Seoul shares rise on earnings expectations

July 21, 2010 By Leave a Comment

Foreign investors were sellers of a net 24 billion won worth
of stocks.

Advancers outnumbered decliners 437 to 342 and 93 issues
ended flat.

Trading volume was 302 million shares worth 4.8 trillion won,
compared with 277.7 million shares worth 4.5 trillion won in the
previous session.

The KOSPI 200 Sept futures index KSc1 ended up 0.90 points
at 226.50, and the KOSPI 200 spot index .KS200 rose 0.52 points
to 225.84.

The junior Kosdaq market .KQ11 ended 0.25 percent higher at
499.72.

Move on day +0.28 percent

12-month high 1,757.76 26 APRIL 2010

12-month low 1,447.11 20 JULY 2009

Change on yr +3.21 percent

All-time high 2,085.45 1 NOV 2007

All-time low 93.10 6 JAN 1981

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UPDATE 1-Japan aims to keep spending, bond caps in 2011/12

July 21, 2010 By Leave a Comment

TOKYO, July 20 (Reuters) – Japan’s government said it would stick to caps on spending and new bond issuance in the next fiscal year, although meeting the targets is expected to be tough given rising social welfare costs.

Credit agencies have warned of possible downgrades of Japan’s debt rating as the ruling party’s loss in an upper house election jeopardised efforts to rein in the country’s huge public debt.

Japan will keep new debt issuance from exceeding the current year’s level of 44.3 trillion yen ($511 billion), Chief Cabinet Secretary Yoshito Sengoku said after the government released a budget outline for fiscal 2011/12, starting next April.

The outline says the government will aim to cap general-account spending, which excludes debt servicing costs, at around 71 trillion yen in 2011/12 to rein in bulging debt.

Sengoku said the government hoped to formalise the guidelines by the end of July.

Based on the budget guidelines, government ministries will submit their spending requests by the end of August, and a draft annual budget is usually compiled by the end of the year.

Japan’s public debt — nearly twice the size of the $5 trillion economy — has long been financed domestically from the country’s massive pool of savings that mostly sits in the banking system and is recycled into JGBs.

But fears are growing that the ageing population will start drawing on that pool of savings, forcing Japan to rely on foreign investors to fund its debt and potentially creating market instability.

The spending and bond issuance caps were part of a fiscal framework the government agreed on last month to show investors it will take steps to improve public finances after Europe’s sovereign debt crisis pummelled financial markets.

But meeting them is easier said than done.

The government needs to come up with revenues to cover social welfare costs which, due to an ageing society, increases by roughly 1.3 trillion yen each year.

Some ruling party lawmakers are opposed to big cuts in spending in some areas, citing the damage it could do to the fragile economic recovery and the party’s popularity.

Prime Minister Naoto Kan has called on the need for fiscal reform but the big loss of his party in upper house elections earlier this month has reduced his clout in policymaking.

The ruling Democratic Party has a majority in the powerful lower house but will need the support of other parties in passing legislation through the upper house. That means Kan may need to compromise to advocates of big spending. (Additional reporting by Tetsushi Kajimoto; Editing by Edwina Gibbs)

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Seoul shares post 25-mth closing high on techs

July 15, 2010 By Leave a Comment

July 14 (Reuters) – Seoul shares posted an over two-year closing high on Wednesday as technology issues such as Samsung Electronics (005930.KS) soared on Intel’s positive earnings, but POSCO (005490.KS) retreated on outlook worries.

Foreign investors were buyers of a net 905 billion won ($746.4 million) worth of stocks, their biggest daily purchase since mid-September 2009.

The Korea Composite Stock Price Index (KOSPI) finished up 1.32 percent at 1,758.01 points, its highest close since mid-June 2008.

(Reporting by Jungyoun Park; Editing by Jonathan Hopfner)

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Factbox: Policies at stake after government loses election

July 13, 2010 By Leave a Comment

Voters dealt Kan’s Democratic Party of Japan a stinging rebuke in the election, depriving the DPJ and its tiny ally of a majority less than a year after the Democrats swept to power with promises of change.

The Democrats still have a dominant grip on the more powerful lower house. But they will need to seek new partners to control the upper chamber, which can block bills.

Below are key policies that could be affected by the outcome of the election:

FISCAL POLICY

Debt woes in the euro zone have turned the spotlight on Japan’s own massive debt, which the International Monetary Fund put at 217.7 percent of gross domestic product last year, far worse than Greece’s debt-to-GDP ratio of 115.1 percent.

Most of Japan’s debt is held by domestic investors, who are less sensitive to credit ratings agency downgrades than foreign investors, but that is slowly changing as the population ages and household savings fall.

Kan, a former finance minister, had made fiscal reform a top priority, floating a possible doubling of the 5 percent consumption tax. The main opposition Liberal Democratic Party also favors a rise in the sales tax to 10 percent, but the poor election results could make it harder for Kan to push forward debate on the politically touchy topic.

The government last month unveiled a mid- and long-term fiscal reform strategy. But the plan lacked specific ideas on how to meet ambitious targets such as balancing the budget and reducing its debt-to-GDP ratio.

A majority of voters agree fiscal reform is needed. But his apparent flip-flopping on a possible additional tax burden has put off many voters.

MONETARY POLICY

The Bank of Japan, which has stressed the need for a credible plan to cut back public debt, sees little need to ease monetary policy and feels it has done enough for now by outlining a loan program aimed at supporting industries with growth potential.

Political instability after Sunday’s election means it would be difficult for the government to carry out steps to support a fragile recovery in the world’s No.2 economy. That could renew government pressure for a more aggressive monetary policy. While the BOJ is independent from the government by law, direct pressure from the premier might be hard to resist.

