Month: August 2015

China pumps cash into economy for 2nd time in week

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

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China’s central bank said on Friday that it injected 60 billion yuan (USD 9.39 billion) into interbank money market via short-term liquidity operations (SLOs).

The seven-day loans have an average interest rate of 2.35 percent, the People’s Bank of China (PBOC) said in a statement on its website.

This marks the second SLOs loan this week as the central bank has injected another 140 billion yuan on Wednesday.

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

This is why BOJ will have to turn on stimulus taps again

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

Asia stocks extend recovery on China, Wall Street gains

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

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Asian stocks extended their recovery into the final trading day of the week as investors cheered a second day of gains in Chinese and US markets.

China’s benchmark Shanghai Composite spiked more than 1 percent in early trade on Friday, building on a 5.4 percent gain in the previous session following news that the People’s Bank of China purchased stocks from big firms and requested state-owned banks to buy more yuan on its behalf late on Thursday.

“Chinese markets could underpin Asia once again, with the Stabilization Fund speculated at buying blue chip stocks yesterday [Thursday],” Chris Weston, IG’s chief market strategist commented in a morning note.

“I thought it was quite fitting that authorities want a stable stock market ahead of the September 3 war commemorations and while it hasn’t occurred of late, this time around I suspect authorities are going to get their wish. In the very short-term, I would not be betting against Chinese wishes.”

The mood in Asia was also lifted by Wall Street’s more than 2 percent gains on Thursday that brought major indices out of correction territory thanks to a strong revised estimate of second-quarter US gross domestic product (GDP).

To be sure, sentiment still remains fragile amid conflicting comments from Federal Reserve officials at a key meeting of central bankers at Jackson Hole. Kansas Fed President Esther George told CNBC on Thursday that interest rates should be normalized in September, one day after New York Fed chief William Dudley said a interest rake hike next month seemed less compelling.

China markets 1 percent higher

Chinese investors seemed to brush off official data released at the market open showing a 2.9 percent annual decline in July industrial profits. Shenzhen and Hong Kong shares were also more than 1 percent higher in early trade, tracking Shanghai’s gains.

Energy stocks led the gains in Shanghai on the back of higher oil prices; Sinopec and PetroChina climbed 4 and 3 percent respectively while Yanzhou Coal rose more than 3 percent.

Hong Kong-listed BAIC Motor rallied 1 percent after Reuters reported it may be taking a stake in German carmaker Daimler.

Nikkei 2.3 percent higher

Japanese stocks breached the 19,000 mark as investors digested mixed July data released before the market open.

Household spending fell 0.2 percent on year, missing expectations for a 1.3 percent climb. But on the bright side, consumer prices were unchanged from a year earlier, defying expectations for a fall, and retail sales also came in stronger than expected.

Japan Display shot up 9 percent on reports it is buying Sharp’s distressed liquid crystal display (LCD) business. The latter’s share price rose 3.6 percent.

A weaker yen also lifted exporter stocks across the board; the currency traded at 121 per dollar, off Monday’s near seven-month high of 117.Mazda Motor and Takata both spiked 5 while Komatsu was 4 percent higher.

ASX gains 0.7 percent

Australia’s resource-heavy benchmark S&P ASX 200 index rose for a fourth straight session thanks to a rebound in metal prices overnight.

Copper rallied more than 4 percent, its largest daily gain in two years on hopes of a delayed US interest rate hike, sending Rio Tinto and BHP Billiton 4 and 5 percent higher respectively.

Brent and Nymex extended gains on Thursday after rallying overnight, helped by the prospect of lower Nigerian crude exports. That saw energy producers like Oil Search and Beach Energy jump 6 and 8 percent respectively.

Atlas Iron added 19 percent after announcing progress in its plans to cut costs and increase production.

Supermarket chain Woolworths rose 0.6 percent after reporting a 12.5 percent decline in full year profits, the first drop in nearly two decades.

Kospi up 1.2 percent

South Korean stocks also gained for a fourth consecutive session, on track to end the week more than 2 percent higher.

Among large-cap stocks, steelmaker Posco increased nearly 4 percent while heavyweight Samsung Electronics rose 1.3 percent.

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

Oil prices surge 7%, US crude rises above $41

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

Dow futures briefly add more than 200 points after GDP beat

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

Revealed: The world’s cheapest emerging market

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

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If there`s one good thing to come out of the emerging market rout, it`s cheaper valuations.

The MSCI Emerging Markets Index (Toronto Stock Exchange: XEM-CA)`s 11 percent retreat in local currency terms so far this month has pushed its 12-month forward price-to-earnings (P/E) ratio to 9.4 a touch below its 5-year average of 10, according to Capital Economics.

