Month: March 2014

Get ready Asia, another busy week in store

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A busy week ahead starts with Asian markets digesting key weekend events: A widening in the Chinese yuan`s trading band and exit polls showing Crimea has voted to join Russia in a move that could fuel risk aversion.

The key highlights of the week include Chinese foreign direct investment and house price data expected early in the week, the release minutes on Tuesday from the Reserve Bank of Australia`s (RBA) last meeting and a central bank meeting in the Philippines on Thursday. Japan trade data is also expected in the week.

Outside Asia, focus is likely to fall on a two-day meeting of the US Federal Reserve, which concludes on Wednesday. The Fed is seen moving ahead with a scaling back of its monetary stimulus, with another $10 billion “taper” of the bond-buying program to USD 55 billion a month.

“There`s lots of uncertainty in the market on Ukraine,” Deb Clarke, the global head of investment research at Mercer, said on CNBC, speaking about the implications of the weekend referendum in Crimea, which could exacerbate tensions between the West and Russia.

Everyone`s also concerned about China. We`ve had the yuan band widening at the weekend. We do see China as a concern and somewhere where there is risk…But the underlying fundamentals are still pretty strong,” she added.

China`s central bank on Saturday doubled the yuan`s daily trading range to 2 percent.

The move has been anticipated for some time and analysts say reflects confidence in Beijing that the economy is stable enough to handle further reforms in the country`s financial markets.

In Japan, February trade data is expected on Tuesday or Wednesday.

Economists polled by Reuters forecast a 12.4 percent rise in exports from a year earlier, compared with a 9.5 percent increase in January.

Elsewhere, minutes from the last central bank meeting in Australia are due for release on Tuesday. The RBA left its key interest rate steady at a record low of 2.5 percent earlier this month.

“The minutes from the last RBA Board meeting are likely to reiterate that the Bank is comfortable with the way the economy is responding to low interest rates, but that uncertainty remains around the handover from mining investment to the rest of the economy and as a result a period of stability in interest rates remains appropriate,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital said in a note.

– By CNBC.Com`s Dhara Ranasinghe; Follow her on Twitter @DharaCNBC

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fed meets amid market skittishness

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Janet Yellen takes center stage in the week ahead, chairing her first FOMC meeting amid market skittishness over events in Ukraine.

There is little doubt the Fed will continue to move forward and announce another USD 10 billion “taper” of its bond-buying program, taking it to USD 55 billion a month.

The Fed is widely expected to take a knife to some of the language in its statement that set an unemployment rate of 6.5 percent as a level to cut rates.

“This is all about her. It’s her first meeting. It just doesn’t seem like the meeting where there’s going to be a lot of policy fireworks given it might be prudent to let things coast through again, while they all get on the same page,” said George Goncalves, Treasury strategist at Nomura Americas.

The Fed’s target of 6.5 percent for unemployment is seen by the markets as outdated and confusing, since unemployment is now at 6.7 percent. Fed officials have also called it obsolete. The Fed will also release new economic forecasts, and any talk about the economy is likely to suggest that the weather may be a major factor behind recent weak data.

(Read more: Why this is the one number to watch in week ahead)

Goncalves does not expect the Fed to make moves based on Ukraine, unless markets deteriorate rapidly. “The Fed’s in a tough predicament because they can’t seem like they’re reaciting. They demonstrated once before when we had the fallout in January, they were unwaivering. They did the taper,” he said.

While stocks sold off in the past week, buyers sought safety in bonds, sending the 10-year yield to 2.65 percent. The Dow was down 2.4 percent to 16,065 and the S&P was off nearly 2 percent to 1,841, in the worst weekly performance since January.

(Read more: Battered market limps to end of ugly week)

The Fed’s success at altering its forward guidance will ultimately show up in the yield curve, Goncalves said. “The flattening of the curve could be the risk next week. 10s (10-year notes) and 30s (30-year bonds) maybe can go up a little bit in rates, but fives (5-year notes) can go up more if they don’t seem like they made more progress on the forward guidance,” he said.

