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Saturday, 19 March 2011
Japan’s Recession Threat Lessens Following G-7’s Joint Intervention on Yen
Japan’s Recession Threat Lessens Following G-7’s Joint Intervention on Yen
By - Mar 19, 2011 10:35 AM GMT+0800
Japan’s risk of becoming the first Group of Seven member to return to a recession after the global financial crisis eased as the G-7 intervened to halt the yen’s appreciation.
The G-7’s yen sales sent the currency down the most since September, to 80.58 per dollar at the close yesterday in New York, compared with the postwar high of 76.25 reached March 17. Japan’s Vice Finance Minister Fumihiko Igarashi said in an interview “we confirmed” further intervention could be done.
“The risks to the downside for Japan’s economy were reduced significantly by the G-7 intervention,” said Takuji Aida, a senior economist at UBS AG in Tokyo. “This coordinated action may help corporate sentiment to recover, a key factor in reviving growth, along with public spending.”
Reduced scope for yen gains would limit damage to exporters’ earnings once companies from Toyota Motor Corp. to Sony Corp. restart factories. Focus now turns to the duration of electricity cuts in the aftermath of the nation’s record earthquake. At the crippled Fukushima Dai-Ichi nuclear power plant, engineers worked to restore power used for pumps needed to protect fuel rods from overheating and releasing radiation.
Paring Loss
The Nikkei 225 (NKY) Stock Average closed 2.7 percent higher yesterday, paring its slide since the disaster to 12 percent. The tumble in equities in the aftermath of the quake, in conjunction with the rising yen, threatened to impair companies’ balance sheets ahead of the March 31 close to the fiscal year.
To aid companies with fund-raising concerns, Prime Minister Naoto Kan’s government may provide more than 10 trillion yen ($124 billion) of loans, the Nikkei newspaper reported without saying where it obtained the information.
Japan’s economy, the world’s third biggest, may skirt a contraction and grow about 1 percent this year as the nation rebuilds after the March 11 temblor and tsunami, according to UBS and Nomura Holdings Inc.
The Federal Reserve, European Central Bank, Bank of England, Germany’s Bundesbank, the Bank of France, the Bank of Canada and the Italian central bank said they joined the yen sales. A Japanese government official said on condition of anonymity that his country probably sold less than 2 trillion yen, the amount it used in its last intervention. Yesterday’s drop in the yen was the biggest since Japan’s unilateral sales on Sept. 15.
‘Very Problematic’
“The risk of the yen rising unchallenged to uncompetitive levels would have been very problematic in an economy where, outside of export dynamism, there’s really been very little dynamic for growth,” said Richard Jerram, head of Asian economics at Macquarie Securities Ltd. in Singapore. The intervention is “a significant help” to the economy, he said.
Japan’s economy had already shrunk in the fourth quarter of 2010 as government stimulus measures adopted during the global financial crisis were phased out. The nation has suffered limited growth and sustained declines in consumer prices as an aging and shrinking population undercut domestic demand.
Every one yen that the currency appreciates against the dollar erodes about 30 billion yen from Toyota’s earnings, according to the company. Honda Motor Co., which produces more than 70 percent of its vehicles outside Japan, loses 17 billion yen for each yen the currency strengthens.
“We won’t manipulate it, but I hope that the yen goes back to where it was before the earthquake,” Igarashi said in the interview in Tokyo March 18. He added that he hoped the G-7 action would put a floor under the currency.
Yen’s Climb
The yen has appreciated 3 percent against the dollar since the close the day before the magnitude-9 quake. The currency, which has now strengthened 19 percent in the past two years, rose in recent days on speculation Japan’s insurers would repatriate overseas assets. Economic and Fiscal Policy Minister Kaoru Yosano has said there was no basis for such speculation.
Nomura analysts see the economy expanding 1.1 percent this year, 0.4 percentage point less than their estimate before the disaster struck. The earthquake and tsunami ripped apart northeastern towns, killing thousands and damaging nuclear reactors at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant. Almost 400,000 people remained in evacuation shelters yesterday.
Soldiers and firefighters from Tokyo, using dozens of fire engines, doused sea water on reactor No. 3 yesterday, after an explosion this week. TEPCO also said it may finish reconnecting a power line to the No. 2 reactor.
