Yen Boosts Japanese Stocks

Japanese stocks climbed on Tuesday, helped by a weaker yen, while shares in Hong Kong were higher as investors digested two separate readings on China’s manufacturing sector.

The Nikkei was up 0.8% at 15047.84, trading above the 15000 mark for the first time since early April. The index was boosted by the strength of the dollar, which rose 0.6% against the yen on Monday—its largest daily percentage gain since late March. A weaker yen is considered beneficial to Japanese exporters. Tuesday the yen was last little moved at ¥102.37 to the dollar.

“The relative resilience of U.S. stocks, as well as a stronger dollar, are a simple formula for Japan share buying,” said Yutaka Miura, senior technical analyst at Mizuho Securities.

In Hong Kong, trading resumed after a holiday Monday, with the Hang Seng Index adding 0.5% after the final reading of HSBC’s manufacturing PMI came in at 49.4, slightly lower than a preliminary reading of 49.7. A score above 50 indicates an expansion in manufacturing activity, while a score below that level points to a contraction.

The data caused the Hang Seng to pare earlier gains of as much as 1.1%. In early trading, investors reacted to China’s official manufacturing purchasing managers index, released over the weekend, which rose to 50.8 in May compared with 50.4 in April, a further sign of stability in the world’s second largest economy. In mainland China, the Shanghai Composite was up 0.5%.

Elsewhere in the region stocks were little moved, shrugging off a small rise on Wall Street Monday.

Australia’s S&P/ASX 200 was down 0.1%, South Korea’s Kospi was flat and Singapore’s Straits Times Index was also less than 0.1% lower.

At the end of the week, the focus will be on the U.S., which will release its monthly labor report on Friday. The U.S. is expected to have added 210,000 jobs last month, according to a survey by The Wall Street Journal of economists.

–Bradford Frischkorn contributed to this article.

Write to Daniel Inman at daniel.inman@wsj.com

Source:

stream.wsj.com

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Asian Stocks Mixed After US Growth Slowdown

Asian stocks were mixed Thursday with most markets closed for a holiday after U.S. economic growth slowed and the Federal Reserve promised to keep interest rates low.

Oil edged down to stay below $99 per barrel on expectation of weaker U.S. demand and reports of higher supplies.

Tokyo's Nikkei 225 index gained 0.4 percent to 14,360.27 points and Malaysia added 0.7 percent to 1,871.52. Sydney's S&P ASX 200 shed 0.4 percent to 5,467.10 while New Zealand was off 0.4 percent at 5,557.59.

Markets in China, Hong Kong, South Korea and Taiwan were closed for the labor day holiday.

Investors were encouraged by the Fed's pledge Wednesday following a policy meeting to keep short-term interest rates low to support the economy "for a considerable time" after its bond purchases end, likely late this year.

"The accommodative stance is certainly going to maintain the current upswings in consumer sentiment and spending," said Evan Lucas of IG Markets in a report.

In China, a survey of manufacturers by the state-sanctioned Federation of Logistics and Purchasing showed April activity growth was weak, adding to signs the world's second-largest economy is cooling further after growth dipped to 7.4 percent in the three months ending in March.

In a sign of confidence in the U.S. economy, the Fed said it would go ahead with plans to reduce bond purchases by $10 billion this month. Such purchases were aimed at encouraging investment by pushing down long-term interest rates and have helped to buoy stock markets.

U.S. government data showed economic growth slowed to a 0.1 percent annualized rate in the January-March period from 2.6 percent in the previous quarter.

That was the weakest growth since late 2012 and was largely put down to the winter storms that hit North America during the period. But it disappointed economists who expected a more modest slowdown to 1.1 percent.

A hiring survey by the ADP payrolls processor said the U.S. economy added 220,000 jobs in April, up from 209,000 in March and the most since November. Official government figures are due Friday.

On Thursday, Britain's FTSE 100 and Germany's DAX each added 0.2 percent while France's CAC-40 dropped 0.2 percent.

On Wall Street, the Dow Jones industrial average and the broader Standard & Poor's 500 both edged up 0.1 percent.

Crude for June delivery shed another 7 cents to $99.67 per barrel in electronic trading on the New York Mercantile Exchange.

On Wednesday, the contract fell $1.54 per barrel to $99.74 after U.S. and European Union sanctions imposed on Russian officials, businesspeople and companies over the Ukraine crisis were less severe than traders feared. Markets had been on edge that sanctions might disrupt Russian oil supplies.

In currency markets, the dollar was unchanged at 102.25 yen and the euro was flat at $1.387.

Source:

abcnews.go.com

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Alibaba Loss Shows Need for Hong Kong Market to Change, Li Says

For Hong Kong exchange head Charles Li, losing what may be the biggest Internet offering in Chinese history shows the market needs to change its ways as it seeks to be the investment gateway to the world’s second-biggest economy.

