1. World Bank Sees Capital-Flow Risks, Global Growth Slowing to 3.3% in 2011 2. China Turning to Seller of Kan's Debt as Yen Strength Fades: Japan Credit 3. Topix Gains for Fifth Day on Commodities, Easing Concern Over Europe Debt 4. Gold Buying Shows RBI Losing `Never Ending' Inflation Battle: India Credit 5. Australian Employers Added 2,300 Workers in December, Less Than Estimated 6. Lundin, Inmet Mining Agree to Merge to Create Company Valued at $9 Billion 7. AIG Warrants to Be Issued Next Week as Insurer Works to Repay U.S. Rescue 8. Trichet Faces `Annus Horribilis' as Crisis Tests One-Size-Fits-All Policy 9. Nissan Forecasts Decline in Europe Market Share After Micra Move to India 10.U.S. Coal Producers to Gain From Australia's Record Floods: Chart of Day 11 Australia Price Risk Seen in 20% Tomato Jump as RBA Forced to Extend Pause 12.Ultrathin Piaget Watches for $200,000 Tackle Chunky Pre-Crisis Timepieces
1. World Bank Sees Capital-Flow Risks, Global Growth Slowing to 3.3% in 2011
Capital inflows, a driving force of the recovery in emerging countries, now pose risks to global growth as they can trigger abrupt currency fluctuations that may do "lasting damage" to some nations, the World Bank said. The Washington-based institution today left a growth forecast for the world´s economy this year unchanged at 3.3 percent, from a revised 3.9 percent in 2010. It predicted that the slowdown, which reflects capacity constraints in developing nations and restructuring in developed economies, will be followed by faster growth of 3.6 percent in 2012. "The pickup in international capital flows reinforced the recovery in most developing countries," Hans Timmer, the World Bank´s director of development prospects, said in a press release today. "However, heavy inflows to certain middle-income economies may carry risks and threaten medium-term recovery, especially if currency values rise suddenly or if asset bubbles emerge." While the recovery is "broad-based" and "solid," the growth rates "are not strong enough to undo the damage that was done during the crisis in all parts of the world," Timmer said on a conference call today.
2. China Turning to Seller of Kan's Debt as Yen Strength Fades: Japan Credit
China went from scooping up the most Japanese debt in a year to selling the most, exiting the world´s lowest yields as forecasters expect the yen to retreat further from the 15-year high seen in November. The country sold a net 81.3 billion yen ($979 million) of Japanese bonds in November, Japan´s Ministry of Finance said yesterday. China had been set for the biggest yearly increase since at least 2005 before unwinding with net sales in three of the four months through November. "With China´s currency likely to appreciate against the yen, there is little incentive for China to buy Japanese debt," said Masaru Hamasaki, chief strategist at Toyota Asset Management Co. in Tokyo, which manages about $17 billion. "Because of low yields and currency risk, I think China won´t buy Japanese debt that much this year." China, holder of the world´s largest foreign-exchange reserves, is shifting attention from Japan to Europe as a credit crisis pushes the trading bloc to seek outside help, according to Susumu Kato, chief economist for Japan in Tokyo at Credit Agricole CIB and CLSA. Chinese Vice Premier Li Keqiang last week expressed confidence in Spain´s financial markets and pledged more purchases of that country´s debt.
3. Topix Gains for Fifth Day on Commodities, Easing Concern Over Europe Debt
Japanese stocks rose, sending the Topix index to a fifth straight gain, after commodity prices climbed, Wells Fargo & Co. boosted ratings on U.S. banks and speculation mounted that Europe will step up efforts to control its debt crisis. Canon Inc., the world´s largest camera maker, climbed 1 percent as the euro soared, boosting the outlook for export earnings. Honda Motor Co., a Japanese carmaker that gets about 80 percent of its sales abroad, rose 1.4 percent. Mitsui & Co., a trading company that counts commodities as its biggest source of profit, gained 1.8 percent. Mitsubishi UFJ Financial Group Inc., Japan´s biggest publicly traded bank, jumped 2 percent. "Uncertainty remains about the situation in Europe, but excessive pessimism is easing," said Mitsushige Akino, who oversees about $450 million in assets in Tokyo at Ichiyoshi Investment Management Co. The Nikkei 225 Stock Average rose 1 percent to 10,617.73 as of 9:06 a.m. in Tokyo. The broader Topix gained 1 percent to 939.26, with almost eight times as many shares advancing as declining.
