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malaysia

Malaysia's construction Stocks Are Ready to Grow


Prime Minister Najib Razak is yet to award 12 billion ringgit ($3.4 billion) of contracts from two stimulus packages, Wong Chew Hann, a Kuala Lumpur-based analyst at Maybank, said in a report today. The first-quarter economic slump of 6.2 percent underlines the need for faster project implementation, Wong said. "The momentum of awards for construction jobs should quicken," Wong said in the report, reiterating an "overweight" rating on the industry. "Tenders and awards ought to lift the valuations of construction stocks." The rollout of all outstanding contracts has the potential to trigger Malaysia's first building boom since the Petronas Twin Towers and the Kuala Lumpur International Airport projects before the 1997-1998 regional financial crisis, Maybank said. Steelmakers, property developers and construction stocks are already among the year's top climbers on the nation's main index. IJM, helping to build a tunnel for an interstate Malaysian water project, has almost doubled in 2009 and is the second-best performer on the Kuala Lumpur Composite Index. Gamuda, jointly building a railway in the north of Malaysia, has surged 33 percent. WCT has jumped 27 percent.

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srilanka

First Private Equity fund from Sri Lanka


Calamander plans to invest between $50 million and $75 million in the island nation's rubber, tea, timber, coconut, bank and ceramics businesses in the next 18 months, Managing Director Roman Scott said in a telephone interview on June 19. The fund aims to earn a return of as much as 35 percent, he said. "It's not a big fund by world standards but for Sri Lanka you can actually do a lot of damage with that kind of money," Scott said. "There's a huge opportunity to do a lot." Interest in Sri Lanka is growing after its military defeated the Tamil Tiger rebels last month, ending Asia's longest running civil war. Investor Jim Rogers, who correctly predicted a commodity price rally in 1999, says he sees "wonderful opportunities" in Sri Lanka, while HSBC Private Bank says the country could become the "Hong Kong of India." "The end of the war has greatly enhanced Sri Lanka's prospects," said Jan Zalewski, a London-based analyst at IHS Global Insight, an economic forecasting company. "But the future depends upon the government's initiative to satisfactorily address the root causes of the conflict." Calamander's Scott said the private equity market in Sri Lanka could grow to between $1 billion and $3 billion in five years provided the government gets its "economic and political policies right."

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japan

Goldman Sachs recommends Japanese Banks


Goldman Sachs Group Inc. said it recommends buying Japanese banks and shorting the nation's steelmakers, citing valuations. Japanese bank stocks are relatively cheap as they trade at about 70 percent of their average price-to-book ratio, compared with up to 120 percent for banks across Asia, Kathy Matsui, the Tokyo-based chief strategist at the brokerage, said in a report dated yesterday. The country's steel shares are at or above their midpoint price-to-book levels, the report said. "Japanese banks should enjoy an outsized earnings impact from lower credit costs as the economy stabilizes," Matsui wrote. "The recovery in stock prices should also help alleviate capital concerns." While many investors have bought into steel stocks that are sensitive to global economic trends, most are still "extremely underweight" in domestic cyclical shares like banks, Matsui said in the report. The brokerage boosted Mitsubishi UFJ Financial Group Inc. to "buy" from "sell" and Mizuho Financial Group Inc. to "neutral" from "sell," the report showed. Mitsubishi UFJ rallied 2.2 percent to 605 yen while Mizuho gained 2.1 percent to 246 yen as of the 11 a.m. trading break on the Tokyo Stock Exchange.

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thailand

Thai Exports Plunge but Improvement is Predicted


Thailand's exports for the month of May dropped dramatically since 1992 due to lack of demand for products. Shipments declined 26.6 percent from the prior year, according to the Commerce Ministry's Permanent Secretary Siripol Yodmuangcharoen. An Economist at Capital Nomura Securities Pcl in Bangkok, Nuchjarin Panarode said the drop has steadied and other economic indicators support the prediction that exports may improve. Exports have fallen about 15-19 percent in 2009 and perhaps will continue to fall at a slower rate in the third quarter, but the Prime Minister asserts that exports will return to growth by the fourth quarter of the year. About 70 percent of Thailand's economy relies on shipments. A less severe drop in exports is predicted as companies like Hana Microelectronics Pcl and KCE Electronics Pcl ship more products. Thailand's industrial output actually increased in April since exporters' customers began rebuilding stockpiles, expecting a boost in demand. Richard Han, chief executive officer from Hana affirmed that demand had increased from April to May. They expect demand from China and the rest of the continent to help their exports. Since the country's imports are still relatively low, the economy will not worsen, and it might be positive for net exports, as stated by Capital Nomura's Nuchjarin.

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india

India and Deflation


There are numerous reasons for deflation to occur. It can be caused by a decrease in the supply of money or credit or by a decrease in government and consumer spending. Side effects that accompany deflation are increased unemployment, due to lower levels of demand in the economy and dwindling profits. This could further increase the severity of a recession. In India, the Ministry of Commerce and Industry has reported that "wholesale prices fell 1.61% in the year to June, compared with a rise of 0.13% the previous week" Analysts said that prices would continue falling for the next fourth months, now that lower food prices have pulled the index down. An economist at Nomura, Sonal Verma, predicts that the country will "have negative numbers at least till September, primarily because inflation had picked up very sharply during this period last year." Figures show that inflation rose up to 12.9% in August 2008 but has been decreasing since then.