U.S. Optimistic
Admiral Robert Willard, head of the U.S. Pacific Command, said he was cautiously optimistic that the damage can be contained and a “worst-case scenario will never be encountered.”
The risks to an economic recovery include an uncertain power supply, with the nation facing rolling blackouts and Citigroup Inc. warning this week that the nation may face an “irreversible” blow to capacity. Household sentiment has also suffered.
“Japan has little choice but to rely on exports as consumer spending will likely stay weak,” saidJunko Nishioka, chief economist at RBS Securities. “Service consumption will likely slump even in the Tokyo area as consumers may be discouraged from going out because of the confusion resulting from the earthquake, such as the power shortage,” she said.
Before the quake, Japan’s economy was showing signs of a revival, after shrinking an annualized 1.3 percent in the fourth quarter of last year.
The central bank yesterday repeated its pledge to pursue “powerful monetary easing” and added 3 trillion yen to the financial system, bringing its total emergency fund injections this week to 37 trillion yen. On March 14, it doubled an asset- purchase fund to 10 trillion yen, pledging to step up purchases of securities including government debt, exchange-traded funds and real-estate investment trusts.
To contact the reporters on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net;Michael Heath in Sydney at mheath1@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst in Hong Kong atppanckhurst@bloomberg.net
Moderate price hikes seen for houses
Moderate price hikes seen for houses
By ANGIE NG
Brian Koh ... ‘Ultimately the question of affordability and sustainability will kick in.’
Saturday March 19, 2011
Moderate price hikes seen for houses
By ANGIE NG
angie@thestar.com.my
ALTHOUGH the demand for residential properties in the Klang Valley is expected to remain good this year, property consultants expect prices of landed housing to show only moderate increases compare with the double-digit jump in 2010.
Landed property prices grew strongly last year, up by as much as 20% in some areas. This can be attributed to the limited new supply, which only increased by 3% during the year, which was less than half of the 6%-8% annual growth seen during 2004-2008.
Brian Koh ... ‘Ultimately the question of affordability and sustainability will kick in.’Strong buying interest and economic performance data last year led to many new project launches last year after being deferred following the global financial crisis.
The increase in project launches is also due to higher confidence in demand and take-up rate.
Many of these projects will be completed this year and add to the supply numbers.
DTZ Nawawi Tie Leung Sdn Bhd executive director Brian Koh says prices have gone way up last year and this has resulted in the market “becoming quite thin now.”
“Such high prices are not sustainable as there will be a limit to how much they can go up. Ultimately the question of affordability and sustainability will kick in,” Koh says.
Concurring with Koh, Knight Frank Ooi & Zaharin Sdn Bhd managing director Eric Ooi expects prices of landed housing to show modest increases averaging between 5% and 10% these one to two years.
This is in line with the expected slower growth in the country's gross domestic product of 5% to 6% this year from an expansion of 7.1% last year.
“Such increases are healthier and more sustainable for the market. I believe it is one of the effects of Bank Negara's measure that capped the loan-to-value ratio (LVR) at 70% for the third mortgage borrower. It is a good measure to curb speculation in the market,” Ooi says.
The move is seen as a measure to reduce speculative activities and prevent the housing market from overheating as the economy recovers amid a low interest rate environment.
Ooi says market sentiment is still generally healthy with demand strongest for terrace houses priced from RM300,000 to RM1mil.
CB Richard Ellis managing director Allan Soo says the high prices of landed houses have made affordability a serious issue, especially among first-time house buyers.
He says the market preference appears to be for smaller units with lowerentry costs.
Soo says the proposed mass rapid transit (MRT) system augurs well for the market and hopefully there will be more affordable housing projects to meet the needs of the people.
“Developers have already started formulating plans for property developments near the various stations, which should be a major driver for new projects over the next two years,” he adds.
He concurs that the LVR measure has contributed towards curbing speculative buying in the market, notably the medium-high to high-end price range of up to RM3mil.
On overseas investment, he says the strong ringgit over other major currencies has made owning property overseas a more viable proposition for those looking to spread their investment portfolio outside the country.
“Malaysians are venturing overseas and the popular countries include Singapore, the United Kingdom and Australia,” he adds.
Meanwhile, a recent survey by Real Estate & Housing Developers' Association reveals that average prices of newly developed residential property are expected to grow by 13% this year over last year's as a result of rising raw material prices.
