Asian Business news summary:
SINGAPORE: Asian currencies gain from dollar's woe - Profit-taking trims stock market gains: Asian currencies made slow gains on Monday, helped by the US dollar's fall against the yen, but Indonesia's troubles remained a blot on the horizon. Worries about spiraling food prices and potential unrest in Indonesia ahead of next week's presidential elections continued to hamper trade. Data released on Monday showed month-on-month inflation jumped 12.76% in February after a 6.88% rise in January. Food prices rose 16.07% in February.
1. INDONESIAN RUPIAH: The rupiah held up above 9,000 per dollar, largely due to traders' reluctance to commit themselves in the face of continuing uncertainty over Jakarta's plans to stabilize the rupiah via a proposed currency board. Dealers said trade in the rupiah had practically dried up with no interbank market to speak of, and interest was likely to be further dampened before the elections end on March 11. Market intelligence analysts think that the rupiah will keep to an 8,300-9,100 range before 11 March.
2. PHILIPPINE PESO: The Philippine peso firmed as foreign funds re-entered the stock market, but gains were limited by expectations of corporate demand for cheaper dollars.
3. SOUTH KOREAN WON: The won was firm above 1,600 per dollar on heavy foreign stock buying and news the customs-cleared trade account had turned to a surplus of $3.29 billion in February from a $2.12 billion deficit a year ago.
4. MALAYSIAN RINGGIT: Elsewhere the ringgit posted healthy gains, but failed to clear the 3.60 per dollar barrier after benefiting from dollar sales by exporters and interbank players near 3.65. Bullish technical indicators, a strong stock market and a slowdown in loan growth in January all supported the ringgit, dealers said.
5. SINGAPORE DOLLAR: The Sing dollar edged higher with the ringgit as traders absorbed the details of Friday's budget. They said disappointment over the lack of a widely-sought corporate tax cut would limit the Singapore dollar's gains to 1.61 per US dollar.
Asia-Pacific stock markets ended mixed Monday, with domestic factors dictating the course of trading and profit-taking by investors paring down gains. Expectations of additional economic status stimulus in Japan, disappointment over Singapore's 1998 budget, a large trade surplus posted by South Korea, a large deficit logged by Australia and bank recapitalisation plans in Thailand were among factors influencing investors. Indonesian President Suharto's vow to move cautiously on plans to peg the rupiah and reaffirmation of his commitment to an IMF reform program also underpinned regional stock markets.
NIKKEI: Japanese share prices rallied 2.6% on reported remarks by a ruling party leader calling for the use of funds from postal savings to bolster the stock market, brokers said. The Nikkei stock average of 225 selected issues on the Tokyo Stock Exchange rose 432.67 points to close at 17,264.34, finishing above the 17,000 support level for the first time since February 12. The broader Topix index of all issues was up 24.52 points at 1,296.97.
HANG SENG: Hong Kong share prices dropped 1.4% after earlier gains were wiped out by futures-led profit-taking following a series of recent rises. The key Hang Seng index shed 161.85 points to close at 11,318.84 - the first drop after three consecutive sessions of gains, following an 8.3% gain over the week to Friday.
MANILA: Manila's composite stock index ended 14.26 higher at 2,280.56 after racking up more than 130 points last week.
SINGAPORE: Singapore share prices fell 0.3%, but ended off their lows, on profit-taking amid disappointment over details of the 1998 budget unveiled over the weekend. The Straits Times Industrials index shed 4.74 points to close at 1,610.64. The All-Singapore index fell 2.02 points to 428.11. Finance Minister Richard Hu rejected a clamor for a cut in the 26-per cent corporate tax rate but gave tax and other incentives to the financial services industry.
LONDON: Share surge sends records tumbling - Gold falling below $300, yen jumps:
European shares extended last week's surge when they had another broad-based advance on Monday sent closing records tumbling like nine pins. Prices were driven higher by a bullish cocktail which included hopes for steady or lower interest rates, institutional liquidity, mergers and merger speculation and currency factors traders said.
GOLD: Gold weakened through European trading as fresh rumors of new Central Bank sales of gold filtered through the market on Monday while silver traded higher, traders said. God was fixed at $298.35 in the afternoon, down from the morning fix at $299.75. Spot gold closed in London at $298.80/$299.30 an ounce against the previous New York close at $298.90/$299.40 an ounce. A London bullion dealer said gold had hit solid resistance at $300.00. Analysts said there could have been some selling out of New York.
Europe's three largest bourses, London, Paris and Frankfurt - all registered new closing highs, gaining 0.9%, 0.7% and 1.9% respectively. All three overcame a slow start when prices looked like crumbling and slight weakness on Wall Street, which was in a hesitant mood after smashing through the 8,500 barrier for the first time on Friday. Britain's FTSE 100 index climbed to its third consecutive record closing high, helped by bid and corporate activity and a marked absence of sellers which created a shortage of stock in leading shares. Share trading records came crashing elsewhere in Europe too, with the Dutch, Italian, Spanish, Swedish and Swiss bourses all making new closing highs.
