Archive for September, 2011

Japan factory production rises for fifth month

Friday, September 30th, 2011 | Finance News

TOKYO – Japan's factory production rose for the fifth straight month in August, almost restoring it to levels recorded before the March earthquake and tsunami disasters.

The improvement, however, is clouded by uncertainty ahead as Japanese manufacturers contend with a persistently strong yen and a fragile global economy.

Industrial output climbed 0.8 percent from the previous month, according to a Ministry of Economy, Trade and Industry report Friday. Sectors driving gains included transport equipment, electronic parts, and iron and steel.

The ministry said industrial production has almost fully recovered from the March disasters. But August's result undershot the government's earlier estimates, reflecting the new pressures on exports.

"It would be necessary to keep watch on future developments," the ministry said.

Exports are a key growth driver for the world's No. 3 economy, and any slowdown in overseas demand could thwart progress made since the disaster. The tsunami wiped out much of Japan's northeast coast, damaging factories and disrupting critical supplies for key Japanese industries such as autos and electronics.

Supply issues have been mostly resolved, and production is back to 96 percent of its pre-quake level, said Goldman Sachs economist Chiwoong Lee.

"Now that production is largely free of supply constraints, we expect it to directly reflect external demand conditions and start to weaken," Lee said in a research note.

Shipments rose 0.3 percent in August, while inventories expanded 2.1 percent.

The ministry expects industrial production to fall 2.5 percent in September before rising 3.8 percent in October.

Separately, the government says Japan's unemployment rate fell to 4.3 percent in August.

The result marked the first improvement in three months, but the figure may not reflect the true health of the job market, the Ministry of Internal Affairs and Communications said.

The report does not include the three prefectures hardest hit by the tsunami — Iwate, Miyagi and Fukushima. It also does not account for unemployed workers who have simply given up seeking jobs.

The government also released data on consumer prices and household spending.

The August core consumer prices index, which excludes volatile fresh foods, rose 0.2 percent from a year earlier on higher fuel costs. Preliminary CPI for the Tokyo area — considered an indicator of broader price trends for the country — fell 0.1 percent in September.

Meanwhile, average monthly household spending tumbled a real 4.1 percent from a year earlier as family incomes fell. The figure is a key barometer of private consumption, which accounts for more than half of Japan's gross domestic product.

Average monthly household income in August fell 1.7 percent from last year to 463,760 yen ($6,045), the ministry said.

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Global wine auctions, investments to slow in 2012

Thursday, September 29th, 2011 | Finance News

HONG KONG (Reuters) – Global wine auctions and investments will slow next year as the euro zone crisis and slowdown in the U.S. economy take their toll on the wine industry, but Asia may prove slightly more resilient, said Pancho Campo, a Spanish wine expert.

Fears of a Greek default that have roiled the world's financial markets and stubbornly high U.S. unemployment rates have had an impact on recent auctions, with none of the auction houses this month selling 100 percent of their lots.

"I think the economy has something to do (with it)," said Campo, president of the Wine Academy of Spain, who is on a visit to Asian cities this week to promote a wine conference in Hong Kong later this year.

Though he compared the slowdown to the time when the dot com and real estate bubbles burst, he said in an exclusive interview with Reuters TV that he felt a bit of cooling was inevitable.

"(I am) starting to get the feeling that there was a bubble about wine investments and wine auctions. So for me, it's a natural trend that it was to slow down," he said.

"I don't think it's just going to explode, I think the market will just slow down and the market will find its place."

Much of the recovery of the wine market in Europe will depend in large part on how fast the economies there recover and lift the uncertainty that its depressing the market.

The United States was long a key market for Europe, but the slowing of the economy there as well has made many winemakers pin their hopes on Asia, he said -- and rightly so.

Wine collectors, particularly from Hong Kong, bought more than $200 million worth of fine wines at auction in the first half of 2011, nearly doubling the amount for the same period last year. Wine consumption in Asia has seen double digit growth over the past five to 10 years.

Campo acknowledged that there is a "more positive" feeling in Asia, which he has visited eight or nine times.

"I see that there are two tiers in Asia. You have the top tie where you find fine Bordeaux Chateau and the very expensive wines, and that has been very successful," he said.

"Then you have the lower tier where you have all the cheap stuff, where you have all the wines that sell for lower than 2 euros, 1 euro. In the middle, there's the big gap."

He said that key for the future of the industry, particularly in places like Asia where the culture of wine needs to be developed, is to target the young people he termed "the millennials" -- those aged 18 and 19 -- and get them excited about wine.

"Eventually they'll go to university, they'll become CEOS, doctors, architects and that's the kind of people that you want involved in the wine industry," he said.

"They might invest, they might not invest, but if they become drinkers, they will drink regularly, and as they get more familiar with wines they will trade up and buy more expensive wines. That is the category that has to grow if the Asian wine trade wants to be successful."

(Additional reporting by Andy Ho; editing by Elaine Lies)

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Oil above $82 as recession worries fade for now

Thursday, September 29th, 2011 | Finance News

BANGKOK – Oil prices inched higher Friday as recession alarm bells quieted following a glimmer of positive U.S. economic news and steps in Europe toward controlling its debt crisis.

Benchmark crude was up 32 cents to $82.47 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose 93 cents to close at $82.14 per barrel in New York.

German lawmakers took a major step toward dealing with Europe's debt crisis Thursday by strengthening a bailout fund for financially strapped countries. That eased worries about Greece, which only has enough money to pay its bills through mid-October.

The country risks a massive default on its debts, an event that could spiral into a financial and banking crisis across the continent. Some experts say a Greek default could lead to a global recession, thus hurting demand for oil.

In the U.S., meanwhile, the Labor Department said the number of people seeking unemployment benefits fell sharply last week by 37,000 to a seasonally adjusted 391,000. That was the fewest since April 2.

Some energy traders viewed the data as a sign that the U.S. was grinding its way out of a slowdown. Others, however, found the data less than convincing.

"While we recognize this is an improvement, we hardly find it encouraging," analysts at the Schork Report wrote. "Initial jobless claims may be at their lowest level since April but, like congratulating the most stable inmate at the insane asylum, this is a heavily modified compliment."

In other energy trading, heating oil rose 0.8 cent to $2.83 per gallon and gasoline futures added 1.5 cents to $2.57 per gallon. Natural gas was up 1.1 cent at $3.76 per 1,000 cubic feet.

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