The opposition Your Party, seen by some as a potential DPJ ally after it won 10 seats in Sunday’s poll, wants to revise the law governing the central bank to seek stronger government-BOJ cooperation to end deflation by making maximum employment one of the BOJ’s objectives, similar to a law governing the U.S. Federal Reserve.

YEN POLICY

Investors remain reluctant to test the government’s tolerance for a strong currency, although Tokyo has not intervened in the market since early 2004.

Kan caused a stir in January when he said he would work with the BOJ to weaken the yen, and that “it would be nice” if the Japanese currency slipped further.

He has subsequently toed the government line that stable exchange rates are desirable but levels should be set by the markets — but noted after becoming prime minister that there was a general view that a weaker yen would be better for Japan’s export-driven economy.

CLIMATE POLICY

Kan has stuck to a 2020 goal to cut Japan’s greenhouse gas emissions by 25 percent from 1990 levels, premised on an international framework in which major emitting countries would agree on ambitious targets.

The more powerful lower house passed a climate bill including that goal and a shortlist of domestic measures to achieve it, but the upper house ran out of time to enact the legislation. But the fate of the legislation is murky after the ruling coalition suffered a major setback in the poll.

POSTAL REFORM

The parliament session ended in mid-June without passage of a bill to scale back postal privatization. Kan has said he will resubmit the legislation, sought by his tiny coalition partner the People’s New Party, in an extra session in the autumn.

But without a coalition upper house majority, it looks almost impossible for the legislation to be enacted any time soon.

Not all Democratic Party lawmakers are keen on the legislation and banks complain it would give Japan Post an unfair advantage because of an implicit government guarantee.

Japan Post, which has retail banking and insurance services, is the world’s largest financial conglomerate with assets of about 300 trillion yen ($3,387 billion) and its fate could sway financial markets and industry.

The United States and Europe have said the draft legislation had not addressed their concerns about what they see as the preferential treatment that Japan Post receives compared with private-sector companies.

DIPLOMACY, SECURITY POLICY

The election defeat of the ruling coalition is unlikely to shift Japan’s foreign and security policies drastically.

The Democrats took power promising to steer a diplomatic course more independent of close ally the United States, but efforts by Kan’s predecessor Hatoyama to do so hit a roadblock when he failed to find an alternative to keeping a U.S. Marine airbase on the southern Japanese island of Okinawa.

Tokyo and Washington have basically agreed to implement a 2006 agreement to shift the Marines’ Futenma airbase to a less crowded part of Okinawa, host to about half the U.S. troops in the country.

But local opposition clouds the outlook for implementation, and experts worry that Hatoyama opened a Pandora’s box by fanning anti-base sentiment that could undermine the 50-year-old alliance.

The government will also likely keep stressing the need to deepen ties with other Asian countries including China, given Japan’s increasing reliance on the region for economic growth.

(Compiled by Leika Kihara, Hideyuki Sano, Charlotte Cooper, Yoko Nishikawa, Risa Maeda and Linda Sieg; Editing by Michael Watson)

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INTERVIEW-Somali leader worried by foreign jihadists

July 11, 2010 By Leave a Comment

MOGADISHU, July 10 (Reuters) – Somalia’s embattled president urged regional powers to step up the fight against the growing number of foreign fighters he said are joining the ranks of Islamist insurgents in the Horn of Africa nation.

Days after neighbouring nations promised to deploy an extra 2,000 peacekeepers to the anarchic country, President Sheikh Sharif Ahmed said the swelling number of militants posed a growing threat to regional security.

“Somalia is at risk from the growing number of foreign militants (here). We cannot turn a blind eye. Things have gone beyond a level we can tolerate so there is an urgent need for international or regional help,” he told Reuters late on Friday.

Foreign investors in Kenya, east Africa’s largest economy which shares a largely porous border with Somalia, cite the Islamist insurgency as a serious concern.

Western diplomats and security officials fear Islamist extremists could use Somalia as a launch pad for attacks across the volatile region and further afield.

Ahmed said his government, which controls little more than a few blocks in the Somali capital, Mogadishu, and is heavily dependent on an African Union peacekeeping force to ensure a semblance of security, was unable to carry out its functions.

“My government can do little to forge its institutional duties because of constant attacks,” he said.

Earlier this week, the regional bloc IGAD vowed to boost AU troop numbers to more than 8,000 but said they eventually wanted a 20,000-strong force, including United Nation blue helmets. [ID:nLDE6641M1]

“The IGAD leaders have agreed that Somalia can no longer remain as it is, because every country in the region, including Ethiopia, will face the terrorist threat,” Ahmed said in an interview.

Ethiopian troops invaded Somalia in 2006 to oust an Islamist movement from Mogadishu. That sparked the Islamist insurgency which still rages.

Hardline Islamist group al Shabaab, which claims links to al Qaeda, has previously threatened to attack Ethiopia and Kenya, as well as Uganda and Burundi which have sent peacekeepers to prop up Ahmed’s struggling administration.

It is not yet clear whether Ethiopia, an IGAD member along with Kenya, Uganda, Sudan, Djibouti and Somalia, will send peacekeepers.

For now, a U.N. resolution prevents Somalia’s immediate neighbours from contributing troops, although regional leaders have suggested the ban should be reconsidered.

In southern Somalia’s coastal town of Kismayu, local al Shabaab commanders and residents say the Islamists are on a massive recruitment drive.

“They are getting hundreds of volunteers who are joining them because there is no work and they (rebels) pay some money,” resident Ali Yusuf told Reuters.

“Everyone we recruit we send to a training camp. Inside the camp he will get a weapon and ammunition,” said one al Shabaab fighter who did not want to be named.

