Thread: Asian News

Japan's import is increasing due to the high cost of imported petro.

China's trade surplus bigger than Japan's for 1st time.

From The Yomiuri Shimbun-27 Jan 06.

China's trade surplus exceeded Japan's on a U.S. dollar basis in 2005 for the first time since comparable data became available, according to the Finance Ministry's preliminary trade statistics released Thursday.

The trade surplus last year declined 26.5 percent from the previous year to 8.79 trillion yen on a customs-clearance basis, the first decrease in four years.

The figure is equivalent to 80.1 billion dollars, far lower than China's 101.9 billion dollars.

Though the value of Japan's exports was the highest ever, the value of imports also hit a record high. The eclipse of export value by import value has been attributed primarily to the cost of imported petroleum products, which ballooned due to recent high crude oil prices.

Chinese exports of textiles, mainly to Europe and the United States, surged, helping the nation to achieve a more than threefold jump in its trade surplus from a year ago on a customs-clearance basis.

The value of Japan's import and export trade with China, including Hong Kong, increased 12.4 percent froma year ago to 24.95 trillion yen.

The Japan-China trade figure was larger than 21.88 trillion yen worth of trade Japan conducted with the United States. It was the second year in a row that trade value with China had exceeded that with the United States. It means Japan's largest trading partner is now China.

Economists said trade statistics soon to be released likely will show that Germany is the world's top trade surplus holder.
(Jan. 27, 2006)
Business
go

From Moneynews--28 Jan 06.

Falling Dollar, Striking Gold

The American dollar kicked off the week in a foul mood losing 2 percent to start the week.

That's no surprise to your currency. However, the catalyst this week was not a weakening of the American economy, rather it was a double-whammy of comments from two leading members at the European Central Bank (ECB).

Some weeks ago Jean Claude Trichet, president of the European Central Bank claimed that the rising price of oil would cause a slowing of the European economy.

That dashed euro bull hopes for a 2006 rally against the dollar. Until that point this was the widely held theory: rising interest rates would support the euro especially now that there's a clear end in sight to rate hikes from the Federal Reserve.

Then, into the fray jumped Messers Issing and Noyer, both ECB members. They told reporters over the weekend that the rising price of oil would likely raise more of a threat to inflation than it would impinge upon growth.

If that turned out to be the case then the ECB would definitely continue to raise interest rates. And the reaction to those comments from currency investors was to stockpile the euro, the yen and the pound.

As I'd commented some weeks ago in this very column, the euro is likely to be the currency of choice this year. My expectation is for a run back at the 2004 lows for the dollar at $1.36 and beyond. As such SectorTrade readers are already in the pole position for such an advance.

But apart from sending the dollar lower on the $1.9 trillion per day foreign exchanges, the move had repercussions on the commodities markets. Not least the weaker dollar helped push up the price of gold one again.

Gold has been on a tear over the last several years bolstered by under investment in mining activity and booming fundamental demand.

You see global demand for gold ranging from Arabic, Indian and Chinese demand for jewelry has risen.

Gold, well known for its protective qualities as a hedge against the falling value of printed government money (a.k.a. local currency), is becoming increasingly sought after as an asset by investors all over the globe.

Take a look at today's chart, which shows the percentage change in the value of gold as priced in five major currencies. Apart from the dollar, I have priced gold in terms of the Swiss franc, British pound, Japanese yen and the euro currency.

While the price of gold as measured in dollars is the clear winner, having risen roughly 35 percent since the February nadir in gold, Japanese investors are up 10 percent, while everyone else is up around 4 percent.

With international equity markets posting gains in 2005 of anywhere from 16 percent (U.K.) to 40 percent (Japan)it's entirely possible that investors might benefit from this established down trend in the dollar hitched at the hip with a rising price of gold.

Foreign equities might continue their ascent this year, but I'd be more willing to wager that gold will fare better in 2006.

The dollar is higher on 27 Jan 06 due to the reasons below plus the expected Federal Reserve increase in the interest rate. However, in a few days it will drift lower.



Dollar higher in late trade Friday
Strong homes sales figures also support the dollar
By Leslie Wines, MarketWatch
Last Update: 3:53 PM ET Jan. 27, 2006


NEW YORK (MarketWatch) -- The dollar perched at a three-week high against the yen late in Friday's session, benefiting from apparent Asian demand and indications that the housing market remains robust.
MARKETWATCH TOP NEWS
Data, especially jobs, should be strong
Davos forum concludes on serious note
Fed set to hike again, but it will be mum about March
Stocks seen gaining as Fed meets

The euro late in the day was down 0.1% at $1.2106 as the dollar rose 0.8% to 117.23 yen, its strongest level since January 2.

