Sunday, August 22, 2010

International Headlines; Irish Banks looking Suspect;China’s property bank stress tests $IRE $CAF

International Headlines

· Australia’s elections – hung parliament most likely, a neg. for Australian markets - With 78 percent of votes counted, a hung parliament was most likely, with two possible scenarios for a minority government: a conservative administration backed by rural independents or a Labor government backed by Green or green-minded MPs; it appears as if a government led by Abbott has the best chance of prevailing in terms of seat count (which would wind up being a pos. for the mining industry).  Reuters/Bloomberg

· Irish Banks – bidders for Ireland’s EBS are seeking assurances from the government that it will backstop any exceptional losses incurred.  Reuters 

· Irish Banks – the Ireland NAMA (National Asset Mgmt Agency) will apply a discount of more than 60% to a second pool of loans it is buying from Anglo Irish Bank – Bloomberg 

· German eco growth – the country’s chamber of industry and commerce (DIHK) raised its forecast for ’10 eco growth from +2.3% to +3.4% (there have been a bunch of various groups and government bodies to come out and raise the country’s growth view and most of them are due to the robust Q2 GDP # just posted) - Reuters 

· UK interest rates – a new policy forecast from a British think tank has forecast the BOE hiking rates up to 8% within the next few years to stave off inflation; the think tank thinks economic growth will accelerate, resulting in surging inflation – London Telegraph.

· China’s property bank stress tests said to find risks; a 50% drop in home prices (which was one of the parameters of the most recent tests) would cause the NPL ratio, which is now 100bp, to rise another 100-200bp; the tests reveal that overall bank capital quality would remain pretty healthy even under adverse stress scenarios – Reuters 

· China real estate – an oped in the WSJ this weekend discusses how China’s real estate market is a bubble – the government misallocated billions towards housing and real estate in general.  WSJ 

· China Construction Bank earnings come in better-than-expected; Q2 net 35.6 bln yuan vs consensus f'cst 34.27 bln yuan; profit growth slowed from Q1 – Reuters 

· BYDthe Chinese auto maker posted Q2 earnings that fell short of St expectations; Q2 net 716 mln yuan, lags f'cast of 1.1 bln yuan; It sold 123,000 cars in the second quarter, down 24.5 percent from the previous quarter.  – Reuters 

· China eco growth + commodities – the head of  Rio Tinto says China’s economic growth will slow to 6-7% in the coming years, which could drive commodity prices down to their ’08 lows.  Sydney Morning Herald

· Japan - Japanese Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa may not meet next week as expected, Jiji news agency reported.  The two could hold a phone meeting instead.  The government doesn’t want to give the impression that it is interfering in monetary policy.  The BOJ is unlikely to intervene until the next scheduled meeting on Sept 6-7 unless the yen surges to 80.  Reuters

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