Month: March 2016

The US central bank this week held its target short-term interest rate range at 0.25 percent to 0.5 percent. The Fed indicated it could hike twice this year, but as rates remain below historical averages, many market watchers have wondered what the Fed could do to respond to another potential slowdown.

Bernanke said the Fed could use forward guidance, or “talking down” longer-term rates while convincing markets that short-term rates will remain low. If economic weakness warranted a stronger response, the Fed may consider quantitative easing.

Russia’s central bank held interest rates steady on Friday, warning that inflation risks remained “high” and the oil price rise could be “unsustainable.”

The central bank kept its key rate at 11 percent , as widely expected by analysts.

In the bank’s statement accompanying the decision, it said it had made the decision “despite certain stabilization in financial and commodity markets and a slowdown in inflation, inflation risks remain high.”

The decision comes at a time of renewed hope for Russia’s beleaguered economy and businesses with oil and other commodity prices showing tentative signs of recovery.

Despite reasons to be cheerful, however, the central bank warned that “the current oil market still features a continued oversupply, on the backdrop of a slowdown in the Chinese economy, more supplies originating from Iran and tighter competition for market share.”

“This is why the certain recovery in crude prices seen in the recent weeks may prove to be unsustainable. In recognition of this, the Bank of Russia assumed in its baseline scenario the average forecast oil price of USD 30 per barrel in 2016 (below the current price), with its gradual rise to USD 40 per barrel to 2018.”

The ruble strengthened to 67.98 per US dollar following the decision. The central bank said in its statement that recent ruble weakness had also boosted inflationary pressures.

“Despite growing oil prices and ruble strengthening in the latest period, the accumulated weakening of the ruble, impacted by the drop in oil prices, between late 2015 and early 2016, is still putting pro-inflationary pressure on the economy, contributing to continued high inflation expectations.”

Ahead of the decision, analysts cited by TASS had noted that the case for holding rather than cutting rates was not clear cut, however, and the central bank did not rule out increasing rates last month.

Of particular concern is the shaky decline recently in the rate of inflation. While inflation has been steadily trending downwards, at 8.1 percent as of February, on a weekly basis inflation rose in early March signaling that the trend might not be as solid as hoped.

Housing prices in Australasia rose the most last year, with both Australia and New Zealand seeing climbs exceeding 10 percent, while prices slumped in Singapore and Taiwan, Knight Frank said Friday.

The average 12.4 percent increase in housing prices in Australasia compared with a global average of 3 percent in the 55 housing markets tracked in Knight Frank’s Global House Price index. Overall, housing price growth globally accelerated from a 2.3 percent increase in 2014, the report said.

Australia and New Zealand both ranked among the least affordable housing markets in the world when comparing house prices with income, according to the report, which used data from the Organisation for Economic Co-operation and Development (OECD).

Prices in Asia lagged, growing just 1.9 percent last year. While Hong Kong has long ranked among the world’s most expensive housing markets, price growth there slowed to 7 percent in 2015 from 17 percent a year earlier, Knight Frank said.

“The slower rate of growth is attributable to rising supply (more than 11,200 homes were completed in 2015), as well as China’s financial market volatility and the expectation of increasing interest rates,” the report said.

Singapore’s famed Changi Airport has kept its title of ‘World’s Best Airport’ for the fourth year in a row, the 2016 World Airport Awards revealed on Thursday.

Air transport research firm Skytrax, which conducts the annual World Airport Awards, picks its winner based on the number of votes sent in by travelers in what Skytrax calls the largest, global airport satisfaction survey.

“Changi Airport continues to innovate in both product and service options for its customers, and focus on making the customer experience at the airport as enjoyable and relaxing as possible,” said Edward Plaisted, CEO of Skytrax.

Asian airports dominated Skytrax’s list this year, taking six out of the top ten spots.

Coming in second was Incheon Airport in Seoul, followed by Munich Airport, Tokyo’s Haneda Airport, Hong Kong International Airport, Nagoya’s Chubu Centrair International Airport, Zurich Airport, London’s Heathrow airport, Osaka’s Kansai International Airport and Doha’s Hamad International Airport.

Changi’s many attractions makes it a tourist destination in itself, and is a source of pride for Singaporeans.

A movie theater, rooftop swimming pool, children’s playgrounds, foot massage machines, and music bar lounges are just some of the amenities weary travelers can enjoy among the airport’s three terminals.

Moreover, Changi is planning three major developments that it hopes will cement its title as world’s best airport in the coming years.

Next year, the airport will launch a fourth passenger terminal designed to meet the operational needs of both full service and low cost carriers. Terminal 4 will increase handling capacity to 82 million passengers a year, from 66 million currently, Changi said in a statement on Thursday.

In 2019, a mixed-use complex is due to open. Called the ‘Jewel Changi Airport,’ the building will be designed by world renowned architect Moshe Safdie, featuring a glass and steel facade. It will house one of the largest indoor collections of plants in Singapore, a five-story garden filled with thousands of trees, and a 40-meter high indoor waterfall.