The two-day Fed meeting ends Wednesday with a presser by Yellen, also her first.

Markets are expected to remain on edge going into the coming week, after Sunday’s referendum in Crimea on whether to join Russia or stay with Ukraine. Tense talks between the US  and Russia ended Friday with no clear resolution on whether Russia would recognize the vote and the West would impose sanctions.

“I think anxieties are going to be running high. The Crimea vote is a foregone conclusion, but how does the West respond? How does Russia respond?” said Marc Chandler, chief Treasury strategist at Brown Brothers Harriman.

(Read more: Was that Russia transferring dollar holdings?)

On the data front, there is industrial production Monday, CPI on Tuesday, and home sales data and weekly jobless claims Thursday. There are a few earnings, including Nike on Thursday and Tiffany on Friday.

Monday

Earnings: JA Solar

8:30 a.m.: Empire State survey

9:00 a.m.: TIC data

9:15 a.m.: Industrial production

10:00 a.m.: NAHB survey

Tuesday

Earnings: Adobe Systems, Oracle, DSW, FactSet

FOMC meeting begins

8:30 a.m.: CPI

8:30 a.m.: Housing starts

Wednesday

Earnings: FedEx, Guess, HermanMiller, KB Home, General Mills

7:00 a.m.: Mortgage applications

8:30 a.m.: Current account

10:30 a.m.: EIA oil inventories

2:00 p.m.: FOMC statement and projections

2:30 p.m.: Fed Chair Janet Yellen press briefing

Thursday

Earnings: Nike, Scholastic, Lennar, Silver Wheaton

8:30 a.m.: Initial claims

10:00 a.m.: Existing homes

10:00 a.m.: Philadelphia Fed survey

10:00 a.m.: Leading indicators

10:30 a.m.: EIA natural gas

Friday

Earnings: Darden Restaurants, Tiffany

11:45 a.m.: St. Louis Fed President James Bullard

1:45 p.m.: Dallas Fed President Richard Fisher

4:30 p.m.: Minneapolis Fed President Narayana Kocherlakota

6:30 p.m.: Fed Gov. Jerome Stein

—By CNBC’s Patti Domm. Follow her on Twitter @pattidomm.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Crimea referendum: Why it’s so important

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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On Sunday, the people of Crimea go to the polls in a referendum on whether to stay part of Ukraine. They are widely forecast to back rejecting Ukrainian rule – but many of the most powerful international forces are discrediting the results before they come in.

“Seems to me that this referendum is already pre-ordered and we can easily predict the outcome of this referendum,” Ukrainian Prime Minister Arseniy Yatsenyuk told CNBC Thursday in New York.

Crimea is already an autonomous region within Ukraine, but a yes vote would in theory mean full independence. In practice, of course, it is unlikely to be recognized by the Ukrainian government or its international supporters.

Crimea, a peninsula the size of Maryland, is of extreme strategic importance to Russia because of its geographical location. Since Kremlin-backed Viktor Yanukovych was deposed as Prime Minister of Ukraine, Russian troops are suspected to have entered Crimea, although the country’s President Vladimir Putin and other officials have denied this.

Critics argue that the presence of such troops would discredit the poll.

(Read more: Why Crimea matters)

How is the vote likely to be split?

The Crimean population, if they go to the referendum, is likely to vote along ethnic lines, which would mean that the majority Russian-speaking population would dominate. However, around a quarter of the population is Ukrainian-speaking and there is also a substantial minority Crimean Tatars, Muslims who were deported en masse under Stalin and who are anti-Russian influence, so it could be pretty close.

(Read more: Run on banks in Crimea)

What will Russia do?

The real tension and worry rests on whether Russia decides to enforce the referendum results with military action or an immediate annexation of Crimea.

