Monday, July 9, 2012

20120709 1028 Local & Global Economy Related News.

Bank Negara Malaysia's (BNM) international reserves amounted to RM428.8bn (US$134.2bn) as at 29 Jun 2012, compared to RM417.3bn (US$136bn) as at 15 Jun 2012. The reserves position was sufficient to finance 9.4 months of retained imports and was 4.3 times the short-term external debt. (BNM)

Foreign funds and local retail investors sold more Malaysian equities in Jun than they bought despite the benchmark FBM KLCI Index moving up about 2% during the month, according to figures provided by Bursa Malaysia. Local institutions, however, were net buyers of equities to the tune of RM1.8bn. Jun trade statistics show that foreign institutions sold RM8.9bn worth of shares in Jun and bought RM8.1bn. Local retail investors sold RM4.8bn and bought RM4.4bn. Local institutions sold RM13.2bn and bought RM15bn. (Malaysian Insider)

The government will consider revising the price of RON95 petrol if the world oil price drops to a certain level, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said. The government could not simply reduce the price of RON95 petrol although the world price of crude oil has dropped. The government needed to study the matter first before making a decision to reduce the price of RON95 as it was subsidised fuel, he said. As of 7 July, the price for the subsidised RON95 is still maintained at RM1.90 per litre and the government still bears the subsidy of 53 sen per litre for RON95, he said. The government had until now, borne RM6.6bn in subsidies for RON95, he added. The price of RON95 would remain at RM1.90 a litre even if global fuel prices were to increase, he said. (BT, Malaysian Insider)

Malaysia aims to become an initial public offering (IPO) centre to enable it to compete with other capital markets on a global scale. The Capital Market Task Force will come up with a blueprint to further enhance Malaysian capital markets, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said Saturday. The task force will hold its first meeting soon, he said. About 10 members from the relevant sectors will be included in the task force. “After the formation of the committee, we will organise labs. There will be seven or eight labs to touch on the various parts of the capital markets," he said. The Securities Commission (SC) will be the secretariat of the task force. (Bernama, The Star)

The unemployment rate in Malaysia has dropped from 3.1% to 2.9% so far this year, said Deputy Finance Minister Datuk Donald Lim Siang Chai. On other matter, he said the level of investor confidence in Malaysia was reflected in the surge of inflowing foreign direct investments (FDI). According to the United Nations Conference on Trade and Development (Unctad) 2012 World Investment Report, FDI in Malaysia had leapt to US$11.97bn (RM35.7bn) compared with US$9.1bn (RM28.8bn) in 2010 and US$1.45bn (RM4.59bn) in 2009. The Ministry of International Trade and Industry reported that the manufacturing sector accounted for the largest share of FDI and that 72% of total trade came from Asian countries. (The Star)

Malaysia is on track to exceed last year's foreign direct investment (FDI) inflow of US$11.97bn, said International Trade and Industry Minister, Datuk Seri Mustapa Mohamed. "We know it’s tough, but on the basis of what we have been receiving in terms of applications, enquiries and approvals so far, interest continues to be strong,” he said. According to Unctad report, Malaysia was ranked third for FDI inflow into Asean last year, with Singapore and Indonesia positioned at the top with US$64bn and US$18.91bn respectively, while Thailand occupied fourth spot at US$9.57bn. (Bernama)

US President Barack Obama expanded trade complaints against China, accusing the nation of imposing unfair taxes on American vehicles. (Bloomberg)

US nonfarm payrolls increased 80,000 in Jun (a revised 77,000 in May), undershooting consensus of 90,000. The unemployment rate remained at 8.2%, matching May and the consensus, whilst average hourly earnings grew 0.3% mom (a revised 0.2% in May), overshooting consensus of 0.2%. Private payrolls advanced 84,000 in Jun after gaining 105,000 the prior month. Expectations were for a 100,000 increase, whilst the average workweek edged up to 34.5 hours from 34.4 in May. The market median forecast was for 34.4 hours. (Bloomberg)

China Premier Wen Jiabao said downward pressure on the economy is still “relatively large” and the government will intensify fine-tuning of policies even as measures taken since April are helping stabilize a slowdown. (Bloomberg)

China will have difficulty meeting its 10% trade growth target this year, Vice Premier Wang Qishan said, adding that China would import more high-tech equipment, manufacturing components, energy and consumer goods, while helping small- and medium-sized exporters cope with a credit squeeze. (Reuters)

ECB President Mario Draghi said any future role the institution might play in supervising euro-area banks must not endanger its independence, asserting that “there should be no contamination between the two areas and we’ll certainly find ways to make sure that this is so.” (Bloomberg)

The IMF will reduce its estimate for global growth this year on weakness in investment, jobs and manufacturing in Europe, the US, Brazil, India and China, Managing Director Christine Lagarde said. (Bloomberg)

Italian Prime Minister Mario Monti denounced unnamed "northern" EU states for taking positions that contributed to spikes in borrowing costs for Italy and Spain. (AFP)

The Italian government agreed on a series of measures to slash public spending by €26bn over three years, including major payroll cuts, with much of the savings to be found in the health and public administration budgets. (AFP)

Greece's newly elected prime minister Antonis Samaras said he would ramp up privatizations, close down dozens of state agencies and overhaul the country's dysfunctional public sector. (WSJ)

Senior euro-zone finance officials, working to create a single overarching bank supervisor for the euro-zone, are settling on a framework that would create a new agency reporting to the ECB to police the largest banks in the currency union, people involved in the discussions said. (WSJ)

Japan’s leading economic index rose to 95.9 in May (95.6 in Apr), exceeding consensus expectations of a decline to 95. (RTTNews)

Japan’s government could run out of money by the end of Oct, halting all state spending including salaries, pensions and unemployment benefits, because of a standoff in parliament that has blocked a bill to finance the deficit, warned Finance Minister Jun Azumi. (Reuters)

Indonesia’s balance of payments in 2Q12 continues to be at a deficit but has declined compared to the first quarter with US$1.03bn, said Anny Ratnawati, Deputy Minister of Finance. (IFT)

Car sales in Indonesia rose to 534,876 units in the first six months compared to 417,672 in first half of 2011. A total of 101,639 cars were sold in Jun, a record high, according to data from the Association of Indonesian Automotive Industries (Gaikindo). (Jakarta Globe)

In Vietnam, Deputy Prime Minister Vu Van Ninh said the country may miss its 6% growth target and the central bank told lenders to cut borrowing costs on existing loans to help businesses. (Bloomberg)

Vietnam’s economy will continue to face difficulties in 2H12 although it is gradually regaining stability, forecast the National Financial Supervisory Commission who also predicted that average inflation in the last six months would not exceed 0.5% a month and the accumulated rate at year-end would be less than 6% (The Saigon Times)

The Philippines’ foreign reserves inched higher to US$76.3bn in Jun from US$76bn in May. (Bloomberg)

In the Philippines, the central bank said it will prohibit foreign funds from investing in its special deposit accounts to stem gains in the peso. (Bloomberg)

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