed steelmaker, sank 6.9 percent in Shanghai. Tokio Marine Holdings Inc. dropped 2 percent in Tokyo. Honda Motor Co., Japan’s No. 2 automaker, added 1.7 percent after Nomura Holdings Inc. upgraded Japan’s auto industry. Qantas Airways Ltd., Australia’s biggest airline, advanced 4.6 percent as it signaled improving passenger volumes.
The MSCI Asia Pacific Index fell 0.3 percent to 110.33 as of 2:54 p.m. in Tokyo, erasing an earlier gain of 0.6 percent. The gauge has rallied 56 percent from a more than five-year low on March 9 amid speculation the global economy is recovering.
“The earnings season has been surprising,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $95 billion. “It’s given investors confidence the recovery is coming through and that valuations will be supported by strong earnings. Still, markets have rallied a long way and are vulnerable to bad news.”
Maanshan Steel, China’s No. 4 listed steelmaker, sank 6.9 percent in Shanghai. Tokio Marine Holdings Inc. dropped 2 percent in Tokyo. Honda Motor Co., Japan’s No. 2 automaker, added 1.7 percent after Nomura Holdings Inc. upgraded Japan’s auto industry. Qantas Airways Ltd., Australia’s biggest airline, advanced 4.6 percent as it signaled improving passenger volumes.
The MSCI Asia Pacific Index fell 0.3 percent to 110.33 as of 2:54 p.m. in Tokyo, erasing an earlier gain of 0.6 percent. The gauge has rallied 56 percent from a more than five-year low on March 9 amid speculation the global economy is recovering.
“The earnings season has been surprising,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $95 billion. “It’s given investors confidence the recovery is coming through and that valuations will be supported by strong earnings. Still, markets have rallied a long way and are vulnerable to bad news.”
Tuesday, August 18, 2009
Check your Awareness........!!
1. What is the expansion ( Full Form ) of YAHOO..?
Yet Another Hierarchy of Officious Oracle
2. What is the expansion ( Full Form ) of ADIDAS?
ADIDAS- All Day I Dream About Sports
3. Expansion of Star as in Star TV Network?
Satellite Television Asian Region
4. What is expansion of "ICICI?"
Industrial credit and Investments Corporation of India
5. The 1984-85 season. 2nd ODI between India and Pakistan at Sialkot - India 210/3 with Vengsarkar 94*. Match abandoned. Why?
That match was abandoned after people heard the news of Indira Gandhi being killed.
6. Who is the only man to have written the National Anthems for two different countries?
Rabindranath Tagore who wrote national anthem for two different countries one is our 's National
anthem and another one is for Bangladesh- (Amar Sonar* *Bangla )
7. From what four word expression does the word `goodbye` derive?
Goodbye comes from the ex-pression: 'god be with you'.
8. How was Agnes Gonxha Bojaxhiu better known?
Agnes Gonxha Bojaxhiu is none other Mother Teresa
9. Name the only other country to have got independence on Aug 15th?
South Korea
10. Why was James Bond Associated with the Number 007?
Because 007 is the ISD code for Russia (or the USSR , as it was known during the cold war)
11. Who faced the first ball in the first ever One day match?
Geoffrey Boycott
12. Which cricketer played for South Africa before it was banned from international cricket and later represented Zimbabwe ?
John Traicos
13. Which is the only country that is surrounded from all sides by only one country (other than Vatican )?
Lesotho surrounded from all sides by South Africa ..
14. Which is the only sport which is not allowed to play left handed?
.. Polo.
India Plans ‘Simpler’ Mining Law to Boost Investment
Aug. 18 (Bloomberg) -- India aims to cut permit delays and attract overseas capital through “simpler” resource investment laws to help double mining’s contribution to the nation’s $1.2 trillion economy to at least 4 percent.
“We hope to increase it to 5 percent but expect it to increase to at least 4 percent in five years,” Mines Minister B.K. Handique said in an interview in New Delhi yesterday. The legislation will be presented to parliament in the winter session this year, he said.
Delays in securing mining licenses have undermined India’s efforts to win more investment, holding up construction of $32 billion projects announced ArcelorMittal and Posco, the world’s largest and sixth-largest steelmakers. The new law will develop the changes to the mineral policy last year that have so far failed to unlock development.
“It will be great if the government is able to cut down the long-winded procedure,” Niraj Shah, an analyst at Centrum Capital Ltd., said today. It will help companies who are serious about building operations in India, he said.
India, which holds the world’s fourth-largest bauxite deposits and the fifth-largest iron ore reserves according to McKinsey & Co., currently regulates mining through the five- decade old Mines & Minerals (Development & Regulation) Act.
“We will introduce a legal framework that ensures sustainable development and includes environment concerns,” Handique said. “We have to ensure it’s more broad-based as if there is resistance from people it will not be possible to translate the act into reality.”
Posco, ArcelorMittal
Land disputes and delays in allocating mining licenses have stopped South Korea-based Posco from proceeding with potentially the biggest overseas investment in India. The company is yet to begin building a $12 billion, 12 million metric ton steel plant in eastern Orissa state, planned for more than five years.
“The policy is aimed to make the rules more transparent and simpler,” Handique said. “Posco is a bad precedent but we know that overseas companies want to invest in India and transparent policy will help that,” he said, adding that he also expects the law changes to spark investment from domestic companies.
“We hope the government approves the mine license soon, then we would like to secure land and start the project as soon as possible,” Choi Doo Jin, a spokesman at Posco, said by phone from Seoul today.
ArcelorMittal has proposed setting up two mills in India, one in Orissa and another in Jharkhand -- with a total capacity of 24 million tons. It signed an accord for the Jharkhand mill in mid- 2005, followed by the one in Orissa.
Besides companies, countries including South Africa, Namibia and Colombia have shown interest in investing in the mining sector, Handique said.
“We hope to increase it to 5 percent but expect it to increase to at least 4 percent in five years,” Mines Minister B.K. Handique said in an interview in New Delhi yesterday. The legislation will be presented to parliament in the winter session this year, he said.
Delays in securing mining licenses have undermined India’s efforts to win more investment, holding up construction of $32 billion projects announced ArcelorMittal and Posco, the world’s largest and sixth-largest steelmakers. The new law will develop the changes to the mineral policy last year that have so far failed to unlock development.
“It will be great if the government is able to cut down the long-winded procedure,” Niraj Shah, an analyst at Centrum Capital Ltd., said today. It will help companies who are serious about building operations in India, he said.
India, which holds the world’s fourth-largest bauxite deposits and the fifth-largest iron ore reserves according to McKinsey & Co., currently regulates mining through the five- decade old Mines & Minerals (Development & Regulation) Act.
“We will introduce a legal framework that ensures sustainable development and includes environment concerns,” Handique said. “We have to ensure it’s more broad-based as if there is resistance from people it will not be possible to translate the act into reality.”
Posco, ArcelorMittal
Land disputes and delays in allocating mining licenses have stopped South Korea-based Posco from proceeding with potentially the biggest overseas investment in India. The company is yet to begin building a $12 billion, 12 million metric ton steel plant in eastern Orissa state, planned for more than five years.
“The policy is aimed to make the rules more transparent and simpler,” Handique said. “Posco is a bad precedent but we know that overseas companies want to invest in India and transparent policy will help that,” he said, adding that he also expects the law changes to spark investment from domestic companies.
“We hope the government approves the mine license soon, then we would like to secure land and start the project as soon as possible,” Choi Doo Jin, a spokesman at Posco, said by phone from Seoul today.
ArcelorMittal has proposed setting up two mills in India, one in Orissa and another in Jharkhand -- with a total capacity of 24 million tons. It signed an accord for the Jharkhand mill in mid- 2005, followed by the one in Orissa.
Besides companies, countries including South Africa, Namibia and Colombia have shown interest in investing in the mining sector, Handique said.
Review : Kaminey
Kaminey is the best Bollywood film I’ve seen this year. It’s an audacious, original rollercoaster ride. Written and directed by Vishal Bharadwaj, Kaminey requires patience and attention but the pay off is more than worth it.
Kaminey is about Charlie and Guddu, twin brothers played by Shahid Kapoor, both of whom suffer from speech impediments and who can’t stand the sight of each other. Charlie, who pronounces S as F, is a small time gangster. Guddu, who stammers, is a mousy NGO worker. Guddu’s life plans, chalked out until 2014 on a chart stuck in his cupboard, are wrecked when he impregnates Sweety, his fiery girlfriend who until now has neglected to tell him that she is the sister of a powerful gangster-politician, Bhope, played by Amol Gupte. Meanwhile Charlie has come to possess a guitar containing cocaine worth 10 crore. The quintessential gambler thinks he’s finally hit the big score. What follows is a frantic, convoluted journey through Mumbai’s mean streets which are of course populated by many Kamineys: corrupt cops, nasty drug dealers, gun wielding henchmen. Eventually, the brothers’ determinedly separate narratives collide and they are forced to come together.