The dollar threw off initial weakness in late morning amid apparent demand from Asian central banks, according to Craig Russell, senior foreign exchange dealer at Alaron.

The Bank of China often bids the dollar higher in order to protect the value of its large Treasury holdings, he said.

The dollar began the day under pressure after a much weaker-than-expected fourth-quarter gross domestic product report startled the market.

The Commerce Department said economic growth slowed to a 1.1% annual rate in the fourth quarter, the weakest in three years. See full story.

The slowdown in real gross domestic product from 4.1% in the third quarter to 1.1% in the fourth quarter was largely due to weak auto sales, slower business investment, a rise in imports and a large drop in federal spending. Read the full report.

Economists were expecting growth to slow to 2.7% in the quarter, according to a survey conducted by MarketWatch. See Economic Calendar.

Action Economics said the forecasting discrepancy appeared to stem from the difficulty of gauging government and private spending on hurricane recovery.

The dollar later drew support from news from the Commerce Department that sales of new homes increased a surprising 2.9% in December to a seasonally adjusted annual rate of 1.269 million.

Economists surveyed by MarketWatch were expecting sales to fall slightly to a 1.23 million rate.

Foreign exchange market participants in recent weeks have been parsing data carefully because of uncertainty about whether the Federal Reserve is likely to keep lifting rates this year.

The weak GDP report subtracted from the case for the Federal Reserve to continue lifting rates, but the indication that residential real estate, a key driver of the economy, remains robust supports the argument for more increases.

Currently higher U.S. rates make the dollar a more attractive investment than the lower-yielding euro and yen.

Thanks, Ichiro. I am 100% in the I fund and most of my other IRA funds are in the international market. I truly expect that they are going to outperform our US markets this year. Take a look my Fidelity portafolios:

Master's MOST AGGRESSIVE - Long term portafolio

Master's Fidelity Portafolio

The world economic powers need to find an alternative source of energy because the creeping price increase of petro will increase inflation and hurt the economies of the Asian countries. I still remember what effect the oil shock had on the world stock market many decades ago.

SAN FRANCISCO (MarketWatch) -- Crude futures climbed above $68 a barrel Monday to their highest level in a week, supported by concerns over output risks in the Middle East and Nigeria ahead of an expected decision by key oil producers to keep oil output quotas unchanged. When it gathers in Vienna on Tuesday, the Organization of the Petroleum Exporting Countries "is expected to do nothing as oil prices are strong ahead of the meeting," said Phil Flynn, a senior analyst at Alaron Trading.
"Of course doing nothing must be bullish as oil continues to head higher," he said.
Crude-oil futures for March delivery were recently up 29 cents at $68.05 a barrel on the New York Mercantile Exchange after climbing as high as $68.20, its highest since Jan. 23. Prices are trading close to their record of $70.85, set in late August.
February unleaded gasoline climbed 3.56 cents to $1.772 a gallon and February heating oil traded at $1.838 a gallon, up 3.11 cents.
"As long as oil prices continue to rise and China continues to industrialize, OPEC will be content to sit around and keep production status quo," said Emanuel Balarie, senior market strategist at Wisdom Financial.
He sees the gathering "as more of a marketing meeting for higher oil prices rather than a meeting that discusses production levels."
OPEC musings
The oil market expects the group on Tuesday to make a formal decision to keep its production quota of 28 million barrels of oil a day because of recent strength in prices. Still, some members want a production cut.
"We believe that OPEC has to be ready to cut (production), maybe now at this meeting, maybe at the next meeting," said Venezuelan Energy Minister Rafael Ramirez, according to an Agence France-Presse report.
For now, that appears to be a minority view.
Saudi Prince Alwaleed bin Talal bin Abdulaziz Alsaud said in an interview with CNBC that Saudi Arabia does not intend to cut oil production and reiterated his position that oil prices are too high.
Libya Oil Minister Fathi bin Shtawan said OPEC doesn't need to cut output as long as crude prices exceed $50 a barrel, Dow Jones Newswires reported.
"There is a consensus with the member countries to maintain the current quota as there is enough oil in the market," added Algerian Oil Minister Chakib Khelil at a news conference Saturday in Algiers.
Overseas risk
Oil prices of late have been buffeted by concern about Iran's nuclear research, which has triggered worldwide condemnation and led to speculation about a possible military attack on the world's second-largest oil exporter.
Attacks on oil facilities in Nigeria have also boosted prices, though news reports emerged Monday that militants have released four foreign oil workers that had been kidnapped on Jan. 11.
Michael Wittner, global head of energy market research at Calyon, noted that the cut from Nigerian output losses pales compared with the losses from last year's hurricane disruptions, but crude prices remain at similar levels.
"The answer, of course, is that a huge wave of financial investment is entering the commodity space, and events in Iran and Nigeria are underscoring the geopolitical risks to oil supply," he said.
He estimates that a geopolitical risk premium of $5 a barrel is built into prices.
Looking ahead, "oil prices will continue to head higher, especially if China's economy keeps on growing at a record pace," said Wisdom's Balarie.

