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Upbeat economic data lifts world shares
Upbeat economic data lifts world shares (Reuters) / 5 September 2013 European government bond yields were at near 1-1/2 year highs on Thursday and the dollar clung close to six week peaks on a combination of a better global economic outlook, nervousness about Syria and pending central bank meetings. Russia and China, meanwhile, both warned the US ahead of the G23 meeting in St Petersburg that the end of the Federal Reserve’s bond-buying programme could have a profound impact on the global economy. The European Central Bank and Bank of England were both expected to leave interest rates unchanged, but investors were looking for statements reiterating pledges to keep rates low given recent stronger economic data. ECB President Mario Draghi “is going to want talk down the prospects of recovery a little bit and get people’s feet on the ground” said Will Hobbs, head of equities strategy at Barclays Wealth. European money market rates have been moving higher recently in response to stronger economic data and on expectations the Federal Reserve is set to begin unwinding its stimulus, possibly as soon as later this month. Analysts see little options for the bank other than just maintaining a soft tone in communication, sending German 10-year bond yields have raised to 1-1/2 year highs of 1.981 percent. Earlier the Bank of Japan voted unanimously to maintain its monetary stimulus, while declaring the world’s third-largest economy was on a recovery path, sending the yen briefly above 100 to the dollar, a six week low. In the emerging markets India’s new RBI began his tenure in spectacular fashion by unveiling measures to support the currency and the banking sector that sent the Nifty up 3.3 percent and boosting the rupee. The rupee rose to as high as 65.53 per US dollar, pulling well away from a record low around 68.85 set last week. The gain in Indian stocks and a slight rise in Tokyo’s shares after the BOJ decision helped lifted Asia equity prices by 0.6 percent, to near a three week high. European share markets were up 0.5 percent in early trade, gaining ground for the second day in a row and hitting its highest level since August 27. “People are waiting for cues from the central banks, and there is just no real trend on the market at the moment,” said Guillaume Dumans, co-head of research firm 2Bremans. The euro last traded at $1.3185, down slightly against the stronger dollar and not far from a six-week low of $1.3138. MSCI world equity index was up 0.1 percent following a second day of gains on Wall Street spurred by another set of upbeat USdata, which included the strongest monthly rise in car sales during August since October 2007. “Strong car sales in the US again lifted market confidence in the economy, and lifted expectations that the US Federal Reserve will start cutting back its stimulus this month,” said Isao Kubo, an equity strategist at Nissay Asset Management. Syria Action Markets remained cautious about Syria as a possible US military strike moved one step closer after a Senate committee voted in favour of action, clearing the way for a vote in the full Senate, likely next week. The possible military strike against Syria in reaction to its alleged use of chemical weapons and the Fed’s decision to reduce its stimulus were expected to dominate discussions at a meeting of leaders from the Group of 20 developed and developing economies in St Petersburg. In a note prepared for the meeting the IMF warned that emerging countries were particularly vulnerable to a tightening of US monetary policy. It urged strengthened global action to revitalise growth and better manage risks, adding some downside risks have become more prominent. US President Barack Obama meanwhile was expected to use the meeting to win international backing for a military strike against Syria and this was keeping a floor under oil markets Brent crude rose 56 cents to $115.47, while US oil was up 64 cents to $107.97. Continue reading
Indian rupee, stocks jump on new bank chief’s plans
Indian rupee, stocks jump on new bank chief’s plans (AFP) / 5 September 2013 India’s rupee strengthened and stocks jumped on Thursday after new central bank governor Raghuram Rajan outlined a reform plan aimed at boosting investor confidence and stabilising the ailing currency. Raghuram Rajan, second left, the newly appointed governor of Reserve Bank of India, is received by its Deputy Governor Kamalesh Chandra Chakrabarty, second right, and others as he arrives at the RBI headquarters in Mumbai, India. AP The rupee climbed to 65.75 against the dollar, gaining nearly two percent from its previous close, on investor hopes the worst could be over for the currency, the worst performing in Asia this year. Indian shares jumped as much as 2.96 percent at the open, led by banking stocks, after Rajan took over Wednesday from Duvvuri Subbarao as head of the Reserve Bank of India (RBI). In the afternoon stocks were up 1.51 percent. Rajan sought to reassure rattled markets with his first speech in the post, outlining a fresh approach to the currency crisis and warning that he may have to take unpopular steps to get Asia’s third largest economy back on track. Sonal Varma, an economist at Nomura Securities, said Rajan had made “an impressive start” but she stressed that a weak growth