Stock Exchange, Finance, Economy

China aims for 2010 GDP growth of 8 pct

2009-12-21T03:57:00.000-08:00

China's government is targeting 8 percent growth next year as the global economy recovers. "Based on the economic growth target of about 8 percent, set by the central government, we aim for industrial output growth at about 11 percent," said Li Yizhong in a webcast on his ministry's site.
Li's comment was the first indication of Beijing's 2010 growth target, a figure that usually is released after the start of the year. The annual target has been set at 8 percent for several years, though growth has exceeded that. Forecasts by private sector economists for China's economic growth next year range from 9 to 11.9 percent, well above the government target.

China's economy expanded 7.7 percent for the first nine months this year, helped by the government's 4 trillion yuan ($586 billion) stimulus package. A government report this month said full-year growth is forecast at 8.3 percent. The World Bank is forecasting 8.4 percent.
China's leaders vowed at an annual planning meeting this month to keep economic stimulus and easy credit policies in place. China's industrial production in the first 11 months of this year rose 10.3 percent from the same period last year. Growth in November alone was 19.2 percent over a year earlier.

Inflation rate climbs to 3.3 percent

2009-12-16T06:57:00.001-08:00

The Central Statistical Office (GUS) informed on Tuesday that prices paid by consumers in November were 3.3 percent higher than in the same month of the previous year.
The y/y inflation was 0.2 percent higher than in October. The prices were pulled up mainly by the food sector, where the increase was 0.7 percent as compared to the previous month and the price of petrol which jumped 0.9 percent.
The main reason behind the more than 3 percent increase in prices was an escalation in fees on apartments and food prices. The inflation would have been even higher if it was not for a fall in the prices of clothing and shoes.

According to analysts, in December as well as in January the inflation will again be higher, but next year the dynamics will begin to reverse. Within less than six months, the inflation rate is projected to drop to 2.5 percent, according to the targets of the Monetary Policy Council.

Japan unveils $80.6 billion stimulus plan

2009-12-08T02:21:00.000-08:00

Japan's government on Tuesday unveiled a new economic stimulus package which includes a 7.2 trillion yen ($80.6 billion) in spending in an effort to appease demands for more public assistance.

However, the plan was "largely expected and there was a delay in approving the stimulus due to disagreements within the coalition, but the final amount is not a big surprise. The government plans to decide on Dec. 15 on the outline of the second extra budget for the current fiscal year ending in March to pay for the stimulus package, Finance Minster Hirohisa Fujii said.

Fujii also said the budget will likely involve sales of new government securities worth around 9.3 trillion, bringing the total debt issuance for the current fiscal year to a record 53.5 trillion yen, according to the report. Prime Minister Yuko Hatoyama's first stimulus plan includes 3.5 trillion yen to help regions, 600 billion yen for employment and 800 billion yen on environmental initiatives.
The package is timely as it comes just ahead of the likely sharp downward revision in Q2 Gross Domestic Product.

China's leaders vow to keep stimulus, easy credit

2009-12-07T01:40:00.000-08:00

China's leaders wrapped up an annual strategy meeting Monday vowing to keep economic stimulus and easy credit policies in place to support a stable recovery, while improving the quality of the country's often chaotic economic growth.
The meeting in Beijing, presided over by President Hu Jintao and Premier Wen Jiabao, ended as expected with calls to ensure the recovery from the global crisis remains stable, the official Xinhua News Agency said in dispatches posted on the government's main Web site.

Officials attending the three-day Central Economic Work Conference agreed that the global slowdown had added to the urgency for China to adjust its model of economic growth, which many economists say is excessively dominated by state-led industries, rather than more sustainable, consumer-led demand. China's economy is forecast to grow 8.3 percent this year, after dipping to a low of 6.1 percent in the first quarter and since recovering to 8.9 percent in July-September.

Like other major economies, China remains wary of pulling back from stimulus policies put in place late last year, given the weakness of key export markets in the U.S. and Europe, where unemployment has continued to rise despite signs the worst of the crisis may be past. To counter the slump in exports, Beijing announced a 4 trillion yuan ($586 billion) stimulus package and urged state-controlled banks to lend lavishly to support a slew of public works projects.

Now, the emphasis is shifting to promoting consumer spending and private investment -- drivers of domestic demand that are seen as crucial for future growth. While consumer demand has remained resilient despite the slowdown earlier in the year, it still accounts for less than half of China's economic activity -- well below the levels in many other major economies.

Another 100,000 jobs lost in the U.S.

2009-12-04T02:44:00.000-08:00

Nearly two years after the Great Recession began, the U.S. economy still is shedding jobs, economists said ahead of the Labor Department's November jobs report.