The valuation gap between MSCI World Index – which tracks 23 developed markets and MSCI Emerging Markets is now at its widest point since before the global financial crisis.

The MSCI World Index is trading at a forward P/E ratio of 13.9. A higher P/E ratio implies that stocks are relatively pricey compared with earnings.

Read More: Why emerging market currencies are collapsing

“Emerging market equity valuations are no longer stretched either in an absolute or relative sense following the summer sell-off,” said John Higgins, chief markets economist at Capital Economics.

“Once the recent volatility in global markets settles down, we think that these valuations could rise, leading to some outperformance of EM equities in the months ahead,” he said.

So, which is the cheapest market then?

Of all the major emerging equity markets surveyed by the research house, Russia is currently the cheapest on an absolute basis. The forward P/E ratio for the MSCI Russia Index stands at 4.9 – compared with its 5-year average of 5.2.

Capital Economics` findings are based on an analysis of 20 individual MSCI EM country indexes. The MSCI Egypt Index follows in second, with a forward P/E ratio of 7.3; however, it remains above its 4.3 long-term average.

The MSCI China Index is not far off, with a forward P/E ratio of 7.8, 13 percent below its historical average of 9.

The MSCI China index has a lower P/E ratio than the Shanghai Composite, the most widely tracked stock index in the mailand.

That is because the MSCI index largely tracks Chinese companies listed in Hong Kong, or H-shares, which typically trade at a discount to A-shares – Chinese companies listed in the mainland.

The markets that have fallen furthest below their long-term averages are the Peru, Colombia and Taiwan.

The MSCI Peru, MSCI Colombia and MSCI Taiwan indexes are trading at a forward P/E ratio of 9.4, 11.2 and 9.9 or 32 percent, 25 percent and 22 percent below their 5-year mean, respectively.

Mikio Kumada, executive director and global strategist at LGT Capital Partners agrees emerging market equity valuations seem far more reasonable following the recent selloff.

“Valuations have corrected a lot in EMs, China H-shares in particular look attractive now that they`re even cheaper,” he said.

However, Kumada says he wouldn`t go as far as predicting outperformance of emerging market equities relative to their developed market counterparts based on the dip in stock prices.

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

Here’s how to pick opportunities in India’s sell-off

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

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With Indian equities dragged into the emerging market bloodbath, the first impulse may be to sell, but here’s one bank’s advice on how to identify opportunities amid the downturn.

“The easiest way to identify beneficiaries of such a market fall is to look at companies which benefit from a fall in commodity prices or a lower rupee,” said Nomura analysts led by Prabhat Awasthi.

The recent bout of global risk aversion, triggered by concerns over an impending U.S. rate hike and China’s economic slowdown, has had a knock on impact on commodity prices, equities and emerging market currencies – and India hasn’t been spared.

The benchmark BSE Sensex has declined almost 9 so far this month, hitting a one-year low earlier this week. Meanwhile, the rupee has depreciated over 3 percent against the greenback over the same period.

The fall in India’s stocks has been rather indiscriminate across sectors, said Awasthi. Following the recent pullback, the Sensex is trading at a one-year forward price-to-earnings ratio of 14.8 – a 10 percent discount to its five-year average, according to Nomura.

Nomura highlights five stocks that have become fundamentally attractive but also have earnings upside if the current macro backdrop of a weaker rupee and lower oil prices were to stay.

The bank likes Asian Paints, Hindustan Unilever, HCL Tech, Mahindra & Mahindra and Ultratech Cement, predicting upsides of 2.1 percent, 17.8 percent, 21.4 percent, 29.3 percent and 18.1 percent for the stocks respectively over the next 12 months.

Awasthi isn’t the only strategist advising investors to dip their toes back into the Indian market following the recent pullback.

Sanjiv Duggal, head of Asian and Indian equities at HSBC Global Asset Management, believes this is an opportune time for investors with a three-to-five-year horizon.

“Markets have corrected, the rupee has weakened, so it’s throwing up an opportunity to deploy some money for the medium to longer-term,” said Duggal, who manages three funds at the bank – the HSBC Global Investment Funds: Asia ex Japan Equity, HSBC Global Investment Funds: Asia Pacific ex Japan Equity High
Dividend and HSBC Global Investment Funds: Asia Pacific ex Japan Smaller Companies.

There are two main catalysts that could drive Indian equities in the coming months, said Duggal.

