Spanish premier Mariano Rajoy has required proposals from academics how to make a "bad bank". Proposals are expected to outline mechanisms to purchase damaged assets (e.g. real estate) from commercial banks at reduced prices. Spain needs about $133 bn from EFSF or IMF to provide asset transfer to bad bank.
The euro fell by 0.4% against US dollar to $1.3267, hitting seven-week low. Investors lose confidence in euro and euro-based assets after no certain solutions to the spreading debt crisis coming from the meeting of the EU leaders. The euro also was down against British pound by 0.07%, currently EUR/GBP is traded at 0.8608.
Italian short-term debt has a higher yield compared to long-term debt signaling on distress in the bond market. Yields on Italian bonds increased while the price of bonds fell. The yield on two-year bonds increased by 37 basis points to 7.45%, reported by FactSet Research. Meanwhile, five-year bonds yield increased to 7.61% and 10-year bond yield jumped to 7.17%.
One more sign of instability of property market in China is that more construction companies face essential delays in payments from property developers. More than 80% of construction companies experience delays in payment, reported Credit Suisse. Moreover, builders were asked to slow down the speed of work on the current construction projects.
Hungarian stocks decreased rapidly after it was announced that the country's credit rating was decreased to junk status by Moody's Investors. The rating agency claimed Hungary's ability to implement fiscal consolidation is doubtful; moreover, there is turmoil in public-sector debt cut. The BUX index was down 4.3% in the early trade in Budapest.
The pace of economic growth in China probably will decrease; China's GDP is projected to be 8.4% in 2012 being lower than 9.1% in 2011, reported the World Bank of China. China's inflation is projected to be moderate of 4.1% in 2012 as compared to 5.3% this year. Trade surplus forecast for 2011 is 3.5% of GDP and 3% of GDP in 2012.
Russia has decided to leave benchmark interest rate untouched for a second consecutive month. According to Bank Rossii statement released today it will keep borrowing rate at 8.25%. Russia is trying to restrict inflation to 7% - the lowest since the collapse of Soviet Union in 1991. However, depreciation of ruble may boost inflation next month as export power is increasing.
Michael C. Woodford, a former president of Olympus Corp. together with Japanese officials is working on a rescue plan that would dodge Olympus delisting. The key goal for company is create accounts by December 14 placed by regulators to evade being delisted from trading. Olympus has been exposed to delisting after 3 executives were detected to engage in scheme to shroud losses.
According to Jesse Wang, China Investment Corp. executive vice president China's national health fund could indirectly support Europe via investments. Wang pointed out that fund could not play the role of main rescuer in EU debt crisis; however, if there would show up prospective investment opportunities, China's fund could help to boost growth through investing.
Japan's Nikkei Stock Average Index experienced slight downturn ending up at 8,160.01 or 0.6% down on Friday trade. Nevertheless, the index is still fluctuating in the area of 2.5 year-low. Financial institutions gave negative contribution to index, though by the end of trade it was offset by leading exporters. Shinsei Bank Ltd lost 5.2% while Nikon Corp. and Mitsubishi Motors Corp. each added 3.0% and
Borrowing costs on Brazilian interest rate futures fell after Dilma Rousseff told the nation has capacity to apply monetary policy to stimulate growth. Yields on futures maturing January 2013 dropped 0.14% or 14 bp reaching 9.76%. Brazil experienced the slowest growth during the last 3 months since January, therefore government seek opportunities to fuel the economy.
Japanese 10-year bond yields experienced an increase of 3 bp reaching 1.025% on growing worries that country's debt burden may increase. Surge in yields was fuelled by Standard & Poor's unexpected announcement saying Japan is close to credit rating downgrading. Twenty-year rates jumped 5.5 bp to 1.785% while 30-year notes gained 5 bp to 1.96%.