Another 100,000 jobs were destroyed during November, according to the median forecast of economists surveyed. It would be the 23rd consecutive month of job losses, the longest losing streak since the 1930s. The official unemployment rate is expected to remain at 10.2%, the highest since 1983.

After the steep drop in gross domestic product in late 2008 and early 2009, the economy is growing again, but it's not growing fast enough to create any jobs. So far, at least 7.4 million jobs have been lost, an estimate that's likely to be revised to more than 8 million.
However, most economists we surveyed think the economy will continue to grow at about a 3% annual pace through the middle of next year. That should be just fast enough to encourage some businesses to increase the work week for their remaining workers and to start hiring again.

Because so many jobs were lost at the end of 2008 (and, to a lesser extent, at the end of 2007), the seasonal adjustment process could be assuming that all those losses were due to normal seasonal variations, and not to the extremely distressed economy. That means that November's payroll figures will likely overstate what's really going on

S&P cuts Dubai company ratings

2009-12-03T04:57:00.000-08:00

International ratings agency Standard & Poor's says it has cut the ratings of six Dubai government-backed entities to junk status amid worries about the emirate's willingness to back its indebted companies.

S&P said in a statement Thursday that the downgrades reflect its view that the Dubai, while committed to backing its government-backed companies, "does not consider (their) credit standing or financial obligations as its priority responsibilities."

The moves come as Dubai World, the emirate's biggest conglomerate, is looking to restructure roughly $26 billion of its $60 billion in debt.
The news has sparked fears that heavily indebted Dubai could default on its debt obligations, estimated to be as high as $100 billion.

British services-sector recovery slows

2009-12-03T04:24:00.001-08:00

Business activity in Britain's services sector slowed slightly in November, according to a monthly survey of purchasing managers.

The CIPS/Markit purchasing managers index for the sector slipped to 56.6 from a reading of 56.9 in October, coming in below expectations for a slight rise to 57.0.
Services are the dominant sector in the British economy. A reading of more than 50 means a majority of managers saw a rise in activity, while a figure of less than 50 signals a decline in activity.

The survey found the strongest rise in incoming new business since September 2007. Businesses, however, continued to shed jobs for the 19th consecutive month, although the overall pace of job losses was the slowest in more than a year, the report said.

Latvia: recession will have cost 37 pct of economy

2009-12-02T05:16:00.000-08:00

Latvia's central bank said Wednesday that its economy will have lost over a third of its value over the past two years due to the recession. The Bank of Latvia wrote in its macroeconomics report that compared with the fourth quarter of 2007, when Latvia's four-year boom peaked, gross domestic product would fall 37 percent.

The size of Latvia's economy will return to the level of 2004 -- the year it joined the European Union. For four years after membership, Latvia boasted the hottest economy in the EU, only to see it enter a freefall in the beginning of 2008 -- as the global financial crisis began.

In December 2008 the government was forced to turn to international lenders such as the International Monetary Fund and the EU for a euro7.5 billion ($11 billion) bailout loan to stave off bankruptcy. Latvia's economy is expected to shrink by about 18 percent this year and another 4 percent in 2010.

Meanwhile, the ranks of the jobless continue to swell. On Tuesday, Eurostat, the EU's statistics agency, reported that unemployment in Latvia in October was 20.7 percent, the highest in the 27-member bloc.

Warsaw Stock Exchange kicks off the week

2009-12-01T00:55:00.000-08:00

Investors on the Warsaw Stock Exchange in Poland began the new week in on an upbeat note. The WIG20 index gained 1.5 percent in value, which is a reversal when compared to the last days of the previous week, where the index was on a downward trend following in the footsteps of foreign markets.

Moreover, domestic investors were glad to see good news from the Central Statistical Office (GUS) concerning GDP growth in Q3. Among the WIG20 companies, the largest growth was recorded by copper giant KGHM and oil corporations PKN Orlen and Lotos.
Yesterday's growth resulted in the WIG20 index closing the month in the black.

Since the end of October, it gained 3.4 percent, which is the eighth month this year in which it recorded growth. Since the beginning of January, the WIG20 has shot up 31.5 percent.

China manufacturing activity gains in November

2009-11-30T23:32:00.001-08:00

A pair of much-watched indexes of Chinese manufacturing activity released Tuesday showed continuing expansion in November, adding to the view that recovery in the world's most populous nation remains on track.
HSBC's Manufacturing Purchasing Managers Index rose to 55.7 in November, up from 55.4in October, the bank said. The reading was the fastest pace of expansion since April 2004.

A rival PMI, compiled on behalf of China's National Bureau of Statistics and the China Federation of Logistics & Purchasing, came in at 55.2, unchanged from its level a month earlier but marking the ninth straight month the index has printed above 50.
Among the 11 sub-categories in the Federation's PMI, the new export-order component fell to 53.6 versus from 54.5 in October. The Federation's PMI surveys about 700 companies.

