Month: November 2014

Warning: Asian currencies set for battering

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

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Currencies across Asia are set for a beating, buffeted by a combination of the G3 central banks, a stronger US dollar and newly volatile Chinese yuan, HSBC said.

“It will be slim pickings in terms of which Asian currencies to like next year. Even the yuan will be predisposed to bouts of higher volatility, which could further upset the region`s currencies,” HSBC said in a note Thursday. “While we had expected most Asian currencies to trade on the back foot against the US dollar, some are now even starting to underperform the euro.”

Many of Asia`s currencies have had a tough week since the Bank of Japan (BOJ) announced a fresh batch of stimulus, with the Singapore dollar shedding 1.5 percent against the US dollar, the Thai baht losing 1.1 percent, the Malaysian ringgit dropping 2.2 percent and Indonesia`s rupiah slipping 0.7 percent.

Not just the Fed

Currencies with sound external balances, such as the yuan, Korean won, Taiwan dollar and Singapore dollar, were expected to hold up better against the Federal Reserve`s tapering of its asset purchases this year, HSBC said.

But it added, “It has become steadily clearer that Asian currencies are held hostage to more than just the Fed. The ECB (European Central Bank) has become increasingly important and suddenly so too has the Bank of Japan.”

ECB President Mario Draghi this week indicated the central bank may take further aggressive stimulus measures, with many analysts expecting a quantitative easing program, including bond-buying, is in the works. The ECB is already buying asset-backed securities.

Draghi`s comments followed the Bank of Japan (Tokyo Stock Exchange: 8301.T-JP)`s surprise move last Friday to expand an already large stimulus program by increasing asset purchases. It plans to increase purchases of Japanese government bonds (JGBs) to 80 trillion yen annually from the current 50 trillion yen as well as tripling purchases of exchange-traded funds (ETFs) to 3 trillion yen and tripling Japanese real-estate investment trust (REIT) purchases to 90 billion yen.

“This muddies the picture as to which Asian currencies should outperform,” HSBC said. “It only fuels a stronger US dollar and even those Asian currencies with sound external balances (the Korean won, the Singapore dollar and the Taiwan dollar) cannot ride out the storm. It is all proving to be a nasty combination for many Asian currencies.”

Furthermore, with inflation falling and growth slowing across the region, many policy makers will be less inclined to step in to curb currency weakness, HSBC said.

Will the yuan stand out?

The yuan will be the “elephant in the room,” HSBC said.

“So far the redback has been resilient and it continues to be our preferred currency to outperform in the region, on account of prudent policy, strong underlying inflows, high yields and an ongoing reform and internationalization story,” it said. But it noted that authorities are set on creating more “two-way” volatility.

“If that starts to happen in an environment when other Asian currencies are already under pressure, as they are now, then it will only upset the apple cart further,” it said.

Others also expect Asia`s currencies face significant headwinds.

“We remain tactically bullish on global emerging markets,” Societe Generale said in a note Thursday. But it added, “In the absence of global growth signals, there is little support for emerging market foreign-exchange exposure from a fundamental perspective, however, especially when one factors in the easing bias of many EM central banks.”

But Societe Generale expects Asian currencies will be more resilient to US dollar strength compared with other regions.

“A persistently weaker Japanese yen could act as drag on regional currency performance, but aside from the Korean won, the Malaysian ringgit, and the Singapore dollar (the worst performers since the surprise BOJ easing) the direct impact should be minimal,” it said.

In a separate note, Societe Generale noted it doesn`t expect significant inflows into emerging Asia from asset-allocation changes by Japan`s Government Pension Investment Fund (GPIF). It estimates as much as USD 14 billion could head to the region based on the fund`s equity and bond index benchmarks, but that`s dwarfed by the USD 318 billion that flowed into emerging Asia excluding Hong Kong and Singapore over the past two years.

-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

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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

Time ripe for US-based cos to invest in India: NRN Murthy

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

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N R Narayana Murthy, the billionaire founder of Infosys, said Thursday that he expects robust growth ahead for India.

“I think there are opportunities outside India, as well as in India,” he said. “In fact, some of the largest projects that most Indian software companies are doing are in India.”

On CNBC’s “Fast Money,” Murthy expressed faith that Narendra Modi, India’s new prime minister, would lead the country toward creating a more business-friendly climate.

“Till now we had coalition governments,” he said. “But this time we have a government which has absolute majority in the parliament. He’s also a man of action. He has enunciated a program called digital India where he wants to bring the power of Internet and broadband communications to the benefit of every Indian.”

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Murthy said the time was ripe for US-based companies to invest in India.

“Therefore, I think this is the right time for American companies to add even more value to India,” he said. “Already, we have almost every high-tech company there. We have GM. We have Ford. We have lots of American companies there, but we need even more of them because they bring a lot of value to our economy.”

Murthy, who founded Infosys in 1981 with USD 1,150 and grew it into a market capitalization of USD 38.6 billion, said that he expected the company to continue its upward trajectory.

Read More: Who’s not on the CNBC NEXT List?