The Ukrainian region of Donetsk, on the Russian border, is likely to become the next flash point for the growing tensions between Russia and Ukraine. The region, now run by oligarch Serhiy Taruta, has seen violent clashes between pro-Russian and pro-Ukrainian forces in recent days.

The Ukrainian government has asked for the international community to address “unprovoked acts of aggression against Ukraine from the Russian Federation and its attempt to annex” Crimea. This is likely to mean sanctions against Russia.

(Read more: Ukraine enlists billionaires to take on Russia)

How are markets likely to move?

The retreat away from riskier assets will continue if this referendum results in Crimea leaving the Ukraine. A yes vote, and subsequent Russian military occupation, could move economic sanctions against Russia by the US from possibility to reality, which would send Russian stocks and the rouble spiraling further downwards.

“Real money is finally waking up to the realization that this stuff is serious,” Timothy Ash, head of emerging market research at Standard Bank, said.

– By CNBC’s Catherine Boyle. Twitter: @cboylecnbc.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ETFs woo Mrs Watanabe with foreign stocks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Providers of exchange traded funds, or ETFs, are wooing Japanese retail investors with opportunities to invest in foreign stocks amid expectations the market will soon see a flood of fresh funds.

“Here in Japan, it is very clear the non-domestic equity share of investments in this market is significantly lower compared to Europe or to the US, so there is much more need for diversification in general,” said Harmut Graff, CEO of index provider Stoxx.

This week, his company launched the Stoxx Asean-five Select Dividend 50 index ETF on the Tokyo Stock Exchange, in partnership with Nomura.

Graff expects a lot more demand for these sorts of products following the launch of the Nippon Individual Savings Account, or NISA, program at the beginning of the year. The accounts offer a five-year tax holiday on dividends and capital gains, provided the funds are invested in stocks, mutual funds or exchange-traded funds, with bonds not eligible for the tax breaks.

The Bank of Japan estimates that around 55 percent of the 1.5 quadrillion yen (around USD 14.6 trillion) worth of Japanese household financial assets are collecting dust in cash and deposits. The government aims to get about 25 trillion yen of that shifted to NISA accounts by 2020. If around 1 trillion yen a year flows into Japanese equities, share prices could rise by around 5.2 percent a year, Nomura said in a December report.

Mrs Watanabe, the nickname for Japan`s retail investors, could be a tough sell when it comes to foreign shares. Globally, retail investors tend to have home bias when it comes to asset allocation, but Japanese investors may be more wary than most.

A recent survey by Franklin Templeton found that within Asia, Japanese investors are the most likely to expect the best equity and fixed income returns will come from their home country, with 54 percent preferring to invest there, compared with the next-most stay-at-homers, Australia at 45 percent and China at 35 percent.

But Graff expects the dividend focus of his company`s first offering in Japan will overcome some resistance, citing current low interest rates globally. Japan`s 10-year government bond is currently offering around 0.64 percent interest, according to Reuters data. 

His company is also considering offering thematic products, such as infrastructure investments, in addition to regional ones.

“We definitely believe there is much more possibilities for growth in this specific area,” he said. “Passive (index) possibilities come along with significant lower fees compared with other alternatives for investing into the equity market,” Graff added, citing significant growth in recent years.

ETFs are a big business. In the US, around USD 1.30 trillion was invested in ETFs as of November 2012, according to data from the Investment Company Institute. Around 4.21 trillion yen (around USD 41 billion) was invested in ETFs at the end of 2012, according to data from the Japan Securities Dealers Association.

Others expect Mrs. Watanabe`s home bias can be overcome to an extent.

“Japanese investors are not particularly different from other investors,” said Ed Rogers, CEO of Rogers Investment Advisors, noting many US investors keeping upwards of 90 percent of their investments in their home market. “There`s a sliver of the population that`s always interested in international investment and diversifying away from home country risks.”

Many of Japan`s small and medium-sized businesses diversifying operations around the region, particularly in places such as Thailand, and investing in those countries` equities is just an extension, Rogers noted.