More than 21,000 Somalis have been killed since the insurgency began in 2007, while about three million people, almost a third of the population, are dependent on aid. (Additional reporting by Sahra Abdi in Nairobi; Writing by Richard Lough; Editing by Jon Hemming)

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Seoul shares rise as investors welcome rate hike

July 10, 2010 By Leave a Comment

Foreign investors were buyers of a net 314.5 billion won
($260.3 million) worth of stocks.

Institutions bought a net 118 billion won worth of shares and
retail investors sold a net 484 billion won worth.

Advancers outnumbered decliners 461 to 316 and 91 issues
ended flat.

Trading volume stood at 464 million shares worth 5.5 trillion
won, compared with 324.8 million shares worth 5 trillion won in
the previous session.

The KOSPI 200 Sept futures index KSc1 ended up 3.50 points
at 225.30, and the KOSPI 200 spot index .KS200 gained 3.66
points to 224.44.

The junior Kosdaq market .KQ11 ended 0.65 percent higher at
492.15.

Move on day +1.43 percent

12-month high 1,757.76 26 APRIL 2010

12-month low 1,377.60 14 JULY 2009

Change on yr -2.4 percent

All-time high 2,085.45 1 NOV 2007

All-time low 93.10 6 JAN 1981
(Editing by Jonathan Hopfner)

Filed Under: International News Tagged With: , , , , , , , , , , , , ,

Seoul shares rise as investors welcome rate hike

July 10, 2010 By Leave a Comment

SEOUL, July 9 (Reuters) – Seoul shares rose on Friday as investors welcomed the central bank’s surprise rate hike decision as a sign the economy was making a firm recovery, sending exporters and financials including Hana Financial (086790.KS) up.

The Korea Composite Stock Price Index (KOSPI) finished 1.43 percent higher at 1,723.01 points, just 2 percent away from its earlier 2010 high of 1,757.76 points.

“The rate hike came a bit earlier than expected, but investors took it as a sign the domestic economy was doing very solidly. Foreign investors’ buying confirmed that positive view,” said Kim June-kie, a market analyst at SK Securities.

“Optimistic quarterly earnings expectations are helping market make further upward moves,” Kim added.

Financials bounced as the rate hike strengthened hopes banks may see higher net interest rate margins, analysts said.

“Insurers will benefit as they can buy bonds more cheaply, while banks’ net interest margin could be helped through levying higher interest rates on lending,” said Shim Kyu-sun, an analyst at HI Investment & Securities.

Shares in Hana Financial Group rose 5.5 percent and Woori Finance Holdings (053000.KS) gained 4.14 percent.

Samsung Life Insurance (032830.KS) rose 1.43 percent and Korea Life (088350.KS) climbed 1.47 percent.

Key blue chips also outperformed as expectations for the impending second quarter earnings season mounted.

Shares in Samsung Electronics (005930.KS), the world’s No.1 memory chip maker, gained 2.71 percent and Hyundai Motor (005380.KS), South Korea’s No.1 automaker, rose 3.35 percent.

Tour and airline issues also outperformed as the won KRW= extended gains after the rate hike news. A stronger won could help boost demand for overseas travel and reduce the costs of imported jet fuel.

Shares in Korean Air Line (003490.KS) advanced 1.38 percent and major tour agency Hana Tour (039130.KQ) ended up 2.99 percent.

CCTV maker Samsung Techwin (012450.KS) jumped 5.5 percent as it was widely expected to post strong quarterly figures.

“Samsung Techwin’s margins improvement has been definitely strong, but I think shares have been a bit overbought,” said Chun Seong-hoon, an analyst at Eugene Investment & Securities, adding that shares were trading at about 25 times 2010 forecast earnings.

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UPDATE 1-China “mini-QFII” could launch this year -media

July 2, 2010 By Leave a Comment

SHANGHAI, July 1 (Reuters) — China may let Hong Kong subsidiaries of domestic brokerages and fund managers facilitate investments of offshore yuan deposits back into mainland capital markets in a pilot scheme as soon as this year, local media said on Thursday.

Under the scheme, dubbed “mini-QFII”, institutions will be allowed to channel yuan held offshore into investments in China within certain quotas, the 21st Century Business Herald reported.

Currently, foreign investors can only invest in local-currency stocks and bonds in China under the Qualified Foreign Institutional Investor (QFII) scheme, after converting foreign currencies into yuan.

Hong Kong-based banking sources told the newspaper that they expected the scheme to be implemented either by the end of this year or early 2011.

The mini-QFII scheme, when implemented, “will bring down the threshold for fund companies to participate in the QFII market,” said Xav Feng, head of research for China and Taiwan at fund-rating agency Lipper.

“You will see more new products on the market, which is a positive development for China’s fund industry,” said Feng.

Yao Gang, the vice chairman of China’s securities regulator, said last weekend that the government was studying how to promote the “mini-QFII” scheme, but did not give a timetable.

The China Securities Regulatory Commission (CSRC) was studying the possibility of allowing Chinese brokerages to launch yuan-denominated mutual funds in Hong Kong to invest in China’s A-share market, Yao said.

The scheme is part of China’s plans to promote international use of the yuan, in order to reduce the country’s reliance on the U.S. dollar in cross-border transactions.

Those efforts include a separate programme for allowing some foreign trade transactions to be conducted in yuan.

One of the constraints to the development of that programme has been that businesses being paid in yuan have few places to park their money other than bank deposits, meaning that creating more opportunities to invest yuan could help in the development of those efforts as well.

The “mini-QFII” plan is likely to be limited to around 10 billion yuan ($1.5 billion) initially, fund consultancy Z-Ben Advisors said in a research report on Wednesday.

The full-fledged QFII programme, by comparison, enables institutional investors including UBS (UBS.N)(UBSN.VX) to invest a total of roughly $30 billion in China’s capital markets.

