TOKYO (Nov 1): Renewed worries about the slow progress in resolving the euro zone's debt crisis dampened investor appetite for risk, sending Asian shares and commodities lower on Tuesday while keeping pressure on the euro.
The switch to safety helped the dollar firm against six major currencies, although it slipped from Monday's three-month peak against the yen after Japan's record one-day intervention estimated by local media at as much as 10 trillion yen ($128 billion).
The euro came under renewed pressure amid growing doubts about the effective implementation of a plan agreed just last week to contain Europe's debt crisis, having lost all of the gains made in a run to as high as $1.4247 last Thursday after the debt deal was announced.
Greek Prime Minister George Papandreou has called an unexpected referendum on a new EU bailout deal for his debt-ridden country, while Italian bonds faced persistent selling pressure.
"The depth and breadth of unanswered questions from Thursday's EU deal, the spectacle of euro-peripheral bonds yields/yield spreads mostly higher on Monday and general support afforded the USD from the BOJ's intervention, ensured EURUSD traded down in fits and starts throughout Monday," BNP Paribas analysts wrote in a note.
Traders said Asian stocks were generally ripe for profit-taking after a sharp rally last week on relief that European leaders had at least come to an agreement on a basic framework to help reduce Greece's huge debts, boost the region's bailout fund and strengthen banks.
A slightly weaker-than-expected pickup in China's factory activity as shown by official purchasing managers' index (PMI), which fell to 50.4 in October from September's 51.2, provided another excuse for selling, sending Hong Kong's benchmark Hang Seng index down 2 percent on Tuesday.
China's factory activity in October was its slowest since February 2009, reminding investors of the risks to the world's No. 2 economy from a sagging global backdrop.
The data sent risk-sensitive Australian dollar and the euro lower as well, but gold, perceived as a safe haven asset, was underpinned as other riskier assets slid.
"The China data was disappointing, but it shows growth is continuing," although at a lower rate than previously expected, said Adrian Foster, head of financial markets research for Asia-Pacific at Rabobank International in Hong Kong.
The pessimism in global markets that was prevalent 1-2 months ago was overdone and it is unlikely that the U.S. economy would fall into a double-dip recession, while a lack of specifics from last week's European meeting is a reminder that there was no once-and-for-all solution to Europe's problems, which will linger for 1-2 years, he added.
"We may see a bit of underpinning in the fourth quarter. But caution will stay with us, and we expect quite sharp daily moves," Foster said, adding that the markets may fall 3-4 percent for a few days, but rather than continuing the downtrend, they may reverse course and rise.
MSCI's broadest index of Asia Pacific shares outside Japan fell 1 percent on Tuesday, after ending October up more than 12 percent for its best monthly gain since May, helped by last week's huge rally on a long-awaited plan to resolve the European debt crisis.
The Nikkei average fell 0.8 percent.
MF GLOBAL REMINDS
The MSCI world equity index dropped 2.4 percent on Monday, pulling back from its highest levels in nearly three months hit last week, but gained 10 percent in October for its biggest one-month rise since April 2009.
U.S. stocks fell as the spike in the U.S. dollar weighed on commodity prices, sending the Standard & Poor's 500 Index down 2.47 percent on Monday. Despite the losses, it posted its biggest monthly percentage rise since December 1991.
U.S. futures broker MF Global Holdings Ltd filed for bankruptcy protection on Monday after bad bets on euro zone debt, highlighting the risk from exposure to the region as long as its sovereign debt crisis remained unresolved.
The collapse of MF Global forced a scramble to untangle trading positions, putting a brake on trading activity in U.S. gold, crude oil and grain futures on Monday.
Some analysts said such unwinding of trading positions could intensify selling pressures and weigh on broad markets.
Gold rose 0.5 percent on Tuesday after losing nearly 1 percent the day before on a firmer dollar, while oil slipped.
Asian credit markets weakened on Tuesday, as renewed worries about the European debt woes and rising Italian bond yields led to a sharp widening of the spreads on the iTraxx Asia ex-Japan investment grade index , a gauge for whether investor risk appetite is returning. The spread widened by 14 basis points from Monday.
Italian 10-year government bond yields rose back above 6 percent on Monday to levels last seen in August, before the European Central Bank stepped in to buy Spanish and Italian debt in the secondary market.
U.S. Treasuries soared on Monday, with 30-year bonds posting their best day since the Federal Reserve announced its first massive stimulus programme in March 2009, while the yield on benchmark 10-year notes fell to 2.12 percent from 2.32 percent late Friday. (Reuters)
Monday, October 31, 2011
Thursday, October 27, 2011
Emerging Stock Funds Post Second Week of Inflows, Led by Asia, Citi Says
Emerging-market equity funds reported a second week of inflows, as investors became more optimistic about a solution to the European debt crisis, according to Citigroup Inc.