 “There is opportunity in India as well opportunity outside of India because right from Day One, we leveraged the part of globalization which is all about sourcing capital from where it is cheapest, sourcing talent from where it is best available, producing where it is most cost-effecting and selling where the markets are without being constrained by national boundaries,” he said. “That’s how I define globalization, and my company was based on that principle.”

Murthy was named No. 13 on the CNBC First 25 List of visionary leaders who shaped the world of business and finance since 1989, the year CNBC started.

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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

ECB leaves key rates unchanged; Draghi warns on growth

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

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The European Central Bank held its key interest rates at record lows Thursday amid media reports of dissent over President Mario Draghi’s leadership and communication style.

The euro zone’s benchmark lending rate will remain at 0.05 percent, while its deposit rate will stay at negative 0.20 percent—effectively charging lenders for holding deposits with the central bank.

At his regular press conference, Draghi said heightened unemployment would dampen the euro area’s economic recovery and that the unstable geopolitical situation would also weigh—particularly on investment.

Read More: Live blog: BoE, ECB to take center stage

Draghi added that data showed growth momentum in the euro zone had weakened since the summer, leading to a downward revision of GDP estimates until 2016.

Citing ECB sources, Reuters reported on Tuesday that euro area central bankers were planning to challenge Draghi over what they see as his secretive management style and erratic communication. The agency said central bankers hoped to persuade Draghi to act more collegially at the ECB policy meetings that took place on Wednesday and this morning.

Conflict within the 24-member ECB Governing Council could limit Draghi’s scope for bolder policy action in the coming months. Analysts continue to debate whether the ECB will instigate a U.S.-style sovereign bond-buying program.

The Bank has already announced unconventional stimulus measures, including asset-backed security (ABS) purchases, in an attempt to boost growth and inflation in the euro area.

Read More: Ben Bernanke: QE will be difficult for the ECB

Inflation remains well-below the ECB’s targeted level of close to 2.0 percent, coming in at 0.4 percent in October. The region’s economy failed to grow in the second quarter of this year, and both Italy’s and Germany’s economies shrunk.

At his press conference on Thursday, Draghi said that the ECB’s newly announced purchasing programs would last for at least two years.

Also on Thursday, the Bank of England opted to leave its benchmark interest rate unchanged at 0.5 percent and hold the size of its bond portfolio at £375 billion ($597 billion).

Attention will now shift to the Bank of England’s inflation report, which will be published next Wednesday. Investors hope this will shed light on when the Bank might start hiking rates.

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

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

More jobs data, ECB loom on Wall Street

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

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Wall Street looked set to turn lower at Thursday’s market open, as caution over the European Central Bank’s forthcoming announcement overshadowed record gains on Wednesday.

Read More – Track US stock index futures

While no interest rate move is expected from the ECB, analysts will look for hints on further stimulus after recent weak economic data. Former Federal Reserve Chairman Ben Bernanke said late on Wednesday that the ECB would have a rough time implementing US-style quantitative easing.

“The ECB is set to remain on hold. However, given still low growth and inflation, Draghi is likely to keep the door open to further actions,” said analysts at Societe Generale in a note.

Meanwhile, the Dow and S&P 500 rose to historical peaks overnight, after the Republicans take control of the Senate, and a better-than-expected jobs report. Private employers added 230,000 jobs in October, a seventh month of job creation. The data came before Friday’s non-farm payrolls report, which is expected to show slower job gains in October.

On Thursday, there will also be job market indicators, with the Challenger job cuts report for October out at 7:30 a.m. ET and weekly initial jobless claims at 8:30 a.m.

AOL and Wendy’s will post quarterly numbers before Wall Street opens on Thursday. Disney and Tekmira Pharmaceuticals will report after US markets close.

In addition, Fed official Charles Evans will speak publicly in Chicago. Also due is more national accounts data, with the preliminary readings for non-farm productivity and unit labor costs for the third quarter.

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

US midterm elections 2014: Republicans win the Senate

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

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NBC News has projected that the Republicans have taken control of the Senate, holding at least 51 seats with several more races still left to call.

The pendulum officially swung in favor of the Republicans with the projections that Joni Ernst had won an Iowa Senate seat, defeating Democrat Bruce Braley.

In the 113th Congress, from 2013 to 2015, the Democrats held 53 seats to the Republican’s 45—two senators identified as independents.

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The Republican Party also renewed its lease on the House on Tuesday night.

Experts told CNBC that a GOP-controlled Senate will look to pursue several legislative goals, including tax reform and energy infrastructure bills.

One area of interest will be what Republicans choose to focus on with the chamber’s banking committee. This could include reforming the Dodd-Frank legislation, said Mark Calabria, director of financial regulation studies at the Cato Institute.

Potentially more significant than any policy priorities, Calabria said, is that a Republican-led Senate will mean that regulators would now “try to maintain a good relationship with Congressional GOP.”

For more on the midterms elections, see the CNBC live blog.

This is a breaking news article.

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

Will Modi’s latest move boost India stocks further?

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

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Indian stocks have been on a tear this year and the government’s plan to implement its budget early could provide a further boost.

