singapore stock market ,singapore stock market news,austraklia stock market ,australia stock market news

ADB asks Sri Lanka to reduce size of budget

The Asian Development Bank on Friday asked Sri Lanka to prune the size of its budget to sustain economic stability as the island emerges from decades of ethnic conflict.

The Manila-based bank’s President Haruhiko Kuroda said Sri Lanka’s top priority now is to rebuild infrastructure in the island’s war-ravaged north and east; and ensure economic stability reaches everyone in the country.

“For that, macro-economic stability, particularly a sustainable budget deficit, is crucial for sustained economic growth,” Kuroda told reporters in Colombo at the end of his three-day visit to the island.

Sri Lanka’s fiscal deficit shot up to 9.7 percent of gross domestic product in 2009, above a seven percent target set by the International Monetary Fund when they released a 2.6 billion dollar bailout package last July.

“Fiscal deficit close to 10 percent of GDP is too large and must be reduced over the medium term,” Kuroda said urging the government to widen its tax net and increase government revenue.

ADB forecasts Sri Lanka’s economy to expand strongly by 6.0 percent this year from 3.5 percent last year, but Kuroda warned the Indian Ocean Island needed to trim its expenses.

“You may be able to increase growth in the short run by increasing spending and reducing taxes. But in the medium to long run if there is no prudent and sound fiscal policy, you cannot have sustained growth,” he said.

ADB Sri Lanka country director Richard Vokes said about 450 million to 500 million dollars has been earmarked to disburse in the tropical island between end 2009 and 2010.

Kuroda said about 50 percent of the project loans will be disbursed in the island’s war-ravaged north and east for reconstruction work and livelihood support.

Sri Lanka is emerging from a 37-year ethnic conflict after government forces last May, crushed the Tamil Tiger rebels who were fighting for an independent homeland for minority Tamils from the majority Sinhalese community.

The United Nations estimates some 100,000 people died in the conflict, while tens of thousands are unable to return to their villages and still live in makeshift homes.

Asia shares rise on Europe, IBM; euro wobbles,asia stock market ,asia stock market news

Asian stocks rose on Thursday as fresh austerity measures promised by Spain and Portugal gave investors hope that Europe’s debt crisis can be contained, while IBM’s strong profit forecast gave a further boost to tech shares.

The euro struggled near 14-month lows, however, on worries that steep government spending cuts in parts of Europe would drag on the region’s already feeble economic growth.

Doubts about the euro’s long-term viability and worries about inflation continued to spur a flight into gold, which shot to a fresh record for a second day in a row. The jump to $1,248.15 an ounce brought gold’s gains to nearly 20 percent since early February.

Spain said on Wednesday it will slash civil service pay and cut public jobs while Portugal’s finance minister told Reuters his government had identified new austerity measures to reduce its budget deficit, offering investors some reassurances that those countries are addressing their deep-rooted fiscal problems.

While worries remain that Greece and other governments will not be able to deliver on deeply unpopular spending cuts, there were signs that recent strains in global money markets were easing, further buoying investor confidence.

The three-month dollar London interbank offered rate was unchanged after rising steadily during the height of the worries about Europe’s sovereign debt problems. <MMT/>

Those developments, coming just a few days after EU finance ministers approved a 750 billion euro bailout package to keep Greece’s debt crisis from spreading through the region, inspired U.S. stocks to their best three-day run in 10 months, with key indexes gaining up to 2.1 percent. <.N>

U.S. markets were also lifted by a strong outlook from tech bellwether <IBM.N>, which forecast it would roughly double its profit by 2015, fueling bullishness on the sector.

By mid-morning the MSCI Asia ex-Japan index <.MIAPJ0000PUS> was 1.4 percent higher with the technology index <.MIAPJIT00PUS> outperforming the broad market with a 2.1 percent rise.

Tech-heavy stock markets in South Korea <.KS11> and Taiwan <.TWII> rose up to 1.8 percent. Both had seen several days of selling by foreign investors earlier in the week, but data showed overseas buyers were returning to Korean shares on Thursday.