Be warned: there are stretches of Kaminey that will thoroughly confuse you, starting with the first fifteen minutes. The film has eleven-odd characters that you need to keep track of. Snatches of dialogue are in Bengali and Marathi. If you look away from the screen to send a text message, you might miss another twist in this very, very tangled tale. The first half moves slowly. You might be bewildered and perhaps even bored. But stay with the film. Because the pacing picks up in the second half and Vishal ties up the threads in an exhilarating climax, which, incredibly enough, manages to combine stunning violence with humor.
Kaminey is that rarest of things: an unpredictable Hindi movie. Vishal, referencing the crackling gangster dramas of Quentin Tarantino and Guy Ritchie, keeps it gritty and dark. Violence looms large over Kaminey but the tension is layered with black humor. The film reworks Hindi cinema’s favorite formula - twins - into a bloody theater of the absurd. Charlie and Guddu are unlike any twins you’ve seen before. Each one is willing to sacrifice the other to get what he wants. This is the role or roles of a lifetime and Shahid Kapoor, best known for innocuous chocolate-boy romances, sinks his teeth in. Kaminey does for him what Omkara did for Saif Ali Khan. A star has evolved into an actor.
Sweety is this year’s most exciting heroine after Paro in Dev D, and Priyanka plays her with aplomb. Only her perfectly manicured nails struck me as out of synch with her character. Vishal has equal affection for the smaller players: from the coke-addled Mikhail played nicely by Chandan Roy Sanyal to the Jai Maharashtra-spouting Bhope. Each one is flesh and blood.
Kaminey will take some getting used to. It isn’t the comfort food that Bollywood normally dishes out. But I strongly recommend that you see it. This taste is worth acquiring.
INTERVIEW - Greenspan sees strong finish to 2009, worries on 2010
WASHINGTON (Reuters) - The U.S. economy is probably due for two strong quarters of economic growth to close out 2009, but the recovery may falter next year, former Federal Reserve Chairman Alan Greenspan said on Monday.
"I think we're OK for the next six months," Greenspan told Reuters in an interview. "We are getting a recovery in (housing) starts and motor vehicles, but the process doesn't have legs to it."
Auto sales and housing, normally the driving forces behind economic recovery, got a boost from government efforts such as the $3 billion "cash-for-clunkers" trade-in program, which encouraged consumers to buy new cars, but it may not be sustainable.
Greenspan, who stepped down as Fed chairman in 2006 after 18 years at the helm, said the U.S. market for autos was "saturated," with 20 percent more cars and light trucks on the road than there are licensed drivers.
With U.S. consumers' finances still shaky after three years of housing market declines, new vehicle sales may fade once the clunker program's cash is exhausted.
As for new home sales, a sharp drop in construction is helping homebuilders clear inventory, but Greenspan said it was unlikely that the rate of U.S. homeownership would return to the boomtime peak, which will keep home sales subdued.
While he has been lauded for presiding over the longest uninterrupted period of economic growth in modern U.S. history from 1991 to 2001, his record has recently come under harsher scrutiny.
Some economy watchers note that it was during Greenspan's tenure at the Fed that the housing bubble inflated.
Critics argue that under his leadership, the Fed kept short-term borrowing costs too low for too long after the 2001 recession, sowing the seeds of the housing and easy credit bubble that contributed to the financial crisis.
Greenspan has defended his record repeatedly, saying global forces overwhelmed the U.S. central bank's efforts to raise borrowing costs.
He has also maintained that bubbles cannot be detected until they burst.
What gives him confidence that the last half of 2009 will generate strong growth is primarily a sharp drop in inventories of goods.
Consumption has been running about 1-1/4 percentage points above the level of economic output. In order to close that gap, companies need to make more goods, which would generate gross domestic product growth on the order of 4 percent to 5 percent if it happened all in one quarter and 2.5 percent per quarter if spread out over six months.
A rebound in stock markets since March 2009 lows may also add some fuel to the recovery by helping companies obtain cheaper sources of funding and rebuilding household wealth.
"The 50 percent rise in corporate equities in the United States, and more than that in the rest of the world, has created an important buffer for debt," he said. "The consequent major contraction of yield spreads across the globe has added more fiscal stimulus than anybody realizes."
"I think we're OK for the next six months," Greenspan told Reuters in an interview. "We are getting a recovery in (housing) starts and motor vehicles, but the process doesn't have legs to it."
Auto sales and housing, normally the driving forces behind economic recovery, got a boost from government efforts such as the $3 billion "cash-for-clunkers" trade-in program, which encouraged consumers to buy new cars, but it may not be sustainable.
Greenspan, who stepped down as Fed chairman in 2006 after 18 years at the helm, said the U.S. market for autos was "saturated," with 20 percent more cars and light trucks on the road than there are licensed drivers.
With U.S. consumers' finances still shaky after three years of housing market declines, new vehicle sales may fade once the clunker program's cash is exhausted.
As for new home sales, a sharp drop in construction is helping homebuilders clear inventory, but Greenspan said it was unlikely that the rate of U.S. homeownership would return to the boomtime peak, which will keep home sales subdued.
While he has been lauded for presiding over the longest uninterrupted period of economic growth in modern U.S. history from 1991 to 2001, his record has recently come under harsher scrutiny.
Some economy watchers note that it was during Greenspan's tenure at the Fed that the housing bubble inflated.
Critics argue that under his leadership, the Fed kept short-term borrowing costs too low for too long after the 2001 recession, sowing the seeds of the housing and easy credit bubble that contributed to the financial crisis.
Greenspan has defended his record repeatedly, saying global forces overwhelmed the U.S. central bank's efforts to raise borrowing costs.
He has also maintained that bubbles cannot be detected until they burst.
What gives him confidence that the last half of 2009 will generate strong growth is primarily a sharp drop in inventories of goods.
Consumption has been running about 1-1/4 percentage points above the level of economic output. In order to close that gap, companies need to make more goods, which would generate gross domestic product growth on the order of 4 percent to 5 percent if it happened all in one quarter and 2.5 percent per quarter if spread out over six months.
A rebound in stock markets since March 2009 lows may also add some fuel to the recovery by helping companies obtain cheaper sources of funding and rebuilding household wealth.
"The 50 percent rise in corporate equities in the United States, and more than that in the rest of the world, has created an important buffer for debt," he said. "The consequent major contraction of yield spreads across the globe has added more fiscal stimulus than anybody realizes."
Monsoon Revival Boosts India’s Sugar Cane, Rice Crops
Aug. 17 (Bloomberg) -- A revival in India’s monsoon rains is helping ease dry weather that’s caused drought in a third of the nation’s districts and dented sowing of rice and sugar cane, a weather bureau official said.
Prime Minister Manmohan Singh today said that there was “no need to panic” as the nation has “adequate stock of wheat and rice” to face the drought.
Uttar Pradesh, the country’s biggest cane grower, Madhya Pradesh, the largest soybeans producer, and Bihar, a top grower of rice and corn, received “good rain” over the past few days, said Ajit Tyagi, director general of the India Meteorological Department, from New Delhi today.
The monsoon season, which brings about three-quarters of the nation’s annual rainfall, may be the driest in seven years, Tyagi said last week, curbing farm output in the world’s second- biggest producer of rice, wheat and sugar. As many as 209 of 626 districts have declared drought, the farm ministry said.
“A lot of paddy crop has been saved in Punjab, Haryana and Andhra Pradesh because of irrigation,” Cabinet Secretary K.M. Chandrashekhar told reporters in New Delhi earlier today before a meeting of chief ministers with Singh to discuss the drought. Recent rains may have helped the crops, he said.
Rice, the nation’s biggest monsoon-sown crops, has been the worst hit: the crop area has fallen 19 percent from a year ago to 24.7 million hectares as of Aug. 12, the farm ministry said. Cane has been planted to 4.25 million hectares, compared with 4.38 million hectares a year earlier.
More Electricity
The government will divert more electricity to farmers so that pumps can be run for longer hours to draw water from tube- wells for irrigating fields, Chandrashekar said. Farmers will be asked to sow short-duration crops, such as oilseeds and lentils, to counter the fall in farm output, he said.