But channelling offshore yuan deposits back to the mainland via the mini-QFII scheme may not necessarily boost valuations of Shanghai- or Shenzhen-listed A-shares, many of which currently trade at a discount to their Hong Kong-listed H-share counterparts, said Lipper’s Feng.

“What the A-share market lacks is not money but confidence,” he said.

The domestic market’s lacklustre performance will likely continue until a clearer picture of the economic outlook emerges, especially regarding interest rates, he said.

China’s stock market remains one of the world’s worst performers this year, down around 27 percent over worries about the economy and government tightening. The benchmark Shanghai Composite Index .SSEC fell 23 percent in the second quarter. (Reporting by Soo Ai Peng, Farah Master and Samuel Shen; Editing by Jason Subler and Jonathan Hopfner)

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Romania court rules some cuts illegal – agency

June 26, 2010 By Leave a Comment

June 25 (Reuters) – Romania’s Constitutional Court rejected some parts of a key austerity package related to pensions on Friday, endangering a vital IMF-led aid deal, local news agency Agerpres reported, citing judicial sources.

Bonds | Global Markets

The court said an official announcement would follow shortly.

Disbursement of about 2 billion euros in aid from the International Monetary Fund and the European Union depended on the court’s approval of a government move to slash state wages by a quarter and cut pensions by 15 percent.

The IMF deal is the main anchor for foreign investors, whose cash is vital to the struggling recession-hit economy. (Reporting by Luiza Ilie and Sam Cage; editing by Philippa Fletcher)

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Nikkei slips off 1-month highs on profit-taking

June 23, 2010 By Leave a Comment

(Reuters) – Japan’s Nikkei average slipped 1.2 percent on Tuesday as profit-taking emerged after a bounce to a one-month high the day before and foreign investors turned sellers.

Japan

Analysts said the market took a breather after recent rises, including last week’s gain of 3 percent, the best weekly performance in three months, as well as Monday’s surge, but that its essential upward trend looked unchanged.

The benchmark fell below a chart retracement level with euphoria over the yuan’s rise ebbing, but many saw support intact at around 9,800, the Nikkei’s 25-day moving average.

“Sentiment overall appears to have turned rather positive, now that it appears the euro may have bottomed out, and this can lead the market suddenly and sharply higher, the way we saw yesterday on the yuan news,” said Hideyuki Ishiguro, a strategist at Okasan Securities.

In light trade, the benchmark Nikkei .N225 fell 125.12 points to 10,112.89, below a 38.2 percent retracement at 10,155 of the fall from its April high of 11,408.17 to its June low of 9,378.23.

The broader Topix shed 0.9 percent to 894.56.

Some analysts said that the Nikkei needed to consolidate above 10,200, which falls a bit below the level of its 50-week moving average, to resume rising again.

“Breaking above this is extremely important, but we need a bit more market energy and volume to do so,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“But today we’re seeing a lot of foreign selling. There’s no follow-through from yesterday.”

European investors were short-covering Nikkei futures on Monday, lifting the cash market as well, analysts said.

The yuan spot exchange rate on Monday rose to its highest since July 2005, sending Asian stocks to a five-week high on hopes for greater Chinese buying power.

But the euphoria faded later in the day, with Wall Street dipping, leaving the Nikkei — which market players said had risen mainly on short-covering in thin volume — vulnerable.

On Tuesday, China’s central bank set the yuan’s daily mid-point at the highest level since its revaluation in July 2005. But the Nikkei shrugged it off.

The Nikkei’s relative strength index (RSI) slipped to 54 after rising close to 60 on Monday, but its MACD continued to climb and few in the market thought any serious falls were in the offing.

“The market was boosted mostly by short-squeezing yesterday, with only some investors who grew optimistic about China’s economic outlook taking long positions,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

“More gains now look fairly limited, also due to worries about the euro zone after news about BNP Paribas and Spanish banks.”

Ratings agency Fitch on Monday cut French bank BNP Paribas’ long-term international rating to AA- from AA, citing reliance on capital markets for a large part of its profits and a deterioration of asset quality in 2009.

Standard and Poor’s Rating Services also said on Monday it had raised its estimates for loan losses for Spain’s banking sector between 2009 and 2011 due to the faster depreciation of real estate assets on banks’ books.

EXPORTERS WEIGH

Shares of exporters ran out of steam and slid after helping lift the Nikkei on Monday.

Canon Inc (7751.T) fell 2.7 percent to 3,780 yen and Tokyo Electron Ltd (8035.T) dropped 3.6 percent to 5,620 yen. TDK Corp (6762.T) lost 2.3 percent to 5,430 yen.

Denso Corp (6902.T), a car parts maker affiliated with Toyota Motor Corp (7203.T), declined 1.8 percent to 2,622 yen after saying its joint venture plant in Guangzhou, China has halted production since Monday morning due to a labor strike.

The plant, Denso (Guangzhou Nansha) Co Ltd, has also halted supply of its fuel injection equipment and other products to Toyota, Honda Motor Co (7267.T) and other carmaker clients since Monday, Denso spokeswoman Yoko Suga said.

Tokyo Electric Power Co (9501.T), Asia’s biggest electric power company, edged up 0.1 percent to 2,431 yen after the Nikkei business daily reported that it is considering investing “tens of billions of yen” in a coal-fired power plant planned by Vietnam Oil and Gas Corp (Petro Vietnam). The plant is expected to start operations in the mid-2010s.

Trade was thin on the Tokyo exchange’s first section, with 1.7 billion shares changing hands, though that was up from last week’s four-month low just below 1.5 billion.