Japan’s Nikkei <.N225> gained 1.5 percent as buyers snapped up tech stocks like Advantest, which makes micro chip testing equipment, and shares of other companies which have recently released upbeat earnings and sales outlooks. Advantest <6857.T> jumped 3.3 percent.

“Worries about southern Europe’s finance problems, which started from Greece, are receding thanks to a series of measures and safety nets to deal with the crisis,” said Mitsuo Shimizu, deputy general manager at Cosmo Securities.

In Taiwan, chipmakers Taiwan Semiconductor Manufacturing Co <2330.TW> and UMC <2303.TW> boosted the main TAIEX share index <.TWII> by 1.4 percent.

“U.S. data and earnings have helped, meaning stocks are moving on news from abroad,” said Chu Yen-min, senior vice-president at KGI Securities in Taiwan. “This market correction is on international factors.”

CURRENCIES

The euro edged up 0.3 percent against the dollar, but traders said any gains were likely to be limited, with investors expected to sell into any rallies such as the one on Monday, when the single currency briefly jumped on news of the massive rescue package.

“Financial markets overall have been returning to calm but the euro remains on a downtrend,” said Kosuke Hanao, head of treasury product sales at HSBC in Tokyo.

“Although the panic sell-off in the euro has eased at the moment, the downside risk still remains,” he said.

Near-term psychological support for the euro is seen at around $1.25, its 14-month low hit last week. But some in the market see the currency falling below $1.2400 as it did in 2008.

Meanwhile, the Australian dollar rose as high as $0.8994 after data showed the domestic economy added 33,700 jobs in April, handily beating forecasts for a 20,000 rise.

Despite the strong growth numbers, there was little impact on Australian rates market since the central bank is expected to hold rates until November because of the European worries.

Crude oil futures eased 25 cents to $75.40 a barrel.

Japan shrugs off JAL tumble as Asia shares mixed

Asian markets were mixed Tuesday with Tokyo clawing its way into the black after shrugging off a wave of selling orders that engulfed crisis-hit Japan Airlines. Shares in Asia’s biggest airline plummeted almost 45 percent as reports pointed to a looming bankruptcy and delisting that would destroy investors’ stakes under a court-ordered restructuring. “Delisting now looks almost certain, so selling won’t stop,” SMBC Friend Research Center analyst Mitsuru Miyazaki told Dow Jones Newswires, as JAL dived by the daily limit of 30 yen to 37 yen. Despite the wave of selling, Tokyo’s Nikkei-225 closed up 0.75 percent, or 80.82 points, to 10,879.14, its highest since October 2008. Analysts said overall upbeat market sentiment outmuscled the impact of JAL’s troubles. Investors were also boosted by American Airlines and its partners increasing their investment offer to JAL to 1.4 billion dollars, as it seeks a tie-up with the Japanese carrier in a bid to get a foot in the Asian market. The new offer, up from a previous 1.1 billion dollars, sees American raise the stakes in its battle with rival Delta Air Lines for JAL. With speculation over the Japan carrier reaching fever pitch, transport minister Seiji Maehara reportedly met the heads of the airline’s creditor banks Tuesday. Sydney ended down 1.03 percent, or 51.2 points, at 4,899.70 and Hong Kong ended 0.38 percent, or 84.88 points lower at 22,326.64. In Sydney minerals firm Alumina lost 4.85 percent to 1.96 dollars after US firm Alcoa — the first blue-chip to report quarterly earnings on Wall Street — posted a lower-than-forecast profit Monday. Alumina and Alcoa are joint venture partners. “The big news of the day came from the US in terms of Alcoa’s fourth quarter earnings report,” CMC Markets analyst David Taylor said. “Despite strong revenues, earnings fell short of expectations and the resources sector took a bit of a hit.” However, bargain hunting in banks and property firms as well as strong interest in telecoms, helped Shanghai surge 1.91 percent, or 61.22 points, to end at 3,273.97. Singapore was 0.15 percent higher ahead of the corporate earnings season. The dollar was stable in late Asian trade as investors eyed upcoming corporate earnings reports, following disappointment over weak US jobs data on Friday. The greenback was at 92.19 yen in Tokyo afternoon trade, against 92.13 in New York late on Monday, when Japanese markets were closed. The euro was little changed at 1.4503 dollars after 1.4514 and to 133.69 yen from 133.71. Oil fell in Asia on forecasts the severe cold snap in the United States will ease and quell demand for heating fuel, analysts said. New York’s main futures contract, light sweet crude for February delivery, stood at 82.03 dollars in the afternoon, down 49 cents from New York’s close. It had hit an intraday peak of 83.95 dollars Monday, its highest since October 9, 2008. Brent North Sea crude for February was down 62 cents at 80.35. Hong Kong gold closed higher at 1,155.80-1,156.80 US dollars an ounce, up from Monday’s 1,153.00-1,154.00 dollars. In other markets: — Seoul closed up 0.27 percent, or 4.52 points, at 1,698.64. — Taipei lost 0.17 percent, or 14.45 points, to close at 8,309.37. Investors moved to take profits on previous gains. — Wellington fell 0.41 percent, or 13.46 points, to 3,290.29. — Manila added 0.59 percent, or 18.27 points, to 3,105.62. Top-traded Philippine Long Distance Telephone Co. rose 0.74 percent to 2,730 pesos.

