Thread: Asian News

Nice input Ichiro. Always great to read your finds.

Both the Nikkei and the European markets are doing quite well during this time but the strength of the US dollar is bringing down the I fund.

I guess the market is reading that there will be several more interest rate increase after March. I just have the feeling that the new Federal Reserve Chairman is going to raise it too much and cause a real estate market panic.

Info from Marketwatch.

Nikkei stages rebound on strong dollar
By Chris Oliver, MarketWatch
ET Feb. 1, 2006

HONG KONG (MarketWatch) -- Asian markets mostly rose on Thursday, lifted by strong gains in New York Wednesday and strength in the U.S. dollar following the Fed's quarter-point rate hike, which translates into a bonus for Asia's export-oriented economies.



In currencies, the dollar bought 118.24 yen mid-morning in Tokyo, a gain of 0.28 yen for the session, and extending the greenback's 0.5% gain in New York Wednesday, where the dollar ended at 117.96 yen.
A weaker yen is a boon for Asia's corporate sector because it boosts profits when dollar-denominated earnings are repatriated.
In Tokyo, the Nikkei 225 gained as much as 1.05% at 16,653.23, while the broader Topix index of all first section issues gained as much as 15.97 points to 1,710.21.
South Korea's Kospi Index extended Wednesday's slide, declining as much as 0.89% to 1,363.73. Singapore's Straits Times Index, the region's top performing market Wednesday, rose as much as 0.42% to 2,442.00.
New Zealand's Gross 50 Index rose as much as 1.05% to 3,200.316, while Australia's All Ordinaries nudged higher as much as 0.21% to 4,914.400.

Markets in China and Taiwan are closed for the Lunar New Year holiday.

TM103.80, +0.09, +0.1%) announced it will establish a Chinese research and development joint venture with its established business partner China FAW Group Corp, according to reports from the Nihon Keizai Shimbun. The venture will focus on product design tailored to Chinese consumers.
Shares of consumer electronics companies led the advance in Tokyo, boosted by the weaker yen and a string of positive earnings results in the sector recently.
Shares of Sony rose as much as 3.23%. The gains follow an announcement the companies would pool their technological expertise and development costs by working together to develop cutting-edge microchips.

Hong Kong-listed Wumart Stores Inc (HK:8277: news, chart, profile) , the largest retailer in the Beijing area, jumped as much as 11.11% after the company said it was paying about HK$359 million ($46 million) for a 75% stake in Chinese supermarket chain Beijing MerryMart Chainstores.
MerryMart owns 23 supermarkets in Beijing and ranks among the top five retail chains on the mainland.
A spokesman for Wumart said the acquisition "will positively consolidate the company's leading position in the retail market in of Beijing."

Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.

Europe markets open higher
Alcatel, Rio Tinto provide lift; Shell lower
By Steve Goldstein, MarketWatch
Last Update: 3:37 AM ET Feb. 2, 2006

LONDON (MarketWatch) -- European stock markets opened higher Thursday, helped by some upbeat earnings from European companies including Alcatel and Rio Tinto and a positive session on Wall Street.

EARNINGSWATCH
Alcatel back to paying dividends after four year wait. European markets higher as Alcatel, Rio Tinto rise. Shell quarterly profit slips 3% on hurricanes hit. Vedior quarterly profit climbs 31%, seeks acquisitions

The German DAX Xetra 30 index rose 0.39% at 5,748, the French CAC 40 index gained 0.20% at 5,009, and the U.K. FTSE 100 index added 0.06% at 5,804, with the main French index reaching the 5,000 level for the first time since August 2001.

The pan-European Dow Jones Stoxx 600 rose 0.23% at 325.22.

U.S. markets finished higher than where they were on the European close, as traders focused more on upbeat results from plane maker Boeing than the earnings miss from Internet search engine Google Inc.

The euro was nearly flat against the U.S. dollar at $1.2059 ahead of a European Central Bank interest rate decision. Most observers see the ECB keeping rates at 2.25% at this meeting before hiking rates in March.

Of companies in focus, French telecommunications equipment maker Alcatel .
ALA13.65, +0.25, +1.9%) surged 4.2% after it said fourth-quarter net income surged to 344 million euros from 7 million euros and resumed dividend payouts for the first time in four years.

Rio Tinto, 207.76+2.75+1.34%

RTP(207.76, +2.75, +1.3%) rose 2.1% after saying it will give back $4 billion to shareholders and reporting a 58% rise in net profit.