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australia

CSR Planning to Increase Sugar Value


CSR Ltd., Australia's second-largest maker of building products, is planning to spin off its sugar unit to take advantage of a 27 percent jump in prices for the sweetener in the past year and improving capital markets. The demerger plan is targeted for completion by the end of the year ending March 31, the Sydney-based company said today in a statement. The sugar business is valued at A$1.2 billion ($958 million), UBS AG said in a report last month. CSR has a market value of A$2 billion. Shares of CSR, Australia's biggest sugar refiner, rose 6 percent on investor optimism for the plan, flagged by the company more than two years ago. Sugar is the best-performing commodity in the past year because of a world wide production shortfall. "They'll lose diversification of earnings but that will probably be viewed as less significant than investors now gaining a pure exposure to sugar and building materials separately," said Will Seddon, who helps manage $250 million at White Funds Management Pty. in Sydney.

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japan

Japan Limits Exports to North Korea while China Prepares to Act


Japan has banned exports to North Korea in response to their nuclear and missile tests in May, with the purpose of sending a "strong message". "What's most important is that North Korea make the right response... to Japan's strong message, even though there are people who point out the volume of exports is small," said Chief Cabinet Secretary Takeo Kawamura. The Japanese concern arises from the proximity of the country, since much of its territory could be hit by North Korean mid-range missiles, according to the BBC's Roland Buerk in Tokyo. North Korea's key trading partner is China. China "has pledged to implement tougher sanctions against North Korea, which were approved by the UN last week." These sanctions include careful inspection of ships suspected of taking banned cargo to and from North Korea, and increased ban on arms sales.

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russia

Russia Seeks for a New Currency


BRIC leaders will discuss new reserve currencies at the summit but called for caution in the currency debate, saying it was in no-one's interest to ruin the dollar. He said new reserve currencies were inevitable. Russia will advocate a cautious approach to changing the system of global reserve currencies when the world's biggest emerging economies hold their first formal summit on Tuesday, the Kremlin's top economic aide said. ussian President Dmitry Medvedev will raise the issue of a global reserve currency at the meeting, top economic aide Arkady Dvorkovich, said. "There is an understanding that the last thing we need now is turmoil on financial markets," Dvorkovich told a news briefing. "No one wants to ruin the dollar, including us." The meeting is scheduled to last about 2 hours. Dvorkovich said BRIC leaders - who control nearly $3 trillion in foreign currency reserves - would also discuss the idea of investing their reserves in each other's currencies.

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allcountries

Asian Stocks Plummet


Asian stocks plummeted and sank the MSCI Asia Pacific Index. This caused investors to question the pace of the economic recovery. China's biggest oil producer, PetroChina Co, fell 2.6 percent in Hong Kong. The world's third-largest mining company, Rio Tinto Group, fell 3 percent in Sydney. Meanwhile, Toyota Motor Corporation, the No. 1 automaker worldwide, fell 3.4 percent after the yen strengthened. The drop in Asian stocks affected the MSCI World Index by the largest amount in two months. According to Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., "Those who bought stocks on a perception the economy would improve are now selling on reality."

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china

Foreign Direct Investment in China fell from a Year Earlier


Investment slumped 17.8 percent in May to $6.38 billion, after falling 22.5 percent in April, the commerce ministry said at a briefing in Beijing on Monday. According to the commerce ministry, foreign-invested businesses account for 30 percent of investment from abroad, 55 percent of trade and 11 percent of urban jobs. Chief Asia economist for Morgan Stanley in Hong Kong, Wang Qing says that companies are "not in the mood for aggressive overseas expansion," On June 12 and 13, Premier Wen Jiabao admitted that the world economic outlook was still unclear and that China still has to establish "solid foundations for a recovery." The economy expanded 6.1 percent in the first quarter compared to the same quarter in 2008, which was the slowest pace in 10 years. China's economic problems are due to falling exports, dwindling profits, industrial overcapacity, and unemployment. However, there are signs of increased retail sales, industrial output, and market confidence.

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indonesia

Hot Emergent Market: Indonesia


Southeast Asia's largest economy may grow 60 percent in the next five years to $800 billion due to a stable administration, lower capital costs and a government plan to spend as much as $34 billion to build roads, ports and power plants by 2017, Morgan Stanley said. Leaders of the nations known as BRIC will meet this week in the Russian city of Yekaterinburg. Indonesia may expand as much as 4 percent this year, making it the fastest-growing major economy in Southeast Asia, according to the International Monetary Fund. Morgan Stanley expects 3.7 percent growth this year.

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china

Tax plan sets off a Protest in China


The officials said that the protest is based on a misunderstanding over the tax plan, since a few furniture-store owners mistakenly thought that municipal party and government wants the furniture industry to collapse. The tax plan: To enforce payment of taxes more strictly from the furniture makers and dealers. Due to opposition, however, the local government's plan has been postponed from June 15.

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