India’s farmers will have to increase the area of coverage in the winter crop to “salvage” the losses in the monsoon crop, Farm Minister Sharad Pawar said in a statement posted on the government’s Web site today. “Every effort has to be taken to contain and moderate” price increases, including controlling speculative tendencies in the market, he said.
Fuel Subsidy
Pawar last month said the government will give a 10-billion rupee subsidy for diesel used to operate water pumps. The assistance hasn’t reached farmers, said Sukhbir Singh Badal, deputy chief minister of Punjab, the nation’s top grower of rice and wheat.
“Farmers should have got free diesel by now,” he told reporters in New Delhi. “If we get more subsidized power and diesel, we may be able to save the paddy crop and match the target” of 13.7 million tons, he said.
Monsoon rain may be similar to 2002, when showers were 19.2 percent below average and the nation faced its worst drought in 12 years, Tyagi said last week. The deficit since the start of this season on June 1 has widened to 29 percent as of Aug. 12, from 25 percent a week ago, the weather bureau said last week.
Falls were 43 percent below average in the northwest, which includes states of Punjab, Haryana and Uttar Pradesh. Shortfall was 23 percent in peninsular India, which includes Maharashtra, the second-biggest grower of sugar cane and cotton.
The weather office has pared the forecast for August rain to between 85-to-90 percent of the long-period average from 101 percent predicted in June. Showers in July, the wettest month in the June-September season, were more than predicted, following the driest June in 83 years.
Prime Minister Manmohan Singh today said that there was “no need to panic” as the nation has “adequate stock of wheat and rice” to face the drought.
Uttar Pradesh, the country’s biggest cane grower, Madhya Pradesh, the largest soybeans producer, and Bihar, a top grower of rice and corn, received “good rain” over the past few days, said Ajit Tyagi, director general of the India Meteorological Department, from New Delhi today.
The monsoon season, which brings about three-quarters of the nation’s annual rainfall, may be the driest in seven years, Tyagi said last week, curbing farm output in the world’s second- biggest producer of rice, wheat and sugar. As many as 209 of 626 districts have declared drought, the farm ministry said.
“A lot of paddy crop has been saved in Punjab, Haryana and Andhra Pradesh because of irrigation,” Cabinet Secretary K.M. Chandrashekhar told reporters in New Delhi earlier today before a meeting of chief ministers with Singh to discuss the drought. Recent rains may have helped the crops, he said.
Rice, the nation’s biggest monsoon-sown crops, has been the worst hit: the crop area has fallen 19 percent from a year ago to 24.7 million hectares as of Aug. 12, the farm ministry said. Cane has been planted to 4.25 million hectares, compared with 4.38 million hectares a year earlier.
More Electricity
The government will divert more electricity to farmers so that pumps can be run for longer hours to draw water from tube- wells for irrigating fields, Chandrashekar said. Farmers will be asked to sow short-duration crops, such as oilseeds and lentils, to counter the fall in farm output, he said.
India’s farmers will have to increase the area of coverage in the winter crop to “salvage” the losses in the monsoon crop, Farm Minister Sharad Pawar said in a statement posted on the government’s Web site today. “Every effort has to be taken to contain and moderate” price increases, including controlling speculative tendencies in the market, he said.
Fuel Subsidy
Pawar last month said the government will give a 10-billion rupee subsidy for diesel used to operate water pumps. The assistance hasn’t reached farmers, said Sukhbir Singh Badal, deputy chief minister of Punjab, the nation’s top grower of rice and wheat.
“Farmers should have got free diesel by now,” he told reporters in New Delhi. “If we get more subsidized power and diesel, we may be able to save the paddy crop and match the target” of 13.7 million tons, he said.
Monsoon rain may be similar to 2002, when showers were 19.2 percent below average and the nation faced its worst drought in 12 years, Tyagi said last week. The deficit since the start of this season on June 1 has widened to 29 percent as of Aug. 12, from 25 percent a week ago, the weather bureau said last week.
Falls were 43 percent below average in the northwest, which includes states of Punjab, Haryana and Uttar Pradesh. Shortfall was 23 percent in peninsular India, which includes Maharashtra, the second-biggest grower of sugar cane and cotton.
The weather office has pared the forecast for August rain to between 85-to-90 percent of the long-period average from 101 percent predicted in June. Showers in July, the wettest month in the June-September season, were more than predicted, following the driest June in 83 years.
Most Asian Stocks Fall Amid Growth Concerns; James Hardie Rises
Aug. 18 (Bloomberg) -- Most Asian stocks fell, led by commodity companies, after metals prices slumped amid concern the global economic recovery will fail to meet investors’ expectations.
Mitsubishi Corp., which generates nearly half its revenue from trading commodities, sank 2.2 percent in Tokyo, while Fortescue Metals Group Ltd. lost 3.1 percent in Sydney. James Hardie Industries NV, the biggest seller of home siding in the U.S., surged 21 percent after forecasting profit at the high end of analyst estimates. Everbright Securities Co. soared 34 percent on its first trading day in Shanghai.
The MSCI Asia Pacific Index dropped 0.3 percent to 110.26 as of 12:05 p.m. in Tokyo. Two stocks declined for each one that advanced. The gauge sank 3.1 percent yesterday, paring its rally from a more than five-year low on March 9 to 57 percent.
“These technical corrections, profit taking and pullbacks are to be expected, but my feeling is that they’ll be relatively shallow,” said Prasad Patkar, who helps manage about $1.2 billion at Platypus Asset Management in Sydney. “Valuations looked stretched, but as long as earnings keep going up, they will start to look more normal as time goes by.”
Japan’s Nikkei 225 Stock Average gained 0.4 percent. Casio Computer Co. rose 5.8 percent after Credit Suisse Group AG increased its rating on the electronics maker. Hong Kong’s Hang Seng Index added 0.6 percent.
The Shanghai Composite Index lost 0.7 percent, extending yesterday’s 5.8 percent slump, which was the steepest since November. Air China Ltd. sank 7.1 percent on concern it may have paid too much to raise its stake in Hong Kong’s Cathay Pacific Airways Ltd.
Trailing Estimates
Futures on the Standard & Poor’s 500 Index gained 0.3 percent. The gauge fell 2.4 percent yesterday, extending a global stock slump after figures on Japan’s economic growth trailed some economists’ estimates and foreign direct investment in China dropped for a 10th month. The MSCI World Index was little changed today after sinking 2.8 percent yesterday.
Reports last week showed that Chinese exports dropped in July, lending fell, and investment growth slowed, while Australia’s statistics bureau said wage growth stalled last quarter as the worst global slump since the Great Depression drove up unemployment.
Mitsubishi sank 2.2 percent to 1,880 yen. Mitsui & Co., a trading house that generates more than half its profit from metals and energy, lost 1.8 percent to 1,219. Fortescue slumped 3.1 percent to A$4.44, following a 10 percent advance in the four previous trading days.
Metal Prices Gain
A measure of six metals, including copper and zinc, traded on the London Metal Exchange fell 2.7 percent yesterday to the lowest level in a week. Copper futures in New York dropped 2.3 percent, while oil sank 1.1 percent.
The MSCI Asia Pacific Index rallied 62 percent through Aug. 14 from its March 9 low on speculation a global economic recovery will boost earnings. Companies in the gauge trade at 1.57 times book value, compared with 1.03 times at the March low. The benchmark has averaged about 1.7 times book value since 2001.
“We were due for a correction, but the overall rising trend for the market remains as earnings and the economy are on the mend,” said Yoshinori Nagano, a senior strategist at Tokyo- based Daiwa Asset Management Co., which oversees the equivalent of $89 billion.
A third of the 503 companies in the MSCI Asia Pacific Index that have reported results since early July have beaten analysts’ profit estimates, while 18 percent have missed, according to data compiled by Bloomberg.
James Hardie
James Hardie, which reported a first-quarter loss on declining earnings from the U.S., surged 21 percent to A$6.97. The company said it expects full-year operating profit at the high end of analysts’ forecasts, excluding costs relating to asbestos claims, and that the U.S. housing slump may be easing.
Everbright Securities, the first Chinese brokerage to make an initial public offering in almost seven years, soared 34 percent to 28.21 yuan. The company raised 11 billion yuan ($1.6 billion) by selling shares to institutional and retail investors.
Air China, the world’s biggest airline by market value, sank 7.1 percent to 7.29 yuan. The company said it will spend HK$6.3 billion ($813 million) raising its stake in Cathay Pacific to 29.99 percent. Cathay lost 1 percent to HK$11.50.