On Friday Hong Kong's Hang Seng Index extended its losses, giving up 1.29% or 231.09 points and closing at 17,704.01 as Angela Merkel rejected issuance of Eurobonds fuelling investors' fears about deepening debt crisis. Banking, energy and real estate shares led the decline in index. Bank of Communications Ltd fell 1.8%, China Merchants Bank Ltd dropped 2.6%, while China Resources Land Ltd. gave up 4.3%. Crude
UK's Deputy Prime Minister announced the plan to create 400,000 work and training placements in order to combat high unemployment among young people. The program is worth ВЈ1bn with salary subsidies of ВЈ2,275 provided to employers for employing 160,000 young people aged between 18 and 24. However, there are still questions about program financing. Youth unemployment in the UK reached 1.02 million.
UniCredit SpA's rating was changed from buy to neutral at Nomura. UniCredit is going to make €7.5 billion capital boost that will affect shares. However, Nomura experts see more potential in Mediobanca Banca di Credito Finanziario SpA that is rated as buy despite slight target share price cut from €6.9 to €6.6.
European stock markets started Friday's trading from flat to slightly higher. The Stoxx Europe 600 index was flat at 219.78, the German DAX index increased by 0.3% to 5,443.39 and the French CAC index was up by 0.3% to 2,834.93. The FTSE 100 index decreased by 0.2% to 55,118.72.
Olympus, Japanese camera maker, may be delisted from the Tokyo Stock Exchange because of hiding losses. It will be delisted in case it fails to provide truthful financial data till December 14. However, even if the company succeeds in financial reporting till due date, the authorities can delist the company taken the scale of malpractice or in case some connection with Japanese criminal authorities
In recent years China's offshore property developers were focusing on developing economies as Middle East and North Africa. Currently these regions experience a political turmoil thus increasing the level of risk of construction projects. Now China's construction contractors see high potential in entering developed economies, said Yu Zhende, vice-president of Overseas Operations for China State Construction Engineering Corp Ltd.
The US dollar surged against most of its major peers; spreading current week's gains after investors began to switch to US assets considering them as safe haven amid European debt fears. 17-nation currency fell to a seven-week record low against US dollar, as Italy's 2-year borrowing costs rose to highest level in 14 years. On Friday morning trade Euro lost 0.3% and touched $1.3299. EUR/USD
Syrian government did not announce its decision on the Arab League observer mission despite being a couple of hours away from the deadline. The Arab League requires 500 observers to enter Syria to prevent violence as over 3,500 people were killed since protests started in March. In case Syria does not allow observers to enter its territory, the Arab League will meet tomorrow to decide on
On Thursday investors were expressing their anxiety regarding European crisis by demanding higher yields on region's notes. German 10-year borrowing costs reached maximum at 2.26% and ended at 2.19%. Meanwhile the yields of Italian 10-year bonds surged once more, attaining 7.13% and closing at 7.11%. French 10-year papers experienced modest increase and closed at 3.72%.
United Overseas Bank of China decided to target Chinese with high income level. The bank tries to attract clients with more than 1 million yuan in assets. According to statistics the wealth of affluent citizens of China will increase from $2.6 trillion to $8.8 trillion by 2015. More wealthy customers are more demanding in asset management so the bank has to meet their expectations, said
Australian Dollar fell against US Dollar and Japanese Yen as European officials struggle on tools to stop debt crisis, boosting demand for assets with higher borrowing costs. Australian Dollar lost 0.3% reaching $0.9701 in Sydney evening trade. New Zealand's Dollar remained unchanged. Thomas Averill predicts Aussie to plunge to $0.9550 in forthcoming weeks. AUD/USD is currently trading at $0.9711.
Japan's consumer prices decreased for first time since July. Core consumer prices declined by 0.1% in October, reported statistics bureau. Analysts claim the reason for price decline is weak domestic demand and deflation is mainly caused by a decrease in oil prices. High yen and low crude oil costs make energy import cheap thus weighting on prices. The yen advanced 6% against USD in the