Archive for January, 2009

HK stock index up 4.6 pct in first session of 2009 (AP)

Friday, January 2nd, 2009 | Finance News

HONG KONG – Hong Kong stocks jumped 4.6 percent in their first session of 2009, led by Chinese telecom companies after the central government approved licenses for next generation mobile phone services.

The blue-chip Hang Seng Index rose 655.33 points to 15,042.81 on light volumes.

A number of regional markets, including Japan, were closed for the holidays Friday, though most of those open finished higher.

Despite the gains, many investors expect more turbulence as the global downturn's toll on company profits becomes even more apparent in the next six months.

"There will be trading opportunities, but I don't think we've hit the bottom yet," said John Mar, co-head of sales trading at Daiwa Securities SMBC Co. in Hong Kong.

Among the top gainers were Chinese telecom firms after Beijing said Wednesday it had OK'd licenses for third-generation mobile phone services — a step that could lead to billions of dollars in equipment sales.

China Mobile, the world's biggest phone carrier by subscribers, gained 4.8 percent to $81.2 Hong Kong dollars, China Unicom soared 8.8 percent to HK$10.12 and China Telecom advanced 6.2 percent to HK$3.07.

After oil prices soared this week, investors snapped up energy firms. Chinese upstream producer CNOOC gained 4.8 percent to HK$7.59.

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Stock Exchange of Hong Kong: http://www.hkex.com.hk

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Factories slash output and jobs in big emerging markets (Reuters)

Friday, January 2nd, 2009 | Finance News

BEIJING (Reuters) –
Factories in China, India and Russia slashed output and jobs at a record pace in December in another sign the world's largest emerging markets were wilting under the recession that has gripped most industrialized nations.

Factory activity surveys in the United States and Europe on Friday are expected to show steeper contractions in December, as demand collapses at home and crushes growth in many of the developing nations that rely on Western consumption.

Economists and policymakers had seen China, Russia, India and Brazil, with the their vast markets and rising wealth, as the engines of growth that could save the world from recession. Those hopes are fading fast and forecasts are getting gloomier.

South Korea warned exporters 2009 would be tougher than last year, and Singapore said it's export-dependent economy may shrink 2 percent next year. Citigroup said the city state's economy, a bellwether for global trade, would shrink 2.8 percent, the steepest in its history.

And everywhere, from job loses at Chinese factories to the biggest drop in Korean house prices in five years, there were signs that the export slowdown was rippling through domestic economies.

"What is worrying is that the weakness has spread rapidly from the externally-oriented sectors to domestically oriented sectors too," analysts at OCBC Bank in Singapore said in a note after the country announced gross domestic product data.

MARKETS

In contrast to the rapidly darkening economic outlook, the mood in markets has brightened slightly. Having squirreled cash into safe havens for much of the past quarter, investors are eyeing assets pummeled in the financial turmoil of 2008.

Asian shares and the Australian and New Zealand dollars gained on Friday while the Swiss franc and U.S. Treasuries eased, in a tentative sign risk appetite was growing after a year in which $14 trillion was wiped off stock investors' books.

"It feels like we've passed through the eye of the storm," Robert Rennie, chief currency strategist at Westpac in Sydney said of the financial crisis triggered by U.S. bank failures last year.

"That's not to say there isn't another storm on the horizon, but for the moment the intense pessimism of October and November seems to have eased."

For Chinese factories and policymakers looking to contain an economic slump, there was much cause for pessimism.

Manufacturing activity fell for a fifth month as the global financial crisis bludgeoned demand for exports, the Purchasing Managers' Index showed on Friday.

The index rose to 41.2, up from the record low of 40.9 plumbed in November, indicating that while manufacturing was still shrinking, the pace had slowed from November's record.

The output sub-index fell to 38.6, signaling the sharpest contraction in production since the survey was launched in April 2004.