Asia’s Slump January 23 2009 - Australasian Investment Review – (AIR)

Forget slowing China and what it means for Australia, the real disaster for this country is the accelerating slump in Japan and South Korea, which buy more of our raw materials collectively than does China Figures from China showed that growth slowed to 6.8% in the December quarter, down from 9% annual in the September quarter, giving a 2008 growth figure of 7%, sharply down from the 12.9% (in the recently revised figures. But Japan is heading for a crunch: exports plunged a record 35% in December while in South Korea the economy contracted an annual 3.4% rate in the December quarter, the worst since the Asian crisis of 11 years ago. China accounted for 14.9% of our exports in 2007-08 (and was one of the fastest growing markets with a total value of $26.9 billion). Exports though to Japan amounted to $34.9 billion (19.3%) and South Korea was third with $14.9 billion, or 7.9%. So while the concentration on the impact of a slowing China is understandable, the impact on our exports of a severely recessed Japan and a sliding South Korea will be much greater. Many economists believe the Chinese economy will expand by no more than 5% to 6% in 2009, which would be the weakest performance since 1990: but compared to Japan and South Korea, it is still strong. Others expect the government to hit its target growth rate of 8% as the $US585 billion stimulus package from last year and much easier monetary policy kick in (two interest rate cuts and an easing on bank lending, plus a series of export rebates). The slump in China will get the headlines, but at least the growth is positive. Not so in Japan and South Korea. Quite simply is dismal news and bad for Australian exporters. The figures were consistent with recent data showing falling power consumption and back-to-back declines in both exports and imports as the bottom fell out of the world economy.  China’s steel industry slowed in the last few months of 2008, but still topped the half a billion tonne mark, the first country in history to produce that much steel. Besides the terrible fall in exports, Japanese business sentiment dropped sharply. There’s just no good news there for anyone. Both reports came as the Bank of Japan met for a second day to consider policy changes. Rates have been cut as far as they can go (0.1%) and the central bank now has to consider something more radical, such as following the US Fed into a more deliberate policy of quantitative easing by lending money directly to banks, companies and consumers. The twin reports added to expectations that Japan faces a long and deep recession. On top of this has been renewed strength in the yen against the dollar (which in turn has firmed sharply against the euro and the Aussie dollar). The US dollar as around 87 yen: at that rate it’s hard to see any of Japan’s big but hurting export giants (Toyota etc) making any profits at all in exporting at reduced levels to the Americas. The likes of Toyota are forecasting a huge loss, the first for years, as a result of the slump in exports and in markets like the US. Honda, its rival, won’t be far behind. Thursday night, Sony, another big name in Japanese business, said it would lose $US2.9 billion in the year to March, the worst result in 14 years. According to a business confidence survey from Reuters, released yesterday, Japanese manufacturers’ confidence is at a new record low and sentiment in the service sector sentiment dropped to a level not seen for seven years. The slide in exports left Japan with a trade deficit for three months in a row, despite recent falls in oil and other commodity prices. The 35% fall in exports was deeper than the 30% forecast by various polls in Tokyo ahead of the news. The reasons for the sharp slump were not hard to find: exports to the US fell for a 16th consecutive month, while shipments into Asia, which had been holding up well in comparison, dived sharply. Shipments into the recession-hit US fell 36.9%, with car movements slumping. Exports to Asia dropped 36.4%, with those to China down 35.5%: plunging sales of cars and electronics goods and parts helped pull shipments lower.