Declining shares outnumbered advancing ones, 987 to 529. (Editing by Joseph Radford)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Nikkei slips off 1-mth highs on profit-taking

June 23, 2010 By Leave a Comment

TOKYO, June 22 (Reuters) – Japan’s Nikkei average slipped 1.2 percent on Tuesday as profit-taking emerged after a bounce to a one-month high the day before and foreign investors turned sellers.

Analysts said the market took a breather after recent rises, including last week’s gain of 3 percent, the best weekly performance in three months, as well as Monday’s surge, but that its essential upward trend looked unchanged.

The benchmark fell below a chart retracement level with euphoria over the yuan’s rise ebbing, but many saw support intact at around 9,800, the Nikkei’s 25-day moving average.

“Sentiment overall appears to have turned rather positive, now that it appears the euro may have bottomed out, and this can lead the market suddenly and sharply higher, the way we saw yesterday on the yuan news,” said Hideyuki Ishiguro, a strategist at Okasan Securities.

In light trade, the benchmark Nikkei .N225 fell 125.12 points to 10,112.89, below a 38.2 percent retracement at 10,155 of the fall from its April high of 11,408.17 to its June low of 9,378.23.

The broader Topix shed 0.9 percent to 894.56.

Some analysts said that the Nikkei needed to consolidate above 10,200, which falls a bit below the level of its 50-week moving average, to resume rising again.

“Breaking above this is extremely important, but we need a bit more market energy and volume to do so,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“But today we’re seeing a lot of foreign selling. There’s no follow-through from yesterday.”

European investors were short-covering Nikkei futures on Monday, lifting the cash market as well, analysts said.

The yuan spot exchange rate on Monday rose to its highest since July 2005, sending Asian stocks to a five-week high on hopes for greater Chinese buying power.

But the euphoria faded later in the day, with Wall Street dipping, leaving the Nikkei — which market players said had risen mainly on short-covering in thin volume — vulnerable.

On Tuesday, China’s central bank set the yuan’s daily mid-point CNY=SAEC at the highest level since its revaluation in July 2005 [ID:nECB000553]. But the Nikkei shrugged it off.

The Nikkei’s relative strength index (RSI) slipped to 54 after rising close to 60 on Monday, but its MACD continued to climb and few in the market thought any serious falls were in the offing.

“The market was boosted mostly by short-squeezing yesterday, with only some investors who grew optimistic about China’s economic outlook taking long positions,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

“More gains now look fairly limited, also due to worries about the the euro zone after news about BNP Paribas and Spanish banks.”

Ratings agency Fitch on Monday cut French bank BNP Paribas’ long-term international rating to AA- from AA, citing reliance on capital markets for a large part of its profits and a deterioration of asset quality in 2009. [ID:nN21250262]

Standard and Poor’s Rating Services also said on Monday it had raised its estimates for loan losses for Spain’s banking sector between 2009 and 2011 due to the faster depreciation of real estate assets on banks’ books. [ID:nLDE65K1TE]

EXPORTERS WEIGH

Shares of exporters ran out of steam and slid after helping lift the Nikkei on Monday.

Canon Inc (7751.T) fell 2.7 percent to 3,780 yen and Tokyo Electron Ltd (8035.T) dropped 3.6 percent to 5,620 yen. TDK Corp (6762.T) lost 2.3 percent to 5,430 yen.

Denso Corp (6902.T), a car parts maker affiliated with Toyota Motor Corp (7203.T), declined 1.8 percent to 2,622 yen after saying its joint venture plant in Guangzhou, China has halted production since Monday morning due to a labour strike.

The plant, Denso (Guangzhou Nansha) Co Ltd, has also halted supply of its fuel injection equipment and other products to Toyota, Honda Motor Co (7267.T) and other carmaker clients since Monday, Denso spokeswoman Yoko Suga said. [ID:nTFA006678]

Tokyo Electric Power Co (9501.T), Asia’s biggest electric power company, edged up 0.1 percent to 2,431 yen after the Nikkei business daily reported that it is considering investing “tens of billions of yen” in a coal-fired power plant planned by Vietnam Oil and Gas Corp (Petro Vietnam). The plant is expected to start operations in the mid-2010s. [ID:nSGE65K0JA]

Trade was thin on the Tokyo exchange’s first section, with 1.7 billion shares changing hands, though that was up from last week’s four-month low just below 1.5 billion.

Declining shares outnumbered advancing ones, 987 to 529. (Editing by Joseph Radford)

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Korea T-bond futures selling by foreign investors at 6-mth high

June 23, 2010 By Leave a Comment

June 22 (Reuters) – Selling by foreign investors of front-end government bond futures reached a six-month peak on Tuesday, as they locked in gains in emerging market debt on rising inflationary pressure and tightening currency controls.

Foreign investors dumped a net 13,915 contracts of the September contract KTBc1, marketing their largest single-day selling since Dec. 22, 2009, when they sold a net 21,947 contracts, according to the Korea Exchange. (Reporting by Kim Yeon-hee; Editing by Chris Lewis)

Filed Under: International News Tagged With: , , , , , , , , , , ,

Nikkei slips off 1-mth highs on profit-taking

June 23, 2010 By Leave a Comment

June 22 (Reuters) – Japan’s Nikkei average slipped 1.2 percent on Tuesday as profit-taking emerged after a bounce to a one-month high the day before and foreign investors turned sellers.

Stocks | Asian Markets | Financials

The benchmark Nikkei .N225 fell 125.12 points to 10,112.89, below a 38.2 percent retracement at 10,155 of the fall from its April high of 11,408.17 to its June low of 9,378.23.