“Further alignment with Cathay will enhance Air China’s strategic control of China’s most important international gateways -- Beijing and Hong Kong,” said Ally Ma, an analyst at Citigroup Inc. Still, the price “seems too high and disappoints our positive view on Air China.”
In Tokyo, Casio gained 5.8 percent to 788 yen. Credit Suisse upgraded the stock to “outperform” from “underperform” amid optimism the company will restore profits in money-losing businesses.
Mitsubishi Corp., which generates nearly half its revenue from trading commodities, sank 2.2 percent in Tokyo, while Fortescue Metals Group Ltd. lost 3.1 percent in Sydney. James Hardie Industries NV, the biggest seller of home siding in the U.S., surged 21 percent after forecasting profit at the high end of analyst estimates. Everbright Securities Co. soared 34 percent on its first trading day in Shanghai.
The MSCI Asia Pacific Index dropped 0.3 percent to 110.26 as of 12:05 p.m. in Tokyo. Two stocks declined for each one that advanced. The gauge sank 3.1 percent yesterday, paring its rally from a more than five-year low on March 9 to 57 percent.
“These technical corrections, profit taking and pullbacks are to be expected, but my feeling is that they’ll be relatively shallow,” said Prasad Patkar, who helps manage about $1.2 billion at Platypus Asset Management in Sydney. “Valuations looked stretched, but as long as earnings keep going up, they will start to look more normal as time goes by.”
Japan’s Nikkei 225 Stock Average gained 0.4 percent. Casio Computer Co. rose 5.8 percent after Credit Suisse Group AG increased its rating on the electronics maker. Hong Kong’s Hang Seng Index added 0.6 percent.
The Shanghai Composite Index lost 0.7 percent, extending yesterday’s 5.8 percent slump, which was the steepest since November. Air China Ltd. sank 7.1 percent on concern it may have paid too much to raise its stake in Hong Kong’s Cathay Pacific Airways Ltd.
Trailing Estimates
Futures on the Standard & Poor’s 500 Index gained 0.3 percent. The gauge fell 2.4 percent yesterday, extending a global stock slump after figures on Japan’s economic growth trailed some economists’ estimates and foreign direct investment in China dropped for a 10th month. The MSCI World Index was little changed today after sinking 2.8 percent yesterday.
Reports last week showed that Chinese exports dropped in July, lending fell, and investment growth slowed, while Australia’s statistics bureau said wage growth stalled last quarter as the worst global slump since the Great Depression drove up unemployment.
Mitsubishi sank 2.2 percent to 1,880 yen. Mitsui & Co., a trading house that generates more than half its profit from metals and energy, lost 1.8 percent to 1,219. Fortescue slumped 3.1 percent to A$4.44, following a 10 percent advance in the four previous trading days.
Metal Prices Gain
A measure of six metals, including copper and zinc, traded on the London Metal Exchange fell 2.7 percent yesterday to the lowest level in a week. Copper futures in New York dropped 2.3 percent, while oil sank 1.1 percent.
The MSCI Asia Pacific Index rallied 62 percent through Aug. 14 from its March 9 low on speculation a global economic recovery will boost earnings. Companies in the gauge trade at 1.57 times book value, compared with 1.03 times at the March low. The benchmark has averaged about 1.7 times book value since 2001.
“We were due for a correction, but the overall rising trend for the market remains as earnings and the economy are on the mend,” said Yoshinori Nagano, a senior strategist at Tokyo- based Daiwa Asset Management Co., which oversees the equivalent of $89 billion.
A third of the 503 companies in the MSCI Asia Pacific Index that have reported results since early July have beaten analysts’ profit estimates, while 18 percent have missed, according to data compiled by Bloomberg.
James Hardie
James Hardie, which reported a first-quarter loss on declining earnings from the U.S., surged 21 percent to A$6.97. The company said it expects full-year operating profit at the high end of analysts’ forecasts, excluding costs relating to asbestos claims, and that the U.S. housing slump may be easing.
Everbright Securities, the first Chinese brokerage to make an initial public offering in almost seven years, soared 34 percent to 28.21 yuan. The company raised 11 billion yuan ($1.6 billion) by selling shares to institutional and retail investors.
Air China, the world’s biggest airline by market value, sank 7.1 percent to 7.29 yuan. The company said it will spend HK$6.3 billion ($813 million) raising its stake in Cathay Pacific to 29.99 percent. Cathay lost 1 percent to HK$11.50.
“Further alignment with Cathay will enhance Air China’s strategic control of China’s most important international gateways -- Beijing and Hong Kong,” said Ally Ma, an analyst at Citigroup Inc. Still, the price “seems too high and disappoints our positive view on Air China.”
In Tokyo, Casio gained 5.8 percent to 788 yen. Credit Suisse upgraded the stock to “outperform” from “underperform” amid optimism the company will restore profits in money-losing businesses.
Most Asian Stocks Fall Amid Growth Concerns; James Hardie Rises
Aug. 18 (Bloomberg) -- Most Asian stocks fell, led by commodity companies, after metals prices slumped amid concern the global economic recovery will fail to meet investors’ expectations.
Mitsubishi Corp., which generates nearly half its revenue from trading commodities, sank 2.2 percent in Tokyo, while Fortescue Metals Group Ltd. lost 3.1 percent in Sydney. James Hardie Industries NV, the biggest seller of home siding in the U.S., surged 21 percent after forecasting profit at the high end of analyst estimates. Everbright Securities Co. soared 34 percent on its first trading day in Shanghai.
The MSCI Asia Pacific Index dropped 0.3 percent to 110.26 as of 12:05 p.m. in Tokyo. Two stocks declined for each one that advanced. The gauge sank 3.1 percent yesterday, paring its rally from a more than five-year low on March 9 to 57 percent.
“These technical corrections, profit taking and pullbacks are to be expected, but my feeling is that they’ll be relatively shallow,” said Prasad Patkar, who helps manage about $1.2 billion at Platypus Asset Management in Sydney. “Valuations looked stretched, but as long as earnings keep going up, they will start to look more normal as time goes by.”
Japan’s Nikkei 225 Stock Average gained 0.4 percent. Casio Computer Co. rose 5.8 percent after Credit Suisse Group AG increased its rating on the electronics maker. Hong Kong’s Hang Seng Index added 0.6 percent.
The Shanghai Composite Index lost 0.7 percent, extending yesterday’s 5.8 percent slump, which was the steepest since November. Air China Ltd. sank 7.1 percent on concern it may have paid too much to raise its stake in Hong Kong’s Cathay Pacific Airways Ltd.
Trailing Estimates
Futures on the Standard & Poor’s 500 Index gained 0.3 percent. The gauge fell 2.4 percent yesterday, extending a global stock slump after figures on Japan’s economic growth trailed some economists’ estimates and foreign direct investment in China dropped for a 10th month. The MSCI World Index was little changed today after sinking 2.8 percent yesterday.
Reports last week showed that Chinese exports dropped in July, lending fell, and investment growth slowed, while Australia’s statistics bureau said wage growth stalled last quarter as the worst global slump since the Great Depression drove up unemployment.
Mitsubishi sank 2.2 percent to 1,880 yen. Mitsui & Co., a trading house that generates more than half its profit from metals and energy, lost 1.8 percent to 1,219. Fortescue slumped 3.1 percent to A$4.44, following a 10 percent advance in the four previous trading days.
Metal Prices Gain
A measure of six metals, including copper and zinc, traded on the London Metal Exchange fell 2.7 percent yesterday to the lowest level in a week. Copper futures in New York dropped 2.3 percent, while oil sank 1.1 percent.
The MSCI Asia Pacific Index rallied 62 percent through Aug. 14 from its March 9 low on speculation a global economic recovery will boost earnings. Companies in the gauge trade at 1.57 times book value, compared with 1.03 times at the March low. The benchmark has averaged about 1.7 times book value since 2001.
“We were due for a correction, but the overall rising trend for the market remains as earnings and the economy are on the mend,” said Yoshinori Nagano, a senior strategist at Tokyo- based Daiwa Asset Management Co., which oversees the equivalent of $89 billion.
A third of the 503 companies in the MSCI Asia Pacific Index that have reported results since early July have beaten analysts’ profit estimates, while 18 percent have missed, according to data compiled by Bloomberg.
James Hardie
James Hardie, which reported a first-quarter loss on declining earnings from the U.S., surged 21 percent to A$6.97. The company said it expects full-year operating profit at the high end of analysts’ forecasts, excluding costs relating to asbestos claims, and that the U.S. housing slump may be easing.