Asia had been accounting for more than 40% of Japanese exports up to when the drop intensified from September onwards.

But shipments into Europe plunged more than 41% as eurozone economies, lead by Germany, fell deeper into recession.

The UK economy is weakening at a faster rate and it; Denmark and Ireland are also losing their taste for imports from Japan.

Imports dropped 21.5% (well above the 16% forecast from the market) as oil and other commodity prices continued to weaken. The 320.7 billion yen ($US3.6 billion) deficit was the third in a row.

But import volumes are falling, a sure sign of recession as demand is being cut by the sinking economy and weak order books from importers and processors.

Factory output fell 8.5% in November alone, to be 16.6% lower than the same month of 2008. That’s the stuff of a very intense slump.

The Bank of Japan last month cut interest rates to 0.10% from 0.30% when it was clear the recession was deepening. 

Since then the fall has intensified with machinery orders and industrial production falling faster than previously believed.

The government has been unable to pass a stimulus package that could help encourage domestic spending in the absence of export demand. 

Prime Minister Aso so unpopular (as is his Government) that he can’t get agreement from the opposition-led upper house to spend 10 trillion yen ($US111 billion) to boost companies and households.

That is an amazing state of affairs and its no wonder the economy seems to be in something resembling freefall.

Like Japan, China, Taiwan, Singapore, it was the slumping level of demand generated by falling exports and the impact of the financial crisis that saw the economy shrink.

The Bank of Korea said gross domestic product contracted 3.4% in the three months ended December 31, compared with the same period of 2008.

South Korea’s economy last shrank on a year-on-year basis in the fourth quarter of 1998, when growth fell 6% while the country was in the throes of the Asian economic crisis.

For all of 2008, South Korea’s economy grew 2.5%, the worst performance since the 6.9% contraction 1998. South Korea grew 5.1 per cent in 2007.

The central bank said the economy contracted even faster from the September quarter: 5.6%. 

It grew 0.5% in the September quarter from the June quarter, so the economy effectively fell off a cliff in the three months to December, as did Ireland, Singapore, the US and a host of other countries.

Singapore’s economy contracted at an annual rate of nearly 17% in the December quarter, so it was no wonder the government spent up big in the 2009 budget, announced late yesterday.

The Bank of Korea has cut interest rates to a record low 2.5% to boost the economy, which is also suffering from declining consumer spending and rising unemployment. 

Like other countries, the stockmarket has fallen sharply down more than 40% in the past 12 months.

Manufactured exports fell nearly 12% in the quarter from the previous three months, the biggest decline since 1979. 

That has a big, big impact as exports account for about half of gross domestic product.

South Korea has allocated about 140 trillion won, or 15% of GDP, in extra liquidity, tax cuts and stimulus spending. At least the Government is doing something, unlike in Japan.

The central bank had pencilled in a 2% growth forecast for this year. That is changing, according to the bank yesterday.

