Monday, August 24, 2009

Roubini sees 'big risk' of double-dip recession: report

Business Times - 24 Aug 2009

NEW YORK - Nouriel Roubini, one of the few economists who accurately predicted the magnitude of the world's recent financial troubles, sees a 'big risk' of a double-dip recession, according to an opinion piece posted on the Financial Times' website on Sunday.

Prof Roubini, a professor at New York University's Stern School of Business, said it appears the global economy will bottom out in the second half of this year, and that US and western European economies will likely experience 'anaemic' and 'below trend' growth for at least a couple of years.

Yet he warned that policymakers face a 'damned if they do and damned if they don't' conundrum in trying to unwind their massive fiscal and monetary stimuli to keep the global economy from toppling into a depression.

He said that if policymakers try to fight rising budget deficits by raising taxes and cutting spending, they could undermine any recovery.

On the other hand, he said if they maintain large deficits, worries about excessive inflation will grow, causing bond yields and borrowing rates to rise and perhaps choking off economic growth.

Prof Roubini said another reason to worry is that energy, food and oil prices are rising faster than fundamentals warrant, and could be driven higher by speculation or if excessive liquidity creates artificially high demand.

He said the global economy 'could not withstand another contractionary shock' if speculation drives oil rapidly towards US$100 per barrel. US crude oil futures traded on Friday at about US$73.83.

Prof Roubini said the anaemic growth he expects would follow a couple of quarters of rapid growth, as inventories and production levels recover from near-depression levels. -- REUTERS

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Wednesday, August 19, 2009

The Greenback Effect

August 19, 2009
Op-Ed Contributor

The Greenback Effect

Omaha

IN nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions.

The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy — greenback emissions.

To be sure, we’ve been doing this for a reason I resoundingly applaud. Last fall, our financial system stood on the brink of a collapse that threatened a depression. The crisis required our government to display wisdom, courage and decisiveness. Fortunately, the Federal Reserve and key economic officials in both the Bush and Obama administrations responded more than ably to the need.

They made mistakes, of course. How could it have been otherwise when supposedly indestructible pillars of our economic structure were tumbling all around them? A meltdown, though, was avoided, with a gusher of federal money playing an essential role in the rescue.

The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.

To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.

Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent. Admittedly, other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out.

An increase in federal debt can be financed in three ways: borrowing from foreigners, borrowing from our own citizens or, through a roundabout process, printing money. Let’s look at the prospects for each individually — and in combination.

The current account deficit — dollars that we force-feed to the rest of the world and that must then be invested — will be $400 billion or so this year. Assume, in a relatively benign scenario, that all of this is directed by the recipients — China leads the list — to purchases of United States debt. Never mind that this all-Treasuries allocation is no sure thing: some countries may decide that purchasing American stocks, real estate or entire companies makes more sense than soaking up dollar-denominated bonds. Rumblings to that effect have recently increased.

Then take the second element of the scenario — borrowing from our own citizens. Assume that Americans save $500 billion, far above what they’ve saved recently but perhaps consistent with the changing national mood. Finally, assume that these citizens opt to put all their savings into United States Treasuries (partly through intermediaries like banks).

Even with these heroic assumptions, the Treasury will be obliged to find another $900 billion to finance the remainder of the $1.8 trillion of debt it is issuing. Washington’s printing presses will need to work overtime.

Slowing them down will require extraordinary political will. With government expenditures now running 185 percent of receipts, truly major changes in both taxes and outlays will be required. A revived economy can’t come close to bridging that sort of gap.

Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, they can opt for high rates of inflation, which never require a recorded vote and cannot be attributed to a specific action that any elected official takes. In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.... The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

I want to emphasize that there is nothing evil or destructive in an increase in debt that is proportional to an increase in income or assets. As the resources of individuals, corporations and countries grow, each can handle more debt. The United States remains by far the most prosperous country on earth, and its debt-carrying capacity will grow in the future just as it has in the past.

But it was a wise man who said, “All I want to know is where I’m going to die so I’ll never go there.” We don’t want our country to evolve into the banana-republic economy described by Keynes.

Our immediate problem is to get our country back on its feet and flourishing — “whatever it takes” still makes sense. Once recovery is gained, however, Congress must end the rise in the debt-to-G.D.P. ratio and keep our growth in obligations in line with our growth in resources.

Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar’s destiny lies with Congress.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

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FACTBOX-World Gold Council Q2 2009 gold demand trends 19 Aug 2009 14:01

   LONDON, Aug 19 (Reuters) - Global gold demand fell 9 percent in the second quarter to 
719.5 tonnes as rising prices and the impact of the global recession curbed jewellery buying,
a report released Wednesday by the World Gold Council showed.
However, a rise in investment demand for products such as gold-backed exchange-traded
funds prevented a sharper drop in consumption, it added.
Below are the central findings of the World Gold Council's Gold Demand Trends report for
the second quarter of 2009.