V31.93, +0.62, +2.0%) rose 0.4% after saying it's agreed to pay $1.154 billion to Matsushita Electric Industrial Co. for its 7.66% stake in Universal Studios Holdings. Vivendi said the deal is immediately earnings enhancing, and will lift 2006 earnings by at least $30 million after transaction costs. The deal will also simplify tax and legal treatment and "substantially" reduce currency management costs.

Experts: ECB Not Likely to Raise Rates
Thursday February 2, 2:36 am ET
By Matt Moore, AP Business Writer
Economists Expect European Central Bank to Raise Interest Rates, Just Not on Thursday

FRANKFURT, Germany (AP) -- Economists expect the European Central Bank to raise interest rates as Europe's economy picks up -- just not at Thursday's meeting of the bank's governing council.

The bank will likely hold off until March before hiking the key refinancing rate, at 2.25 percent since a quarter-point increase in December, many think.

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Fully 43 of 48 economists polled by Dow Jones Newswires saw no change Thursday, but 46 of 48 predicted a March increase of another quarter point.

The post-meeting press conference with bank President Jean-Claude Trichet will be closely watched for further clues to the bank's direction.

"The probability of a February hike looks very small, but that of a tightening in March remains high in our view," said Lorenzo Codogno, co-head of European economics at the Bank of America in London.

The bank will then raise the refinancing rate gradually to 3 percent by September, he forecast.

Optimism about growth is running high in Europe, with German consumers the most upbeat in five years and business confidence in France up for the first time in four months.

The bank predicts that inflation -- its chief concern -- will remain above 2 percent this year because of stronger economic growth, high oil prices and worker demands for increased wages. With growth now strong enough to take the sour anti-inflation medicine of a rate increase, most observers feel the bank will act soon.

The 12-nation euro zone's economy is forecast to grow 1.9 percent this year, up from 1.4 percent in 2005, the ECB has said.

That rising growth, and wage demands -- Germany's IG Metall is seeking a 5 percent increase for its 3.4 million members -- means the bank is waiting for the right moment to carry out a rate increase, said Joerg Kraemer, chief economist for the HVB Group in Munich, Germany.

Otmar Issing, the ECB's chief economist, said Jan. 19 that risks to the euro-zone economy had "clearly diminished. Almost all data show that the upswing is continuing and strengthening."

Business sentiment in Germany, Europe's biggest economy, rose to a surprising two-year high Wednesday as the Ifo institute survey index hit to 102.0, surpassing expectations of 99.7.

In Italy, January business confidence rose to 92.7, up from 91.3, while in France, the statistics office Insee said French consumer confidence rose to minus 30 from minus 33, its first gain in four months.

Standard & Poor's predicted this week that economic recovery in Europe should remain on track, given efforts by Germany, France, Italy and Spain to cut unemployment.

http://www.ecb.int

The effect of interest rate hike:

PIMCO Managing Director Bill Gross thinks the effects of Alan Greenspan's rate hikes have yet to be felt -- and that the economy will suffer this year as a result. The housing is coming down because of increase in the interest rate which was the important provider of consumption, spending power, over the past several years. Once that begins to dissipate the growth rate will drop to the 1 to 2 percent, the US stock market will adjust accordingly and will be a great time to buy those fat dividend paying stocks.



CNBC Market Dispatches
Selling contagious; Dow slammed

2 p.m. ET. The government reports a surprise fall in fourth-quarter productivity. Energy stocks and prices fall on bearish natural gas inventory numbers. Bill Gross says recent rate hikes have yet to really hit the economy.


Stocks fell sharply at midday as early-morning weakness on inflation concerns was exacerbated by a fall in market-leading stocks like energy and semiconductor companies.

At 2 p.m. ET, the Dow Jones industrials was down about 104 points, or 0.96%, to 10,849, with only Boeing (BA, news, msgs) able to eke out a small gain. The Nasdaq Composite fell more than 27 points, 1.2%, to 2,283. And the Standard & Poor's 500 index lost more than 12.7, or 1%, to 1,269.

Energy stocks tumbled as energy prices fell for the second-straight day. Natural gas supplies fell last week, according to a government report, but not more than analysts expected. And supplies are still well above their average for this time of year, thanks to warm weather in the Northeast, giving traders little reason to buy natural gas futures.

Natural gas futures fell 49.3 cents to $8.23 per million British thermal units. Crude oil futures dropped $1.66 to $64.90 per barrel.

"(Natural gas) storage levels are almost 30% above the five-year average and about 15% above last year," Paul Fleming, a senior analyst at ESAI, told CNBC's "Morning Call." "Overall, the bearish sentiment is probably going to prevail through March."