He expects interest in investing in ETFs will increase as Japan`s multi-decade deflationary malaise may finally be coming to an end.

“If you`re a retail Japanese investor and you`re sitting on top of cash that`s potentially wasting away, it no longer makes sense,” Rogers said. “ETFs are seen as simply an easy way to get exposure to equities,” he said, although he noted he doesn`t believe it`s the optimal investment strategy.

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1
Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Japan’s energy debate rages on tsunami anniversary

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As Japan marked the third anniversary on Tuesday of the devastating earthquake and tsunami that sparked a nuclear emergency, debate rages as to whether the country should return to nuclear power.

Japan shut down its reactors in the wake of the meltdown at the Fukushima nuclear power plant following the March 2011 earthquake and tsunami and Prime Minister Shinzo Abe is keen to return the resource-poor country back to nuclear energy.

He faces opposition from a wary public as well as high-profile figures such as former Prime Minister Junichiro Koizumi. On Sunday, tens of thousands of Japanese staged an anti-nuclear rally in Tokyo, just ahead of the anniversary of the earthquake and tsunami that claimed nearly 20,000 lives.

“Clearly today, the third anniversary of the Fukushima disaster, energy is very much in the thinking here as well as the more tragic consequences of the tsunami,” said Alistair Newton, senior political analyst at Nomura, told CNBC from Tokyo.

Japan needs more fossil fuels to make up for the closures of its nuclear power plants, fueling worries that high energy costs could hurt the economy. Data on Monday showed that Japan`s current account deficit widened to a record of 1.589 trillion yen (USD15.4 billion) in January.

Against this backdrop, Abe last month announced details of a plan that defines nuclear power as an important long-term source of energy for the world`s number three economy. According to media reports, the new Basic Energy Plan will seek to restart Japan`s nuclear reactors.

“You have to consider the tremendous cost of the legacy of Fukushima, which may cost in excess of USD125 billion once all the compensation is paid,” said Edwin Lyman, senior scientist at the global security program of the Union of Concerned Scientists in Washington. “The site is going to remain radioactive for decades and is still leaking radioactivity into the ocean. You have to wonder what you`re buying by restarting those plants.”

The earthquake and tsunami that hit Japan in March 2011 soon developed into a nuclear catastrophe as one system after another at the Fukushima Daiichi nuclear power plant failed. Three of the plant`s six reactors suffered meltdowns, releasing deadly radiation into the sea and air.

Following Fukushima, many countries put their nuclear energy plans under review. Western Europe saw 11 reactors close between 2010 and 2012, according to market research firm Euromonitor.

Abe will have a tough time convincing voters that returning to nuclear power is in Japan`s interests, analysts say.

“We see a big gap right now between the political leaders and the average person in Japan. I think the solution might be the NRA [Nuclear Regulatory Authority], a new agency in charge of regulation will stall the process for a few months, and Abe hopes, during that period, people will calm down and see nuclear power possibility again,” said Daniel Aldrich, associate professor of political science at Purdue University.

A crisis in Ukraine, which has highlighted the risks associated with relying on energy imports from Russia, could help Abe win over public opinion.

“Of course oil from the Middle East and Russia make Japan more dependent on other countries and make Abe seemingly weak. But in actual fact, he [Abe] definitely will use that as an argument to try and convince people to come back onboard,” Aldrich said.

– By CNBC.Com`s Dhara Ranasinghe; Follow her on Twitter @DharaCNBC  

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China faces delicate policy dance on shadow banking

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Amid a spate of default headlines, China`s shadow banking sector is slowing, but loans overall continue to grow amid a delicate policy dance between economic growth and tightening credit.

“On the one hand, (regulators) try to control and taper down on the China shadow banking system side and on the other hand, they need to pump liquidity into the system to ensure the rates do not spike up too drastically,” said David Poh, regional head of asset allocation at Societe Generale private banking. “This is like a fine balance between the two.”