outlook was still a “major concern”. “In our view, amid the current gloom, the new RBI governor has infused a sense of optimism that he is in charge and that the RBI under him will unleash more financial sector reforms, a medium-term positive for the economy,” she said. Rajan, a former IMF chief economist, emphasised the importance of transparency and consistency in the bank’s actions, after the RBI spent weeks trying to stabilise the rupee with a range of measures. He stressed he would hew to the RBI’s mandate of “securing monetary stability” and sustaining confidence in the value of the country’s money. “This means low and stable expectations of inflation, whether that inflation stems from domestic sources or from changes in the value of the currency, from supply constraints or demand pressures,” he said. India faces its worst financial crisis in decades, as the once-booming economy grapples with sharply slowing growth, high inflation and a record current account deficit. Some analysts fear the economy could be heading for a meltdown with the rupee down around 22 percent against the dollar this year. Rajan’s bold entry to the job, which included financial deregulatory measures such as opening up the country’s banking sector, received rave reviews from economists and the local media. “This was easily the most substantive speech by a Reserve Bank governor on his first day in office,” financial daily Business Standard said on Thursday. With a mock photograph of Rajan in a James Bond-style pose on its front page, The Economic Times newspaper said he had “gotten off to a good start, radiating brisk purpose and optimism”. Rajan, famed for forecasting the 2008 global financial crisis, left his post as a professor at the prestigious University of Chicago’s Booth School of Business and returned to India last year before taking up the new job. Continue reading
UAE makes steady progress on all global indices
UAE makes steady progress on all global indices Issac John / 5 September 2013 The UAE is making steady progress in terms of all global development indices issued by prestigious international corporations, His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said on Wednesday. Commenting on the UAE’s enhanced ranking on in the Global Competitiveness Report issued by the World Economic Forum for 2013-2014, Shaikh Mohammed said the nation is making steady progress under the leadership of the President His Highness Shaikh Khalifa bin Zayed Al Nahyan. In the latest WEF report, the UAE has advanced five positions in the total competitiveness of its economy in one year, from 25 th last year to the rank of 19 th this year out of 148 countries. Shaikh Mohammed said the UAE government is continually following up these indices issued by prestigious international corporations, “because retreat is not an option in our government.” “Thanks to the federal and local teams who are jointly working in line with a vision the term of which extends to the year 2021, as well as with agendas and plans that are continuously being revised and assessed as per our growing ambitions in all sectors,” Shaikh Mohammed added. “Our economy is continuously developing, and the indices for security and stability are the best globally. The welfare of our citizens is at the top of our priorities,” he said. On some key sub-indexes the UAE is among the top countries in the world. The WEF report lists 12 pillars of competitiveness as the driving factors explaining an economy’s growth potential and the UAE scores very high here. The ‘Basic Requirements’ rank of the UAE is five, with only Singapore, Switzerland, Hong Kong and Finland ahead on that scale. In ‘Infrastructure’ the UAE takes the 8 th spot and for ‘Macro-economic’ environment the Emirates is 12 th in the world. On the ‘Innovation and Sophistication’ scale the UAE is ranked 25 th in the world. For the fifth time in a row, Switzerland was named as the world’s most competitive economy, the only point of criticism being that the nation ought to improve university enrolment to become even more innovative. Singapore and Finland defended their positions at number two and three among the 148 countries analysed by the World Economic Forum, a Swiss non-profit foundation that aims to bring together business leaders and policy makers. Germany took fourth position in the WEF’s annual ranking of the world’s most competitive economies, just ahead of the US. US — the world’s largest economy — in fifth place for overall competitiveness, up from seventh last year. Among the biggest risers this year was Indonesia, which was able to climb 12 ranks to number 38. The WEF said the rapid progress was due to spending on infrastructure, a more efficient government and gains in the technology sector. India now ranks 60 th , continuing its downward trend that began in 2009. Moreover, the country has fared badly with respect to its Brics peers. Once ahead of Brazil and South Africa, it now trails them by several places and is behind China by a margin of 31 positions, while Russia (64 th ) has almost closed the gap. Some Middle East countries emerged as the biggest losers. Politically troubled Egypt, for instance, dropped 11 placed to 118, while Iran tumbled 16 ranks to come in at number 82 on the back of political instability and lack of financing in the sanctions-hit nation. issacjohn@khaleejtiems.com Continue reading