"Investors should also be aware that the inflation-adjusted all-time high for oil is closer to $100 barrel," he said, so "as it stands, oil is still cheap at these levels."

Natural gas gains
Elsewhere in the energy complex, the March contract for natural-gas futures climbed Monday -- its first full trading session as a front-month contract. February natural gas lost 9.5% last week.
In the latest dealings, March natural gas rose 66.3 cents, or 7.8%, to trade at $9.17 per million British thermal units. It climbed as high as $9.21, its highest since Jan. 20.
"The natural-gas market is on a completely different page now, with profit taking on short positions pushing prices higher, despite what are still impressively bearish prospects," said Tim Evans, an analyst at IFR Markets. "This week will be warmer than last week, limiting the extend to which storage might be drawn down."
Potential price support does exist. "There could be upward spikes if a sustained bout of cold hits and the 17% of Gulf production that remains off-line becomes a factor," said Michael Fitzpatrick, an analyst at Fimat USA.
"But for the moment, that looks unlikely. If these same conditions persist through February, current lows could be easily broken," he said.
In energy equities Monday, benchmarks tracking the oil and gas sectors were higher, with the Oil Service Index

From Mainichi Daily--31 Jan 06.


Japanese stocks rise for sixth straight session, led by banks, oil companies

Japanese stocks rose Tuesday morning for a sixth straight day, buoyed by strong earnings results and led by banks and oil companies. The dollar was little changed against the yen.

The benchmark Nikkei 225 index gained 140.06 points, or 0.85 percent, to wrap up the morning session on the Tokyo Stock Exchange at 16,691.29 points.

Since it last fell on Jan. 23, the Nikkei has surged 8.7 percent, more than recouping losses from the mid-month sell-off triggered by the investigation into Internet startup Livedoor Co.

Although the index continued to gain ground Tuesday, the pace of gains was starting to slow at the morning session's end.

Higher oil prices lifted oil stocks, with Nippon Oil Corp. up 2.73 percent to 938 yen (US$7.97).

Financial companies chalked up gains as attention shifted to banks and brokerages away from technology issues. Mizuho Financial Group rose 2.54 percent to 966,000 yen (US$8,210).

Strong earnings from electronic components maker Kyocera Corp. lifted that company's stock nearly 8 percent to 10,300 yen (US$87.50). The company said its group net profit jumped 76.4 percent to 25.78 billion yen (US$219 million) in the October-December quarter.

The broader Topix index, which includes Japan's largest companies, rose 13.69 points, or 0.80 percent, to 1,717.97 Tuesday morning. Gainers beat losers 928 to 607 on the broader first section of the Tokyo exchange.

In currencies, the U.S. dollar was trading at 117.66 yen on the Tokyo foreign exchange market at 11 a.m. (0200 GMT) Tuesday, up 0.05 yen from late Monday in New York.

The euro rose to US$1.2098 from US$1.2086 late Monday.

The yield on the 10-year Japanese government bond rose to 1.5600 percent from Monday's finish of 1.5550 percent. Its price slipped 0.04 point to 98.63.

January 31, 2006

From Mainichi Daily:

Japan's economy is picking up steam!

Japan's unemployment rate falls to 4.4 percent in December

Japan's unemployment rate fell to 4.4 percent in December and averaged the same rate for the rest of 2005, marking the third straight year of improvement for the Japanese labor market.

The December jobless rate, announced by the Internal Affairs and Communications Ministry, was down 0.2 percentage points from the 4.6 percent reported for November and was slightly better than analysts' forecast of 4.5 percent.