The broader Topix shed 0.9 percent to 894.56. (Reporting by Aiko Hayashi)

Filed Under: International News Tagged With: , , , , , , , , , , , ,

Nikkei slips off 1-mth high after 5 days of gains

June 18, 2010 By Leave a Comment

TOKYO, June 17 (Reuters) – Japan’s Nikkei average fell 0.7 percent on Thursday after five days of gains, coming off one-month highs, though support was expected to hold at the level of the benchmark’s 25-day moving average.

The Nikkei was stuck near 10,000, which market players say is a prerequisite for confirming a double bottom, but further rises were likely to be hard going amid an apparent lack of investor interest, both from overseas investors and at home.

Foreign investors sold a net 916.9 billion yen of Japanese stocks last week, more than the 75.2 billion yen they sold in the previous week and the biggest outflow in one week since March 2008, Finance Ministry data showed.

“Given where the market stands, investors want to bet on a rebound as long as other financial markets — particularly moves in dollar/yen and euro/yen — are calm,” said Akio Yoshino, chief economist at Societe Generale Asset Management.

“But the environment is actually pretty bad. Not only are Greece’s problems bad but the contagion is also serious, with Spain’s yields rising. The market had been ignoring that aspect up until now but the adjustment in stock prices was probably inevitable.”

A Spanish newspaper reported that the European Union, International Monetary Fund and U.S. Treasury were drawing up an emergency credit line for Spain.

The European Commission denied the report, but the spread between the yield on 10-year Spanish bonds and German bunds hit the highest level in the euro’s 11-year history. [ID:nLDE65F0GX]

Coming off a 1-month high hit the previous day, the benchmark Nikkei .N225 shed 67.75 points to 9,999.40 after spending most of the day above 10,000, a key level that has been both support and resistance at different times over the past year.

It had risen 6.7 percent over the past five trading days in its best such streak since a six-day run from Nov. 30 last year.

Support was seen around 9,800, the level of the Nikkei’s 25-day moving average, after the Nikkei closed above it on Tuesday for the first time in roughly two months.

The next resistance levels will likely be around 10,200 and 10,300, near the Nikkei’s 50-week moving average and its 200-day moving average.

In addition, the 38.2 percent retracement from the Nikkei’s April high of 11,408.17 and its June low of 9,378.23 comes in around 10,156.

The broader Topix slipped 0.6 percent to 887.48.

Market players said on Wednesday that long positions had accumulated in blue chip shares, leaving them vulnerable if upward momentum peters out.

“Wednesday’s rises also were without much strength, since the cash market was pushed up mainly by short-covering in futures,” said Yutaka Miura, senior technical analyst at Mizuho Securities.

Trade was thin on the Tokyo exchange’s first section, with 1.5 billion shares changing hands but up from the four-month low marked early this week.

Declining shares outnumbered advancing ones by 983 to 531.

TAKEFUJI CLIMBS

Shares of consumer lender Takefuji Corp (8564.T) ended the day up 6 percent at 302 yen after a company source said it has secured the 41.4 billion yen ($453 million) of funds it needed to redeem convertible bonds due on Saturday. [ID:nTKB006866]

The news confirmed a report in the Nikkei business daily.

But shares of exporters fell after leading gains in the broader market the previous day, hurt by a flat Wall Street finish in the wake of mixed economic data underlining the uneven nature of the economic recovery.

U.S. housing starts fell more than expected in May to a five-month low, casting a shadow over better-than-expected industrial production data for the same month and underscoring the uneven nature of the recovery, helping Wall Street end flat. [ID:nN16144404]

Sony Corp (6758.T) slid 2.8 percent to 2,564 yen and Kyocera Corp (6971.T) slipped 2.9 percent to 7,990 yen. Honda Motor Co (7267.T) fell 0.8 percent to 2,736 yen.

Shares of Fujitsu Ltd (6702.T) and Toshiba Corp (6502.T) gained after the Nikkei business daily said they had reached a deal to integrate their cell phone businesses, with Fujitsu to take a majority stake in a joint venture to be launched as early as October. [ID:nSGE65F0J1]

Fujitsu rose 1 percent to 593 yen and Toshiba climbed 0.8 percent to 487 yen. (Editing by Edwina Gibbs)

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Seoul shares hit 6-wk closing high on techs

June 17, 2010 By Leave a Comment

SEOUL, June 16 (Reuters) – Seoul shares climbed to a six-week closing high on Wednesday, fueled by steady foreign buying and firm gains in key blue chips such as Samsung Electronics (005930.KS) and Woori Finance Holdings (053000.KS).

Analyst said the main index could hit its earlier 2010 high 2010 high of 1757.76 points, reached on April 26th, within this month as appetite for risk revives, and ahead of the second quarter earnings season.

“We are seeing appetite for risk return to the market. Continued foreign buying and earnings expectations before second quarter results season are boosting sentiment,” said Lee Sun-yeb, a market analyst at Shinhan Investment Corporation.

“The main index looks set to hit its earlier 2010 high within a couple of weeks,” Lee said, adding that news of the National Pension Service’s (NPS) plans to boost equity holdings further reinforced investor confidence.

The NPS plans to add more risky assets such as equity and real estate to its holdings as it seeks to diversify its investment portfolio.[ID:nTOE65F009]

The Korea Composite Stock Price Index (KOSPI) finished up 0.91 percent at 1,705.33 points.

Foreign investors were buyers of a net 343 billion won ($279.1 million) worth of stocks, picking up shares for a fourth straight session.

Shares in Woori Finance Holdings rose 3.29 percent after KB Financial Group (105560.KS) nominated a new chairman who is expected to seek a merger with Woori.

“His reported comments definitely pointed to KB Financial pursuing Woori, and those expectations are sending Woori Finance shares higher,” said Ku Yong-uk, a market analyst at Daewoo Securities.