"With five back-to-back PMIs signaling contraction, the manufacturing sector, which accounts for 43 percent of the Chinese economy, is close to technical recession," Eric Fishwick, head of economic research at CLSA, which publishes the index.

For Chinese policymakers worried about social stability the most alarming news may have been the employment sub-index, which showed factories shedding jobs at the fastest pace on record.

PMIs in Russia and India offered similarly grim readings with the headline, employment and output indexes sinking to record lows.

The contraction in Russian manufacturing is deeper than the slump during the 1998 financial crisis, which saw bank collapses and a default on sovereign debt.

In India, factories cut jobs for the first time in the survey's 3- year history to reduce costs.

In all three countries, factories reported slumping export orders with recession chilling demand in the their largest markets -- the United States, Japan and Europe.

U.S., EUROZONE PMIS

Manufacturing PMIs for the euro zone, Britain, Switzerland and the United States are due to be released on Friday. Economists expect all to stay below the 50 mark that divides contraction from expansion.

Smaller Asian exporters are bracing for a double whammy from the collapse in Western demand and shockwaves rippling through major customers in Asia, China and Japan.

South Korea, which ships a fifth of its exports to China, said export growth this year would be about 1 percent, the weakest since 2001. Exports in December dropped 17.4 percent from a year earlier, more than economists had expected.

Singapore's economy contracted at a seasonally adjusted, annualized pace of 12.5 percent during the October-December quarter, following a revised 5.4 percent decline in July-September.

The government cut its economic forecast to a range between a decline of 2 percent and growth of 1 percent in 2009, compared with a range that went from a contraction of 1 percent to growth of 2 percent predicted in November.

Citigroup said that forecast was still too optimistic.

"If we are correct, 2009 will mark the most severe recession in Singapore's history, surpassing the Asian Financial Crisis and the 2001 tech recession," said Citigroup economist Kit Wei Zheng.

(Reporting by Reuters bureaux worldwide; Writing by Dayan Candappa; Editing by Neil Fullick)

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U.S. steel industry urges “buy America” recovery plan (Reuters)

Thursday, January 1st, 2009 | Finance News

WASHINGTON (Reuters) –
The ailing U.S. steel industry is pressing President-elect Barack Obama for a public works plan that could be worth $1 trillion over two years to boost flagging demand for U.S.-made steel, the New York Times reported in Friday's editions.

Daniel DiMicco, chairman and chief executive of Nucor Corp, a giant steel maker, told the paper the industry was asking the incoming administration to "deal with the worst economic slowdown in our lifetime through a recovery program that has in every provision a 'buy America' clause."

The industry supports building mass transit systems, bridges, electric power grids, schools, hospitals and water treatment plants -- all of which would require large amounts of steel.

"We are sharing with the president-elect's transition team our thoughts in terms of the industry's policy priorities," Nancy Gravatt, a spokeswoman for the American Iron and Steel Institute, was quoted as saying.

Obama, who is to be sworn in as president on January 20, has not revealed details of his soon-to-be-announced plan for spurring the weakest economy since the Great Depression more than 70 years ago. Aides have indicated most of the package will probably go into infrastructure spending rather than tax breaks.

"If the president-elect really follows through, he'll fund a lot of mass transit projects," said Wilbur Ross, a Wall Street dealmaker who put together a steel conglomerate known as Arcelor Mittal USA.

"All the big cities have these projects ready to go."

Since September, U.S. steel output has plunged about 50 percent to its lowest point since the 1980s, largely because construction and auto production have fallen sharply.

The fall-off in production of appliances, machinery and other electrical equipment has also reduced steel orders, sending the price of a ton of steel down by half since late summer.

Industry executives are "adding their voices to pleas for a huge public investment program of up to $1 trillion over two years," the Times reported.

Imports, which account for about 30 percent of all steel sales in the United States, are also hurting as customers disappear, the paper said.

(Reporting by Jim Wolf; editing by Todd Eastham)

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