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Moolah
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Posting #1: Thu Jun 12th, 2008 13:40 |
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Ok... we have Vietnami....
now...
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Business Times - 12 Jun 2008
Cut exposure to emerging Asian stocks on inflation: HSBC
SINGAPORE - Investors should avoid exposure to emerging Asian shares as rising inflation threatens to hurt regional currencies, HSBC said in a report.
The investment bank said overall it is cutting global equity exposure by 5 percentage points to 54.5 per cent, and turning neutral on stocks in the developed markets as central banks become worried about inflation more than growth.
HSBC advised investors to raise cash holdings to 11 per cent from 6 per cent.
'Inflation looks a very real problem in Asia and the risk, as we've said before, is that investors lose faith in the region's currencies,' HSBC strategists wrote in a report on June 11.
'Although markets have fallen savagely from their peaks, they're still looking pricey, especially in context of rapidly rising inflation,' HSBC said.
Asian stocks fell to two-month lows on Thursday after oil prices jumped US$5 to near record highs on a report showing four weeks of tightening supply, adding fears about rising inflation.
The MSCI index for Asian stocks excluding Japan has fallen almost 16 per cent this year, and is down almost 25 per cent from a peak in November.
The MSCI index for global stocks is down 9.2 per cent this year.
HSBC said investors should have no exposure to emerging Asian stocks, compared with its previous stance that investors should invest 2.5 per cent in emerging Asian stocks in a model portfolio.
India's central bank raised its key lending rate for the first time in more than a year on Wednesday. Central banks in China, Indonesia and the Philippines have tightened policy in the past week to counter inflation.
In Vietnam, inflation has been running at more than 25 per cent and in developed Singapore inflation surged to a 26-year high of 7.5 per cent in April. -- REUTERS
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Posting #2: Thu Jun 12th, 2008 13:41 |
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June 11th....
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Business Times - 11 Jun 2008
Asian stocks plunge on renewed inflation fears
China, HK equities dive after PBOC hikes reserve ratio to record 17.5%
By CONRAD TAN
(SINGAPORE) Stock prices in the region tumbled yesterday, as investors were spooked by overnight news of further losses at a major US investment bank and fears that central banks are losing the battle against inflation amid soaring oil prices.
Equities in mainland China and Hong Kong were the worst-hit, reeling from the additional blow of monetary tightening measures announced by China's central bank over the three-day weekend.
The Hong Kong, China and Australian markets, which were closed on Monday for a public holiday, also suffered from pent-up selling pressure after last Friday's plunge in US stocks due to surging oil prices and a rising unemployment rate that suggested a worsening outlook for the world's largest economy.
Adding to the flow of bad news overnight, Lehman Brothers, the fourth-largest investment bank in the US, said on Monday that it would report its first quarterly loss since it listed in 1994.
The New York-based firm, which reports its earnings next Monday , expects a net loss of US$2.8 billion for its second quarter to end-May due mainly to losses from its fixed-income business.
The news dashed hopes that the financial sector had seen the worst of the credit market troubles that started in the US sub-prime mortgage market.
In Singapore, the benchmark Straits Times Index fell 1.7 per cent, led by banking stocks DBS Group and United Overseas Bank (UOB), extending its two-day loss to 3.6 per cent since the start of the week.
Hong Kong's Hang Seng Index sank 4.2 per cent, the largest one-day decline since March 17, as shares in banks such as HSBC, the Industrial & Commercial Bank of China and China Construction Bank tumbled.
In mainland China, the CSI 300 index of top stocks listed on the Shanghai and Shenzhen exchanges plummeted 8.1 per cent, the biggest percentage fall since Feb 27 last year. The index is now at its lowest level since April 19 last year.
In Australia, the S&P/ASX 200 index fell 2.8 per cent, dragged down by banking and other financial stocks. Elsewhere in the region, all other major indices also fell, except in Malaysia, where the Kuala Lumpur Composite index ended unchanged.
US Federal Reserve chairman Ben Bernanke spoke at length on Monday about growing inflation pressures from record-high energy prices, sparking concern among some investors that the US central bank could start raising interest rates later this year in a bid to prevent a ruinous, self-reinforcing cycle of price and workers' wage increases.
Mr Bernanke said that 'the latest round of increases in energy prices has added to the upside risks to inflation and inflation expectations', adding that the Fed 'will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilising for growth as well as for inflation'.