The latest loan data seem to suggest fresh caution on lending. Total credit formation slipped to a four-month low of 938.7 billion yuan (around USD153 billion) in February, up 17.1 percent on year, but slower than January`s 17.4 percent rise, hurt by slowing property sales and as shadow lending slipped. January typically sees higher lending activity, in part due to the Lunar New Year holiday distortion.

Combined January and February shadow-banking credit fell 11.3 percent on year, according to data from Nomura. The decline followed news of several near and partial defaults on shadow banking products.

But even as regulators seek to rein in riskier shadow banking lending, especially to sectors suffering from overcapacity, such as coal and property, they have also surprised the market by pushing the currency lower.

“Rampant currency intervention by the People`s Bank [of China] caused interbank interest rates to plummet towards the end of last month,” Capital Economics said in a note. “If the People`s Bank [of China] keeps this up, then looser monetary conditions are likely to support a rebound in credit growth in the `shadow banking sector,`” it added, although it noted it expects the intention was to deter speculative inflows and that the yuan will strengthen again later.

Poh also expects efforts to tamp down riskier credit may not be entirely successful as the liquidity used to keep bank loan rates under control is likely to end up directed toward higher yielding options.

“What they try to pump into the system to ease the monetary policy side will eventually flow into markets and sectors that require the most credit – the coal companies, the real-estate sector,” Poh told CNBC. “These are the ones that have a shortage of cash currently. This will push the rates much higher from here.”

Others have also noted China`s policy is struggling with conflicting goals.

“The government is trying to do two things at the same time. One is it`s trying to contain credit growth,” said Bruce Kasman, chief economist for global research at JPMorgan.

“At the same time, though, the steps they were taking to tighten credit was encouraging money to flow in. It was encouraging upward pressure on the currency and now they`re trying to offset that by doing things to increase liquidity,” Kasman told CNBC. “The question is can they do one without going against their goal on the other?”

He believes efforts to keep credit from overheating are further complicated by the government`s economic growth target of 7.5 percent for the year.

“They`re not really willing to sacrifice growth,” he said. “There`s still a strong desire to keep this job machine running, to keep this economy growing. I think the right question to ask is how long can you go without it hitting a wall and I think the answer is I don`t know.”

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Football clubs can’t buy success: Study

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Piling cash into Australian Football League (AFL) clubs only has a modest impact on team success, University of Melbourne research has found.

According to a recent study, which analyzed football department spending and the on-field success of AFL clubs between 1994 and 2011, the clubs that spent 10 percent above average enjoyed a 9.5 percent increase in their winning ratio.

The chance of winning a premiership was 7 percent higher for the clubs that spent 10 percent more.

“Spending currently explains only a relatively small proportion of the variation in AFL teams` performances,” according to lead researcher Professor Jeff Borland, from the University of Melbourne`s Faculty of Business and Economics.

However, the researchers said that although the impact of money on AFL teams` success has been modest so far, it was likely to become stronger in years to come.

“In the mid-1990s and early 2000s the relation between clubs` spending and their performances was too small to be accurately measured,” Professor Borland said. “But by the late 2000s the relation was stronger and had become statistically significant.”

Borland said the growing trend was not a welcome one for the AFL, in his opinion, and said the AFL needed to take further action to address differences in spending between clubs was the correct path.

“We don`t want this trend to continue. So the AFL needs to strengthen its equalization policies,” he added.

CNBC contacted the AFL who said the issue of clubs being able to compete on a level playing field, in terms of their ability to spend in their football department, has been a major item on their competition`s agenda for some years.

“Our work with the clubs on this subject has been in place for nearly a year and at our meeting in Adelaide last week to coincide with the Annual General Meeting, broad agreement was reached across the competition to further ensure all teams have the chance to compete,” said Patrick Keane, media manager at the AFL.

