SINGAPORE - Standard & Poor's Ratings Services today affirmed its unsolicited 'AAA' long-term and 'A-1+' short-term sovereign credit ratings on Singapore. The outlook remains stable, and the transfer and convertibility assessment remains 'AAA'. Also affirmed were Singapore’s 'axAAA' long-term and 'axA-1+' short-term ASEAN regional scale credit ratings.
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NEW DELHI – The Reserve Bank of India (RBI) today cut its repo rate by 25 basis points to 7.25%, in line with market forecasts. The reverse repo rate automatically follows, decreasing to 6.25% from 6.50%. The RBI has now cut by 75 basis points in 2013. Also in line with expectations, the cash reserve ratio (CRR) remained unchanged at 4%. The CRR has remained unchanged since a 25bps reduction in January, designed to infuse liquidity into the banking system. The RBI set out three challenges for monetary policy going forward: to lift growth, prevent upward pressure on inflation expectations; and ensure liquidity allows adequate credit flow to the productive sectors of the economy.
SEOUL - Export growth for South Korea April – the region’s first monthly export numbers release - registered a disappointing 0.4% y/y (consensus: 2.0% y/y; prior 0.2%). BBVA Bank says the out-turn may be a harbinger of external headwinds for the rest of the region and, despite a better-than-expected Q1 GDP outturn (1.5% y/y), it could raise the likelihood of a rate cut by the Bank of Korea in coming months (the BoK has stayed on hold since October). Headline inflation in South Korea slowed to 1.2% y/y for April (consensus: 1.5%), well below the target range of 2.5-3.5%. www.bbva.com (ATI).
SINGAPORE – Ratings agency Standard & Poor’s has lifted its ratings for the Philippines, but at the same time effectively downgraded its assessment of Indonesia, saying that a stalling of reform momentum and a weaker external profile in Indonesia have diminished the potential for a rating upgrade over the next 12 months (Indonesia also faces an election next year).
SYDNEY - The relationship between Australian business and the Federal Government has further deteriorated, with a survey of Company Directors finding that only 8% of Directors (down from 12%) agree with the statement ‘the Federal Government understands business’. Conversely, 50% of Directors believe the Federal Opposition understands business.
SINGAPORE - Japan's latest effort to escape deflation and revive economic growth is a drastic departure from the policies of previous governments, but Standard & Poor's says there is more than one-third chance that it will lower its 'AA-' long-term sovereign ratings on the nation. The continuing prospect of a downgrade arises from risks associated with recent Government initiatives and uncertainty of their success, S&P says.
MELBOURNE - The Port of Melbourne Corporation has announced successful bidders for the right to operate its new automotive terminal and pre-delivery inspection hub on the western side of Webb Dock. Port of Melbourne is constructing a 920 m wharf and preparing land for private sector development. The automotive facilities are funded as part of an AUD1.6 billion Port Capacity Project to consolidate Victoria’s automotive import-export automotive handling at the Port of Melbourne.
TAIPEI - Chinese officials and scholars have called for non-official political dialogue between China and Taiwan as China’s former Commerce Minister, Chen Deming, becomes Head of the Chinese organisation responsible for dealing with Taiwan. Chen takes over from Chen Yunlin, who was appointed President of the Association for Relations Across the Taiwan Straits (ARATS) in June 2008. At the ARATS board meeting, Chen said: "As cross-strait relations go ever deeper, the two sides eventually will need to look for solutions to our difficult political problems. ARATS supports exchanges and discussions on political issues between academic institutions and related personnel, and it also supports political dialogue between private citizens on both sides." He used the Chinese term "min jian" to indicate the unofficial nature of such dialogue.
DOHA – The International Chamber of Commerce (ICC) today finalised recommendations for World Trade Organization (WTO) member countries to salvage parts of on-going Doha trade negotiations that could boost global GDP by US$960 billion. Several hundred business leaders and trade experts are meeting over four days for the ICC World Trade Agenda Summit, the first held in the Middle East.
TAIPEI - Export orders from Taiwan fell 6.6% y/y in March, following a 14.5% contraction in February and should be seen in the light of market expectations of a 1.9% increase, says ANZ Bank. In the first quarter as a whole, export orders declined 1.7% y/y. “The decline was broad based. Notably, orders from Japan saw the largest decline, down 15.6% y/y, suggesting the weakening JPY is starting to have an impact on export orders,” ANZ says. “At this stage, we believe the Central Bank will not engage in aggressive easing.
SINGAPORE - The bill for China's economic stimulus has to be paid - the question is when and how it will be paid, says Standard & Poor's in a report just published. The ratings agency says bank loans in China grew almost 60% in 2009-2010, staving off a recession, but that loan surge translates into higher credit risks on banks' loan books, which points to the possibility of rising nonperforming loans (NPLs). If that happens, the government's debt burden will rise as it absorbs some of the cost of these bad loans. "This hasn't happened yet, though.
PARIS - A survey by global credit insurance group Coface of corporate credit risk management in the Asia Pacific region for the fourth quarter of 2012 suggests that corporate payment experience in the region generally worsened. Companies in Australia, China and India specifically suffered more non-payment. By sectors, building & construction, IT, ISP and data processing, textile, clothing and shoes, and household electric and electronic appliances were at higher risk. Coface says companies in the region are less optimistic about recovery of global economy in 2013.
RANGOON - The European Union is expected to permanently lift all sanctions on Myanmar, with the exception of its embargo on arms, next week. The sanctions were suspended for one year, until April 30, 2013, in recognition of Myanmar's ongoing democratic reforms - and to encourage further positive steps. Marae Ciantar, Head of the Myanmar practice of the law firm Allens, says that, since then, and with the progressive easing of US sanctions, there has been an extraordinary level of interest from international investors in Myanmar.
HONG KONG – People’s Bank of China Deputy Governor, Yi Gang, has told an IMF conference that the RMB’s daily trading band will be widened “in the near future”. The daily trading band was last widened a year ago to +-1% from +-0.5% previously. In the meantime, the RMB has continued to appreciate against the USD, reaching a new high of 6.17 yesterday, before declining today to 6.18.
LONDON - Prospects for steady gains in global economic growth throughout 2013 are fading, according to the latest Global Forecast from The Economist Intelligence Unit. Although the US economy is strengthening and some key emerging markets will grow faster this year than in 2012, a synchronised global upturn is less likely in the next six months, the EIU says. It now expects growth in global economic output to be no higher in 2013 than the year before, although a better showing in expected in 2014. “We have reduced our 2013 GDP forecast for the euro zone to -0.7% from -0.4%,” the EIU says.
TAIPEI- The State-run Taiwan Power Co. (Taipower) has reiterated that it will incur an estimated loss of NT$330 billion (US$11 billion) and face possible bankruptcy if construction of Taiwan’s fourth nuclear power plant is cancelled. Hsu Yung-hua, Taipower’s acting Vice President, said it will cost Taipower an additional NT$7 billion to NT$8 billion each year if the start of operations at the plant is postponed.