The survey found that houses in the RM100,001 to RM500,000 price bracket are the most sellable, while demand for residences priced between RM250,000 and RM500,000 will remain strong in the next six months.
DTZ's Koh says strong demand exists for smaller, starter homes priced at up to RM300,000.
“Although there is good demand for such housing units, this end of the market is not being properly served and there is still a short supply,” he adds.
Echoing his view, Ooi of Knight Frank says that in the KLCC area, there is also keen interest for smaller residences of about 700 sq ft to 1,500 sq ft priced from RM500,000 to RM1mil.
In its latest research report, Knight Frank Research says projects which offer smaller units, such as M-Suites and The Elements@Ampang are well received by the market with sales rates of more than 80% due to their lower entry prices and ease in future leasing.
The high-end condominium segment has a cautious near-term outlook following the imposition of the 70% LVR cap on third mortgages.
Some 1,202 units of high-end condominiums will be launched this year. Kuala Lumpur suburbs will see more launches including MK 20 and MK 28 by Sunrise Bhd, while SP Setia's KL Eco City is also in the pipeline. Others include sixceylon by Bolton Bhd and JSI Serviced Condominiums by UDA Holdings.
According to Knight Frank Research, within the first half of this year, 1,692 units are scheduled for completion in the city centre of Kuala Lumpur and a further 2,020 units will be in the fringe areas of KL.
Some of the notable projects include Panorama, Swiss Garden Residences, Regalia@Sultan Ismail in KL city; Gallery@U-Thant, Damai 206@ Embassy Row and Brunsfield Embassyview in Ampang Hilir / U-Thant; D'Nine, Suasana Bangsar and Gaya Bangsar in Bangsar; Seni Mont' Kiara, Kiara 3, Sunway Vivaldi and Kiara 9 in Mont' Kiara.
CB Richard Ellis in its latest MarketView says the condominium sector, particularly in the KLCC area, performed more poorly last year.
Some high-end projects witnessed a decline in both capital values and rents as the market consolidated after the heady growth of 2007-2009.
“Of concern is the impending supply, with 2011 completions projected to be around 6,000 units, and we expect this to have an effect on the luxury residential market,” the report says.
US markets post second day of gains despite crises - Channel NewsAsia
US markets post second day of gains despite crises - Channel NewsAsia
NEW YORK - US markets surged for a second straight day Friday following similar rises in Europe and Asia, despite the nuclear emergency in Japan and more tensions on the oil-rich Arabian peninsula.
A cease-fire declaration in Libya and Group of Seven intervention to prevent the yen from surging further, as well as the Federal Reserve's green light for major banks to pay or increase their dividends, provided a boost for the market.
But they drifted lower through the afternoon as a weekend full of uncertainties loomed -- over whether the cease-fire would hold, whether Japan would be able to prevent a nuclear meltdown, and whether tensions in Bahrain, Yemen and oil giant Saudi Arabia would escalate.
The Dow Jones Industrial Average of 30 blue chips closed up 83.93 points (0.71 percent) to 11,858.52 while the broader S&P 500 added 5.49 (0.43 percent) to 1,279.21.
The tech-driven Nasdaq Composite picked up 7.62 points (0.29 percent) at 2,643.67.
"In tentative trading today that included options expiration, stocks managed to end the day in the green, responding today primarily to coordinated currency intervention by the G7 to stop the surge in the Japanese yen," said brokers at Charles Schwab.
"The market continues to fight the negative macroeconomic events and resist breaking down to lower levels," said Michael James of Wedbush Morgan securities.
Some banks -- but not all -- surged after the Federal Reserve gave them permission to begin paying, or increasing, dividends, and engage in share buybacks, after a moratorium dating back to the financial crisis.
Coming after a round of stress tests for the biggest 19 banking groups, the move it was a new sign of the sector's emergence from the 2008-2009 housing finance collapse.
The strong banks during the crisis -- JPMorgan Chase, including BB&T, Wells Fargo, and US Bancorp -- immediately announced a rash of higher dividends and share repurchases.
JPMorgan put on 2.65 percent, BB&T rose 0.5 percent, US Bancorp rose 1.1 percent and Wells Fargo gained 1.5 percent.
Retail banking giants Citigroup (up 1.1 percent) and Bank of America (up 0.4 percent) did not announce dividends.