The People's Bank of China (PBOC) said last Saturday that it would raise the reserve-requirement ratio - the amount of money that commercial banks need to set aside in reserve at the central bank - to a record-high 17.5 per cent in a two-step hike over the next two weeks.
It is the fifth time the PBOC has raised the reserve ratio this year, as it struggles to cool inflationary pressures caused by large inflows of money from foreign investors, higher commodity prices and excessively rapid growth in bank lending.
United Overseas Bank economist Suan Teck Kin said in a note on Monday that 'unlike previous announcements, this one came just before the release of major data releases for May, suggesting that the May inflation data could be worse than the 12-year high reading of 8.5 per cent in April, in view of record high crude oil prices as well as the impact from the Sichuan earthquake on May 12'.
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Posting #3: Thu Jun 12th, 2008 13:41 |
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Business Times - 12 Jun 2008
S'pore inflation to peak above 8%: Credit Suisse
By LYNETTE KHOO
(SINGAPORE) Inflation in Singapore is expected to peak above 8 per cent in May or June, but the risk of higher prices stifling economic growth is not imminent, a Credit Suisse economist said yesterday.
'High inflation is negative for growth but it will depend on real income decline,' the Swiss bank's emerging markets economics group director Cem Karacadag told BT.
'In Singapore's case, real wages are still holding up well,' he said. 'I do not think at this moment in time, we are at a level that will stifle growth.'
The government has raised its full-year forecast range for Consumer Price Index twice since the start of this year, with the latest hike taking the forecast to 5-6 per cent, up from 4.5-5.5 per cent after inflation hit a 26-year high of 7.5 per cent in April from a year earlier.
Elsewhere in Asia, food and oil-related items are also driving inflation to near or above double digits.
At a briefing yesterday, Mr Karacadag said that even if oil prices stabilise there is still inflationary upside because the oil price spike in May has not been fully transmitted, food prices are still rising and there are still cost pressures on the economy.
In countries where government controls mute the pass-through of higher oil prices to retail fuel prices, inflationary expectations may worsen in anticipation of discrete price hikes, he added. The recent 25-33 per cent hike in retail fuel prices by the Indonesian government, for instance, could push annual inflation there above 12 per cent in June.
Credit Suisse has raised its inflation forecasts for most Asian countries for 2008, lifting the forecast for Singapore from 4 to 5 per cent. The hike is greatest for Vietnam - from 10.7 to 22.1 per cent.
But with central banks in the region still wrestling with growth risks in the coming quarters, they are unlikely to rapidly appreciate their currencies to combat inflation, Mr Karacadag said. The pass-through impact that exchange rate has on inflation is also generally low.
'We think that policy responses will depend on the risks to inflationary expectations and the risk of second-round effects,' Mr Karacadag said. 'If oil prices keep rising, the risk is that policy falls behind and monetary tightening has to play catch-up later.'
But monetary tightening in Singapore appears to have some impact. The Monetary Authority of Singapore said last month that if not for the appreciation of the Sing dollar - which rose about 11 per cent against the US greenback last year, and a further 4-5 per cent so far this year - Singapore's 2007 inflation rate would have been 2-2.5 points higher.
'We expect MAS to maintain the current position and slope of its policy band until the next monetary policy statement in October,' Mr Karacadag said. 'If oil prices continue to rise and inflation stay higher for longer time, I do think there is a material possibility of them either steepening the slope or re-centring the band.'
If oil and food prices do not rise further and the second-round effects are avoided, inflation is expected to fall next year and economic growth is expected pick up across Asia ex-Japan, except in Vietnam, he added.
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Moolah
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Posting #4: Thu Jun 12th, 2008 13:46 |
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The Vietnam market making Thai Bankers weary....
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http://www.bangkokpost.com/Business/12Jun2008_biz40.php
Vietnam a concern for Thai bankers
BBL, SCB and Exim monitoring exposure
SOMRUEDI BANCHONGDUANG & WICHIT CHANTANUSORNSIRI
Local bankers are watching nervously events to the east, where Vietnam appears to be on the verge of a full-blown currency crisis.
Wittaya Supatanakul, an adviser for the international banking group at Bangkok Bank, said the country's largest bank did not expect a significant impact if the Vietnamese dong were sharply devalued.
''[Bangkok Bank] will continue its current investment plan in Vietnam, although we along with other banks have been affected by the lack of liquidity in the market,'' he said.
The Vietnamese economy is teetering on the verge of a currency crisis as authorities wrestle with inflation as high as 25%, a sharp decline in the equities market and deteriorating economic conditions in the global market.