The decline was an encouraging sign because the jobless rate had risen in previous months after falling as low as 4.1 percent last June _ the lowest in seven years.

Chief Cabinet Secretary Shinzo Abe said the drop was due to "the government carrying out delicate reforms and policies."

"The economy is revitalizing through the reforms," Abe said, adding that there is regional disparity that needs to be addressed.

After more than a decade of stagnation, the world's second largest economy has been slowly making a turnaround due to stronger exports and consumer spending, while companies have cut costs and boosted profits.

Japan's seasonally adjusted unemployment rate averaged 4.4 percent in 2005, down from 4.7 percent in 2004, and falling for the third straight year.

The ministry also said the total number of jobless was 2.65 million. It was the first drop in two months, down 50,000 from the same month a year earlier.

The jobless rate hit 5.5 percent in 2002 and 2003, the highest rate since the government began keeping such records in the 1950s.

January 31, 2006

Great input!
Further justifies "Why the I."
Any good info on China Markets?

I sure wished that both the China and the India stock markets were represented more heavily in our I index because that is where the grow will be in the future. The Indian stock market should do well because of all the outsourcing business they are getting due to the highly educated engineers they are producing every year and their growing middle class. But, i sure like investing in the ETFs (VPL and EFA) where you could trade like a regular stock. It beats investing in individual stocks since it is less risky and not restrictive like a mutual fund where they discourage active traders. Actually, I have done well with my regular stocks as compared to my IRAs since i dont trade much since I have to pay tax whenever I sell my money making stocks. I have a stock which I have not sold for 21 years and it is a 100 baggers. This company keeps on increasing their dividends annually. This year they will increase by 18% and I am getting about 80% dividend return on my initial shares in this company. It is like rolling a snowball down the mountain where it gets bigger and bigger as it reaches the bottom of the mountain. Those dividend reinvestment programs are great!!

But, the big question for the I fund is the foreign exchange rate. Both the USD and the Euros will drop due to the increase of the interest rate by the FEDs. But, this will be only be temporary since further increase will have a major impact on the US housing market. It will be a very exciting year for the I fund investors.

Overseas M & A activities:


The M&A activities will only increase overseas because the overseas stocks are undervalued as compared to the US market. Also, with the drop of the US $$ in the near future due to the slowdown in the interest rate increase by the Federal Reserve, overseas M & As will use their strong currency (euros and yen) to buy US companies at discount prices. The level of the M&A is increasing quite rapidly here in Japan where the companies would have to increase their stock value or else be taken over by M&A activities.

Last year, the appreciation of the dollar hurt our returns on the I fund but this year it will benefit us.

Global growth seen weathering through
Energy prices, slowdown in U.S. spending are key risks


By Aude Lagorce, MarketWatch

Last Update: 2:00 PM ET DAVOS (MarketWatch) -- The global economy is expected to pull through again in 2006 with steady but not spectacular growth, despite the ballooning U.S. budget deficit, tightening interest rates, and the specter of higher energy prices, said economists at the annual meeting of the World Economic Forum in Davos.