Asian stockmarkets dropped yesterday, driving the region’s main index to a two-year low, after Japan’s economy contracted and companies reported weaker profit growth. The Japanese slowdown, the Chinese bear market, more write-offs in the US banking industry and poorly received profits in Australia were the main drivers behind a sharper than expected loss across the region yesterday. The slowdown in Japan was driven in the main by contractions in exports and home building. It’s a clear sign that the slumping US economy has had a direct knock on impact on Japan. Japanese exports to the US have been falling now for 10 months, and in the past couple of months, they have also lost their growth drive into Asia and emerging markets. Cars, computers and capital equipment shipments across the Pacific to the US have fallen sharply in recent months as the US recession has rolled on. The yen rose to a 12-week high against the euro after the report on the economy, with the currency hitting a two year high against New Zealand’s dollar and the highest in four months against the Aussie currency. The yen also advanced for a third day against the US dollar after hitting a five and a half month high on Tuesday. Japanese investors are unwinding so-called carry trades as they quit higher yielding positions in assets in currencies like the Australian and NZ dollars. The Yen is one of the few currencies the US dollar hasn’t made headway against in its recent rise, which has seen it make big gains against the euro, the NZ and Aussie dollars and sterling. It picked up yesterday with the news of the contraction in the second quarter, an announcement that saw the Nikkei lose around 2% as other markets across Asia fell. The Australian market also lost around 2%, despite solid profits announced by Telstra and the Commonwealth Bank. The Japanese economy contracted 0.6% in the June quarter compared with the March quarter when it rose a revised 0.8% (down from the 1% previously reported). That put growth at an annual minus 2.4% compared to the revised 3.2% expansion in the first quarter. It joined the US, Canadian, Danish, New Zealand and Italian economies in reporting a quarter of contracting growth: the US contracted in the 4th quarter of 2007 on the basis of revised GDP figures issued last month. New Zealand is heading to the dubious honour of a second quarter of contracting growth in the June quarter. The MSCI Asia Pacific Index fell 1.3% to the lowest level since September 2006. The Index has fallen 20% this year as accelerating inflation and slower growth had undermined regional economic growth. That puts the Asian region in a bear market: Japan, Hong Kong, Australia and China are already there. China’s CSI 300 Index slipped 3.1%% at one stage as the value of stocks traded on the two primary exchanges yesterday fell to the lowest since November 2006.

But the markets recovered the losses to close little changed after the afternoon rebound

China’s market has now fallen more than 9% since the Olympic Games started last Friday.

All other indexes in the region fell.

Japanese exports fell the most since the 2001-2002 recession, while record fuel and food prices cut consumer spending and retail sales, while housing contracted.

The Japanese government last week described the economy as “weakening”, language it hadn’t used since 2001.

Rates cuts can’t rise to fight inflation (which is running at a 27 year high for wholesale inflation of 7.1%). Falling oil and petrol prices will bring some relief from this month onwards, which will provide some help to hard-pressed consumers.

Exports slumped 2.3% in the quarter, the first drop in three years imports.

Consumer spending, which accounts for more than half of the economy, decreased 0.5% from the previous quarter.

It is not a recession though, as that is two consecutive quarters of negative growth, a common definition of a recession.

Some analysts reckon the economy could rebound weakly to just above break-even this quarter. Japanese companies though are well-placed to ride out a slowdown: they have plenty of cash, solid cost structures and are better shape than at the start of the 2001 slump.

The second quarter slowdown shouldn’t worsen this year, given the current state of the global economy, especially with the plunge in oil and other commodity prices. 

The impact of the export slowdown was shown with Japan’s current account surplus which fell by a record amount in June as exports fell and higher oil prices pushed up the import bill.

The surplus dropped a huge 67.4% to 493.9 billion yen ($US4.5 billion) from 1.52 trillion yen a year earlier.

The Ministry of Finance said exports fell 1.5% in June from June 2007, the first fall since November 2003. Imports rose 17.8% to a record 6.59 trillion yen. As Japan imports virtually all of its oil, the surge in crude oil prices hurt the country in the month.

The higher import and energy costs were reflected in the 7.1% rise in wholesale price inflation in July, a 27-year high.

The surplus was boosted by returns on investments made overseas.

But some of those are currently being unwound as the carry trade is curtailed.

The difference to China is quite stark: consumer price inflation is easing in China, but wholesale prices are rising: exports are still growing, retail sales surged last month, but imports are growing rapidly.