Everbright Securities, the first Chinese brokerage to make an initial public offering in almost seven years, soared 34 percent to 28.21 yuan. The company raised 11 billion yuan ($1.6 billion) by selling shares to institutional and retail investors.
Air China, the world’s biggest airline by market value, sank 7.1 percent to 7.29 yuan. The company said it will spend HK$6.3 billion ($813 million) raising its stake in Cathay Pacific to 29.99 percent. Cathay lost 1 percent to HK$11.50.
“Further alignment with Cathay will enhance Air China’s strategic control of China’s most important international gateways -- Beijing and Hong Kong,” said Ally Ma, an analyst at Citigroup Inc. Still, the price “seems too high and disappoints our positive view on Air China.”
In Tokyo, Casio gained 5.8 percent to 788 yen. Credit Suisse upgraded the stock to “outperform” from “underperform” amid optimism the company will restore profits in money-losing businesses.
Mitsubishi Corp., which generates nearly half its revenue from trading commodities, sank 2.2 percent in Tokyo, while Fortescue Metals Group Ltd. lost 3.1 percent in Sydney. James Hardie Industries NV, the biggest seller of home siding in the U.S., surged 21 percent after forecasting profit at the high end of analyst estimates. Everbright Securities Co. soared 34 percent on its first trading day in Shanghai.
The MSCI Asia Pacific Index dropped 0.3 percent to 110.26 as of 12:05 p.m. in Tokyo. Two stocks declined for each one that advanced. The gauge sank 3.1 percent yesterday, paring its rally from a more than five-year low on March 9 to 57 percent.
“These technical corrections, profit taking and pullbacks are to be expected, but my feeling is that they’ll be relatively shallow,” said Prasad Patkar, who helps manage about $1.2 billion at Platypus Asset Management in Sydney. “Valuations looked stretched, but as long as earnings keep going up, they will start to look more normal as time goes by.”
Japan’s Nikkei 225 Stock Average gained 0.4 percent. Casio Computer Co. rose 5.8 percent after Credit Suisse Group AG increased its rating on the electronics maker. Hong Kong’s Hang Seng Index added 0.6 percent.
The Shanghai Composite Index lost 0.7 percent, extending yesterday’s 5.8 percent slump, which was the steepest since November. Air China Ltd. sank 7.1 percent on concern it may have paid too much to raise its stake in Hong Kong’s Cathay Pacific Airways Ltd.
Trailing Estimates
Futures on the Standard & Poor’s 500 Index gained 0.3 percent. The gauge fell 2.4 percent yesterday, extending a global stock slump after figures on Japan’s economic growth trailed some economists’ estimates and foreign direct investment in China dropped for a 10th month. The MSCI World Index was little changed today after sinking 2.8 percent yesterday.
Reports last week showed that Chinese exports dropped in July, lending fell, and investment growth slowed, while Australia’s statistics bureau said wage growth stalled last quarter as the worst global slump since the Great Depression drove up unemployment.
Mitsubishi sank 2.2 percent to 1,880 yen. Mitsui & Co., a trading house that generates more than half its profit from metals and energy, lost 1.8 percent to 1,219. Fortescue slumped 3.1 percent to A$4.44, following a 10 percent advance in the four previous trading days.
Metal Prices Gain
A measure of six metals, including copper and zinc, traded on the London Metal Exchange fell 2.7 percent yesterday to the lowest level in a week. Copper futures in New York dropped 2.3 percent, while oil sank 1.1 percent.
The MSCI Asia Pacific Index rallied 62 percent through Aug. 14 from its March 9 low on speculation a global economic recovery will boost earnings. Companies in the gauge trade at 1.57 times book value, compared with 1.03 times at the March low. The benchmark has averaged about 1.7 times book value since 2001.
“We were due for a correction, but the overall rising trend for the market remains as earnings and the economy are on the mend,” said Yoshinori Nagano, a senior strategist at Tokyo- based Daiwa Asset Management Co., which oversees the equivalent of $89 billion.
A third of the 503 companies in the MSCI Asia Pacific Index that have reported results since early July have beaten analysts’ profit estimates, while 18 percent have missed, according to data compiled by Bloomberg.
James Hardie
James Hardie, which reported a first-quarter loss on declining earnings from the U.S., surged 21 percent to A$6.97. The company said it expects full-year operating profit at the high end of analysts’ forecasts, excluding costs relating to asbestos claims, and that the U.S. housing slump may be easing.
Everbright Securities, the first Chinese brokerage to make an initial public offering in almost seven years, soared 34 percent to 28.21 yuan. The company raised 11 billion yuan ($1.6 billion) by selling shares to institutional and retail investors.
Air China, the world’s biggest airline by market value, sank 7.1 percent to 7.29 yuan. The company said it will spend HK$6.3 billion ($813 million) raising its stake in Cathay Pacific to 29.99 percent. Cathay lost 1 percent to HK$11.50.
“Further alignment with Cathay will enhance Air China’s strategic control of China’s most important international gateways -- Beijing and Hong Kong,” said Ally Ma, an analyst at Citigroup Inc. Still, the price “seems too high and disappoints our positive view on Air China.”
In Tokyo, Casio gained 5.8 percent to 788 yen. Credit Suisse upgraded the stock to “outperform” from “underperform” amid optimism the company will restore profits in money-losing businesses.
Monday, August 17, 2009
Stocks Slide on Economy Concern; Yen, Dollar, Treasuries Gain
Stocks fell around the world, led by China, while the yen and the dollar advanced and Treasuries rose as investors speculated that a rally in riskier assets has outpaced the prospects for economic growth.
The MSCI World Index of 23 developed nations sank 1.7 percent at 12:55 p.m. in London, the biggest retreat in a month. Futures on the Standard & Poor’s 500 Index slid 2.3 percent, while China’s Shanghai Composite Index slumped the most since November. The yen strengthened against all 16 of the most-traded currencies tracked by Bloomberg, while the dollar advanced against every one except the yen. The yield on the benchmark 10- year Treasury note dropped to its lowest level this month. Copper and oil declined for a second day.
Equities tumbled after foreign direct investment in China fell, Yunnan Copper Industry Co. said there were “no clear signs” of a recovery and Japan’s economy grew less than economists estimated, reigniting concern that a five-month, 52 percent rally in the MSCI World was overdone. The tally of failed U.S. banks this year climbed to 77 last week, while the Reuters/University of Michigan index of consumer sentiment in America showed an unexpected decrease.
“The rally in risk assets has become overextended as it has run ahead of the improvement in fundamentals,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in an e-mailed report. “The dollar and yen have been boosted by a pickup in safe-haven demand.”
European Stocks
The Dow Jones Stoxx 600 Index of European shares retreated 2.4 percent, the biggest drop in a month. A 41 percent rebound since March 9 has left the regional measure valued at 40.2 times the profits of its companies, near the most expensive since 2003, data compiled by Bloomberg show.
Raw-materials shares declined with metals and oil. Rio Tinto Group, the world’s third-largest metals producer, decreased 5.1 percent in London. Swedbank AB decreased 4.9 percent in Stockholm. The Baltic region’s biggest bank announced a second rights offer in less than a year as it seeks to shore up reserves and exit the Swedish state’s bank support plan. The lender faces soaring loan losses and provisions in Latvia, Lithuania and Estonia.
Lowe’s Cos. slid 11 percent in pre-market New York trading after the second-largest U.S. home-improvement retailer reporting second-quarter profit that missed analysts’ estimates.
The world’s biggest pension funds have lost confidence in stocks as the best long-term investment, cutting holdings or leaving them unchanged during the steepest rally since the 1930s. Funds overseeing money for California teachers and public workers, Dutch government retirees and South Korean private- sector employees reduced their target weightings for equities this year, data compiled by Bloomberg show.
Japan’s Economy
The MSCI Asia Pacific Index lost 3.3 percent, the steepest decline since March. Japan’s gross domestic product expanded at an annual 3.7 percent pace in the three months ended June 30, missing the median estimate for a 3.9 percent increase in a Bloomberg News survey. Sony Corp., the maker of the PlayStation 3 game console, retreated 4.1 percent in Tokyo.
Confidence in the world economy surged to a 22-month high in August on signs the first global recession since World War II is approaching an end, a Bloomberg survey of users on six continents showed last week.
The U.S. unemployment rate dropped in July for the first time since April 2008, data from the Labor Department showed this month, while the German and French economies unexpectedly grew last quarter, government figures indicated last week.