Based on forward contracts in the currency markets, the dong is up to 40% overvalued compared with the US dollar, as the country's trade and current deficits have soared due to the soaring cost of oil imports.
The State Bank of Vietnam on Tuesday announced a minor depreciation of 2% in the dong's official reference rate and a rise in policy interest rates to 14% from 12%. The rate hike also pushed the ceiling for deposit and lending rates to 21% from 18%, as the central bank tries to tighten monetary policy to slow economic growth and inflationary pressure.
The central bank has also moved to curb bank lending growth at less than 30% this year compared with 33% last year.
Limits have also been imposed on lending to the property sector and for margin lending for share trading to curb asset speculation.
The controls have hit asset prices hard, with property prices in Vietnam down 30% to 35% over the past six months. The Vietnamese stock exchange has also lost 65% in value over the past 14 months.
Mr Wittaya said Bangkok Bank had been ''slightly affected'' by the poor macroeconomic situation in the country, adding that its outstanding loans were primarily to Thai and other foreign investors in the Vietnamese manufacturing sector.
Bangkok Bank operates two branches in Vietnam. Its Ho Chi Minh City branch has outstanding loans of US$340 million and its Hanoi branch $110 million.
''The bank does have to be more prudent in doing business in the country, given the uncertainties about the dong and the economy. We will focus on monitoring and helping our existing customers rather than expanding lending,'' Mr Wittaya said.
Paspun Suvanchinda, an executive vice-president at Siam Commercial Bank, said the bank was taking a similarly cautious line.
SCB operates a joint venture with the Vietnam Bank for Agriculture and Rural Development, the country's largest state-owned bank, as well as with the CP Group.
The three partners hold equal shares in VinaSiam Bank, which operates six branches in Vietnam and a loan portfolio of around US$90 million.
At the Export-Import Bank of Thailand, officials said the quality of loans exposed to the Vietnamese market had not been affected to date.
Kittiporn Limpisvasti, an Exim Bank senior executive vice-president, said most of the bank's outbound projects to Vietnam were relatively small.
''But we are reviewing how the economic situation in Vietnam might affect credit quality and the viability of various business ventures,'' he added.
Mr Kittiporn said existing loans for Thai projects in Vietnam were all current. The Exim Bank also had another 10 to 20 million baht worth of exposure in the form of export guarantees, which to date have not yet been exercised.
''If the crisis deteriorates, we will likely stop our transactions. But the situation is not yet at that point,'' he added.
One problem facing outside analysts was in gaining accurate economic data about the state of the Vietnamese economy, Mr Kittiporn said.
Foreign reserve figures vary from as low as $15 billion to as much as $26 billion, depending on how the numbers are calculated. Trade deficit, at $14.4 billion for the first five months of the year, would seem to be highly alarming for the country's external finances, although authorities say the gap can be covered by foreign investment flows and aid from foreign countries.
''Certainly we hope that Vietnam can find a way to handle the crisis, and possibly learn from Thailand's own experience during the 1997 crisis,'' Mr Kittiporn said.
''Actually, one major difference between Thailand then and Vietnam now is the fact that in 1997, Thailand had huge foreign debt levels, much more than Vietnam has today.''
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Moolah
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Posting #5: Thu Jun 12th, 2008 13:48 |
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This wa posted on Guardin UK...
http://www.guardian.co.uk/business/feedarticle/7580306
Cut exposure to emerging Asian stocks on inflation-HSBC
Reuters, Thursday June 12 2008 (Adds Deutsche private bank's strategy)
SINGAPORE, June 12 (Reuters) - Investors should have no exposure to emerging Asian shares as rising inflation threatens to hurt regional currencies, HSBC said in a report.
The drastic recommendation by the global bank compared with its previous stance that investors should invest 2.5 percent in emerging Asian stocks in a model portfolio.
Asia is facing the threat of rising inflation, stemming from high oil and food prices, and aggressive monetary tightening as inflation has breached the comfort zone of most Asian economies.
"Inflation looks a very real problem in Asia and the risk, as we've said before, is that investors lose faith in the region's currencies," HSBC strategists wrote in a report on June 11.
"Although markets have fallen savagely from their peaks, they're still looking pricey, especially in context of rapidly rising inflation," HSBC said.
Overall, HSBC said it was cutting global equity exposure by 5 percentage points to 54.5 percent, and turning neutral on stocks in the developed markets as central banks become worried about inflation more than growth.
HSBC advised investors to raise cash holdings to 11 percent from 6 percent.