"It will be another Goldilocks kind of year" said Laura Tyson, dean of the London Business School and a participant in Wednesday's conference on the "Outlook for the Global Economy."
The onset of a new year customarily brings dire warnings about the state of the world economy. In 2005, observers worried that massive global imbalances and rising energy prices would cause a slowdown in the U.S., a collapse in the dollar and possibly a global recession.
Instead, the global economy brushed off a spike in oil prices and, boosted by record growth in China and a recovery in Europe and Japan, grew at a robust 3.1%.
"The fact that some dire predictions didn't materialize mainly reflects the robustness of the U.S. economy. 2005 has showed us that it is able to absorb more shocks than previously thought," said Jacob Frenkel, vice chairman of AIG.
Barring a hard landing in Beijing or major disruptions to oil supplies, 2006 should bring more of the same.
"I see risks but no reason for a major crash in 2006," said Colin Bradford of the Global Economy and Development Center at the Brookings Institution.
Forecasters at the Centre for Economics and Business Research expect growth of 4.1% this year, down from 4.3% in 2005. The real harm, they say, won't happen until 2007, when they predict growth will weaken to 3.5% as France and Germany screech to a halt and Chinese growth cools down.
New Fed Chairman, housing bubble risk in the U.S.
The first major event of the year on the global markets scene will be the departure at the end of this month of Federal Reserve Chief Alan Greenspan after 18 years at the helm.
"When he leaves ... he will take away 18 years of confidence the markets have invested in him," said Stephen Roach, chief economist at Morgan Stanley.
Although his successor, Ben Bernanke, is inheriting a domestic economy in decent shape, his first test will come quickly. He must steer the housing market to a soft landing to avoid a sharp slowdown in consumer spending.
A U.S. housing market bust, combined with at least two expected interest rate hikes, would cause Americans to rein in spending, with a major impact on the global economy. Much of the spending of recent years has been on the back of higher house prices, as U.S. consumers have remortgaged their homes to release equity.
"There's a little bit of a sign of rust but no sign of bust in the U.S. property market. The weakest link of the global economy in 2006 is the U.S. consumer," said Morgan Stanley's Roach.
Outside of the U.S., the global housing boom of the last three years is also expected to slow down as the European and Japan central banks raise rates in an effort to mop up the easy money that has fueled the property bubble.
After nearly five years of zero percent interest rates, Bank of Japan is seen tightening its policy -- not necessarily by raising rates, but by cutting back on its purchase of government bonds from Japanese banks, which pumps yen into the market.
In the U.S., the threat of a property bust combined with higher interest rates and continuing high oil prices suggest the economy likely won't be able to maintain the same momentum as in 2005, when it grew around 4%.
"The major risk to the global economy is complacency. We cannot keep thinking that we can shrug off the deficit and the property bubble," said Roach.
Tyson of the London Business School agreed, but argued that the biggest risk to the global economy in 2006 is that of an energy supply shock and energy prices reaching new highs.
The World Bank forecasts that a supply shock that reduced oil deliveries by 2 million barrels a day could push prices to more than $90 a barrel for more than a year and reduce growth by 1.5% the following year.
Despite these concerns, observers say U.S. growth of 3% still looks possible, which would be one of the strongest rates managed anywhere in the world -- except in China and India.



China powers ahead, window of opportunity in Europe
The Chinese superpower is expected to continue its rise in the charts after growth of close to 10% helped it become the world's fifth-largest economy in 2005.
New data released Wednesday indicates that China has risen even further in the rankings and may have taken over G7 members France and Britain in its economic output.
The OECD predicts China's economy will grow by 9.4% in 2006 and 9.5% in 2007. And although there are signs of overheating in India, the world's largest democracy should see growth in the range of 6% to 7% in 2006.
Analysts say 2006 should be the year when domestic consumption replaces investment as the driver of growth in China. Changes are beginning to happen, said Min Zhu, executive assistant president at the Bank of China at the conference. He noted that foreign direct investment is now down to 40% of GDP compared to 46% in 2004 and that the government is aware of the need to boost domestic growth and get rid of excess capacity is sectors like steel and aluminium.
Despite issues of overcapacity and the increasing disparity between the fast-developing east coast of China and the rest of the country, he believes strong growth will continue and will become less based on exports and foreign investment and more on the service sector and domestic demand.
"There are signs that China's export growth is weakening and that domestic demand and imports are picking up," said World Bank Chief Economist Francois Bourgignon.
In the currency markets, the question of whether China will allow the yuan to revaluate further will be a key preoccupation.
But AIG's Frenkel said the exchange rate reform in China won't solve the U.S. trade imbalance. Frenkel said for the U.S. deficit to decline, the country needs to start saving more. The national U.S. savings rate hovers around 10% compared to 45% in China.
Tyson summed up the situation by saying that the U.S. needs to consume less and save more while China must do the exact contrary.
Europe's recovery to gather steam
Turning to Europe, economists said it will lag behind, even as the recovery there appears to be on firmer ground.
Marc Touati, chief strategist at Paris-based Natexis Banques Populaires, believes growth will gather steam in the euro zone unless the European Central Bank raises interest rates too fast, provoking a rise of the euro against the dollar.
"2006 is a window of opportunity for Europe before the French and Italian elections and the VAT hike in Germany take a toll on growth again," Touati added.
David Owen, European economist for Dresdner Kleinwort Wasserstein, says the euroland recovery has been driven by strong export growth, facilitated by a weaker euro, and a surge in investment, but he warns that a pick up in consumer spending will be needed in the second half for the growth to be sustained.
Even then, forecasts are unanimously cautious. Touati sees growth of about 2%, an improvement from the 1.3% of 2005, but "still nothing to boast about."