Meanwhile, HSBC said manufacturers reported output growth for the eighth month running in November, driven new orders. HSBC's diffusion index, which surveys about 400 companies, is calculated by adding together the number of positive responses with those indicating conditions are the same from a month earlier.

Polish economy grows in Q3

2009-11-30T04:25:00.000-08:00

Poland's economy grew by 0.5 percent in the third quarter compared with the previous three months, maintaining the country's position as the only major European nation to avoid recession amid the global downturn, official data showed Monday.

The growth helped the annual rate of economic expansion accelerate to 1.7 percent from 1.1 percent in the second quarter, the Central Statistical Office said.
Poland's economy has suffered less from the global economic crisis than many of its neighbors.
Experts credit the large domestic market in the country of 38 million for sustained growth, as well as the fact that Poland did not incur huge debt during the credit boom.

Asia stock rebound

2009-11-29T23:41:00.000-08:00

Asian stock markets rebounded Monday from their steep fall last week after the United Arab Emirates moved to contain the fallout from Dubai's debt crisis.
Major markets jumped by 2 percent or more after tumbling on Friday amid fears Dubai's debt problems could lead to more financial instability and were a sign of hidden troubles elsewhere in the still weak world economy. The UAE's central bank helped soothe investor fears, at least for now, by pledging Sunday to make extra funding available to all banks in the country, including foreign institutions with local branches. However, the bank's announcement, aimed at shoring up confidence and averting a bank run, did not mention any specific help for Dubai. The troubled emirate, which splurged on flashy developments and other investments during the credit boom, said last week it now needed at least a six-month reprieve from paying its roughly $60 billion debt.
In its first day of trade since last week's bombshell, Dubai's stock exchange dropped nearly 6 percent on Monday. Nearly every market traded higher in Asia, with Japan's Nikkei 225 stock average climbing 264.03 points, or 2.9 percent, to 9,345.55. Hong Kong's Hang Seng added 738.34 points, or 3.5 percent, to 21,872.84 and South Korea's Kospi added 2 percent to 1,555.60. Both those markets tumbled nearly 5 percent on Friday.
Uncertainty surrounding Dubai's fate sent Wall Street lower, though the losses were less than other markets. The Dow on Friday fell 154.48, or 1.5 percent, to 10,309.92. The broader Standard & Poor's 500 index fell 19.14, or 1.7 percent, to 1,091.49, and the Nasdaq composite index fell 37.61, or 1.7 percent, to 2,138.44. Wall Street futures pointed to a higher open in the U.S. Monday. Dow futures were up 37, or 0.4 percent, at 10,329 and S&P futures gained 6.7, or 0.6 percent, to 1,096.20.

Polish Economic Ministry predicts 1.5% GDP growth

2009-11-27T01:36:00.000-08:00

The Economic Ministry has announced that year-end GDP should measure about 1.5 percent growth while third quarter GDP growth measured 1.7 percent.

In a report entitled “Analysis of the Economic Situation in Poland between January-September 2009,” that industrial production figures would fall by 3.5 percent for the whole year. In 2009, it predicts that GDP growth will measure about 1.5 percent, a figure that has been influenced by external factors including the credit market and measures taken against the global financial crisis. The Ministry's Department of Analyses and Prognoses predicts that the country's third quarter GDP growth measures 1.7 percent. Ministry analysts foresee a fall in production for the year on end measuring about 3.5 percent on average. The January-October period has seen a drop in production of about five and a half percent, though the third quarter has seen some improvement.

It is important to note that the decrease in production in III quarter was not as severe as in previous quarters, which may indicate a gradual end to a negative trend in industrial output growth which began already in the fourth quarter of 2008.

2009-11-26T14:10:00.000-08:00

Last week stocks on Wall Street were struggling around very important resistance levels. From the beginning of the week the NYSE indices had been fluctuating in narrow ranges, without showing any signs of potential extraction.

The S&P 500 is still just under 50 percent of the Fibonacci retracement, struggling with a long-term downward trend line. The Eurodollar was also moving in the range of 1.4800-1.5000, without showing any determination to increase permanently above the level of 1.5050. Taking into consideration the latest statement Fed in which the bank said that interest rates would be kept at the current low level “for an extended period of time,” investors can be sure that the dollar is still going to be borrowed in carry-trade transactions.

Last week on the Warsaw Stock Exchange began with a strong intra-day increase of the WIG20, which set a new year-to-date high at the level of 2,429 points. The more than three percent growth of the Polish blue-chip index on Monday was lead mainly by banks. Better-than-expected quarterly results from PKO BP (+4.7 percent) have supported investment sentiment and led the rally. We can still observe that investors are focused mainly on large and liquid companies in order to sell them easily in a case of a downturn. In the following days the WIG20 returned to the upward trend line, which was crossed for the third time this week. From the technical point of view, the WSE is facing a threat of a double peak, but everything depends on the situation on foreign markets.