Emerging Markets
China’s Shanghai Composite Index sank 5.8 percent, the steepest slump since Nov. 18, as Ping An Insurance (Group) Co.’s profit missed estimates.
Ping An, China’s second-biggest insurance company, fell 3.9 percent after first-half net income dropped 45 percent. Yunnan Copper sank 10 percent after posting a first-half loss.
The MSCI Emerging Markets Index declined 3.3 percent, the steepest drop since March. Russia’s ruble weakened 2 percent against the dollar and depreciated 1.1 percent against the euro.
The yen advanced the most against the Australian dollar, strengthening 2.5 percent as demand for higher-yielding currencies waned, and rose 1.5 percent versus the euro. The pound slid 1.6 percent against the dollar on growing evidence the U.K.’s sputtering economy is halting the currency’s biggest five-month rally in 24 years.
U.S. Bonds
Gains for Treasuries sent the yield on the benchmark 10- year note down 10 basis points to 3.47 percent. The 30-year yield lost 7 basis points to 4.35 percent.
The cost of protecting European corporate bonds from default rose to the highest since July 23 in the market for credit-default swaps. The Markit iTraxx Europe index of 125 companies with investment-grade ratings rose 4.25 basis points to 99, according to JPMorgan Chase & Co. prices.
Copper for delivery in three months fell 2.9 percent to $6,065 a metric ton on the London Metal Exchange. Aluminum, nickel and zinc also declined. Crude oil retreated 2.3 percent to $65.93 a barrel in New York. Gold fell 1.3 percent to $936.10 an ounce, leading a decline in precious metals.
The MSCI World Index of 23 developed nations sank 1.7 percent at 12:55 p.m. in London, the biggest retreat in a month. Futures on the Standard & Poor’s 500 Index slid 2.3 percent, while China’s Shanghai Composite Index slumped the most since November. The yen strengthened against all 16 of the most-traded currencies tracked by Bloomberg, while the dollar advanced against every one except the yen. The yield on the benchmark 10- year Treasury note dropped to its lowest level this month. Copper and oil declined for a second day.
Equities tumbled after foreign direct investment in China fell, Yunnan Copper Industry Co. said there were “no clear signs” of a recovery and Japan’s economy grew less than economists estimated, reigniting concern that a five-month, 52 percent rally in the MSCI World was overdone. The tally of failed U.S. banks this year climbed to 77 last week, while the Reuters/University of Michigan index of consumer sentiment in America showed an unexpected decrease.
“The rally in risk assets has become overextended as it has run ahead of the improvement in fundamentals,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in an e-mailed report. “The dollar and yen have been boosted by a pickup in safe-haven demand.”
European Stocks
The Dow Jones Stoxx 600 Index of European shares retreated 2.4 percent, the biggest drop in a month. A 41 percent rebound since March 9 has left the regional measure valued at 40.2 times the profits of its companies, near the most expensive since 2003, data compiled by Bloomberg show.
Raw-materials shares declined with metals and oil. Rio Tinto Group, the world’s third-largest metals producer, decreased 5.1 percent in London. Swedbank AB decreased 4.9 percent in Stockholm. The Baltic region’s biggest bank announced a second rights offer in less than a year as it seeks to shore up reserves and exit the Swedish state’s bank support plan. The lender faces soaring loan losses and provisions in Latvia, Lithuania and Estonia.
Lowe’s Cos. slid 11 percent in pre-market New York trading after the second-largest U.S. home-improvement retailer reporting second-quarter profit that missed analysts’ estimates.
The world’s biggest pension funds have lost confidence in stocks as the best long-term investment, cutting holdings or leaving them unchanged during the steepest rally since the 1930s. Funds overseeing money for California teachers and public workers, Dutch government retirees and South Korean private- sector employees reduced their target weightings for equities this year, data compiled by Bloomberg show.
Japan’s Economy
The MSCI Asia Pacific Index lost 3.3 percent, the steepest decline since March. Japan’s gross domestic product expanded at an annual 3.7 percent pace in the three months ended June 30, missing the median estimate for a 3.9 percent increase in a Bloomberg News survey. Sony Corp., the maker of the PlayStation 3 game console, retreated 4.1 percent in Tokyo.
Confidence in the world economy surged to a 22-month high in August on signs the first global recession since World War II is approaching an end, a Bloomberg survey of users on six continents showed last week.
The U.S. unemployment rate dropped in July for the first time since April 2008, data from the Labor Department showed this month, while the German and French economies unexpectedly grew last quarter, government figures indicated last week.
Emerging Markets
China’s Shanghai Composite Index sank 5.8 percent, the steepest slump since Nov. 18, as Ping An Insurance (Group) Co.’s profit missed estimates.
Ping An, China’s second-biggest insurance company, fell 3.9 percent after first-half net income dropped 45 percent. Yunnan Copper sank 10 percent after posting a first-half loss.
The MSCI Emerging Markets Index declined 3.3 percent, the steepest drop since March. Russia’s ruble weakened 2 percent against the dollar and depreciated 1.1 percent against the euro.
The yen advanced the most against the Australian dollar, strengthening 2.5 percent as demand for higher-yielding currencies waned, and rose 1.5 percent versus the euro. The pound slid 1.6 percent against the dollar on growing evidence the U.K.’s sputtering economy is halting the currency’s biggest five-month rally in 24 years.
U.S. Bonds
Gains for Treasuries sent the yield on the benchmark 10- year note down 10 basis points to 3.47 percent. The 30-year yield lost 7 basis points to 4.35 percent.
The cost of protecting European corporate bonds from default rose to the highest since July 23 in the market for credit-default swaps. The Markit iTraxx Europe index of 125 companies with investment-grade ratings rose 4.25 basis points to 99, according to JPMorgan Chase & Co. prices.
Copper for delivery in three months fell 2.9 percent to $6,065 a metric ton on the London Metal Exchange. Aluminum, nickel and zinc also declined. Crude oil retreated 2.3 percent to $65.93 a barrel in New York. Gold fell 1.3 percent to $936.10 an ounce, leading a decline in precious metals.
Japan emerges from recession but investors remain sceptical
Japan's economy has joined France and Germany in emerging from recession as the country's stimulus package gained some traction.
The economy, the world's second-biggest, recorded growth of 0.9pc in the three months to the end of June from the first quarter of the year. If Japan manages to sustain that rate for 12 months, the economy would enjoy expansion of 3.7pc.
The rebound in the economy was fuelled by Japan's key export markets, including China. Japan's neighbour is its biggest export market and saw growth of 7.9pc in the second quarter. Exports contributed 1.6pc to the quarter's growth, helping to offset other headwinds.
Japanese consumer confidence has also been buoyed by the 25 trillion yen stimulus package thrown at the economy by Prime Minister Taro Asa.
Despite Japan's technical emergence from recession, stock markets focused on the prospect that a robust recovery is unlikely. Tokyo's benchmark Nikkei 225 was down almost 3pc in late afternoon trading. Asian stock markets were also reacting to weak consumer confidence numbers released in the US last Friday.
“Growth was supported by stimulus packages and exports but it’s hard to believe they’ll both keep lifting the economy at this pace,” Takahide Kiuchi, chief economist at Nomura told Bloomberg. “We’re over the worst but Japan is in no condition to achieve a sustainable recovery.”
However, the second quarter's growth does bring to an end four straight quarters of expansion and may provide a political boost to Mr Asa, who faces a general election at the end of this month.
The economy, the world's second-biggest, recorded growth of 0.9pc in the three months to the end of June from the first quarter of the year. If Japan manages to sustain that rate for 12 months, the economy would enjoy expansion of 3.7pc.
The rebound in the economy was fuelled by Japan's key export markets, including China. Japan's neighbour is its biggest export market and saw growth of 7.9pc in the second quarter. Exports contributed 1.6pc to the quarter's growth, helping to offset other headwinds.
Japanese consumer confidence has also been buoyed by the 25 trillion yen stimulus package thrown at the economy by Prime Minister Taro Asa.
Despite Japan's technical emergence from recession, stock markets focused on the prospect that a robust recovery is unlikely. Tokyo's benchmark Nikkei 225 was down almost 3pc in late afternoon trading. Asian stock markets were also reacting to weak consumer confidence numbers released in the US last Friday.
“Growth was supported by stimulus packages and exports but it’s hard to believe they’ll both keep lifting the economy at this pace,” Takahide Kiuchi, chief economist at Nomura told Bloomberg. “We’re over the worst but Japan is in no condition to achieve a sustainable recovery.”
However, the second quarter's growth does bring to an end four straight quarters of expansion and may provide a political boost to Mr Asa, who faces a general election at the end of this month.