Deutsche Bank Private Wealth Management said in a report on Thursday that aggressive monetary tightening is required in Indonesia, Philippines, India and Vietnam, and to a more limited extent in Thailand and Malaysia.
"This could hurt equity prices in these peripheral markets," Chua Hak Bin, Asian investment strategist at the private bank said in the report.
However, those markets less hit by oil prices and where monetary tightening will be more limited in future would be Taiwan, Singapore, China and Hong Kong, he said.
Asian stocks fell to an eleven-week low on Thursday after oil prices jumped to near record highs on a report showing four weeks of tightening supply, adding to fears about rising inflation.
The MSCI index for Asian stocks excluding Japan has fallen almost 16 percent this year, and is down almost 25 percent from a peak in November.
The MSCI index for global stocks is down 9.2 percent this year.
India's central bank raised its key lending rate for the first time in more than a year on Wednesday. Central banks in China, Indonesia and the Philippines have tightened policy in the past week to counter inflation.
In Vietnam, inflation has been running at more than 25 percent and in developed Singapore inflation surged to a 26-year high of 7.5 percent in April. (Reporting by Saeed Azhar; Editing by Neil Chatterjee)
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Moolah
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Posting #6: Thu Jun 12th, 2008 13:50 |
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Asian Stocks Tumble Most in Three Months on Inflation Concerns
By Chua Kong Ho and Ian C. Sayson
June 12 (Bloomberg) -- Asian stocks fell the most in three months, led by financial companies and commodity producers, on concern surging inflation and credit turmoil will derail growth.
DLF Ltd., India's biggest property developer, dropped after the nation's central bank unexpectedly raised interest rates. Babcock & Brown Ltd., Australia's second-largest securities firm, plunged a record 28 percent after saying it's being targeted by short sellers. BHP Billiton Ltd., the world's largest mining company, dropped in Sydney and JFE Holdings Inc. tumbled in Tokyo on speculation demand for raw materials and steel will slump.
``Rising inflation is a clear and present danger,'' said Paul Joseph Garcia, chief investment officer at the Manila unit of ING Investment Management Ltd., which oversees $565 billion in global assets. ``Inflation will compress margins of companies and slow consumer demand. We could see another wave of earnings downgrades if oil prices stay elevated.''
The MSCI Asia Pacific Index lost 2.7 percent to 140.48 as of 7:08 p.m. in Tokyo, its biggest decline since March 17. The measure has slumped 6.6 percent this week, set for the worst weekly performance since August last year. All 10 industry groups declined today, with five stocks retreating for each that rose.
Japan's Nikkei 225 Stock Average slumped 2.1 percent to 13,888.60. Mitsui O.S.K. Lines Ltd., the biggest merchant fleet operator, dropped after shipping rates fell the most in 11 weeks.
Australia's S&P/ASX 200 Index lost 2.5 percent. A report showed the economy unexpectedly lost jobs in May, ending a record employment boom. China's CSI 300 Index slid 1.8 percent, extending a six-day, 13 percent rout. Most other Asian markets fell. Vietnam stocks gained, snapping a 25-day, 29 percent slump.
U.S. Selloff
Standard & Poor's 500 Index futures climbed 0.4 percent recently. Stocks retreated in the U.S. yesterday, driving the S&P 500 to its lowest level in two months.
DLF dropped 4.1 percent to 491.1 rupees. HDFC Bank Ltd., India's third-largest bank, dropped 1.8 percent to 1,163.5 rupees.
The Reserve Bank of India increased the repurchase rate to 8 percent, the first increase in 15 months, joining other Asian central banks in Indonesia, the Philippines, Vietnam and Pakistan in raising borrowing costs.
HSBC Holdings Plc today advised investors to sell all their Asian emerging markets stocks and accumulate cash instead, saying accelerating inflation increases the risk of higher interest rates and lower earnings.
Short Selling
Babcock & Brown tumbled 28 percent to A$6.90 in Sydney, cutting the company's market value to A$2.3 billion. Creditors have the right to demand early repayment of debt should Babcock's market capitalization remain below A$2.5 billion for longer than four months, the company said.
Babcock has been targeted by unidentified short sellers, spokeswoman Erica Borgelt said in an interview today. Short sellers sell borrowed shares, expecting to buy them back at a profit after prices fall. Macquarie Group Ltd., Babcock's bigger Australian rival, slumped 5.6 percent to A$50.69.