“We need to ensure our markets continue to be relevant in the new era of economic development,” Hong Kong Exchanges & Clearing Ltd. (388) Chief Executive Officer Li said an an e-mailed statement today, after Alibaba Group Holding Ltd. unveiled plans to sell shares in the U.S. “We are proud of our tradition of respect for the rule of law and adherence to principles. However, we also need to find ways to make our market more responsive and competitive, particularly with respect to new economy or technology companies.”

Alibaba, China’s biggest e-commerce company that’s valued at as much as $200 billion by investment banks, had struggled to persuade Hong Kong’s regulator to approve its proposed governance structure. Brokering a compromise would have been a coup for Hong Kong Exchanges, which is home to the world’s worst-performing stock index this year and hasn’t hosted an initial share sale of more than $4 billion since October 2010.

VIDEO: Alibaba Gets Ready for IPO: Bloomberg West (03/14)

“Alibaba is an amazing prospect and to be losing something of that size does show that maybe the overregulation in Hong Kong is detrimental,” Evan Lucas, Melbourne-based market strategist at trading services provider IG Ltd., said by phone. “Hong Kong is very much about protecting the credibility of its market. They are very, very stringent.”

Alibaba may consider a future listing in China should circumstances permit, the Hangzhou-based company said yesterday. The company founded by former English teacher Jack Ma had proposed that its partners nominate a majority of the board of directors, a system that isn’t allowed under Hong Kong rules.

China Gateway

Ernest Kong, a spokesman for the Securities and Futures Commission, which regulates the stock market, declined to comment.

Li, 52, is positioning Hong Kong as the investment link between China and the rest of the world, buying the London Metal Exchange for $2.2 billion in 2012 to expand the bourse’s operations into commodities and advocating that the city become a hub for offshore yuan trading amid competition from Singapore and Taipei.

“We have to consider possible changes where they might be necessary, with everything according to our due process,” he said today, noting that a committee investigating whether different shareholding structures should be permitted began its work independently of Alibaba.

The city needs a debate on how to handle “innovative companies,” including whether to allow them to have multiple share classes, Li said in October.

‘New Economy’

“Losing one or two listing candidates is not a big deal for Hong Kong, but losing a generation of companies from China’s new economy is,” he wrote in a blog post on the exchange’s website, saying the comments reflect his personal views, not those of the bourse’s board.

Weibo Corp., China’s biggest microblogging outlet with 129 million monthly active users, and retailing website JD.com Inc. are also planning U.S. share sales.

An Alibaba IPO could raise about HK$100 billion ($12.9 billion), Ernst & Young LLP said June 28. That would make it the world’s biggest first-time share offering since Facebook Inc. raised $16 billion in May 2012, according to data compiled by Bloomberg.

The Hang Seng China Enterprises Index (HSCEI) of Chinese shares traded in Hong Kong lost 14 percent this year through last week for the biggest decline among 93 global benchmark measures tracked by Bloomberg.

Tencent Surge

The Hang Seng Index sank 7.6 percent, the worst performance among 24 developed-market gauges behind Japan’s Topix index. The Hong Kong measure would have tumbled further if not for Tencent Holdings Ltd. (700), whose 14 percent rally was the biggest positive contributor to the index.

Tencent, Asia’s largest Internet company, was valued at $135 billion at the end of last week after a 261 percent rally since Dec. 30, 2011. It listed in Hong Kong in 2004.

Hong Kong Exchanges’ share sale pipeline will cushion some of the blow from losing Alibaba.

Tianhe Chemicals Group, a Chinese maker of lubricants and other specialty chemicals, filed an application for a $1 billion IPO in the city, two people with knowledge of the matter said last week. WH Group Ltd., the world’s biggest pork supplier, plans to seek as much as $6 billion from an offering in the first half, people with knowledge of the matter said in January.

A.S. Watson

A.S. Watson & Co., the pharmacy chain controlled by billionaire Li Ka-shing’s Hutchison Whampoa Ltd., said earlier this month it plans an IPO in Hong Kong and another location this year.

The number of initial share sales on Hong Kong’s main board jumped to 48 last quarter from 13 a year earlier, according to the bourse’s website. Still, the $18.9 billion raised by companies and their shareholders through IPOs in the city last year was down from $52.9 billion in 2010, data compiled by Bloomberg show.

Alibaba asked Hong Kong’s exchange to allow a partnership of executives and shareholders to nominate the majority of board members, a person with knowledge of the matter said in August. That would have enabled Ma and his management team to maintain control.

“The main issue with Alibaba is whether it’s going to be one company or missing out on all Internet-related companies,” said Jonas Kan, an analyst at Daiwa Securities Group Inc. in Hong Kong. “The single impact is not too substantial but the regulatory framework needs to evolve with time.”