In a spin-off from the Fed's move, Goldman Sachs added 2.7 percent after announcing it was buying back the $5 billion of shares it sold to billionaire Warren Buffet's Berkshire Hathaway in the crisis in 2008.
Berkshire had extracted a massive 10 percent dividend -- $500 million a year -- from Goldman for the bailout deal, and was getting an extra $500 million in the buyback as a pre-payment fee. Berkshire shares gained 0.5 percent.
Sports shoe maker Nike sank 9.2 percent after a disappointing third quarter report, which said it had been pushing up retail prices to pass on the spiking costs of raw materials.
The bond market fell. The yield on the 10-year Treasury rose to 3.28 percent from 3.25 late Thursday, while the 30-year note was flat at 4.43 percent.
Bond prices and yields move in opposite directions.
- AFP /ls
A cease-fire declaration in Libya and Group of Seven intervention to prevent the yen from surging further, as well as the Federal Reserve's green light for major banks to pay or increase their dividends, provided a boost for the market.
But they drifted lower through the afternoon as a weekend full of uncertainties loomed -- over whether the cease-fire would hold, whether Japan would be able to prevent a nuclear meltdown, and whether tensions in Bahrain, Yemen and oil giant Saudi Arabia would escalate.
The Dow Jones Industrial Average of 30 blue chips closed up 83.93 points (0.71 percent) to 11,858.52 while the broader S&P 500 added 5.49 (0.43 percent) to 1,279.21.
The tech-driven Nasdaq Composite picked up 7.62 points (0.29 percent) at 2,643.67.
"In tentative trading today that included options expiration, stocks managed to end the day in the green, responding today primarily to coordinated currency intervention by the G7 to stop the surge in the Japanese yen," said brokers at Charles Schwab.
"The market continues to fight the negative macroeconomic events and resist breaking down to lower levels," said Michael James of Wedbush Morgan securities.
Some banks -- but not all -- surged after the Federal Reserve gave them permission to begin paying, or increasing, dividends, and engage in share buybacks, after a moratorium dating back to the financial crisis.
Coming after a round of stress tests for the biggest 19 banking groups, the move it was a new sign of the sector's emergence from the 2008-2009 housing finance collapse.
The strong banks during the crisis -- JPMorgan Chase, including BB&T, Wells Fargo, and US Bancorp -- immediately announced a rash of higher dividends and share repurchases.
JPMorgan put on 2.65 percent, BB&T rose 0.5 percent, US Bancorp rose 1.1 percent and Wells Fargo gained 1.5 percent.
Retail banking giants Citigroup (up 1.1 percent) and Bank of America (up 0.4 percent) did not announce dividends.
In a spin-off from the Fed's move, Goldman Sachs added 2.7 percent after announcing it was buying back the $5 billion of shares it sold to billionaire Warren Buffet's Berkshire Hathaway in the crisis in 2008.
Berkshire had extracted a massive 10 percent dividend -- $500 million a year -- from Goldman for the bailout deal, and was getting an extra $500 million in the buyback as a pre-payment fee. Berkshire shares gained 0.5 percent.
Sports shoe maker Nike sank 9.2 percent after a disappointing third quarter report, which said it had been pushing up retail prices to pass on the spiking costs of raw materials.
The bond market fell. The yield on the 10-year Treasury rose to 3.28 percent from 3.25 late Thursday, while the 30-year note was flat at 4.43 percent.
Bond prices and yields move in opposite directions.
- AFP /ls
US student quits UCLA after anti-Asian video - Channel NewsAsia
US student quits UCLA after anti-Asian video - Channel NewsAsia
LOS ANGELES: A US student whose "appalling" anti-Asian and anti-Japanese rant went viral on YouTube announced Friday she was quitting college, after receiving death threats.
The University of California in Los Angeles (UCLA) undergraduate said the video had led to "the harassment of my family ... death threats and being ostracised from an entire community.
"Accordingly, for personal safety reasons, I have chosen to no longer attend classes at UCLA," added the student, in her third year studying political science, in a letter to campus newspaper The Daily Bruin.
In the YouTube clip she lashed out at the "hordes of Asian people" at UCLA. Speaking in a fake Asian language -- "Ohhhh. Ching chong ling long ting tong" -- she chastised them notably for talking on their cellphones in the library.