Funds investing in developing-nation stocks took in $1 billion in the week ended Oct. 26, Citigroup analyst Markus Rosgen wrote in a report today, citing data compiled by EPFR Global. Asia excluding Japan had the biggest inflows, while Latin America and Central & Eastern Europe, Middle East and Africa had outflows, according to the report.
The MSCI Emerging Markets Index has dropped 13 percent this year, driving down estimated price earnings to 10.7 times. That’s less than the four-year average multiple of 11.5 times, according to data compiled by Bloomberg. The index rose 1.4 percent to 1,007.47 at 11:43 a.m. Shanghai time, extending a 21 percent surge since Oct. 4 as European leaders this week agreed to expand a bailout fund and the Chinese government signaled an end to a two-year tightening campaign.
“We are now calling for emerging markets to outperform the developed markets,” Adrian Mowat, JPMorgan Chase & Co.’s Hong Kong-based chief Asian and emerging-market strategist, said in a Bloomberg Television interview today. “Everything in emerging markets got considerably cheaper in the last year.”
Bond funds dedicated to developing nations took in $135 million in the week ended Oct. 26, according to a report from Barclays Capital, citing data from EPFR Global. Flows returned to local-currency bonds, receiving $89 million in the latest week after redemptions of $21 million in the prior week.
“The meeting in Europe boosts investors’ expectations” of a resolution to the debt crisis, Yue Hin Pong, a Citigroup analyst, said today in a phone interview.
The deal to boost Europe’s bailout fund and write down Greek debt was hailed by U.S. President Barack Obama as an “important first step” in resolving the crisis. French President Nicolas Sarkozy said China will “cooperate closely” to ensure the Group of 20 will contribute to the enlarged fund, while a person familiar said Japan plans to support the increase.
Chinese officials will make adjustments at a “suitable time and by an appropriate degree” and will maintain “reasonable” growth in money supply, Premier Wen said during a visit to Tianjin, according to a statement published on Oct. 25 on the government’s website. The government will continue to make tackling inflation a top priority, Wen said.
China’s policy “fine-tuning” has supported a rebound in stocks and may spark a year-end rally, Shen Minggao, the Hong Kong-based head of China research at Citigroup, said in a separate report today.(Bloomberg)
Funds investing in developing-nation stocks took in $1 billion in the week ended Oct. 26, Citigroup analyst Markus Rosgen wrote in a report today, citing data compiled by EPFR Global. Asia excluding Japan had the biggest inflows, while Latin America and Central & Eastern Europe, Middle East and Africa had outflows, according to the report.
The MSCI Emerging Markets Index has dropped 13 percent this year, driving down estimated price earnings to 10.7 times. That’s less than the four-year average multiple of 11.5 times, according to data compiled by Bloomberg. The index rose 1.4 percent to 1,007.47 at 11:43 a.m. Shanghai time, extending a 21 percent surge since Oct. 4 as European leaders this week agreed to expand a bailout fund and the Chinese government signaled an end to a two-year tightening campaign.
“We are now calling for emerging markets to outperform the developed markets,” Adrian Mowat, JPMorgan Chase & Co.’s Hong Kong-based chief Asian and emerging-market strategist, said in a Bloomberg Television interview today. “Everything in emerging markets got considerably cheaper in the last year.”
Bond funds dedicated to developing nations took in $135 million in the week ended Oct. 26, according to a report from Barclays Capital, citing data from EPFR Global. Flows returned to local-currency bonds, receiving $89 million in the latest week after redemptions of $21 million in the prior week.
Easing European Crisis
European leaders said yesterday they had persuaded bondholders to take 50 percent losses on Greek debt and resolved to increase the size of the rescue fund, responding to global pressure to step up the fight against the financial crisis.“The meeting in Europe boosts investors’ expectations” of a resolution to the debt crisis, Yue Hin Pong, a Citigroup analyst, said today in a phone interview.
The deal to boost Europe’s bailout fund and write down Greek debt was hailed by U.S. President Barack Obama as an “important first step” in resolving the crisis. French President Nicolas Sarkozy said China will “cooperate closely” to ensure the Group of 20 will contribute to the enlarged fund, while a person familiar said Japan plans to support the increase.
Chinese officials will make adjustments at a “suitable time and by an appropriate degree” and will maintain “reasonable” growth in money supply, Premier Wen said during a visit to Tianjin, according to a statement published on Oct. 25 on the government’s website. The government will continue to make tackling inflation a top priority, Wen said.