The first is the passage of the goods and services tax (GST) bill that seeks to replace the present regime, where myriads of federal and state tax levies push up the cost of products and services, with a national sales tax. The government has set an April 2016 deadline for rolling out the GST.

“People have been waiting for this for a few years, so when it finally happens, that could be a game changer,” said Duggal. “It widens the tax base in India, which is good for a fiscal point of view. It will help bring in foreign investment as well.”

The other catalyst is a recovery in corporate earnings, driven by a pickup in domestic investment as the government clears stalled projects in areas such as infrastructure and manufacturing.

“Indian earnings have gone through a bit of downturn as the economy slowed down, so earnings growth for the past few years has been very disappointing, so we think now things will revert back to mean,” said Duggal.

“On the back of that we think markets should give you on average 15-20 percent per annum over the next 3-5 years.”

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

Asian mkts rebound, with Shanghai hovering near 3000 level

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

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China’s Shanghai Composite index fluctuated around the critical 3,000 mark early Thursday, tracking the positive sentiment across Asia underpinned by Wall Street’s biggest one-day gain since 2011 overnight.

Overnight, Wall Street made a stunning recovery, following six consecutive days of declines that pushed the major averages into correction territory.

The Nasdaq Composite led gains with a rise of 4.24 percent, while the blue-chip Dow Jones Industrial Average and S&P 500 climbed 3.95 and 3.90 percent, respectively. The S&P 500 emerged out of correction territory on Wednesday, after sinking into correction during Monday’s selloff.

“One reason was that [New York Federal Reserve President] William Dudley, an influential voice on the Federal Open Market Committee (FOMC), said in a speech that a rate hike in September seems ‘less compelling’ in light of market volatility and foreign developments. Secondly, U.S. durable goods and non-defense ex-aircraft capital goods both outperformed expectations, suggesting that investment momentum has picked up,” analysts at Mizuho Bank wrote in a note.

Shanghai Comp jumps 1.5 percent

The benchmark Shanghai Composite traded in positive turf, but remain just shy of reclaiming the key 3,000 level as gains fluctuated.

Blue chips mostly extended gains on the back of fresh monetary stimulus from the People’s Bank of China (PBoC) late Tuesday. Bank of China and China Citic Bank rose 1.1 and 2 percent respectively, while Industrial & Commercial Bank of China (ICBC), the world’s largest bank by assets, ticked up 0.3 percent.

PetroChina, which has the heaviest weighting of any Chinese company in the Shanghai index, ticked down modestly ahead of the release of half-year earnings.

Among China’s other indexes, the CSI300 and smaller Shenzhen Composite rose nearly 2 percent each. Hong Kong’s Hang Seng index also elevated 2.4 percent.

“Technically, the stock market should have reached the bottom… Now that the PBOC has cut interest rates and reserve requirement ratio (RRR), people will think that there’s some kind of support from the government and since people have accumulated a lot of cash, they may start to bottom fish,” Arthur Kwong, head of Asia Pacific equities at BNP Paribas Investment Partners, told CNBC Asia’s “Squawk Box.”

Nikkei leaps 1.9 percent

Equity markets in Japan outperformed in early trade, with the benchmark Nikkei 225 index jumping amid a broad-based rally, while the Topixindex surged 2.4 percent.

Export-oriented stocks attracted hefty buy orders; Toyota Motor led gains among the carmakers, up 3.5 percent, while Sony, Panasonic andCanon elevated between 1.9 and 4.5 percent.

Banks and index heavyweights also propelled the bourse higher. SoftBank and Fanuc charged 3.3 and 1.2 percent, respectively, whileMitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group climbed 3.3 and 2.8 percent, respectively.

Meanwhile, the Bank of Japan’s (BOJ) 2 percent inflation target can be achieved by next year despite the continued drop in global oil prices, BOJ Governor Haruhiko Kuroda said during a speech in New York. It is “far from the case” that the central bank will fail to meet its target, Kuroda added.

The Japanese central bank expects to inflation to hit 2 percent during the April-September first half of next fiscal year, but many analysts see the goal as a tall order.

ASX rises 1.4 percent

Australia’s S&P ASX 200 index widened gains rapidly within minutes after the market open, supported by a pick-up in buying across a majority of sectors.

Australia and New Zealand Banking and National Australia Bank bounced up more than 2 percent each, while Commonwealth Bank of Australia and Westpac leaped 1.6 and 1.9 percent, respectively.

Oil counters took the cues from their U.S. counterparts to rise; Woodside Petroleum and Santos rose more than 3 percent each, while Oil Search advanced 2.6 percent.