In a statement released following the meeting, the AFL Commission chairman Mike Fitzpatrick said achieving greater competitive balance amongst the 18 teams had dominated the thinking of the Commission in 2013 and that progress was continuing in formulating a model to enable all fans to have a reasonable expectation that their team has a good chance of winning on any given day or night, regardless of the club`s financial strength.

The University of Melbourne`s Borland added other factors including club management and coaching are likely to be just as important for a team`s performance.

“So equalization policies also need to make sure that clubs are managed well and are spending their money wisely,” he added.

– By CNBC`s Katie Holliday: Follow her on Twitter @hollidaykatie

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Yuan weakness adds wrinkle to EM debt concerns

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Yuan weakness may put a spike in some companies` carry trades, adding another wrinkle of concern even as currency volatility has put emerging market corporate balance sheets under the microscope amid rising offshore debt loads.

“We have warned investors that the level of corporate indebtedness within emerging markets would mean that a close eye should be kept on corporate solvency,” Jefferies said in a note.

With Shanghai Chaori Solar Energy becoming the first Chinese company to default on its offshore bonds, the role of yuan carry trades – or bets that the Chinese currency would continue to appreciate – are also a concern, the bank said.

The yuan, also known as the renminbi, unexpectedly weakened recently, depreciating around 1.4 percent against the US dollar since the beginning of February. The move caught many investors off guard as yuan appreciation was widely seen as a one-way bet. The currency has attracted considerable foreign investor demand in recent years on its steady appreciation and relative stability.

Jefferies noted companies such as palm oil player Wilmar International have benefitted from the yuan`s appreciation.

“In 2013, Wilmar paid a net interest expense of only US$19 million on US$14 billion of net debt on its books. This is because it earned over 5 percent interest income on its US$12 billion of renminbi deposits while paying just 2.2 percent interest on US$26 billion of largely U.S. dollar-denominated short-term debt,” the bank said. “If the renminbi appreciation trend were to reverse, as it has done recently, Wilmar`s net interest expense could potentially spike, unless its treasury moves quickly to mitigate the exposure.”

The figures may be subject to some interpretation. “We will not be able to confirm the figures in the Jefferies report as they are the analysts` own calculations,” a Wilmar corporate communications representative said via email.

But the investment bank noted that overall, Hong Kong banks have loaned over $400 billion since the US began its quantitative easing program or around 20-25 percent of its annual gross domestic product every quarter since 2010.

“Some of this lending has been through Dim Sum bonds, loans and trade financed. Wilmar`s financial actions are probably just the tip of the iceberg,” Jefferies said.

Concerns over the level of emerging market corporate debt have been heightened as many emerging market currencies have weakened as the US Federal Reserve began unwinding its quantitative easing program.

Data from the Bank for International Settlements (BIS) show emerging markets` international corporate bond issuance rose to around USD 335.6 billion in 2013 from USD 151.5 billion in 2010, even as the average credit quality has been deteriorating.

“In an environment of rising global interest rates and emerging market currency depreciation, this hard currency debt could become increasingly difficult for borrowers to repay,” Nomura said in a note last week.

To be sure, not everyone believes the level of corporate debt in emerging markets is a matter of great concern.

“The BIS are sort of leverage scolds,” said Tim Condon, head of research for Asia at ING Financial, adding he isn`t concerned the corporate debt levels will become a macro issue.

He noted the renminbi has appreciated, with few interruptions, for around eight years. “That is bound to have attracted some speculative positions behind it,” he said. “I`m sure some corporates have done too much of that – and some individuals – but I`m not sure micro distress is a macro problem.”

He`s not alone. “As global interest rates rise, emerging market corporate debt costs will rise,” noted Lorraine Tan, director of equity research at SandP Capital IQ. But she added, while that would make it more difficult for companies to raise capital ahead, “I don`t think it should impede current instruments.”

She expects rates will rise in “baby steps,” and that it wouldn`t be quickly enough to sink Asian companies. Within China, savings rates are also still controlled by the government and those rates also aren`t likely to move quickly enough to become a major risk factor, she noted.