4. Gold Buying Shows RBI Losing `Never Ending' Inflation Battle: India Credit
Record imports of gold by India show the central bank may be losing the battle to tame inflation, spurring investors to sell government bonds. Shipments into Asia´s third-biggest economy may have increased to 800 metric tons from 557 tons in 2009 and exceeding the previous all-time high of 769 in 2007, according to Ajay Mitra, managing director for India and the Middle East at the World Gold Council. Mumbai-based brokerage Nirmal Bang Commodities Pvt. forecasts purchases from overseas markets may rise to as much as 810 tons this year. "Gold is being used as a store of value to protect against never-ending inflation," Ritesh Jain, the Mumbai-based head of fixed income at Canara Robeco Asset Management Ltd. who oversees $1.5 billion, said in an interview on Jan. 7. "Inflation is the biggest concern in the minds of investors and savers." India´s government bonds have lost 0.5 percent this month, Asia´s worst performance after Indonesia, according to indexes compiled by HSBC Holdings Plc. Annual inflation in December was probably 8.40 percent, accelerating for the first time in three months, according to the median forecast of 30 economists in a Bloomberg survey ahead of official data tomorrow.
5. Lundin, Inmet Mining Agree to Merge to Create Company Valued at $9 Billion
Lundin Mining Corp. and Inmet Mining Corp. agreed to combine to create a Canadian copper producer with a market value of about C$9 billion ($9.1 billion) as the metal traded close to a record. Inmet investors will get 3.4918 shares of Symterra Corp., as the new company will be called, for each of their shares and Lundin investors will receive 0.3333 of a Symterra share for each of their shares, the Toronto-based companies said today in a statement. The deal is a "merger of equals," they said. "The long-term fundamentals of copper are compelling," Lukas Lundin, chairman of Lundin, said in the statement. "Symterra provides one of the best growth profiles for copper amongst major mining companies." Inmet is developing the Cobre Panama copper mine in the Central American country and Lundin has a stake in the Tenke Fungurume copper and cobalt project in the Democratic Republic of Congo.
6. AIG Warrants to Be Issued Next Week as Insurer Works to Repay U.S. Rescue
American International Group Inc., the insurer bailed out by the U.S. government, said it is set to issue 75 million warrants to shareholders by Jan. 19 as it works to repay the $182.3 billion rescue. The U.S. Treasury Department and Federal Reserve Bank of New York agreed the insurer´s recapitalization can move forward, New York-based AIG said today in a statement. AIG said it expects to pay about $21 billion to the New York Fed to settle a credit line. It also plans to issue common stock to the Treasury in exchange for preferred shares, leaving the government with a stake of about 92 percent. Treasury would sell its shares over time, AIG said. "With today´s announcement, we anticipate that we will be able to deliver on our promise to the American people to repay the extraordinary assistance they provided to AIG during the financial crisis of 2008," Chief Executive Officer Robert Benmosche said in the statement.
7. Trichet Faces `Annus Horribilis' as Crisis Tests One-Size-Fits-All Policy
Jean-Claude Trichet´s final year at the helm of the European Central Bank may be his toughest yet as widening economic divergences within the euro area strain the bank´s one-size-fits all monetary policy. With the sovereign debt crisis threatening to engulf Portugal and bond yields in debt-strapped nations near euro-era highs, Trichet must decide when to stop buying government assets, withdraw unlimited liquidity provision for banks and possibly even raise interest rates to stem inflation risks. His response to those challenges may shape his legacy by helping to determine the euro´s future. "2011 could be another annus horribilis for the ECB," said Ken Wattret, chief euro-area economist at BNP Paribas in London. "Stress in debt markets hasn´t diminished and the divergence between euro-area countries is getting bigger. It´ll be a big challenge for the ECB and a tough job for its president to negotiate an appropriate path for monetary policy." Trichet, who chairs an ECB policy meeting today, has been forced to take unprecedented steps to buy time for the euro as governments struggle to agree on how best to shore up confidence in the monetary union. The decision to buy government bonds split the ECB´s Governing Council, and some policy makers have warned that price stability, the bank´s primary goal, could be compromised if emergency measures are left in place too long.