However, producers of the precious metal surrendered gains after gold slipped 2 percent overnight amid a stronger dollar. Evolution Miningand Newcrest Mining tumbled 5.5 and 2.1 percent, respectively.

Kospi gains 1.2 percent

South Korea’s Kospi index notched up to a one-week high, a day after posting its biggest single-day rise in two years.

Among gainers, SK Hynix opened up 3.3 percent, while consumer discretionary plays such as AmorePacific and LG Household & Healthcare advanced 3.6 and 2.5 percent, respectively.

However, a mixed performance among other key sectors limited the bourse advances. Blue chip stocks such as Posco fell 1.4 percent, while refiners SK Innovation and S-Oil eased 0.2 and 0.9 percent, respectively.

Rest of Asia

Tracking the upbeat sentiment in the region, Taiwan’s weighted index and Singapore’s Straits Times index opened up more than 1 percent each.

Malaysia’s FTSE Bursa Malaysia KLCI index edged up 0.3 percent in early trade.

Meanwhile, the Philippine economy grew 5.6 percent from a year ago in the second quarter, in line with expectations.

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’s Dudley: September rate hike looks less compelling

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

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A September rate hike is looking less compelling, according to William Dudley, president of the New York Federal Reserve

A voting member of the Federal Open Market Committee, Dudley addressed the Fed’s potential tightening – especially considering the recent collapse in US equities and international financial turmoil – in a Wednesday press briefing.

“From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago,” he said.

“But normalization could become more compelling by the time of the meeting as we get additional information on how the US economy is performing and more information on international and financial market developments, all of which are important in shaping the US economic outlook,” he added.

Immediately after Dudley’s comments on a September move, stocks spiked, but then pulled back. Additionally, the treasury curve steepened, meaning that traders were betting on a rate hike being put off.

RBS said the futures showed a 20 percent chance of a September hike—the figure stood at 25 percent before Dudley’s comments.

Responding to a question about whether a Fed move will come in a subsequent 2015 FOMC meeting, Dudley said he “really” hopes to raise rates this year, but “let’s see how the data unfold before we make any statements about exactly when that might occur.”

He emphasized that the Fed’s decision-making procedure remains data dependent, and said that data points have largely been positive, but “you also have to look at all the other things that could potentially affect the economic outlook.”

Read More: Bridgewater’s Dalio says Fed will ease, not tighten

“There, international developments and financial market developments do have relevance because they can impinge and affect the economic outlook,” he explained.

As for inflation, Dudley said the headline rate remains low because of the drop in oil prices, and the core rate remains flat. But weak oil and a strong dollar will not last “indefinitely,” so the he said he expects inflation to rise.

International developments can affect our inflation, he said, pointing to the slowdown in China’s growth hurting global commodity prices and emerging market economies. With these events, the dollar strengthens against other currencies, and consumers see effects in the US, he said.

Dudley declined to offer a view on why the stock market has suffered in recent sessions, saying that “obviously short-term stock market volatility doesn’t really have significant implications for the US economic outlook.”

“The stock market really has to move a lot and stay there for it to actually have implications for the US economy,” he said, adding that such a move would weigh on the so-called “wealth effect.”

Dudley said he hasn’t yet seen any effects of the stock drop in economic data, but added that there may be some impact in the University of Michigan consumer confidence numbers next week.

Still, he emphasized that the current turmoil is dissimilar to the financial crisis of 2008 because the genesis of the the crash is abroad, not in the US, so “we have to assess” how those international developments could hurt domestic growth.

Responding to a question about the economic slowdown in China, he said Beijing has a challenging task ahead to reorient the economy, but he has faith in the leadership there.

“The good news, though, is that the people there are very capable and they do have quite a bit of resources in terms of what they can do in terms of policy tools to use to help facilitate this transition,” he said. “I think I’m reasonably confident in their ability to do so.”

Read More: Opinion: The Fed should still hike in September

Before the statement on Fed policy, Dudley addressed the health of his region, highlighting New York City’s growth.

“While the Great Recession was the deepest and longest recession in modern history for the nation as a whole, New York City bucked that trend to a surprising degree, and did it with little help from Wall Street,” he said.

He cited tech companies in the so-called “Silicon Alley,” singling out Etsy, as signs of non-finance growth in the city.

Still, he said “pockets of weakness remain” in his region, including Binghamton in upstate New York, which he said “has had no meaningful rebound in employment.”

Additionally, the US Virgin Islands and Puerto Rico “remain in a deep economic slump,” he said, but employment “appears to have steadied” recently. Puerto Rico’s outlook, however, is uncertain given its financial crisis.

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