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1
Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

No sign of flight MH370 as search efforts doubled

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The mystery surrounding Malaysia Airlines flight MH370 mounted on Tuesday as the search effort involving 10 countries expanded its reach.

More than 70 aircraft and ships are involved in the search, which has so far failed to find any sign of the Boeing aircraft that lost contact with air traffic control en route to Beijing from Kuala Lumpur on Saturday.

(Read more: Why a high-tech jet is so hard to find)

“There are no traces and no objects that we have picked up from the sea that comes from the aircraft concerned,” Azharuddin Abdul Rahman, director general of Malaysia’s Civil Aviation Department, told CNBC in a telephone interview.

“I hope everybody will stay patient, we are doing our work, we are intensifying our search and we will not stop until we find something from the aircraft,” he added.

The search area radius for the missing plane has been expanded to 100 nautical miles to cover a larger area of the Gulf of Thailand between Malaysia and Vietnam. Some experts say that search area should be expanded even further.

Amid reports about possible sightings of debris, one compelling lead turned out to be inconclusive. Malaysia’s authorities said late on Monday that oil slicks spotted off the coast of South Vietnam were not connected to the missing plane.

“We have inputs around the world from satellite images, so far we have received two reports this morning,” said Azharuddin, adding the reports have proved inconclusive.

News conference postponed

A news conference scheduled for 10 am local time on Tuesday was postponed indefinitely, suggesting that Malaysian authorities have no new news to offer at this stage.

“The mere fact that this is still a search and rescue [operation] rather than a disaster, underlines how uncertain the authorities are as to what could have happened to this airplane,” Alistair Newton, senior political analyst at Nomura told CNBC.

Malaysia’s chief investigator told CNBC he could not say at this stage whether the nature of the operation would change from search and rescue.

“We have to have a very deep analysis of what is going on, what is expected for the next few days,” Azharuddin said.

Flight MH370 disappeared early on Saturday, about an hour into its flight from Kuala Lumpur, after climbing to a cruising altitude of 35,000 feet.

The aircraft carrying 227 passengers and 12 crew members had people from 14 nationalities including at least 152 Chinese, 38 Malaysians, seven Indonesians, six Australians, five Indians, four French and three Americans, according to Malaysia Airlines.

“It’s actually beyond perplexing,” said Mark Weiss, civil aviation lead at defense consulting firm The Spectrum Group. “I did fly the Boeing 777… I am very familiar with the aircraft, and being familiar with the aircraft I am very uncomfortable, that airplane just doesn’t fall out of the sky.”

 Adding to the mystery of the Malaysia Airlines plane is news that at least two people on board were traveling on passports stolen from an Austrian and an Italian. According to media reports, authorities are investigating those passengers’ thumb prints.

(Read more: Passports are weak link in overseas airports)

Focus on emergency transmitter

Experts voiced their concern that no signal from the aircraft’s emergency locator transmitter had yet been located.

“The emergency locator transmitter is probably continually pinging now. It’s perhaps in a great depth of water, and the search is located far afield if they are not currently locating that,” said Weiss at The Spectrum Group.

(Read more: Will Malaysian Airlines investors endure tragedy?)

 “If you remember what happened on the Air France 447 flight, it was a number of days before they found wreckage and it was quite some time before they were able to get the pinging from the electronic transmitter,” he added, referring to the Air France flight that went missing over the Atlantic in 2009.

Assistance teams from the U.S. National Transportation Safety Board (NTSB), Boeing and U.S. Federal Aviation Administration arrived in Malaysia on Monday to help in the investigation.

“They [the NTSB team] would work in conjunction with them [Malaysian authorities] in trying to determine a trajectory pattern based on whatever radar info is available and try to narrow down a search area to the most likely places.” said Greg Feith, a former senior air safety investigator at the NTSB in Denver, Colorado.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow