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Asia's buying power

Tue, 23 Sep 2008 13:53:22 -0400

After more than two decades in the international banking doldrums, Japan is back. Japan's Nomura Holdings is to pay up to $525 million for Lehman's Asia Pacific franchise and is front-runner to buy the bankrupt bank's businesses in Europe. Nomura with 18,000 staff in 30 countries has its investment banking hub in London, and says bidding for Lehman's European operation makes sense. And senior FX strategist at Standard Chartered, Robert Minikin, said the recovery of Japanese banking was a good sign for all. SOUNDBITE "Certainly I would say that it brings as a source of optimism that eventually over time the issues, such as those we see in the United States with the credit crunch at the moment, given time they can be worked through with appropriate government support. And eventually the banking system as we see in Japan can be revitalised. Of course the developments we see across Asia in terms of stronger growth are certainly helping the Japanese banks at this point." It doesn't stop there. Morgan Stanley has agreed to sell an equity stake of as much as 20 pecent to top Japanese bank Mitsubishi worth an estimated $8.5 billion. But by exceeding the 9,9 percent threshold, the world's number two bank by deposits must receive U.S. regulatory and antitrust approval. And Singapore sovereign fund, GIC, said it saw opportunities in 'distressed assests' in the United States after the financial storm. SOUNDBITE Well I think in terms of market positioning it's clear at this point that U.S. institutions are facing some of the more serious stress. But nevertheless the overall global growth picture and probably banking market dynamics in the medium term still look very healthy and for that reason they are taking this opportunity to expand their presence in what is likely to be a very healthy market going forward." The world's third largest sovereign fund came into the limelight after their high profile investments in UBS and Citigroup in recent months. Stefanie McIntyre, Reuters

Asian banks cut rates

Thu, 09 Oct 2008 13:39:18 -0400

Hong Kong shares rebound on Thursday(October 9), after recording a nearly 13 percent slide so far this week, helped by coordinated central bank action around the world and a raft of favourable policy measures from China. At 0225 GMT the benchmark Hang Seng Index was up 2.8 percent at 15,858.39. On Wednesday (October 8) Hong Kong shares plunged 8.2 percent, their biggest drop in 9 months, sending valuations to levels last seen during the Asian financial crisis as dismayed investors reacted to the looming threat of a global recession. The main index fell below 16,000 for the first time since July 2006 ending Wednesday at 15,431.73. Chinese stocks opened higher on Thursday (October 9) but fell back late on morning trade after the central bank eased monetary policy in an effort to prevent global financial contagion from spreading to China's capital markets. The Shanghai Composite Index, which had tumbled 8.79 percent over the past three days, opened up 1.59 percent at 2,125.567 points. But after 15 minutes of trade it had pulled back as far as 2,084.592 points, down 0.36 percent. Shares in Industrial & Commercial Bank of China, the biggest bank, rose 2.21 percent at the opening but then gave up most of their gains to stand 0.25 percent higher at 4.08 yuan. Most Asian stocks rose on Thursday after central banks from Asia to Europe and the United States cut interest rates to support the global economy, though investors remained fearful with credit markets still nearly frozen. In an unprecedented display of international coordination, the Federal Reserve, the European Central Bank along with several others including China's central bank on Wednesday executed an emergency rate cut, hours after equity markets plunged in Asia and Japan's Nikkei chalked up its biggest decline since the 1987 crash. Analysts had predicted before the opening that the stock market would rise 2 or 3 percent on Thursday, but said its longer-term outlook would remain vulnerable to the condition of overseas markets and the global economy. Some investors said they did not believe the rate cut would do much to help the ailing Chinese stock market. "To put it nicely, they are not doing anything practical for the market. They say they are rescuing the market, but they are not showing us the money. The Americans have injected money into their markets, but our government is not doing so, how can we rescue this market? It is like saying they will help us but they take no action. I do not believe the rate cut (will help much)." Many expect the Chinese central bank to cut benchmark interest rates and reduce banks' reserve ratios further in the next few months. In South Korea the central bank cut its main interest rate by 25 basis points on Thursday, joining in a round of worldwide rate cuts aimed at halting turmoil in global markets. The Bank of Korea lowered its base rate to 5.00 percent from a 7-1/2-year high of 5.25 percent set in August, when the central bank was guarding against mounting inflation expectations. "In some ways, the interest rate cut is expected to minimize the effect of the foreign exchange rise and we're expecting some positive effects since it (the interest rate cut) is keeping in step with global mutual cooperation," said Han Beomho, an investment analyst at Goodmorning Shinhan Securities. The won has fallen this week to its lowest level since the Asian financial crisis a decade ago on fears the economy could buckle in the turmoil sweeping global markets.

Japan stocks surge

Thu, 29 May 2008 11:40:44 -0400

Asia stocks largely gained on Thursday with investors gaining confidence following solid business spending data out of the United States. Japan's Nikkei rose 3 percent (14,124) its best daily gain in eight weeks. Exporters such as Toyota were among the top performers on hopes that U.S. demand for Asia goods will remain strong. In Korea LG Electronics surged almost 6 percent. Hong Kong shares underperformed the North Asia rally. The city's listed bourse operator Hong Kong Exchanges slumped on talk the city's anti-corruption watchdog was investigating a suspected stock warrant scam. Economic news around the region was weak despite the gains in most stock markets. Japan's retail sales rose by less than expected in April suggesting that higher energy and food prices are curtailing spending in the world's second largest economy. In Australia data showed businesses cut back spending last quarter as a slump in consumption hurt the retail sector. And finally in the Philippines first quarter economic growth was slower than expected in the first quarter thanks to rocketing inflation and a weak U.S. economy. Tara Joseph-Hui reporting for Reuters.

Hitachi Faces $1B Loss

Fri, 16 Jan 2009 10:30:17 -0500

South Korean electronics giant Samsung Electronics reorganised itself into two major groups, joining together its chip and display units and combining the telecom and media businesses. The world's biggest maker of memory chips and LCD screens, is struggling as chronic oversupply and falling consumer demand has wiped out profits from the two flagship units, once considered the company's cash cows. Hitachi, Japan's biggest electronics maker, faces an annual loss of more than a billion dollars instead of a previously forecast profit, hurt by a sharp decline in microchip sales. Hitachi is also suffering from halting orders for automotive equipment and sluggish sales in its flat-panel TVs and other electronics as consumers hold off on off big-ticket purchases. Like Japan's Fuji Heavy Industries, the maker of Subaru cars, which warned it faced a loss of 100 million dollars, down from the previously forecast quarter of a billion dollar profit, because of falling demand and the stronger yen. It may also cut its dividend. And despite the gloomy company news, markets were higher on investor reassurance after the U.S. government said Bank of America Corp will receive 20 billion dollars in fresh government cash and a federal backstop against 118 billion dollars of bad assets. But gains in Hong Kong were pared by HSBC shares which tanked after a second broker downgrade this week. The Bank of Japan warned that financial conditions were tightening rapidly as falling stock prices hurt Japanese banks, signalling concern over renewed stress in global credit markets. Japan, like the United States and much of Europe, is in recession, with blue-chip companies such as carmakers Toyota and Honda slashing output as customers cut back on spending worldwide. Stefanie McIntyre, Reuters

Confidence slips in China

Thu, 11 Sep 2008 13:13:54 -0400

It's been quite a year for China - the highs of the summer Olympic games. The lows of natural disasters such as the latest landslides in Shanxi province. The country's burgeoning stock market is also seeing its share of drama. Shanghai's index tapped a fresh 21-month low on Thursday as jitters about the economy gripped investor confidence. While many analysts said China would avoid a post-Olympics slump thanks to robust investor confidence, many are now worried the country is catching a cold from a steep slowdown abroad. The country's red hot housing market has slowed in urban areas. Growth is expected to slow as demand for exports slips in coming months and corporate profits weaken in turn. Investors had expected the government to take measures to prop up investor confidence after the Olympics. With little sign of any initiatives turnover on Shanghai's exchange has shrunk. Already burnt earlier in the year, local investors are running for cover. In Hong Kong stocks in major China firms such as China Mobile are falling hard as international investors move funds in search of safer bets. Resource and commodity stocks such as Asia's largest oil and gas producer PetroChina are also taking a beating. Tara Joseph-Hui reporting for Reuters.