Anxiety among investors is increasing along with the divergences between some markets. US stocks and gold set new highs, while oil and the Eurodollar are moving in a narrow range. This situation seems to cause a lot of uncertainty, but market participants should be patient and wait for the final outcome.

US economy below estimates

2009-11-26T13:20:00.001-08:00

U.S. Gross Domestic Product increased 2.8% from July to September, below the 3.5% increase previously estimated by the government, according to preliminary figures by the U.S. Commerce Department. The decrease was due to downward revisions in consumer spending and business investment in nonresidential structures, as well as changes to imports and exports. After the release of U.S. GDP, USD/JPY decline from Monday’s high at 89.20 has extended below 88.55 support, and the Dollar has dipped to 88.35, its lowest level since early October. Dollar and Yen have edged up against major rivals.

According to the GDP report, massive job cuts by businesses are paying off for them. Corporate profits increased at a 10.6% quarterly rate, the fastest rate since 2004. In the prior quarter, profits rose at a 3.7% rate. Growth in the third quarter was the strongest in two years, the government said. Before growing in the June-to-September quarter, the U.S. economy had shrunk for four straight quarters for the first time since the Great Depression.

The economy shrank at a 0.7% annualized rate in the second quarter and at a 6.4% pace in the first quarter. The figures are seasonally adjusted and adjusted for price changes. Third-quarter growth was due to higher consumer spending and robust government spending, among other factors.

Poland is not friendly for the business

2009-11-26T05:47:00.000-08:00

In a World Bank report issued on the last Monday, Poland was ranked 151 out of 183 evaluated countries in relation to how easy its for businesses to pay tax.

On average, a Polish company has to pay 40 taxes, which eat up 42.3 percent of profits. On average, a company spends 395 hours each year to pay the obligations to the tax office.
The main criteria were the number of taxes to be paid, their value and how much time it takes to cover these obligations.

The best situation is in the Maldives, where companies only pay one tax and the whole operation takes less than one hour. On the opposite pole is Belarus, where companies have to pay 107 different taxes which takes approximately 900 hours every year.

Poland's unemployment rate rises to 11.1 percent

2009-11-26T04:41:00.000-08:00

Official measurements from the Central Statistics Office (GUS) suggest that Poland's jobless rate rose to 11.1 percent during October, up from 10.9 percent in September. The figures, released on Wednesday, point to an anemic labor market in spite of Poland's relatively stable economy.

Out of a population of 38 million there were over 1.74 million people registered as unemployed at the end of October, according to GUS.

After the collapse of communism in the early 1990s, Poland suffered from high rates of unemployment. The trend continued into the next decade when the jobless rate reached a peak of 20.7 percent in February 2003. Accession to the EU in 2004 brought Poland robust economic growth and a healthy jobless rate, which fell to a low of 8.8 percent in October 2008 just before the global economic crisis impacted.

Taiwan's economy shrinks 1.29% in third quarter

2009-11-26T04:25:00.001-08:00

Taiwan's economy shrank a smaller-than-expected 1.29% in the third quarter from a year earlier, narrowing from a 7.5% decline in the second quarter, indicating the island's economy is poised to exit its worst-ever recession, according to wire reports Thursday. The government amended its growth forecast for 2009 to a contraction of 2.53% from a previous forecast for a 4.04% decline made in August.

Dollar falls to 14-year low vs yen

2009-11-26T04:10:00.000-08:00

The dollar tumbled to 14-year low against the yen Thursday, adding to pressure on Japan's beleaguered exporters, amid indications U.S. interest rates will remain low and the Federal Reserve isn't overly concerned about the dollar's slide. The dollar sank to 86.27 yen in Tokyo trading, the lowest since July 1995, and sending the Nikkei 225 stock average down by 0.6 percent to 9,383.24. It later recovered to near 86.80 but dealers were not ruling out further weakness in the currency.
Analysts said some investors were selling the dollar to buy gold, which surged to a record Thursday, and other commodities. The 16-nation euro, meanwhile, bought $1.5085 in European morning trade, down from $1.5132 late Wednesday in New York. The euro had reached $1.5142 Wednesday, its highest point since August of last year.
A strong yen is bad for Japan's economy because it erodes overseas income for the country's big auto and electronics exporters. The dollar's latest plunge also adds to concerns over China's tight currency controls, which its trading partners say are giving it an unfair advantage in export markets.
Currency traders seized on the reference to the dollar as the Fed is usually wary of talking about changes in currency values. A strong dollar tends to fuel deflation by reducing the price of imports and raw materials. Falling prices can cut into corporate profits and could lead to lower wages.