"In America, we do not talk on our cell phones in the library," she said in the three-minute clip, adding: "If you're gonna come to UCLA, then use American manners."
She continued: "I swear they're going through their whole families, just checking on everybody from the tsunami thing. I mean, I know, that sounds horrible. I feel sorry for all the people affected by the tsunami.
"But if you're going to go call your address book, like you might as well go outside, because, if something is wrong, you might really freak out and you're in the libtary, and everybody's quiet.
UCLA chancellor Gene Block condemned the comments earlier in the week as "appalling" and said the video did not represent the views of the university community.
In her letter to the Daily Bruin Friday, the student said she was "trying to produce a humorous YouTube video," but instead "offended the UCLA community and the entire Asian culture."
"I am truly sorry for the hurtful words I said and the pain it caused to anyone who watched the video," she wrote.
"Especially in the wake of the ongoing disaster in Japan, I would do anything to take back my insensitive words. I could write apology letters all day and night, but I know they wouldn't erase the video from your memory."
-AFP/wk
The University of California in Los Angeles (UCLA) undergraduate said the video had led to "the harassment of my family ... death threats and being ostracised from an entire community.
"Accordingly, for personal safety reasons, I have chosen to no longer attend classes at UCLA," added the student, in her third year studying political science, in a letter to campus newspaper The Daily Bruin.
In the YouTube clip she lashed out at the "hordes of Asian people" at UCLA. Speaking in a fake Asian language -- "Ohhhh. Ching chong ling long ting tong" -- she chastised them notably for talking on their cellphones in the library.
"In America, we do not talk on our cell phones in the library," she said in the three-minute clip, adding: "If you're gonna come to UCLA, then use American manners."
She continued: "I swear they're going through their whole families, just checking on everybody from the tsunami thing. I mean, I know, that sounds horrible. I feel sorry for all the people affected by the tsunami.
"But if you're going to go call your address book, like you might as well go outside, because, if something is wrong, you might really freak out and you're in the libtary, and everybody's quiet.
UCLA chancellor Gene Block condemned the comments earlier in the week as "appalling" and said the video did not represent the views of the university community.
In her letter to the Daily Bruin Friday, the student said she was "trying to produce a humorous YouTube video," but instead "offended the UCLA community and the entire Asian culture."
"I am truly sorry for the hurtful words I said and the pain it caused to anyone who watched the video," she wrote.
"Especially in the wake of the ongoing disaster in Japan, I would do anything to take back my insensitive words. I could write apology letters all day and night, but I know they wouldn't erase the video from your memory."
-AFP/wk
OTCBB.COM: DIRECT FILING IPO VS. REVERSE MERGER
Direct Filing IPO vs. Reverse Merger
Which method is right for you?
Which method is right for you?
IPO Method Comparison for the OTCBB:
When deciding whether go public via direct filings or via reverse merger with an OTCBB public shell company, here are some things to consider:
COST: Going Public by reverse merger with a trading OTCBB public shell company is much more expensive. The cost to conduct a reverse merger, including the legal fees and public shell cost is anywhere from $350,000 to more than $500,000 USD. In comparison, the cost to go public by direct filings is typically under $50,000 (USD).
TIME: Going Public by reverse merger with a trading OTCBB public shell company is much faster than going public direct. The time it takes to complete a reverse merger is only a few weeks, whereas to go public on the OTCBB direct typically takes approximately 6 months from the date your audit is completed.
FINANCIAL AUDIT: Whether you go public by reverse merger with a public shell or direct filings, the OTCBB requires that your financials be audited before the filing or merger and then yearly by a PCAOB registered CPA firm.
SHAREHOLDERS: To be a publicly traded company, you need a minimum of approximately 35 shareholders. If your company does not already have 35 shareholders, you must do a private offering for the purpose of amassing those shareholders, which can be quite a hassle. When you go public by reverse merger with an OTCBB public shell company, the OTCBB shell company already has the required number of shareholders.
POTENTIAL CONTINGENT LIABILITIES: when you go public by reverse merger with a public shell company, there is the potential that you acquire problems associated with the OTCBB shell's 'former life'. When you go public direct, you have a perfectly clean, new public shell company.
So as you can see, going public by reverse merger is much faster and the company going public doesn't have to worry about obtaining shareholders, but is approximately 6 times the cost as going public direct.
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