IDENTIFIABLE GOLD DEMAND (TONNES)

2007 2008 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 %Ch
Q2'09
vs Q2'08
Jewellery Consumption 2404.4 2185.8 446.7 517.8 673.1 548.3 345.1 404.1 -22
Industrial & Dental 461.7 435.6 116.0 117.6 112.2 89.7 78.8 93.1 -21
-Electronics 310.6 292.7 80.5 81.3 76.4 54.5 50.2 60.4 -26
-Other Industrial 93.2 86.9 21.3 22.2 22.0 21.5 15.8 20.2 -9
-Dentistry 57.8 55.9 14.3 14.1 13.8 13.7 12.8 12.5 -11
Identifiable Investment 685.9 1183.0 170.7 151.9 420.1 440.2 600.0 222.4 46
Net Retail Investment 432.5 862.1 98.1 147.9 270.6 345.5 134.9 165.7 12
-Bar Hoarding 236.5 391.8 49.4 92.2 126.4 123.9 -33.1 59.4 -36
-Official Coins 137.0 191.3 28.6 36.5 61.8 64.4 72.9 59.2 62
-Medals/Imitation Coins 72.6 69.6 10.7 14.5 25.0 19.4 2.4 8.3 -43
-Other Id'd Retail Invest. -13.6 209.3 9.3 4.7 57.4 137.9 92.7 38.7 720
ETFs & Similar Products 253.3 320.9 72.7 4.0 149.5 94.7 465.1 56.7 1315

Total Identifiable Demand 3551.9 3804.4 733.4 787.3 1205.4 1078.3 1023.9 719.5 -9

Source: World Gold Council Gold Demand Trends report, Q2 2009
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Tuesday, August 18, 2009

Hong Kong IPO Pipeline - Aug 18 18 Aug 2009 15:23

     HONG KONG, Aug 18 (Reuters) - The following are some of the 
major companies planning initial public offerings on the Hong
Kong stock exchange.
Please contact Fion Li at (+852) 2843-6936 to submit entries
for this diary.
Click on the square bracket for the latest story.
* Denotes new entry or update
** A- and H-shares combined
===============================================================
DEBUT COMPANY SHRS PRICE MANAGERS PROCEEDS
DATE (MLN) (HK$/SHR) (US$MLN)
===============================================================
Sept Sinopharm N.A. N.A. CICC, UBS 1,030
2009 Holdings Morgan Stanley
[ID:nHKG262363]
---------------------------------------------------------------
*Sept China South N.A. N.A. Merrill Lynch, 513
2009 City Holdings BOCI
[ID:nHKG232386]
---------------------------------------------------------------
Sept China Metallurgical N.A. N.A. Morgan Stanley 4,000**
2009 Group CICC, Citi,
[ID:nHKG75082] Citic Securities
---------------------------------------------------------------
Oct China Vanadium N.A. N.A. Citigroup 200
2009 Titano Magnetite
Mining Co Ltd
[ID:nHKG218674]
---------------------------------------------------------------
*Oct China SCE N.A. N.A. Deutsche Bank, 400
2009 Property Holdings Morgan Stanley
[ID:nHKG320663]
---------------------------------------------------------------
Q4 Wynn Macau N.A. N.A. JPMorgan, UBS 500-1,000
2009 <WYNN.O> Morgan Stanley
[ID:nSP478097]
---------------------------------------------------------------
Q4 Lung Ming N.A. N.A. 500-1,000
2009 [ID:nHKG44842]
---------------------------------------------------------------
Q4 Longyuan N.A. N.A. Morgan Stanley 700
2009 Electric
[ID:nHKG185111]
---------------------------------------------------------------
H2 Las Vegas N.A. N.A. Goldman 1,500-2,000
2009 Sands' <LVS.N>
Macau assets
[ID:nSIN441766]
---------------------------------------------------------------
2009 Fantasia Group N.A. N.A. UBS, Goldman 500
[ID:nHKG164817]
---------------------------------------------------------------
End Evergrande Real N.A. N.A. CS, Goldman 1,500
2009 Estate Group Merrill Lynch
[ID:nHKG164817]
---------------------------------------------------------------
*End China Minsheng 3,320 N.A UBS, BOCI 2,930
2009 Banking Corp
<600016.SS>
[ID:nnSEO13647]
---------------------------------------------------------------
End Sany Heavy N.A. N.A. HSBC 200
2009 Equipment Co
[ID:nHKG259152]
---------------------------------------------------------------
*End Trinity N.A. N.A. JP Morgan, 200
2009 [ID:nHKG129890] Citigroup
---------------------------------------------------------------
End Yingde Gases N.A. N.A. Morgan Staley 300
2009 [ID:nHKG54140] Goldman
---------------------------------------------------------------
2009 China Pacific N.A. N.A. CICC 3,500
/2010 Insurance (Group) CS, UBS
Ltd <601601.SS> Goldman
[ID:nSHA309267]
---------------------------------------------------------------
2009/ Powerlong Group N.A. N.A. UBS, Goldman 230
2010 [ID:nHKG168099]
---------------------------------------------------------------
2009 Glorious Property N.A. N.A. UBS, JP Morgan 1,000
/2010 Holdings Deutsche Bank
[ID:nHKG164817]
---------------------------------------------------------------
Q1 AIA <AIG.N> N.A. N.A. Morgan Stanley 4,000
2010 [ID:nHKG20632] Deutsche Bank
---------------------------------------------------------------
2010 Wilmar N.A. N.A. BOCI, Goldman 3,000-4,000
International's Morgan Stanley
<WLIL.SI>
China unit
[ID:nHKG120371]
---------------------------------------------------------------
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Monday, August 17, 2009