U.S. productivity finally stumbles

U.S. productivity, one of the stalwarts of the recent economic expansion, fell 0.6% in the fourth quarter, compared to a downwardly revised 4.5% gain in the third quarter, the Labor Department reported. Economists expected productivity to have risen 1% in the last three months of 2005.

At the same time, labor costs rose 2.4%, which is the biggest rise since 2000, the Associated Press reported.

High worker productivity has enabled companies to avoid big hiring, but if that trend ends the labor market will become more competitive and wages will rise. Today's numbers are bound to alert the Federal Reserve, since wages are a big component in inflation.

PIMCO's Gross sees 2% GDP growth

While some on Wall Street are worrying that the Federal Reserve will continue to raise interest rates, PIMCO Managing Director Bill Gross thinks the effects of Alan Greenspan's rate hikes have yet to be felt -- and that the economy will suffer this year as a result.

MSN Money Insurance
"Fed policy works with a lag," Gross told CNBC's "Squawk Box." "Housing is coming down and that's been the important provider of consumption, spending power, over the past several years. Once that begins to dissipate … you're going to see a consumer in the 1% to 2% growth area. You're going to see real wages continuing to be weak, and a 2% GDP number in my view."

"It's fair to say that the Fed has been on a March here for almost 20 months and 350 basis points," Gross said. "And so we're going to be seeing the effects of what the Fed has done for a long time to come, for 2006 and 2007."

As for incoming Federal Reserve Chairman Ben Bernanke, Gross feels the new chief won't be as hawkish on inflation, under current circumstances, as his predecessor, citing a speech Bernanke gave in March 2005 talking about the importance of a normal yield curve.

Right now the yield curve is flat, with small differences between long-term and short-term interest rates.


-- Kim Khan

Asian news from Mainichi Daily:

Japanese stocks fall following Wall Street's decline, dollar little changed against yen

Japanese stocks fell Friday morning following Wall Street's overnight drop while some investors took profits in reaction to the previous day's rally. The dollar was little changed against the yen.

The benchmark Nikkei 225 index shed 88.63 points, or 0.53 percent, to 16,621.92 points at the end of morning trading on the Tokyo Stock Exchange. The index on Thursday rose to a five-year high, gaining 230.46 points, or 1.40 percent, to close at 16,710.55 point -- the highest since Sept. 1, 2000.

Prices moved lower as investors took profits from Thursday's gains following falls on Wall Street overnight, triggered by investor concerns about inflation after a surprise jump in U.S. labor costs. The Dow Jones industrial average fell 101.97, or 0.93 percent, to 10,851.98.

Among morning losers were banks and auto issues. They include Mizuho Financial Group Inc., Honda Motor Co., Toyota Motor Corp. Select technology stocks also fell, with Canon Inc., Sharp Corp. and Kyocera Corp. among them.

Investors also awaited the release of the U.S. payrolls data due out later Friday in Washington.

The broader Topix index, which includes Japan's largest companies, was down 5.33 points, or 0.31 percent, at 1,705.69. The Topix rose 16.78 points, or 0.99 percent, the day before.

In currencies, the dollar bought 118.40 yen on the Tokyo foreign exchange market at 11 a.m. (0200 GMT) Friday, down 0.05 yen from late Thursday in New York. The euro rose to US$1.2092 from US$1.2042.

The yield on the 10-year Japanese government bond rose to 1.5650 percent from Thursday's finish of 1.5450 percent. Its price fell 0.17 point to 100.29.

February 3, 2006

From Moneynews:

1. Greenspan Drops Dollars, Puts on Pounds

Having given up managing the U.S. dollar, former Federal Reserve Chairman Alan Greenspan will now try to guide Britain's currency through the rocks and shoals of the international economy.

According to Forbes, after 19 years at the helm of the Fed, Greenspan has agreed to become an honorary adviser to Britain's Treasury. Greenspan will also serve as a consultant to his former opposite number in the money game, Gordon Brown, the United Kingdom's chancellor of the Exchequer, which is the United Kingdom's Treasury Department.

Brown was delighted by the news, calling Greenspan's willingness to team up with him "good news for us." Brown said Greenspan will be a valuable ally in areas relating to global economic change.

Best of all, Brown - and the U.K. population - will get Greenspan's advice for free, as he has agreed to be an unpaid adviser.

The two should hit it off well, having formed a trans-Atlantic mutual admiration society. Forbes recalled that Brown has called Greenspan "the world's greatest economic leader of our generation" and Greenspan once said that Gordon Brown is "without peer amongst the world's economic policymakers."

