Sunday, March 7, 2010

International Headlines $ICBC $FXI $CAF

International Headlines

·         China – hints at potential action on the yuan - At a news conference Saturday, Zhou Xiaochuan, the governor of the central bank, acknowledged that China has been using exchange-rate controls, which hold down the value of the yuan against the dollar.  He said such a policy would be "withdrawn sooner or later," but added that current economic outlook was still uncertain; the tone of the speech was inline w/comments from other officials: the yuan could rise in value in the future, but not anytime soon – Thestreet.com/NYT 

·         China & the yuan – Roubini says China will permit a “token” 4% increase in the yuan over the next 12 months.  Roubini’s forecast is less aggressive than the median expectation in a Bloomberg poll, which calls for a 5% rise in the next year.   Bloomberg 

·         China’s PBOC says it will keep a moderately loose monetary policy and “reasonably sufficient” liquidity – Bloomberg

·         China moves to cut back local lending – Chinese municipalities have been creating financing vehicles that raise debt as a way to bypass loan limits; the municipality in turn guarantees these vehicles.  However, Chinese officials will move to ban this guarantee as part of a broader move to cut back on surging lending occurring in several pockets of the government.  There is a worry that a sharp reduction in this local lending could lead to a surge in bad debt as it would deprive many projects of needed financing.  Bloomberg 

·         China banks should raise capital via profit growth according to China’s bank regulator.  Banks should use retained earnings first before seeking alternative means.  Bloomberg

·         China’s ICBC says it will slow its lending in ’10 (new lending will be down Y/Y) and added that its capital was sound; the co says there was no mis-use of loans lent in H2:08 and ‘09.  ICBC says it has no plans to raise capital at the moment.  Bloomberg 

·         China - China "will definitely" allow eligible foreign firms to list in Shanghai, the city's mayor Han Zheng said Sunday.  "We will definitely launch the international board at the appropriate time. At the moment, however, there are lots of systems and rules to set up, and the relevant government departments are actively working on such tasks,"  WSJ  

·         China’s trade surplus may have narrowed to only $8B in the month of Feb according to Bloomberg, down from $14B in Jan; expectations by economists call for a gap of ~$7.15B – Bloomberg 

·         Chinese Foreign Minister Yang Jiechi said on Sunday that relations with the United States had been "seriously disrupted," after a rise in friction between the two big powers.  Reuters 

·         China is pushing for the yuan to be added to the basket of currencies that comprise the IMF's special drawing rights, aiming for its inclusion in 2015, Japanese daily Sankei Shimbun said on Saturday – Reuters 

·         Euro – Paul Volcker tells Bloomberg that he remains a believer in the euro and that its prob. a positive that the eurozone’s first major test came from one of its smaller economies – Bloomberg

·         Europe may require a Eurozone monetary fund w/powers similar to the IMF according to the German Finance Minister; Schaeuble says that the Greek incident highlights the need for an “institutions that has the powers and know-how of the IMF” – Bloomberg 

·         UK – Darling won’t unveil any new spending cuts in the next UK budget; the budget could hit on Mar 24; the lack of any new austerity measures could put further pressure on the pound.  London Times.  http://business.timesonline.co.uk/tol/business/economics/article7052557.ece  

·         UK - The British Chambers of Commerce has lowered its GDP growth expectations for 2011, warning against complacency after the UK's exit from recession – BBC 

·         Iceland – as expected, Iceland rejected a referendum that would repay $3.5B to London and The Netherlands following the collapse of Icesave; Steingrimur Sigfusson, Iceland’s finance minister, said the government remained committed to repaying the full amount and predicted that negotiations could resume within days in search of a compromise – London Telegraph.  http://www.telegraph.co.uk/news/worldnews/europe/iceland/7388449/Icelanders-reject-plan-to-repay-3.5bn-to-Britain-and-Netherlands.html  

·         Greece – French President Sarkozy says the euro region must be ready to stand by its obligations to Greece should the country struggle to fund its budget; Sarkozy added that Greece doesn’t need any financial assistance at the moment – Bloomberg

·         Greece – Germany’s Merkel urged regulators to take action against sovereign CDS speculators.  “We must succeed at putting a stop to the speculator’s game with sovereign states,”.  Merkel said she would discuss the issue w/the US.  Merkel repeated that there was no need for a bailout of Greece.  London Times.  http://business.timesonline.co.uk/tol/business/economics/article7052224.ece  

·         Greece – PM Papandreuo has majority support in his country (51.9% in support vs. 47.5% who don’t) despite recent efforts to cut the country’s budget – Bloomberg 

·         Greece - French President Nicolas Sarkozy on Sunday said a number of European Union countries were preparing a support package for Greece, even though he doesn't believe the Greek government will need financial help (Greece’s PM is currently in France, having visited Germany last Fri, and will be coming to the US this week).  WSJ

·         Dubai World may offer new shares to existing shareholders and its parent company may sell some of its stake to list in London; the moves could raise as much as $1B – Bloomberg 

·         Iran – China backtracked a bit on the Iranian issue, stating that sanctions can’t resolve the Iranian nuclear issue (a Chinese diplomat last week appeared to signal that China may back a series of sanctions against the country); Iran’s foreign ministry expressed confidence on Sun that world powers won’t reach a consensus on a new round of sanctions – Bloomberg 

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