ANTA Sports H1 net profit rises 40.1 pct 17 Aug 2009 13:09

  Aug 17 (Reuters) - Six months ended June 30, 2009 
(in million yuan unless stated)
Shr (yuan) 0.2443 vs 0.1744
Interim Div (H.K. cents) 12.0 vs 10.0
Net 608.3 vs 434.3
Total revenue 2,817.0 vs 2,205.2
Company name ANTA Sports Products Ltd.
Books close September 1-4
Dividend payable September 11
NOTE - ANTA Sports <2020.HK> is one of China top home-grown
sportswear brand and retailer.
The calculation of share earnings is based on the weighted
average of 2,490.06 million shares in issue during the period vs
2,490.00 million shares the same period a year ago.
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Tingyi H1 net profit rises 40.57 pct 17 Aug 2009 12:43

    Aug 17 (Reuters) - Six months ended June 30, 2009 
(in million US$ unless stated)
Shr (U.S. cents) 3.21 vs 2.28
Interim Div (U.S. cents) nil vs nil
Net 179.38 vs 127.61
Turnover 2,501.67 vs 2,049.25
Company name Tingyi (Cayman Islands) Holdings
Corp.
NOTE - Tingyi <0322.HK> is an instant noodle maker.
The calculation of share earnings is based on the weighted
average of 5,586.79 million shares in issue during the period vs
5,588.71 million shares the same period a year ago.
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Friday, August 14, 2009

Analysis sees oil falling to below US$10

Business Times - 14 Aug 2009

(LONDON) Crude oil may plunge to less than US$10 a barrel in the next decade after surging to a record US$147 last year, said Robert Prechter, who achieved fame for cautioning on Oct 5, 1987, that stocks would crash.

'I expect crude oil prices to fall below US$10 a barrel sometime over the next decade,' Mr Prechter, founder of Elliott Wave International Inc, said in an e-mail on Wednesday. 'It took many years for it to achieve US$147.50, and it will take a long while for the full retreat to occur.'

Oil should fall to between US$4 and US$10 a barrel based on a technical analysis called Elliott Wave principle, Mr Prechter said in the Elliott Wave Theorist report last month. The forecast rests on a 'supercycle' theory, which through a series of five waves from last century suggests a decline from last year's peak.

Crude oil in New York reached a record high of US$147.50 on July 11, 2008 before tumbling to US$33.20 on Jan 15 this year on expectations that the global recession will sap demand for fuels. Oil has since more than doubled to US$70.70 a barrel in New York.

'The Elliott-Wave picture pretty much assures us that there will be no additional waves of advance to extend the 'peak oil' mania,' Mr Prechter said in the report. 'On the contrary, if five waves are complete from the early 1990s, oil should fall to between US$4 and US$10 a barrel, which, needless to say, supports our deflationary outlook.'

Commodities may have peaked last year and the next major top may be in the late 2030s, Mr Prechter said, citing wave and cycle analyst Harry Dent, who showed a 29-year cycle in commodities, with past peaks in 1920, 1951, 1980 and 2008. Two weeks after Mr Prechter warned in 1987 that stocks would crash, the Dow Jones Industrial Average plunged 23 per cent. He advised betting against US equities three months before the market peaked in October 2007. In February 2009, he recommended ending that bet in anticipation of a 'sharp and scary rebound'.