Also of note, Greenspan is now Sir Alan, having received an honorary knighthood - a distinction he shares with fellow Americans, former New York Mayor Rudy Giuliani and Microsoft founder Bill Gates.

From Money:--2 Feb 06


Bush Pushes Fed to the Right

While newly minted U.S. Supreme Court Justice Samuel Alito has earned the bulk of media coverage, new Federal Reserve Chairman Ben Bernanke is now ensconced at the Fed, operating under the radar so far.

But it's the Fed, and not just the Supreme Court, that is tilting more to the political right these days, argues Larry Kudlow, writing in National Review Online.

"President Bush has famously changed the composition of the Supreme Court with the appointments of judges John Roberts and Samuel Alito, two big conservative victories," writes Kudlow.

"But equally interesting is the president's overhaul of the Federal Reserve, which becomes the 'Bernanke Fed' with the retirement of Alan Greenspan this week. While the Supreme Court has loudly gone right, our central bank is quietly doing the same."

Kudlow points to a pair of new central bank appointments made by President Bush last week. Kevin Warsh and Randall Kroszner were tapped to fill two vacancies on the Fed's Board of Governors.

"Warsh is a current White House economic adviser and a former Morgan Stanley investment banker,"


says Kudlow. "Kroszner is the University of Chicago economics professor who served on the Council of Economic Advisers during Bush's first term. The two nominees are tried and true free-market, low-tax, deregulation-inclined policy advisers."

Two previous Bush appointees to the Fed - Susan Bies, a former Tennessee banker, and Mark Olson, formerly with Ernst & Young and U.S. Bancorp and a legislative assistant to former Republican congressman Bill Frenzel of Minnesota - have pushed the Fed further to the right, adds Kudlow.

"All told, Bush has appointed six of the seven current board members - an incredible turnover. While they are not all supply-siders (Donald Kohn is more of a traditional Washington Keynesian, while Roger Ferguson is a Clinton-era carryover), I would say this Fed board is at the margin much more supply-side - in terms of an allegiance to low taxes and regulations - than prior boards."

Kudlow continues: "Adding together the shifts to the Supreme Court and the Federal Reserve, it could be argued that the policy organs that hold sway over the judicial and monetary influences on business are more free-market, Reaganesque and pro-growth than anything we've seen in a long time."

That should create a Federal Reserve that will be more open to free-enterprise growth and less biased toward higher taxes and stricter economic regulations.

"With a firm monetary foundation, Reagan-like policies of low tax rates and free-market deregulation will afford American entrepreneurs the freedom and rewards that are necessary to maximize economic growth," concludes Kudlow.

"Without question, the private sector must be liberated so it can effectively function as the engine of prosperity. This capitalist model was restored and rejuvenated by President Reagan 25 years ago and its success has been copied worldwide. Bush's appointments to the Fed and the Supreme Court are the latest testament to this."

Good news! The European Central bank (ECB) laid the groundwork for a rise in interest rates as early as next month. This is good because it will offset the increase by the anticipated rate increase by the FED in March. Without this increase by ECB, it will only increase the demand of the US dollars and lower our I fund return. I think that in another six months or so the Japanese monetary officials will be raising their interest rates to reduce inflation.


AP
Euro Down Slightly Against Dollar
Friday February 3, 7:31 am ET
Euro Down Slightly Against Dollar After European Interest Rate Decision

FRANKFURT, Germany (AP) -- The euro dropped slightly against the dollar on Friday with some analysts predicting a strong report on U.S. job creation.

In morning European trading, the 12-nation currency bought $1.2071, down from $1.2096 in New York trading the night before, when it rose after the European Central Bank laid the groundwork for a rise in interest rates as early as next month.

The ECB left its interest rate unchanged at 2.25 percent during its meeting Thursday, but President Jean-Claude Trichet said he would adjust rates as necessary to keep prices stable.

"In the shorter period of time we will continue to do whatever is needed in delivery of price stability," Trichet said. "But I won't say anything about what we will decide afterward."

Most analysts are convinced the bank will move to increase the rates in March. Higher interest rates usually bolster a currency by attracting international investors.

On Wednesday, the U.S. Federal Reserve raised interest rates to 4.5 percent in a widely expected move.

The British pound was down to $1.7769 Friday from $1.7796 the night before.

The dollar bought 118.49 Japanese yen, up slightly from 118.45, setting six-week highs in part on speculation that Friday's U.S. payrolls data for January will reinforce confidence in the strength of the U.S. economy.