The plunge echoed a decline in Lehman Brothers Holdings Inc., the fourth-biggest U.S. securities firm, which sank 14 percent to $23.75 in New York yesterday. Lehman has fallen 30 percent in the last four trading sessions as options traders increased bets the shares will sink as low as $15 by next month.
BHP dropped 3.8 percent to A$41.80. JFE, the world's third- largest steelmaker, slumped 6.7 percent to 5,570 yen. Aluminum Corp. of China Ltd., the country's biggest maker of the alloy, retreated 3.9 percent to HK$11.36 in Hong Kong, the lowest since March 20.
A measure of raw-materials producers sank the most since Feb. 6 on concern rising inflation will lead to higher borrowing costs, cutting demand for copper, steel and aluminum.
Marine Transport
Shipping lines dropped. Mitsui O.S.K. fell 4.8 percent to 1,440 yen. Nippon Yusen K.K., Japan's largest shipping line, lost 4.6 percent to 980 yen. STX Pan Ocean Co., South Korea's biggest shipping line for iron ore and coal, dropped 7.3 percent to 2,280 won, the most in three months.
Prices for transporting bulk commodities such as iron ore, coal and grain by sea had their biggest tumble in more than two months yesterday, according to an index from the Baltic Exchange in London. The Baltic Dry Index, which measures the price of transporting bulk commodities, slumped 2.7 percent yesterday.
Investors from the U.S. to Europe to Japan are growing more convinced stocks will drop in the next six months as commodity prices curb profits and force central banks to raise interest rates, a survey of Bloomberg users showed.
Crude oil surged $5.07 to $136.38 a barrel in New York yesterday after a U.S. report showed inventories fell for a fourth week.
Accelerating consumer prices are ``a slap in the face,'' said Ivan Leung, Hong Kong-based chief investment strategist at JPMorgan Private Bank, which oversees $400 billion in assets. ``Everyone was used to low levels of inflation in the last decade.''
http://www.bloomberg.com/apps/news?pid=20601087&sid=aA4OIMmPv2FM&refer=home
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Moolah
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Posting #7: Tue Jun 17th, 2008 06:38 |
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LOL!!!
That Jubak bugger - he's jumping on ze bandwagon!
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Inflation from Asia: The next crisis
Rapidly rising prices across the continent are the biggest danger for the global economy right now. And things could get much worse in the coming months
By Jim Jubak
Inflation is out of control. Even by wildly understated official measures, prices are climbing at two -- or more -- times government targets. And with central banks printing money and flooding the financial markets with cash, inflation is going to get a whole lot worse before it gets better.
In the United States? No. At least not yet.
Look to Asia if you want to see runaway inflation now. In China and India, inflation looks like it's headed for double digits. Even inflation stalwarts such as Singapore are feeling the pressure.
And in Vietnam, the inflation genie is clearly out of the bottle, with prices climbing at an annual rate of 25% in April. (Japan, as it has been for much of the past two decades, is the regional exception.)
Even with the financial crisis that started in the subprime-mortgage market still far from over, I'd rate runaway inflation in Asia as the greatest danger to the global economy.
For a problem so big and so important, inflation in Asia is still off the radar screen for most U.S. investors. (U.S. consumers have their own problems at the gas pump and grocery checkout counter to absorb their attention.) Here's a quick rundown of inflation across the continent:
As bad as these numbers appear, they're actually worse than they look. Many, even the low readings from Malaysia and Taiwan, represent longtime highs that are accelerating rapidly.
In Malaysia, for example, the 3% annual rate for April was a 15-month high, and the central bank is now predicting inflation will climb to 4.2% for all of 2008. That would be the highest inflation rate in Malaysia since 1998, when, during the Asian financial crisis, inflation averaged 5.3%. In Taiwan, Citibank Taiwan recently raised its projection for 2008 inflation to 3.29% on average for the year. That would be the fastest inflation jump since 1995 and is up from the company's February projection of just 1.98% for 2008.
Rate increases push down stock market
Why is Asian inflation such a huge danger, first to national economies and then to the global economy?
Look at what has happened in Vietnam in just the past few days as that country's central bank has decided to fight inflation. The State Bank of Vietnam raised interest rates to 14% from 12% on June 11. That's the third increase in interest rates this year.
Those interest rate increases have crushed the nascent Vietnamese stock market. The VN, an index of 151 companies on the Ho Chi Minh Stock Exchange, was down more than 60% for 2008 as of June 11. And the government is predicting economic growth will slow to 7% for 2009 from last year's 8.5%.
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