Technical analysis involves making predictions based on price and volume history. The Elliott Wave principle is named after Ralph Nelson Elliott, an accountant who developed the concept in the 1930s, proposing that market prices unfold in specific patterns, which practitioners today call Elliott waves. - Bloomberg

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Wednesday, August 12, 2009

UPDATE 1-HKEx posts 1st profit rise in 4 quarters 12 Aug 2009 13:30

* HKEx Q2 net HK$1.37 bln vs HK$1.32 bln consensus forecast

* Trading volumes jump 60 percent from first quarter

* Capital raising increases 11-fold from Q1

(Adds comments, share price, details)

By Parvathy Ullatil

HONG KONG, Aug 12 (Reuters) - A stock market rebound helped the world's largest listed exchange operator, Hong Kong Exchanges & Clearing (HKEx) <0388.HK>, end four quarters of shrinking earnings, with trading volume set to continue improving in coming months.

Increased capital-raising and surging fund flows into the region are expected to bolster the exchange's revenues further amid a blazing stock market rally that has sent the benchmark Hang Seng Index <.HSI> up 44 percent so far this year, one of the best performers among major global markets.

"Riding on the bumpy road to recovery, investors are advised to be cautious about potential market volatility," The bourse opeartor warned investors in a statement on Wednesday.

Shares in HKEx, which recently overtook Chicago's CME Group <CME.O> as the world's largest exchange operator by market capitalisation, rose to a 15-month high on Tuesday but were down 2.2 percent by midday Wednesday, in-line with the broad market.

The stock has more than doubled this year, outstripping a 67 percent jump in rival Singapore Exchange's <SGXL.SI> shares as investors bet on a likely deregulation of the Chinese capital markets which is expected to bring more liquidity and trading products into Hong Kong.

Various possibilities including a potential cross-listing of Shenzhen B shares and Hong Kong H-shares, and introduction of China A-share ETF-related derivatives, are being discussed by regulators in both regions, according to media reports.

The bourse operator said in a statement on Wednesday that it would "expand our product and service offerings to position ourselves well for a market recovery".

HKEX reported a net profit of HK$1.37 billion ($200 billion) for the April-June period, compared with HK$1.32 billion a year earlier.

The result beat a consensus forecast of HK$1.32 billion from four analysts polled by Reuters, and marked a 64 percent improvement over the HK$834.24 million profit it reported in the first three months of 2009.

Average daily turnover, the key determinant of exchange revenue, swelled to nearly HK$72 billion in the second quarter, from a dismal HK$45 billion in the first quarter, as confidence in an early turnaround in the Chinese economy took hold and fundraising activity picked up pace.

The IPO pipeline heated up with 11 new listings in the April-June period compared with a seven in the first three months of 2009, while total capital raising rose nearly 11 fold in the second quarter. But the latest figure was still well below the record levels seen in 2006-2007.

HKEx's regional rival Singapore Exchange <SGXL.SI> last week reported a 0.9 percent increase in its June quarter earnings.


HKEx - HKEX 00388
SGX - SGX S68
NASDAQ - CME GROUP A ORD CME


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Monday, August 10, 2009

Zijin 1H Result

    Aug 10 (Reuters) - Six months ended June 30, 2009 
(in million yuan unless stated)
Shr (yuan) 0.133 vs 0.128
Interim Div (yuan) nil vs nil
Net 1,932.69 vs 1,742.40
Revenue 9,376.43 vs 8,212.65
Company name Zijin Mining Group Co. Ltd.
NOTE - Zijin Mining <2899.HK> <601899.SS> is a leading gold
mining enterprise principally engaged in the exploration, mining,
production, refining and sale of gold and other mineral resources
in China.
The figures are prepared in accordance with International
Financial Reporting Standards (IFRS).
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Thursday, August 6, 2009

FACTBOX-The world's biggest casino operators 06 Aug 2009 11:28

 Aug 6 (Reuters) - Following are market shares of some of the 
world's biggest listed casino operators.
Company Market share Total debt
Macau Las Vegas ($ mln)
MGM Mirage <MGM.N> 8 pct 40 pct 19,751.5
Las Vegas Sands <LVS.N> 25 pct 11 pct 12,288.5
Wynn Resorts <WYNN.O> 14 pct 11 pct 5,491.9
Melco Crown <MPEL.O> 9 pct nil 2,313.7
SJM Holdings <0880.HK>* 31 pct nil 1,481.8
Galaxy <0027.HK>* 13 pct nil 1,468.1
Genting <GENT.KL> nil nil 3,015.0

- Market share as of June 30, 2009
- Total debt as of March 31, 2009 except SJM Holdings and Galaxy,
which are as of December 31, 2008
(Sources: Thomson Reuters data, Bernstein and Credit Suisse
estimates, Macau Gaming Inspection and Coordination Bureau)
(Reporting by Julie Goh; Editing by Valerie Lee and Chris Lewis)
((julie.goh@thomsonreuters.com; +603 2333 8036; Reuters
Messaging: julie.goh.reuters.com@reuters.net))
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