Google, Facebook

Manchester United Plc was considering a Hong Kong listing in 2011 before ultimately picking the NYSE, where it has a two-class equity ownership structure that lets insiders retain control. Both Google Inc. and Facebook, which are listed on a U.S. market run by Nasdaq OMX Group Inc., also have two classes of stock.

U.S. companies with dual-share structures are subject to more stringent reporting requirements and a class-action litigation system, which does not exist in Hong Kong.

Hong Kong’s stance “could actually be beneficial in the medium to longer term,” said IG’s Lucas. “Yes, it’s money lost, but credibility is just as important these days.”

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Ben Scent

News Source: www.businessweek.com

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China suggests full interest rate liberalisation in 2 years

Chinese yuan banknotes are seen inside a counter of the Suining City Commercial Bank in Suining, Sichuan province December 7, 2010.

(Reuters) - China's central bank governor said on Tuesday that the country's deposit rates are likely to liberalised in one to two years - the most explicit timeframe to date for what would be the final step in freeing up banks to set their own interest rates.

The move will let financial markets decide the price of loans, which economists say will go a long way to prevent the wasteful investment funded by artificially cheap credit that has led to a massive buildup in debt.

"Deposit rate liberalisation is on our agenda. Personally I think it's very likely to be realised within one to two years," said Zhou Xiaochuan, the head of the People's Bank of China.

Zhou spoke in a media briefing lasting more than an hour at China's annual parliament session. He offered few surprises, reiterating a promise to speed-up financial reform and to move steadily towards freeing up the yuan on the country's capital account.

Analysts expect the controls on deposit rates to be lifted gradually. The current ceiling on deposit rates is 110 percent of the benchmark set by the central bank.

However, Zhou said he expected deposit rates to rise as a result of liberalisation. The central bank already allows banks to set their own lending rates, but there is limited room for them to float lending rates given the controls on deposit rates.

Beijing announced sweeping reforms late last year as it tries to shift the economy away from a reliance on the investment and exports that have fuelled double-digit expansion for three decades in favour of consumption and services, which it hopes will generate more sustainable long-term growth.

Analysts said Zhou's remarks showed China's reform plans are on track. "It's in line with expectations," said Ting Lu of Bank of America-Merrill Lynch in Hong Kong.

The central bank is widely expected to introduce a deposit insurance scheme before liberalising deposit rates to protect savers in case a freed-up market leads to major turbulence for smaller banks.

HSBC analysts said they expected the insurance scheme to be introduced "in the coming months".

Much of China's economic expansion in recent years was fuelled by a rapid rise in debt levels, stirring concerns that China is inflating a credit bubble that may destabilise its economy as growth cools.

A Thomson Reuters analysis of 945 listed medium and large non-financial firms showed total debt soared by more than 260 percent, from 1.82 trillion yuan to 4.74 trillion yuan, between December 2008 and September 2013.

Standard & Poor's estimated outstanding bank loans and bond debt among non-financial companies in China reached about $12 trillion at the end of 2013, the equivalent of more than 120 percent of GDP.

On Friday, China recorded its first domestic bond default when loss-making solar equipment producer Chaori Solar missed an interest payment, setting a landmark for market discipline in the world's second-largest economy.

However, Shang Fulin, the head of China's bank regulator, played down the debt risks.

"China's banks have been growing with high speed in recent years, which indeed brings some risks. But the risks are generally under control," Shang said.

"Our provisions and capital for bad assets are sufficient."

SMALLER STATE PRESENCE

China also flagged more competition for the country's banks.

Shang said the government will allow five privately owned banks to be set up in the wealthier regions of Tianjin, Shanghai, Zhejiang and Guangdong to support cash-starved small firms.

E-commerce giants Alibaba Group Holding (IPO-ALIB.N) and Tencent Holdings Ltd (0700.HK) are among the companies with approval to take part in the pilots, the Communist Party's official newspaper, the People's Daily, reported.

Private investors have long complained about how they are unable to invest in China's profitable banking sector, which is overwhelmingly dominated by the state.

Cutting bureaucracy and reducing state presence across a range of sectors is a central theme in China's reform ambition, a subject also touched upon by Xiao Gang, the head of China's securities regulator.

Xiao said it is normal to see increased volatility in the country's capital market, and the regulator will consider possible market impact when introducing new reforms.

The securities regulator let initial public offerings resume in January after a 14-month hiatus, but the worrying spectre of insider trading in the IPO market has prompted regulators to tighten controls.

Neither Zhou nor the other financial chiefs commented about the state of China's economy.

Data at the weekend raised fresh concerns about the outlook for the world's second-biggest economy. Exports in February tumbled more than 18 percent from a year earlier and purchasing managers' reports have suggested factory sector growth is stalling.

Every bout of weaker-than-expected data raises market speculation that in pushing through with reforms, Beijing is at the same time sending the economy into a slump.