“However there are still many unknown factors, such as what form the sale of Woori would take,” Ku said, adding that he “did not see great synergy in the merger.”

KB Financial Group retreated 2.83 percent.

Shares in NCSoft (036570.KS) jumped 7.18 percent amid positive expectations about its new game “Blade and Soul,” currently in the trial stage and expected to come out later this year or early next year, analysts said.

Telecom issues declined after LG Telecom (032640.KS) unveiled aggressively priced wireless service plans on Tuesday.

Shares in SK Telecom (017670.KS) were down 0.9 percent and KT Corp (030200.KS) shed 2.63 percent.

Memory chip makers were helped by a 5.5 percent spike in the key U.S. semiconductor index .SOXX.

Shares in Samsung Electronics (005930.KS), the world’s No.1 memory chip maker, rose 2.63 percent.

Shares in airlines and tour issues advanced as the summer holiday season approached, stoking positive earnings expectations.

Shares in Korean Air Line (003490.KS), South Korea’s top air carrier, rose 2.58 percent and Hana Tour (039130.KQ), a major tour agency, climbed 1.26 percent.

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Seoul shares rise 0.9 pct on foreign buying, techs

June 15, 2010 By Leave a Comment

June 14 (Reuters) – Seoul shares ended up 0.9 percent on Monday as steady buying by foreign investors sustained upside momentum, with gains led by retail and technology issues including Samsung Electronics (005930.KS).

Financials

The Korea Composite Stock Price Index (KOSPI) finished up 0.91 percent at 1,690.60 points.

(Reporting by Jungyoun Park; Editing by Jonathan Hopfner)

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Taiwan stocks hit 3-week closing high; TSMC gains

June 15, 2010 By Leave a Comment

TAIPEI, June 14 (Reuters) – Taiwan stocks rose 1.2 percent to
a three-week closing high on Monday, with financials in the lead,
while chip maker TSMC (2330.TW) gained amid optimism over demand
for technology products.

Taiwan’s main TAIEX share index closed up 87.91
points at 7,387.40. The financial sub-index .TFNI gained 2.1
percent.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s
top contract chipmaker, rose 0.99 percent, lifting the
electronics sub-index .TELI 0.82 percent.

Some analysts said foreign investors were likely to buy more
local shares this week if U.S. stocks stabilised and sales of a
new generation of personal computers, mobile phones and other
high-tech gadgets continued to grow globally.

Foreign investors were net buyers in the past two trading
sessions. Their net selling in May had totalled T$127 billion
($3.92 billion), the highest monthly total in 2-½ years.
[ID:nTOE65305E]

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Nikkei to edge up; resistance at 9,900 seen holding

June 14, 2010 By Leave a Comment

(Reuters) – Japan’s Nikkei average is likely to edge higher on Monday and test key resistance after strong U.S. consumer sentiment data reassured investors about the health of the economy following an unexpected drop in retail sales.

Japan

Chip-linked shares such as Advantest Corp are likely to rise after U.S. peers gained, with the Philadelphia Semiconductor Index rising 1.4 percent.

But worries about the euro zone’s debt problems may make it hard for the benchmark to push above 9,900, the level of its 25-day moving average, analysts said.

“The Nikkei may well test resistance, but whether it actually breaks through it or not is problematical given the uncertainties that still linger,” said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.

“Some foreign investors, such as hedge funds, appear to be taking a positive view of the new government of (Prime Minister Naoto) Kan, and whether this will continue or not is another big question.”

Kan, who took over the nation’s top job after his unpopular predecessor quit abruptly nearly two weeks ago, has made tackling a public debt that is already twice the size of Japan’s GDP a top priority.

Other market players said investors will be eyeing a Thursday summit of European Union leaders for clues as to steps the euro zone might take on its debt issues.

In a sign stocks are likely to open higher, Nikkei futures traded in Chicago closed at 9,850, up 1.4 percent from the Osaka close.

U.S. retail sales slid an unexpected 1.2 percent, but data also showed U.S. consumer sentiment near a 2- year high.

The dollar hovered around 91.76 yen in early Asian trade and was likely to provide an additional boost to shares, while the euro was steady at 111.20 yen.

The benchmark Nikkei is expected to advance toward its 25-day moving average as longer-term technical momentum indicators such as MACD powered solidly upwards on Friday after narrowly averting a bearish cross last week.

Market players said the Nikkei will move between 9,700 and 9,900. It closed at 9,705.25 on Friday.

STOCKS TO WATCH

– Nissan Motor Co

Nissan’s automobile business is expected to be debt free for the first time in three years in fiscal 2010, with its net cash position likely about 100 billion yen, the Nikkei business daily reported.

– Itochu Corp

Trading house Itochu may issue an additional 50 billion yen in bonds in the current financial year to increase its reliance on direct financing, the Nikkei business daily said.

– Mitsui & Co

U.S. President Barack Obama will press BP to set up an escrow account to pay damage claims by individuals and businesses hurt by the Gulf of Mexico oil spill disaster.

Mitsui owns 10 percent of the leaking well.

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Timeline: South Korea’s foreign exchange regulations

June 14, 2010 By Leave a Comment

(Reuters) – South Korea unveiled on Sunday new curbs on financial institutions’ currency trading, saying it aimed to smooth volatile capital flows, particularly linked to short-term foreign borrowing.

South Korea

Following is a timeline of major changes in South Korea’s foreign exchange regulations after it had opened up its capital markets in several tranches following the 1997-98 Asian financial crisis.

————————————————————-

Nov, 2009 – The authorities announce a first set of tighter regulations on currency trading, including new standards for foreign exchange liquidity risk management, restrictions on currency forward transactions of non-financial companies, and mandatory minimum holdings of safe foreign currency assets by domestic banks.