In currencies, the yen was reinvigorated and set to gain in the days ahead, thanks to hopes that Japan's government will head members of its own party who are urging it to do more to stimulate growth. Ground it gave back to the dollar late in Europe after the release of a stronger-than-expected US National Association of Purchasing Management survey was viewed by analysts as a temporary setback. The yen is expected to be trading around 123 by the end of the week, below Monday's two-week low of 124.78. For the time being however the dollar was supported by a report showing the NAPM business conditions index unexpected rose to 53.3 in February from 52.4 in January.
BEIJING: China banks in line for capital boost amid reform drive - $32.5b treasury bonds planned: China's four commercial state banks are to get a huge cash injection to help them cope with high levels of risky debt amid the country's sweeping economic restructuring. The Industrial and Commercial Bank of China, the Agricultural Bank of China, Bank of China and China Construction Bank will get 270 billion yuan ($32.5 billion) through special treasury bond issues.
The treasury bond plan, proposed by the finance ministry, was approved Saturday by the standing committee of the National People's Congress (NPC). The plan would allow the capital adequacy ratio of the four to reach the international standard of eight per cent, with the institutions at risk of insolvency due to the numerous bad and doubtful debts incurred from near-bankrupt state enterprises.
The central People's Bank of China has estimated the level of non-performing debt on the four banks' books as standing at 30 billion dollars, or around six per cent of their outstanding loans.
JAKARTA: `IMF+' concept gets cautious response - Indonesia currency board idea a ploy?: Indonesian President Suharto's new formula to rescue his country's devastated economy was given a cautious response Monday, as analysts warned the economy could not take off without implementation of key IMF reforms.
The US economist pushing Suharto to peg the rupiah to the US dollar said the "IMF plus" plan would include a fixed exchange rate and a programme for rescheduling and reducing Indonesia's mounting debt. Steve Hanke was quoted in the local press as saying that the current IMF-led reform plan which would provide some 40 billion dollars to resuscitate the economy was "fatally flawed." He described the IMF-plus concept as "complete and comprehensive."
In his agreement with the IMF, President Suharto said he would break up many of the cartels - run by his family and friends which dominate Indonesia's economy, close failing banks and take steps to restore the confidence of investors who have fled the country.
After weeks of debate on the pros and cons of an Indonesian currency board system, analysts say the currency board (CBS) could in fact be a political move by President Suharto to buy time, help prevent further heavy selling of the rupiah and put back other key issues.
Meanwhile, month on month inflation jumped 12.76% in February after a 6.88% rise in January, the government said on Monday. That puts the year on year rate, as calculated by Reuters, around 31.74%. Analysts say that, as a rule of thumb, hyper-inflation is defined as price increases running at between 40 and 50 per cent or even much higher. Inflation at these levels has not been experienced in Indonesia since the mid-1960s.
WASHINGTON: Rubin hails new stimulus `measures': US Treasury Secretary Robert Rubin on Monday welcomed prospects for a Japanese economic stimulus package, which he said would help some of Tokyo's struggling Asian neighbours. Press reports in Tokyo on Friday said Japan's ruling Liberal Democratic Party was preparing additional measures, based on tax cuts, to jump-start the economy. The Nihon Keizei Shimbun business daily reported that the centerpiece of the proposal would be a reduction in the income tax rate, currently at 65% at the top level. US officials have repeatedly prodded Japanese authorities to slash taxes, stimulate domestic demand and absorb more imports in order to assist foundering economies elsewhere in Asia.
News in brief:
HONG KONG banks may cut their prime lending rate in one or two weeks if interbank rates remain stable, a leading banker said Monday. David Li, chairman and chief executive of Bank of East Asia Ltd., told AFX-Asia that banks had to tread cautiously. Bank of East Asia is one of Hong Kong's four leading banks, ranked after Hongkong Bank, Bank of China and Standard Chartered.
BANGKOK: Thai telecommunications giant Shinawatra Computer and Communication plc posted a massive net loss of $134.3 million last year on the back of the falling baht. Shinawatra recorded a loss of 5.64 billion baht ($134.3 million) for 1997, against a profit of 2.63 billion baht a year earlier, due to a foreign exchange loss of 4.10 billion baht.
FRANKFURT: Germany's leading industrial group, Daimler-Benz, boosted its auto output by 13% last year to 746,000 passenger cards, the group announced by Monday. Turnover done by the group's passenger car division, its biggest, rose by 15% year on year to 53 billion marks.
TOKYO: Former executives of Japan's collapsed Yamaichi Securities Co have been questioned by prosecutors on their roles in covering up the giant brokerage's huge off-the-book losses, news reports said Monday. They included former chairman Tsugio Yukihira, who has already been grilled by the Securities and Exchange Surveillance Commission (SESC) for allegedly falsifying financial reports to hide such losses. In December, Yukihira testified as an unsworn witness in parliament that he had ordered his company to hide its liabilities and that he was among the top three Yamaichi executives who were aware of the losses. The century-old Yamaichi, once the nation's fourth largest securities brokerage, collapsed in November under huge concealed losses in the largest corporate failure since World War II. Yamaichi has been forced to liquidate 264.8 billion yen ($2.1 billion) in off-the-book losses.
Samira |