Asian Stocks Fall After U.S. Consumer Confidence Index Declines
Asian stocks dropped for the first time in three days after an unexpected decline in a U.S. consumer confidence index raised concern about the strength of a revival in global growth.
Sony Corp., the maker of Vaio computers and PlayStation 3 consoles, sank 3.7 percent. Nissan Motor Co., which generates a third of its revenue in the U.S., lost 2.3 percent in Tokyo. Nintendo Co., the world’s biggest maker of handheld game consoles, lost 2.2 percent after Credit Suisse Group AG cut its investment rating.
“Investors didn’t like the signs of weakness in the U.S. economic recovery last week,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. in Tokyo.
The MSCI Asia Pacific Index lost 1.3 percent to 112.76 as of 9:59 a.m. in Tokyo. The gauge has climbed 60 percent from a five-year low on March 9 on speculation stimulus policies and lower interest rates around the world will help revive the global economy.
Japan’s Nikkei 225 Stock Average fell 2 percent even as a government report showed the country’s economy grew for the first time in five quarters. Australia’s S&P/ASX 200 Index slipped 0.8 percent, while New Zealand’s NZX 50 Index declined 0.2 percent.
Futures on the Standard & Poor’s 500 Index sank 0.5 percent. It lost 0.9 percent on Aug. 14 after The Reuters/University of Michigan preliminary index of sentiment fell to 63.2 from 66 the month before. Economists had forecast an increase to 69, according to the average estimate in a Bloomberg News survey.
Rising Valuations
Better-than-estimated economic and earnings reports worldwide have driven the MSCI Asia Pacific Index’s rally since March, lifting the average valuation of its companies to 25 times estimated profit, more than the S&P 500 Index’s 16.8 times.
Mohamed El-Erian, co-chief investment officer of Pacific Investment Management Co., told CNBC on Aug. 14 current market valuations aren’t warranted by the economic outlook for 2010.
Sony, which gets 24 percent of its revenue in the U.S., sank 3.7 percent to 2,615. Nissan declined 2.3 percent to 712 yen. Honda Motor Co., Japan’s No. 2 automaker, fell 2.9 percent to 3,030 yen.
Exporters also fell as demand for safe-haven assets increased following the U.S. confidence report, helping the yen strengthen to as much as 94.43 versus the dollar, compared with about 95.27 at the close of trading in Tokyo on Aug. 14. A stronger yen lowers the amount of dollar-denominated sales when converted back into the Japanese currency.
Nintendo fell 2.2 percent to 24,870 yen in Osaka. Koya Tabata, an analyst at Credit Suisse Group in Tokyo, cut the shares to “neutral” from “outperform” as sales of the Wii game console are likely to be worse than previously forecast.
Sony Corp., the maker of Vaio computers and PlayStation 3 consoles, sank 3.7 percent. Nissan Motor Co., which generates a third of its revenue in the U.S., lost 2.3 percent in Tokyo. Nintendo Co., the world’s biggest maker of handheld game consoles, lost 2.2 percent after Credit Suisse Group AG cut its investment rating.
“Investors didn’t like the signs of weakness in the U.S. economic recovery last week,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. in Tokyo.
The MSCI Asia Pacific Index lost 1.3 percent to 112.76 as of 9:59 a.m. in Tokyo. The gauge has climbed 60 percent from a five-year low on March 9 on speculation stimulus policies and lower interest rates around the world will help revive the global economy.
Japan’s Nikkei 225 Stock Average fell 2 percent even as a government report showed the country’s economy grew for the first time in five quarters. Australia’s S&P/ASX 200 Index slipped 0.8 percent, while New Zealand’s NZX 50 Index declined 0.2 percent.
Futures on the Standard & Poor’s 500 Index sank 0.5 percent. It lost 0.9 percent on Aug. 14 after The Reuters/University of Michigan preliminary index of sentiment fell to 63.2 from 66 the month before. Economists had forecast an increase to 69, according to the average estimate in a Bloomberg News survey.
Rising Valuations
Better-than-estimated economic and earnings reports worldwide have driven the MSCI Asia Pacific Index’s rally since March, lifting the average valuation of its companies to 25 times estimated profit, more than the S&P 500 Index’s 16.8 times.
Mohamed El-Erian, co-chief investment officer of Pacific Investment Management Co., told CNBC on Aug. 14 current market valuations aren’t warranted by the economic outlook for 2010.
Sony, which gets 24 percent of its revenue in the U.S., sank 3.7 percent to 2,615. Nissan declined 2.3 percent to 712 yen. Honda Motor Co., Japan’s No. 2 automaker, fell 2.9 percent to 3,030 yen.
Exporters also fell as demand for safe-haven assets increased following the U.S. confidence report, helping the yen strengthen to as much as 94.43 versus the dollar, compared with about 95.27 at the close of trading in Tokyo on Aug. 14. A stronger yen lowers the amount of dollar-denominated sales when converted back into the Japanese currency.
Nintendo fell 2.2 percent to 24,870 yen in Osaka. Koya Tabata, an analyst at Credit Suisse Group in Tokyo, cut the shares to “neutral” from “outperform” as sales of the Wii game console are likely to be worse than previously forecast.
Friday, August 14, 2009
Germany and France in surprise recovery from recession
Germany and France rebounded unexpectedly from recession in the second quarter as stimulus plans around the world boosted demand for exports.
Europe's largest economy grew by 0.3pc from the first quarter, when it shrank by 3.5pc. Economists had been predicting a 0.2pc decline in Germany. The improvement brings an end to Germany's worst recession since the Second World War.
The German statistics office said the economy was helped by higher government and personal spending and a pick up in construction during the quarter.
France also reported growth in the second quarter, with a 0.3pc rise in gross domestic product (GDP). Forecast had been for a contraction of 0.2pc.
The British economy shrank by 0.8pc in the second quarter, more than twice as much as economists had forecast, because of the continuing hit to financial services and the property markets which buoyed up growth until the financial crisis hit.
Despite the recent improvement, economists and business leaders expect recovery to be sluggish.
Marius Kloppers, the chief executive of mining giant BHP Billiton, whose earnings are dependant on industrial growth, said yesterday he expects the world economy to take longer to get back to full speed than after previous downturns.
Eurozone GDP figures out later today are expected to show the region's economy shrank 0.5pc from the first quarter. Although, the rebound in euro region's two biggest economies mean the European Central Bank is unlikely to increase its stimulus measures.
Europe's largest economy grew by 0.3pc from the first quarter, when it shrank by 3.5pc. Economists had been predicting a 0.2pc decline in Germany. The improvement brings an end to Germany's worst recession since the Second World War.
The German statistics office said the economy was helped by higher government and personal spending and a pick up in construction during the quarter.
France also reported growth in the second quarter, with a 0.3pc rise in gross domestic product (GDP). Forecast had been for a contraction of 0.2pc.
The British economy shrank by 0.8pc in the second quarter, more than twice as much as economists had forecast, because of the continuing hit to financial services and the property markets which buoyed up growth until the financial crisis hit.
Despite the recent improvement, economists and business leaders expect recovery to be sluggish.
Marius Kloppers, the chief executive of mining giant BHP Billiton, whose earnings are dependant on industrial growth, said yesterday he expects the world economy to take longer to get back to full speed than after previous downturns.
Eurozone GDP figures out later today are expected to show the region's economy shrank 0.5pc from the first quarter. Although, the rebound in euro region's two biggest economies mean the European Central Bank is unlikely to increase its stimulus measures.
India May Trigger $39 Billion of Share Sales With Ownership Cap
Aug. 14 (Bloomberg) -- India may trigger as much as 1.9 trillion rupees ($39 billion) in stock sales, equivalent to five years of equity offerings, with a proposal to limit stakes of controlling shareholders.
Prime Minister Manmohan Singh’s government is considering a plan that would require at least 25 percent of a company’s stock to be traded. The rule would prompt equity sales in 560 of Mumbai’s 3,335 most-active stocks, such as NMDC Ltd. and Steel Authority of India Ltd., according to data compiled by Bloomberg.
The changes may encourage foreign investment by bringing Indian regulations in line with the U.S., U.K. and Hong Kong, said Anshul Krishan, the Mumbai-based head of Goldman Sachs Group Inc.’s India financing group. The sales, equal to about 4 percent of India’s $1 trillion stock market, probably won’t affect prices if they’re staggered over time, said Purav Jhaveri, senior investment strategist at Franklin Global Advisers.