July, 2009 – The minimum amount of deposits for foreign currency margin trade raised to 5 percent of transaction value from 2 percent in an effort to clamp down on speculative forex trading by individual investors.

June, 2008 – A $3 million limit on individual investment-purpose foreign property deals removed, a move seen as containing the won’s advance.

Dec, 2007 – The authorities ease currency forwards trade rules to help foreign investors mitigate risks from settlement mismatch, in the process of selling South Korean securities and futures positions, and exchanging the proceeds in the won into another currency.

- Exempts financial services companies from reporting foreign exchange-related over-the-counter derivative transactions to the authorities.

May, 2006 – Seoul bumps up South Korean banks’ currency position caps to 50 percent of own capital from 30 percent.

March, 2006 – Limit on South Korean banks’ currency positions set at 30 percent of own capital

Dec, 2005 – The authorities abolish a rule requiring permission prior to cross-border capital transaction.

Jan, 2004 – Seoul limits the ability of South Korean institutions to trade in non-deliverable forwards (NDF), in a move seen as easing upward pressure on the won.

June, 2002 – South Korea allows brokerage and insurance companies to participate in interbank foreign exchange market, and lets brokers initiate over-the-counter FX derivative trades.

(Reporting by Kim Yeon-hee; Editing by Tomasz Janowski)

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Analysis: Japan sovereign CDS may start to shake JGB market

June 12, 2010 By Leave a Comment

(Reuters) – Hedge funds and foreign investors are building up protection on Japanese government bonds in the credit default swaps market, underscoring persistent worries about Japan’s poor fiscal health and suggesting that JGBs could be shaken by CDS moves in the near future.

Japan

The outstanding volume of CDS written on JGBs has doubled in the past eight months as Europe’s sovereign debt crisis has made anxious banks and investors hedge their exposure to Japan, the most heavily indebted of the major economies.

Japan’s public debt — totaling nearly 200 percent of GDP — has long been financed domestically from the country’s massive pool of savings that mostly sits in the banking system and is recycled into JGBs.

But fears are growing that the aging population will start drawing on that pool of savings, forcing Japan to rely on foreign investors to fund its debt and potentially creating market instability.

New Prime Minister Naoto Kan, who has vowed to start fixing the tattered finances, warned on Friday Japan risked default if it failed to act, and investors are not convinced it has been taking enough steps to head off a crisis down the road.

While other sovereign CDS spreads have shrunk this week along with a rebound in stock markets, Japanese sovereign CDS spreads have edged out to 99 basis points, pushing back toward a record peak of 130 basis points and up from 3 basis points just three years ago.

Some analysts are wary the big increase in volume on Japanese sovereign CDS may spark a volatile widening of spreads that could even prompt domestic investors to start shedding their JGB holdings.

“Fear is what drives CDS, big upticks take place when sentiment is weak. It is a game of increasing fear as much as possible and then getting out,” said a senior credit trader at a U.S. bank.

Foreign commercial banks, which have loan business with Japanese companies and swap houses exposed to yen products, are among the buyers of protection, traders said.

“There are participants out there scared enough to buy protection. People really drive hard on fear. It is ‘hedge when you can, not when you have to’.”

CDS VOLUME INCREASE

Net notional volume of Japan’s five-year sovereign CDS stood at $4.45 billion on June 4, data from the Depository Trust & Clearing Corporation (DTCC) shows, up from $2.94 billion at the end of November.

Traders said some investors have made handsome profits over the past two years thanks to extreme moves in CDS, which is the best scenario for dealers.

The Japanese government is doing little to give a sense of security to the markets in managing its public debt, and this could be used by speculators to create market volatility and opportunity for profits, the trader at a U.S. bank said.

Potential disappointment or a downgrade of the sovereign credit rating following Japan’s expected medium-term outlook on fiscal restructuring due later in the month could be their trading incentives.

Volume has also grown in U.S. sovereign CDS and UK sovereign CDS in the past year, a research paper released by the Bank of Japan in April showed, reflecting market concerns over the fiscal state of major economies after a blow-up in government spending following the global credit crisis.

But the volume in Japan sovereign CDS remained about 1 percent of a total of $2.17 trillion, in which Italy’s sovereign CDS had the biggest share at 10 percent.

Traders said the biggest advantage of CDS was its low cost enabling speculators to make bets. Protection against Japan’s default risk was bought and sold almost entirely by overseas investors, they said.

For that reason, some analysts warned that price movements in Japan sovereign CDS may become very volatile and that in turn could sour sentiment among domestic investors toward JGBs, resulting in higher costs for Japan to finance its debt.

“A boost in trading activity may come sooner than we’re now anticipating if more foreign players recognize the trend of falling domestic savings and an expected rise in foreign JGB holdings in the coming years, and find motivation to sell protection now,” said Jun Ishii, chief fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities, in a client note in April.

DOMESTIC INVESTORS MAY BE MORE PIVOTAL

Market experts argue that Japan’s sovereign CDS market, despite the recent jump in volume, is still a drop in the bucket compared to the huge JGB market dominated by real money domestic investors who invest trillions of yen.

It will be the domestic investors, not overseas players, who would rock the JGB market if they decide to react negatively on fiscal concerns, they say.

Japan’s five-year CDS spread rose to a 14-month high of 98 basis points in late May as fears escalated that the euro zone’s debt crisis was spreading to its banking system.

That was a day after the benchmark 10-year JGB yield dropped to a five-month low of 1.190 percent.

“A sort of correlation between CDS spreads and JGB yields may exist but when you are talking about a hundred million on one side and a trillion on the other, it is like smoke and mirrors. I am skeptical that the CDS market can move JGBs,” said the trader at a U.S. bank.

(Editing by Eric Burroughs)

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