The government expects the economy to grow 7.5 percent this year, which would be the lowest pace in 24 years, although Finance Minister Lou Jiwei said that this target was flexible. The economy grew 7.7 percent last year.

(Additional reporting by Adam Rose and Koh Gui Qing; Editing by Neil Fullick)

News Source: in.reuters.com

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Latest airline perk: Safe distance from the masses

• Latest airline perk: Safe distance from the masses

  
  Kamran Jebreili AP

  FILE - In this Sunday, Feb. 10, 2013, file photo the first class section of an Emirates airlines Airbus A380 is ready for boarding at the new Concourse A of Dubai airport in Dubai. When Emirates Airline opened a new concourse at its home airport in Dubai last year, it made sure to keep coach passengers separate from those in business and first class. The top floor of the building is a lounge for premium passengers with direct boarding to the upstairs of Emiratesí fleet of double-decker Airbus A380s. Those in coach wait one story below and board to the lower level or the plane. (AP Photo/Kamran Jebreili) ORG XMIT: NYBZ404

NEW YORK — On flights from San Francisco to Hong Kong, first-class passengers can enjoy a Mesclun salad with king crab or a grilled USDA prime beef tenderloin, stretch out in a 3-foot-wide seat that converts to a bed and wash it all down with a pre-slumber Krug "Grande Cuvee" Brut Champagne.

Yet some of the most cherished new international first-class perks have nothing to do with meals, drinks or seats. Global airlines are increasingly rewarding wealthy fliers with something more intangible: physical distance between them and everyone else.

The idea is to provide an exclusive experience — inaccessible, even invisible, to the masses in coach. It's one way that a gap between the world's wealthiest 1 percent and everyone else has widened.

Many top-paying international passengers, having put down roughly $15,000 for a ticket, now check-in at secluded facilities and are driven in luxury cars directly to planes. Others can savor the same premier privileges by redeeming 125,000 or more frequent flier miles for a trip of a lifetime.

When Emirates Airline opened a new concourse at its home airport in Dubai last year, it made sure to keep coach passengers separate from those in business and first class. The top floor of the building is a lounge for premium passengers with direct boarding to the upstairs of Emirates' fleet of double-decker Airbus A380s. Those in coach wait one story below and board to the lower level of the plane.

London's Heathrow Airport took a private suite area designed for the royal family and heads of state and in July opened it to any passenger flying business or first class who's willing to pay an extra $2,500.

"First class has become a way for a traveler to have an almost private jet-like experience," says Henry Harteveldt, an airline analyst with Hudson Crossing. Airlines "will do everything but sing a lullaby."

The 20 percenters

There's a lot of money on the line. At big carriers like American Airlines, about 70 percent of revenue comes from the top 20 percent of its customers.

The special treatment now starts at check-in. American and United Airlines have developed private rooms, located in discrete corners of their terminals in New York, Chicago and elsewhere, that allow for a speedy check-in. Boarding passes in hand, travelers exit through hidden doors leading to the front of security lines.

Some foreign airlines have gone further.

Lufthansa offers first-class passengers a separate terminal in Frankfurt. There's a restaurant, cigar lounge and dedicated immigration officers. For those who choose to shower or take a bath, the private restrooms come with their own rubber ducky — an exclusive plastic souvenir for the international jet set. When it's time to board, passengers are driven across the tarmac to their plane in a Mercedes-Benz S-Class or Porsche Cayenne.

"That sort of exclusivity plays to the ego of people who are in a position to spend that much money on airline flight," says Tim Winship, publisher of travel advice site FrequentFlier.com.

At Heathrow's private suites, designed for up to six people, fliers pass swiftly and privately through their own immigration and security screening. While they're waiting, hors d'oeuvres and Champagne are provided. Steak, sushi or other meals can be delivered from airport restaurants. When it comes time to actually fly, passengers are driven to their plane in a BMW 7 Series sedan and escorted to their seat.

U.S. airlines have copied a bit of that touch. United started in July and Delta Air Lines in 2011 driving their top customers who have tight connections at major airports from one gate to another in luxury cars. No need to enter the terminal, let alone fight the crowd on the moving walkway.

International first class has long been distinguished by gourmet meals, wide seats and giant TVs preloaded with hundreds of movies and TV shows. But in recent years, airlines also upgraded their international business-class sections, ripping apart cabins to install chairs that convert into lay-flat beds. That left little to differentiate first class from business class.

So some airlines scrapped the ultra-premium cabin. Others have cut the number of first-class seats in half, thereby creating a more intimate experience that commands the higher price. For instance, a roundtrip flight in July between New York and Hong Kong on Cathay Pacific costs $1,600 in coach, $7,600 in business class and $19,000 in first class.

Besides privacy, that extra cash provides an outsize seat, attentive service and superior wines and liquors.

News Source: www.tulsaworld.com

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