“The 25 percent minimum would be good for the long-term Indian market,” Seth Freeman, chief executive officer of EM Capital Management LLC in San Francisco, which advises investors on emerging markets and runs the EM Capital India Gateway Fund, said in an e-mail response to questions. “There are many very attractive companies with small floats that investors would like to be able to invest in.”
The rule change would require the government, whose constitution embraces socialism, to reduce dominant stakes in key industries such as steelmaking, oil and electricity supply. The top 10 companies that would have to sell stock are state- run, accounting for about 80 percent of the total by value.
Sensex Surges
The Bombay Stock Exchange’s Sensitive Index, or Sensex, has climbed 61 percent this year, the eighth-best performer among 89 measures tracked by Bloomberg. Growth in Asia’s third-largest economy may accelerate to 7.75 percent after the government initiated stimulus plans to bolster banks’ capital and spur consumer spending, according to the finance ministry.
International funds have bought 357.5 billion rupees of Indian stocks this year through Aug. 11, compared with record net sales of 530 billion rupees for all of 2008, according to data on the Securities and Exchange Board of India Web site.
Finance Minister Pranab Mukherjee said in his July 6 budget speech that a rule requiring a public float of at least 25 percent for listed companies should be enforced uniformly, even for state-run enterprises that had been exempted. The government plans to boost funding for a rural jobs program by selling shares in some state-run companies.
No Minimum
Rules allow companies with a free-float worth at least 1 billion rupees to have as little as 10 percent traded, while there is no minimum for state-run enterprises, the ministry’s Web site says.
“The average public float in Indian listed companies is less than 15 percent,” Mukherjee said. “Deep, non-manipulable markets require larger and diversified public shareholdings.”
The Sensex has returned 192 percent over the past five years, second in Asia only to Indonesia. Since 2005, companies have raised 1.89 trillion rupees in share sales, including 116 billion rupees in January last year by Mumbai-based Reliance Power Ltd. that marked the country’s biggest initial public offering. New Delhi-based DLF Ltd., India’s largest real estate developer, sold 92 billion rupees of stock in June 2007.
Government Control
India’s government plans to sell 8.38 percent of NMDC, the nation’s largest iron-ore producer, Steel Secretary Pramod Rastogi said Aug. 5. The stake would fetch 120 billion rupees at current prices, he said. The government holds 98.4 percent in Hyderabad-based NMDC, and 85.8 percent of New Delhi-based Steel Authority of India, the nation’s second-biggest producer, according to Bloomberg data.
“The sheer magnitude of offloading involved may result in an overhang on the secondary capital markets,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd. in New Delhi, said in an interview. “The capital market may find it difficult to absorb such heavy equity.”
GMR Infrastructure Ltd., based in Bangalore, scrapped a $500 million international sale on June 30 as at least 40 companies announced plans to sell more than 350 billion rupees of shares, mostly to foreign institutional investors.
The Securities and Exchange Board of India advocates “a phased approach, as companies may need time” to sell shares, N. Hariharan, a Mumbai-based spokesman for the market regulator, said in an e-mail Aug. 7.
‘Phased Manner’
The proposal “should be positive for markets if introduced in a phased manner,” Franklin’s Jhaveri said in an e-mail response to questions. Franklin Templeton Investments in San Mateo, California manages $482.4 billion worldwide, including more than $3 billion in Indian stocks.
The Finance Ministry sought public comment on the plan on its Web site July 9. Singh’s administration plans to take up the issue after completing 100 days in office, Junior Finance Minister Namo Narain Meena said in a written statement to parliament in New Delhi on Aug. 4. Singh was sworn in on May 22.
The changes are important for protecting shareholders in India, said Andrew Foster, who oversees $2 billion in assets, including Indian securities, at Matthews International Capital Management LCC in San Francisco.
“Such a change is a welcome one,” Foster said in an e- mailed response to questions. “Ensuring a reasonable minimum float would help avoid share price manipulation, scams, abuse by majority shareholders, etc. So I think this would constitute a positive structural change.”
Prime Minister Manmohan Singh’s government is considering a plan that would require at least 25 percent of a company’s stock to be traded. The rule would prompt equity sales in 560 of Mumbai’s 3,335 most-active stocks, such as NMDC Ltd. and Steel Authority of India Ltd., according to data compiled by Bloomberg.
The changes may encourage foreign investment by bringing Indian regulations in line with the U.S., U.K. and Hong Kong, said Anshul Krishan, the Mumbai-based head of Goldman Sachs Group Inc.’s India financing group. The sales, equal to about 4 percent of India’s $1 trillion stock market, probably won’t affect prices if they’re staggered over time, said Purav Jhaveri, senior investment strategist at Franklin Global Advisers.
“The 25 percent minimum would be good for the long-term Indian market,” Seth Freeman, chief executive officer of EM Capital Management LLC in San Francisco, which advises investors on emerging markets and runs the EM Capital India Gateway Fund, said in an e-mail response to questions. “There are many very attractive companies with small floats that investors would like to be able to invest in.”
The rule change would require the government, whose constitution embraces socialism, to reduce dominant stakes in key industries such as steelmaking, oil and electricity supply. The top 10 companies that would have to sell stock are state- run, accounting for about 80 percent of the total by value.
Sensex Surges
The Bombay Stock Exchange’s Sensitive Index, or Sensex, has climbed 61 percent this year, the eighth-best performer among 89 measures tracked by Bloomberg. Growth in Asia’s third-largest economy may accelerate to 7.75 percent after the government initiated stimulus plans to bolster banks’ capital and spur consumer spending, according to the finance ministry.
International funds have bought 357.5 billion rupees of Indian stocks this year through Aug. 11, compared with record net sales of 530 billion rupees for all of 2008, according to data on the Securities and Exchange Board of India Web site.
Finance Minister Pranab Mukherjee said in his July 6 budget speech that a rule requiring a public float of at least 25 percent for listed companies should be enforced uniformly, even for state-run enterprises that had been exempted. The government plans to boost funding for a rural jobs program by selling shares in some state-run companies.
No Minimum
Rules allow companies with a free-float worth at least 1 billion rupees to have as little as 10 percent traded, while there is no minimum for state-run enterprises, the ministry’s Web site says.
“The average public float in Indian listed companies is less than 15 percent,” Mukherjee said. “Deep, non-manipulable markets require larger and diversified public shareholdings.”
The Sensex has returned 192 percent over the past five years, second in Asia only to Indonesia. Since 2005, companies have raised 1.89 trillion rupees in share sales, including 116 billion rupees in January last year by Mumbai-based Reliance Power Ltd. that marked the country’s biggest initial public offering. New Delhi-based DLF Ltd., India’s largest real estate developer, sold 92 billion rupees of stock in June 2007.
Government Control
India’s government plans to sell 8.38 percent of NMDC, the nation’s largest iron-ore producer, Steel Secretary Pramod Rastogi said Aug. 5. The stake would fetch 120 billion rupees at current prices, he said. The government holds 98.4 percent in Hyderabad-based NMDC, and 85.8 percent of New Delhi-based Steel Authority of India, the nation’s second-biggest producer, according to Bloomberg data.
“The sheer magnitude of offloading involved may result in an overhang on the secondary capital markets,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd. in New Delhi, said in an interview. “The capital market may find it difficult to absorb such heavy equity.”
GMR Infrastructure Ltd., based in Bangalore, scrapped a $500 million international sale on June 30 as at least 40 companies announced plans to sell more than 350 billion rupees of shares, mostly to foreign institutional investors.
The Securities and Exchange Board of India advocates “a phased approach, as companies may need time” to sell shares, N. Hariharan, a Mumbai-based spokesman for the market regulator, said in an e-mail Aug. 7.
‘Phased Manner’
The proposal “should be positive for markets if introduced in a phased manner,” Franklin’s Jhaveri said in an e-mail response to questions. Franklin Templeton Investments in San Mateo, California manages $482.4 billion worldwide, including more than $3 billion in Indian stocks.
The Finance Ministry sought public comment on the plan on its Web site July 9. Singh’s administration plans to take up the issue after completing 100 days in office, Junior Finance Minister Namo Narain Meena said in a written statement to parliament in New Delhi on Aug. 4. Singh was sworn in on May 22.
The changes are important for protecting shareholders in India, said Andrew Foster, who oversees $2 billion in assets, including Indian securities, at Matthews International Capital Management LCC in San Francisco.
“Such a change is a welcome one,” Foster said in an e- mailed response to questions. “Ensuring a reasonable minimum float would help avoid share price manipulation, scams, abuse by majority shareholders, etc. So I think this would constitute a positive structural change.”
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