Lastly, a fifth terminal is scheduled for completion in the second half of the 2020s. Set to be one of the largest terminals in the world, according to Changi, it is expected to increase total capacity to 135 million passenger movements per year.

Markets have zigzagged their way through the year so far, spooked first by fears the US Federal Reserve would tighten too much, then assuaged by predictions it wouldn’t move rates at all.

Now, Fed forecasts run the gamut, a CNBC survey has found, begging the question: Why isn’t there a consensus?

For one, the market signals have become a moving target.

“Markets are never wrong but they continue to change their minds about what the Fed will do this year,” DBS Bank said in a note Wednesday, ahead of the Federal Reserve decision due later in the global day.

“In January, Fed fund futures reckoned the Fed would hike 2.5 times by December. Six weeks later, all of those hikes were gone. Six weeks after that – today, that is – 1.5 hikes are back on the screen.”

There’s another reason there isn’t much agreement on what’s ahead: Many of the forecasts in the survey diverged too widely to meet easily at a median.

At the dovish end of the scale, BNP Paribas doesn’t expect an interest rate hike this year or next.

Asia markets were mixed Wednesday, following a weaker finish on Wall Street overnight as as traders await the US Federal Reserve decision due later in the US and news from the National People’s Congress meeting in China.

The US central bank is widely expected to stand pat on policy, but analysts will be closely watching the wording of the Federal Open Market Committee’s statement for cues on the direction ahead. That uncertainty is helping to keep markets constrained.

“No one appears to be making bets in front of the Fed, with just a little profit-taking,” Mark Matthews, head of research for Asia at Julius Baer, said in a note Wednesday. “For a knee-jerk up, the Fed has to say ‘no rate rises for a very long time.’ On the other hand, with any inkling of more tightening, the best result is flat. That leaves the risk-reward relatively poor in the short-term.”

The Australian S&P/ASX 200 was flat in early trade, with the materials subindex slipping 0.94 percent and the energy subindex down 0.44 percent. Those declines were offset by a 0.53 percent gain in the heavily weighted financial subindex.

Japan’s benchmark Nikkei 225 shed 0.47 percent, extending Tuesday’s 0.68 percent fall. Across the Korean Strait, the Kospi was up 0.49 percent in early trade.

Japanese exporters were mostly lower, with Toyota shares down 0.18 percent, Honda 1.59 percent lower and Nissan slipping 0.5percent.

Shares of electronics giant Sharp tumbled 9.21 percent after a report said that the Taiwan-based Foxconn may delay its Sharp takeover deal to get further clarity on its financial performance, reported Reuters.

In late February, Reuters had reported that Sharp had contingent liabilities worth around 300 billion yen ($2.66 billion) which had not been disclosed to Foxconn.

In the currency market, the Japanese yen held at the 113 handle against the dollar, after yesterday’s Bank of Japan decision to keep interest rates on hold. The dollar/yen pair traded flat at 113.08 as of 8:21 a.m HK/SIN time.

Down Under, the Australian dollar/US dollar pair was flat at 0.746 as of 8:23 a.m. HK/SIN time.

Resource producers were down, with shares of Rio Tinto lower by 1.02 percent, Fortescue falling 1.38 percent and BHP Billiton shedding 2.34 percent.

In the oil space, US crude futures climbed 1.43 percent to $36.86 a barrel, while global benchmark Brent was up 0.88 percent at $39.08 as of 9:45 a.m. HK/SIN time.

Some analysts believe oil prices will continue to sway market sentiment.

“Oil will remain a leading commodity and its movements will govern equity markets in the short term,” said Evan Lucas, market strategist from IG, in a morning note.

Overnight in the US, major indexes finished mixed, with only the Dow Jones industrial average higher, rising 0.13 percent. The S&P 500 closed down 0.18 percent and the Nasdaq composite fell 0.45 percent.

Policymakers at the US Federal Reserve are in danger of failing to see the real path of inflation rates and stoking market volatility in the process, according to new research by multinational investment firm Pimco.

According to a company blogpost, the central bank hasn’t fully understood the real reasons behind a recent collapse on the breakeven inflation rate — an important metric used to gauge longer-term trends in consumer price growth. This breakeven rate is the difference between the yield on a fixed-rate bond and an inflation-linked bond such as a Treasury inflation-protected security (TIPS).

“We believe the Fed’s dismissal of market-implied breakeven inflation rates may have increased volatility in the markets due to a loss of faith in either the Fed’s understanding of market signals or its desire to achieve its inflation goal,” Jeremie Banet and Mihir Worah, both portfolio managers at the Newport Beach-company, said in a blogpost on the company’s website late Monday.

“Confidence in the Fed’s analysis of market and economic data and its objectives is key to successful monetary policy. We believe the Fed may have undermined this,” they added.