Very interesting!!!!

Friday February 3, 5:46 PM
SE Asia Stocks-S'pore off 6-yr highs on rate worries
SINGAPORE, Feb 3 (Reuters) - Singapore shares snapped a six-session rally on Friday, as worries that short-term interest rates may rise higher than expected hit banks and property stocks.

Asian markets were spooked by U.S. data released on Thursday showing higher labour costs and lower business productivity; That could be an early sign of inflation pressure building in the world's largest economy.

The threat of higher inflation could prompt the U.S. Federal Reserve to keep raising interest rates, which would cut into corporate profits and hurt consumer spending.

Singapore's Straits Times Index ended 0.4 percent off Thursday's six-year closing high, led by losses in United Overseas Bank , down 0.7 percent, and CapitaLand Ltd. which fell by almost 2 percent.

Eddie Wong, chief Asian strategist at ABN AMRO, said a lot of capital in recent months has flowed into Asian markets from the U.S. bond market, where long-term bond yields have not matched the rise in short-term bond yields, offering little premium to investors.

He warned that inflationary expectations might reverse the trend and start lifting long-term Treasury yields.


"That could potentially reverse the fund flow back to the bond market," Wong said.

Higher long-term yields also dampen foreign portfolio investors' appetite for high-risk emerging market assets.

Singapore Airlines fell 2.9 percent, a day after the world's second-most valuable airline posted its fourth straight quarter of declining earnings and said the high price of jet fuel was its biggest worry.

Elsewhere in the region, the Philippine index closed 0.96 percent lower while Indonesian stocks ended just 0.06 percent higher aided by mobile phone operator Bakrie Telecom's strong trading debut.

The medium-sized company, a relatively new entrant to the rapidly growing mobile telecoms sector in the region's largest economy, opened 45 percent above its initial offer price.

Malaysian shares resumed trade after a break of almost a week, rising 1.51 percent -- the biggest single-day rise in about seven months -- to hit a 3-½ month high, aided by a 9.5 percent rise in plantation firm IOI Corp. .

IOI had announced a 30 sen interim dividend on January 27, the last day of trade before the holidays.

"We are overweight on the plantation sector for its defensive earnings, strong growth prospects due to rising CPO (crude palm oil) price and good dividend yields," said CIMB analyst Ivy Ng in Kuala Lumpur.

By 0908 GMT, Thai stocks had risen 0.83 percent, recovering from a two-week closing low, led by a 4.7 percent rise in Thai Petrochemical Industry .

However, the market's upside was capped by worries ahead of an anti-government rally planned for the weekend, dealers said.

Thai Prime Minister Thaksin Shinawatra has faced several such rallies in recent months; his family's decision to sell its stake in Shin Corp for $1.9 billion last month attracted criticism and has been investigated by Thai regulators.

The stock regulators said Thaksin's son probably broke stock disclosure laws by failing to report shares in the telecoms empire his father founded and which his son held offshore.

From Moneynews---4 Feb 06. (invest in overseas stock index using ETFs (EFA and VPL).



Exchange Traded Funds

Got an ETF in your investment portfolio yet?

Chances are, you might. According to a September estimate by Boston-based Financial Research Corp., total assets committed to exchange-traded funds could rise 29% to $1 trillion by 2010.

In 1993 the first ETF (known as the Spider) was launched to track the S&P 500 index. Today there are 201 funds, with 50 new ones added in 2005.

The flow of investments into ETFs totaled $53.9 billion last year, causing the total value to surge to $296 billion, according to the Investment Company Institute.

ETFs seem to be a more popular tool among institutions.

Because of the liquidity of the ETF market, when a portfolio manager takes in fresh money, with a single stroke they can put the cash to work with a sector or index ETF. That keeps the money fully invested until the manager decides which individual shares he wants to commit the money to.

Since ETFs are passive rather than actively managed, the lower fees tend to get passed on to clients.

For example, on a $10,000 investment, an ETF investor can expect to pay $36 annually in fees, compared to $147 for actively managed funds.

Similarly, internationally devised ETFs command just $55 in fees per year as opposed to the $174 fee on actively managed funds.

Investors by and large have warmed to the ETF revolution with one key feature being that the divide between professional and small investors has narrowed.

The ability to invest in a single share of an index, sector or single commodity (such as gold) has made for smarter investing by the army of small investors.

Investors have poured $6.1 billion into the StreetTracks Gold Trust since it began trading in November 2004. It makes me wonder whether that money would otherwise have been put into individual gold-mining stocks, which are clearly riskier.