“Comments that the Indian government aims to implement its new budget from 1 April (three months early) should only add to the [positive] sentiment,” said Chris Weston, market strategist at IG.

“This [Nifty 50 index] still has great upside potential. Naturally there will be corrections, but buyers continue to step in and pay up for the earnings, with improving fundamentals,” he said.

India’s Nifty 50 surged 32 percent year to date and is Asia’s best performing index. By contrast, the second-best performing index, the Shenzhen Stock Exchange Composite index, is up 28.72 percent, while last year’s standout, Japan’s Nikkei, is only up 1.5 percent.

Read More: India goes from fragile to fabulous

Modi-mania

The election of Prime Minister Narendra Modi in May and his promise to boost India’s flagging economy through much-needed reforms underlie India’s stock market rally.

In July, Modi announced a budget of structural reforms aimed at reviving growth. A decision to speed up the budget process by three months – announced on Saturday – could see some of these measures rolled out sooner than expected.

“What investors are realizing is that, in a world that is pretty short of growth, you are seeing the best opportunities in India,” said Geoff Lewis, global market strategist at JP Morgan Asset Management.

“It’s an economy that’s turned around cyclically and also we are seeing a positive response to ‘Modinomics,'” he said, referring to Modi’s plan to unblock stalled infrastructure projects, attract foreign investment and revive economic growth.

Read More: Soaring India stocks have strategists on edge

India’s economy expanded a faster-than-expected 5.7 percent on year in the April to June quarter, recovering from its lowest growth rate in a decade in the previous quarter.

“If you compare against long-term averages in terms of price-to-earnings ratios, we think the Indian stock market is one of the stories where the fundamentals are still strong, so will be relatively supported,” added Lewis.

Stocks on the Nifty 50 index are trading at an average price-to-earnings ratio of 16.62 times earnings.

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Doubts remain

Other analysts doubt that speeding up the budget will greatly impact equity markets.

“The scope for any near-term gains from the budget may be checked because some of it has already been unveiled,” said Vishnu Varathan, market economist at Mizhuo Bank.

The external environment poses the greatest risk to Indian stocks’ good fortune, he added.

“If we don’t see euro zone growth recovering sustainably there could be enough cause to question the optimism on India’s prospects,” he said. “Obviously the Bank of Japan’s move has contributed to the momentum in global equity markets, but if that momentum starts to waver we could see a bit of a pull back.”

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

Will Bank of Japan spark a currency war?

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

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The Bank of Japan’s (BoJ) stimulus blitz raises the specter of currency wars as a rapidly weakening yen threatens the competitiveness of export-driven economies, say strategists.

“Whenever you have these kinds of disruptive moves by central banks, there`s always going to be fall out effects,” said BorisSchlossberg, managing director of FX strategy at BK Asset Management.

Markets were caught off guard by the BoJ`s announcement on Friday that it would expandpurchases of exchange-traded funds (ETFs) and real estate investment trusts, extend the duration of its portfolio of Japanese government bonds (JGBs), and increase the pace of monetary base expansion.

The yen plunged nearly 3 percent against the USD on Friday and extended its selloff on Monday, falling to a fresh-seven year low in early Asian trade. It last traded at 112.71.

Yen vs won

“The hottest currency war today is Japan vs Korea. That`s probably the one to keep an eye on. The yen-won cross rate is very sensitive as Japan and Korea compete in a lot of key areas,” said Sean Callow, senior currency strategist at Westpac.

The Japanese currency has fallen around 20 percent against the won since the BoJ launched its unprecedented stimulus program in April 2013.

Currency strategists say the BoJ`s actions could encourage the Bank of Korea (BoK) to become more defensive against local currency strength through intervention in the foreign exchange market or a rate cut.

“We see increasing risks that it may cut rates by 25 basis points to 1.75 percent in coming months,” Young Sun Kwon, economist at Nomura wrote in a note late Friday, highlighting that Korea`s export momentum already looks weak.

Exports grew 2.5 percent in October from a year earlier, following a revised 6.9 percent gain in September, provisional data from the trade ministry showed.

South Korean authorities have been vocal about the negative impact of a depreciating yen. In late-October, President Park Geun-hye said low economic growth, low inflation and the weak yen are three main risks facing South Korea`s economy and corporations.

Asia`s other exporters

Other major exporting nations in Asia such as Taiwan and China may act to limit strength in their currencies.

“It remains to be seen whether Chinese exporters get upset about weakness in the yen and whether Chinese authorities will guide the currency lower,” said Callow.

The People`s Bank of China on Monday fixed the yuan mid-point at 6.1525, weaker than Friday`s mid-point of 6.1461 and previous close of 6.1135.

Geoffrey Yu, foreign exchange strategist at UBS agrees that South Korea will “have an issue” with yen weakness, but doesn`t think Chinese authorities will be as concerned.

“The PBOC and BOJ work quite well each other,” he said. “I think China would be much more concerned about where dollar-Thai bhat and Vietnamese dong trade.”

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

Cheaper EMs may not be a bargain

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

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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