China’s policy “fine-tuning” has supported a rebound in stocks and may spark a year-end rally, Shen Minggao, the Hong Kong-based head of China research at Citigroup, said in a separate report today.(Bloomberg)
Aussie Declines From Two-Month High on Speculation Gains Were Too Rapid
The Australian dollar fell from its highest level in almost two months against the greenback as traders speculated that the currency’s biggest advance in more than a year yesterday had been too rapid.
Demand for the so-called Aussie was also dented before the nation’s central bank meets Nov. 1 amid bets Governor Glenn Stevens will cut interest rates to 4.5 percent. The New Zealand dollar, known as the kiwi, retreated from near a five-week high. Both South Pacific nations’ currencies were still headed for a five-day gain as easing concern about Europe’s debt crisis and signs of U.S. growth supported demand for high-yielding assets.
“In the short term, you will get a bit of a pullback as a standard correction following strong rallies,” said Richard Grace, the Sydney-based chief foreign-exchange strategist and head of international economics at Commonwealth Bank of Australia. “We have a forecast of $1.04 for the Aussie by year- end and we feel very comfortable with that.”
The Australian dollar fell 0.5 percent to $1.0672 as of 2:05 p.m. in Sydney from $1.0730 yesterday in New York when it touched $1.0753, its highest level since Sept. 1. The currency weakened 0.7 percent to 80.93 yen from yesterday, when it rose 2.9 percent. The Australian dollar’s 3.2 percent gain against the U.S. dollar yesterday was the biggest since May 2010.
New Zealand’s dollar weakened 0.3 percent to 82 U.S. cents after earlier touching 82.43, the most since Sept. 21. The kiwi fell 0.5 percent to 62.19 yen.
The Aussie’s 14-day relative strength index versus the dollar reached 69 yesterday, near the 70 level that signals to some traders that an asset’s price has risen too quickly and may be set to reverse direction.(Bloomberg)
Demand for the so-called Aussie was also dented before the nation’s central bank meets Nov. 1 amid bets Governor Glenn Stevens will cut interest rates to 4.5 percent. The New Zealand dollar, known as the kiwi, retreated from near a five-week high. Both South Pacific nations’ currencies were still headed for a five-day gain as easing concern about Europe’s debt crisis and signs of U.S. growth supported demand for high-yielding assets.
“In the short term, you will get a bit of a pullback as a standard correction following strong rallies,” said Richard Grace, the Sydney-based chief foreign-exchange strategist and head of international economics at Commonwealth Bank of Australia. “We have a forecast of $1.04 for the Aussie by year- end and we feel very comfortable with that.”
The Australian dollar fell 0.5 percent to $1.0672 as of 2:05 p.m. in Sydney from $1.0730 yesterday in New York when it touched $1.0753, its highest level since Sept. 1. The currency weakened 0.7 percent to 80.93 yen from yesterday, when it rose 2.9 percent. The Australian dollar’s 3.2 percent gain against the U.S. dollar yesterday was the biggest since May 2010.
New Zealand’s dollar weakened 0.3 percent to 82 U.S. cents after earlier touching 82.43, the most since Sept. 21. The kiwi fell 0.5 percent to 62.19 yen.
The Aussie’s 14-day relative strength index versus the dollar reached 69 yesterday, near the 70 level that signals to some traders that an asset’s price has risen too quickly and may be set to reverse direction.(Bloomberg)
Thursday, October 13, 2011
Indonesia Bonds Head for Weekly Gain on Inflows; Rupiah Steady
Indonesia’s bonds headed for a third weekly gain and the rupiah snapped a five-week decline as foreign funds boosted holdings of the nation’s assets.
Government debt rallied as the central bank lowered its benchmark interest rate by 25 basis points to 6.50 percent on Oct. 11 and purchased sovereign bonds this month. Overseas investors bought $237 million more Indonesian shares than they sold in the first four days of this week, according to exchange data.
“We saw funds coming into Indonesian markets,” said Wiling Bolung, head of treasury at ANZ Panin Bank in Jakarta. “The confidence has returned as Bank Indonesia has managed the situation well. Certainly, the investor sentiment has turned positive.”
The yield on the 10-year bond fell 43 basis points, or 0.43 percentage point, to 6.44 percent this week as of yesterday, prices compiled by Bloomberg showed. The rupiah traded at 8,880 per dollar from 8,900 at the end of last week as of 9:13 a.m. in Jakarta, according to prices from local banks complied by Bloomberg. The currency declined more than 4 percent in the previous five weeks.
Foreign ownership of the nation’s debt rose 0.7 percent to 214 trillion rupiah ($24 billion) in the first two days of this week, according to data from the finance ministry’s website.
Bank Indonesia is selling dollars when needed to ease volatility in the currency, Deputy Governor Hartadi Sarwono said Oct. 7.(Bloomberg)
Government debt rallied as the central bank lowered its benchmark interest rate by 25 basis points to 6.50 percent on Oct. 11 and purchased sovereign bonds this month. Overseas investors bought $237 million more Indonesian shares than they sold in the first four days of this week, according to exchange data.
“We saw funds coming into Indonesian markets,” said Wiling Bolung, head of treasury at ANZ Panin Bank in Jakarta. “The confidence has returned as Bank Indonesia has managed the situation well. Certainly, the investor sentiment has turned positive.”
The yield on the 10-year bond fell 43 basis points, or 0.43 percentage point, to 6.44 percent this week as of yesterday, prices compiled by Bloomberg showed. The rupiah traded at 8,880 per dollar from 8,900 at the end of last week as of 9:13 a.m. in Jakarta, according to prices from local banks complied by Bloomberg. The currency declined more than 4 percent in the previous five weeks.
Foreign ownership of the nation’s debt rose 0.7 percent to 214 trillion rupiah ($24 billion) in the first two days of this week, according to data from the finance ministry’s website.
Bank Indonesia is selling dollars when needed to ease volatility in the currency, Deputy Governor Hartadi Sarwono said Oct. 7.(Bloomberg)
Palm futures dip on profit taking avtivities
CPO FUTURES
CRUDE palm oil futures on Bursa Malaysia Derivatives ended lower on profit-taking activities yesterday, dealers said.
October 2011 and November 2011 decreased RM33 each to RM2,842 and RM2,830 a tonne respectively, December 2011 lost RM20 to RM2,844 a tonne and January 2012 shed RM32 to RM2,846.
Volume rose to 15,240 lots from Wednesday's 28,080 lots while open interest went up to 143,285 contracts, from 142,442 recorded on Wednesday .
On the physical market, October South fell RM15 to RM2,860 a tonne.
OIL
NEW YORK: Brent and US crude futures extended losses yesterday in choppy trading after data showed initial jobless claims fell last week in the US, but only from a level in the previous week that was revised higher.
Weak economic data from China had already weighed on prices ahead of the jobless claims report.
ICE Brent November crude was down US$1.61 (US$1.00 = RM3.20) to US$109.75 a barrel by 1240 GMT, having fallen to US$109.37 after the data. The day’s high trade was US$111.87.
On the New York Mercantile Exchange, November crude fell US$1.17 to US$84.40 a barrel, trading from US$83.94 to US$85.39.
RUBBER
THE Malaysian rubber market closed mixed yesterday amid supply shortage in Thailand, dealers said.
“Traders are worried over the floods in the largest rubber-producing country which may disrupt supply of the commodity used to make tyres and gloves,” a dealer said.
The Malaysian Rubber Board’s official physical price for tyre-grade SMR20 slid 3 sen to 1,314 sen a kg while latex-in-bulk gained ½ sen to 832.5 sen.
The unofficial closing price for the tyre-grade SMR 20 fell 7.5 sen to 1,310 sen while latex-in-bulk shed 3.5 sen to 829 sen.
TIN
TIN price on the Kuala Lumpur Tin Market (KLTM) remained unchanged at US$22,400 a tonne as the market remained cautious, dealers said yesterday.
"Buyers remained sidelined awaiting leads from the London Metal Exchange (LME) today. They may enter the market tomorrow," a dealer said.
The tin price on LME rose US$650 to US$23,050 per tonne in overnight trading.
On the local front, turnover slipped one tonne to 40 tonnes with Japanese, European and Malaysian traders accounting for the yesterday's transaction.
At the opening bell, bids amounted to 43 tonnes while offers stood at 40 tonnes.
The price differential between the KLTM and the LME was at a discount of US$310 per tonne against a premium of US$340 per tonne yesterday.(Business Times)
CRUDE palm oil futures on Bursa Malaysia Derivatives ended lower on profit-taking activities yesterday, dealers said.
October 2011 and November 2011 decreased RM33 each to RM2,842 and RM2,830 a tonne respectively, December 2011 lost RM20 to RM2,844 a tonne and January 2012 shed RM32 to RM2,846.
Volume rose to 15,240 lots from Wednesday's 28,080 lots while open interest went up to 143,285 contracts, from 142,442 recorded on Wednesday .
OIL
NEW YORK: Brent and US crude futures extended losses yesterday in choppy trading after data showed initial jobless claims fell last week in the US, but only from a level in the previous week that was revised higher.
Weak economic data from China had already weighed on prices ahead of the jobless claims report.
ICE Brent November crude was down US$1.61 (US$1.00 = RM3.20) to US$109.75 a barrel by 1240 GMT, having fallen to US$109.37 after the data. The day’s high trade was US$111.87.
On the New York Mercantile Exchange, November crude fell US$1.17 to US$84.40 a barrel, trading from US$83.94 to US$85.39.
RUBBER
THE Malaysian rubber market closed mixed yesterday amid supply shortage in Thailand, dealers said.
“Traders are worried over the floods in the largest rubber-producing country which may disrupt supply of the commodity used to make tyres and gloves,” a dealer said.
The Malaysian Rubber Board’s official physical price for tyre-grade SMR20 slid 3 sen to 1,314 sen a kg while latex-in-bulk gained ½ sen to 832.5 sen.
The unofficial closing price for the tyre-grade SMR 20 fell 7.5 sen to 1,310 sen while latex-in-bulk shed 3.5 sen to 829 sen.
TIN
TIN price on the Kuala Lumpur Tin Market (KLTM) remained unchanged at US$22,400 a tonne as the market remained cautious, dealers said yesterday.
"Buyers remained sidelined awaiting leads from the London Metal Exchange (LME) today. They may enter the market tomorrow," a dealer said.
The tin price on LME rose US$650 to US$23,050 per tonne in overnight trading.
On the local front, turnover slipped one tonne to 40 tonnes with Japanese, European and Malaysian traders accounting for the yesterday's transaction.
At the opening bell, bids amounted to 43 tonnes while offers stood at 40 tonnes.
The price differential between the KLTM and the LME was at a discount of US$310 per tonne against a premium of US$340 per tonne yesterday.(Business Times)
Sunday, October 9, 2011
Weakening Ringgit Lifted Global Funds in September 2011
The Fundsupermart Indices - All Equity dropped 5.5% month-to-date as at 30 September 2011. The top 5 funds were mostly global funds; bottom 5 funds were mostly Malaysia funds.(Author : iFAST Content Team)
Key Points:
- FSMI lost 5.5% month-to-date
- Top 5 funds were mostly global funds
- Bottom 5 funds were mostly Malaysia funds
During the month of September, the MSCI AC World Index shed 2.9% (in RM terms) as the markets remained focused on the Eurozone debt crisis and on fresh fears of a global downturn and possible recession. In US, the Fed announced that it would embark on “Operation Twist” in a bid to lower longer-term interest rates which have more bearing on mortgage rates and longer-term funding costs for corporations. Elsewhere in Europe, the payout of EUR8 billion to Greece under the initial bailout plan is still pending approval from Eurozone finance ministers, while the European Commission expects Eurozone GDP growth at 0.2% and 0.1% in 3Q and 4Q 2011 respectively after recording a 0.2% growth in 2Q 2011 (growth numbers in q-o-q terms).
Only Japan and Tech (US and Asia Pacific) were in the black for the month of September, as the Nikkei 225, Nasdaq 100 and Bloomberg Asia Pacific Technology indices gained 3.5%, 2.6% and 4.3% respectively (all in RM terms). These gains were mainly attributed to the weakening of the RM against most major currencies. During the month, the FSMI - All Equity index lost 5.5%, bringing its year-to-date returns to -11.6%.
Weakening Ringgit Boosted The Performance of Global Funds
The top performing fund in September, the RHB - GS US Equity Fund, was among the worst performing funds in August. That being said, the fund outperformed its benchmark the S&P 500, which lost 0.3% in September (in RM terms). This outperformance is attributed to its larger holdings in the Tech sector and lesser holdings in underperforming sectors such as energy and materials vis-à-vis its benchmark (based on end August data).
Top performing global funds also managed to outperform their respective benchmarks, with each fund using different strategies. AmOasis Global Islamic Equity and Prudential Global Leaders Fund focused on high-quality large cap stocks in traditionally defensive sectors such as consumer staples and healthcare, while the RHB Global Fortune Fund systematically shorted the markets.
On the currency exchange front, the RM strengthened against the Aussie dollar (for the second consecutive month) by 2.1%, while at the same time weakening against the US dollar, renminbi and yen by 7.1%, 6.9% and 6.7% respectively. Since the start of 2011, the RM had weakened against the yen, renminbi, euro and US dollar by 9.4%, 7.4%, 5.0% and 4.2% respectively (as of 30 September 2011).(Source:iFast Compilation, as at 30 September 2011)
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