Economic slowdown predictions

Fri, 25 Apr 2008 14:14:42 -0400

Canadians can expect economic growth to grind to a near halt in the second quarter of the year because of the U.S. slowdown and the global credit crunch, the Bank of Canada said Thursday. - In its monetary policy report, the central bank said economic growth for the April-June quarter will hit an annual rate of only 0.3 per cent, down from a January expectation of two per cent growth. - The bank also sees growth of 1.8 per cent for the last six months of this year - down from its previous estimate of 2.3 per cent. - "The deterioration in economic and financial conditions in the United States will have significant spillover effects globally, particularly in the industrial economies," the bank said in its quarterly outlook. - In Ottawa, Bank of Canada governor Mark Carney said strong domestic demand is offsetting some of the fallout from the U.S. situation and the credit slowdown. - "Consumer confidence is quite strong at present," Carney said during a news conference, but he added it is reasonable to expect some softening of that confidence among Canadian consumers and businesses. - Carney told reporters that U.S. economic growth is expected to be stalled for the first quarter and negative in the second quarter. - The bank sees only one per cent overall growth in the U.S. this year, followed by 1.7 per cent next year, rising to 3.4 per cent in 2010. - The current U.S. economic malaise will push down Canadian exports until they begin to improve in the second half of this year and 2009. - Tensions in the world credit market are expected to persist through the rest of 2008 before starting to ease sometime next year. The central bank doesn't see credit markets returning to normal until 2010. - Despite the credit crunch, the central bank notes that it hasn't become more difficult for Canadian consumers to borrow. Even though fixed mortgage rates haven't fallen as fast as the Bank of Canada has slashed its key overnight rate, the central bank says growth in household borrowing remains "strong, despite some deceleration thus far in 2008." - The report comes just two days after the central bank cut its key interest rate by half a percentage point to three per cent in a move to give the Canadian economy a shot in the arm. - The bank reiterated that further interest rate cuts are likely in the medium term. - Conditions in Canada are expected to remain soft in 2009 - with the central bank forecasting first-half growth of 2.7 per cent, and second-half growth of 3.3 per cent. - The economy is expected to get back into balance in 2010, when the Bank of Canada sees growth of 3.4 per cent.

India's sex workers Bank

Mon, 17 Dec 2007 10:40:25 -0500

A bank in India is helping sex workers save their money for a brighter future. MOREINFO: The bank was started by a sex-worker collective in the heart of Mumbai's red light district. More than 1,200 sex workers now hold accounts at the Sangini Women's Co-operative Society bank, which will soon introduce low-interest loans. SCRIPT: India's financial capital Mumbai is a beacon for sex workers from all over South Asia, yet prejudice and red tape has locked them out of the banking system. Many sex workers lack proof of identification which excludes them from opening up bank accounts and those who do have the necessary documents say they're often made to feel unwelcome at banks. Now a new bank especially for sex workers removes the traditional obstacles SOUNDBITE: Unidentified woman "I have two children, a boy and a girl. The girl is married and the boy is small. I want to educate him so he can get a good job so that he can marry and be happy, that's my dream." Many investors are saving their way out of prostitution. Shilpa Merchant who helped to set up the banK says some women want to return to their villages, but have no savings and need to keep working to pay off loan sharks. SOUNDBITE: SHILPA MERCHANT "This is a way for them to finally get out of the vicious cycle of being dependent on the madame or being dependent on the money lender and being able to refuse a customer who doesn't wear a condom. They do not have this fear of where is my next meal coming from." Some investors are saving up to buy their freedom. Many of Mumbai's sex workers are sold to brothels and must pay large sums to leave If a woman is confined to a brothel the bank will pay her regular visits to collect her savings. The bank provides no immediate way out of sex work, but by investing as little as fifty cents a day, many women can contemplate retirement and even set up businesses. In Mumbai, I'm Alana Rosenbaum reporting for Reuters.