8. Nissan Forecasts Decline in Europe Market Share After Micra Move to India
Nissan Motor Co.´s European sales expansion may encounter a setback this quarter, after the transfer of Micra small-car production to India created supply shortages, a regional sales executive said. "Market share will be a little bit challenged," Pierre Boutin, western Europe managing director, said yesterday in an interview. "I ran out of Micra stock completely in November." Japan´s third-largest carmaker halted Micra production in Sunderland, England, in July after building inventory to cover the transition to a revamped model assembled in India. Those stocks were exhausted earlier than expected as European incentives fueled demand for small cars, Boutin said at the regional sales division´s headquarters outside Paris. Supplies of the new model won´t reach normal levels until March, he said. The loss of market share will be worst in France, the executive predicted. Because of the Micra shortage, Nissan missed out on a December sales surge before the expiry of the country´s scrapping bonus, he said. The 500-euro ($650) subsidy continues to apply to 2010 orders delivered by March 31.
9. U.S. Coal Producers to Gain From Australia's Record Floods: Chart of Day
U.S. coal companies including Patriot Coal Corp. are set to benefit from higher prices and sales as record rainfall crimps exports from Australia, the world´s biggest exporter, according to MF Global Australia Ltd. The CHART OF THE DAY shows Australia´s coking coal exports and prices, based on data compiled by Bloomberg from the government and McCloskey Group Ltd. Flooding in the state of Queensland, which Citigroup Inc. estimates supplies more than half of the global seaborne trade for the steelmaking fuel, has disrupted mines, cut transport and caused prices to surge. "Some of the funds we speak to with global mandates have been buying U.S. coal producers to take advantage of the recent spike in the spot coal price, which is expected to be ongoing," said Nick Burmester, head of hedge fund sales at MF Global in Sydney. "Patriot has recently sold coking coal into Asia." Contract prices, which reached a record $300 a metric ton in 2008, may rise to $330, compared with $225 in this quarter, and a cash price of $280, Bank of America Merrill Lynch said Jan. 12 in a report. BHP Billiton Ltd., partner in the world´s biggest coking coal exporter, and Xstrata Plc are among miners who´ve warned they may miss deliveries because of the floods that have inundated an area the size of France and Germany. They are the worst in 100 years, Nomura Australia Ltd. said yesterday.
10.Australia Price Risk Seen in 20% Tomato Jump as RBA Forced to Extend Pause
Reserve Bank of Australia Governor Glenn Stevens can glimpse the inflation threat he faces from the nation´s floods at the produce shop near his suburban Sydney home in Sylvania Waters. Tomato prices soared 20 percent in the past week and bananas, grapes and sweet potatoes are up 10 percent, said Maurice Sorace, owner of Sylvania Best Fresh, who gets about a third of his fruit and vegetables from flood-ravaged Queensland state. "Prices will be higher in the next week" as the deluge drowns more crops and clogs roads, he said. The crisis may force the RBA to accept higher inflation in coming months as the floods spur food and commodity costs and slow growth in a disaster zone the size of Egypt. Australian inflation-linked bonds rallied the most in more than five years as the damage, along with future rebuilding in a country already near full employment, risked stoking consumer prices. "At a time when the economy does not have a lot of spare capacity and a mining and energy-investment boom is also expected over the next few years, the RBA will face an even greater challenge to manage medium-term inflation pressures," said Paul Brennan, an economist at Citigroup Inc. in Sydney.
11.Ultrathin Piaget Watches for $200,000 Tackle Chunky Pre-Crisis Timepieces
When it comes to watches, Piaget is banking on the adage: one can never be too rich or too thin. Piaget aims for record sales in the next fiscal year as more shoppers in Asia buy its Altiplano watches. The collection includes the world´s thinnest automatic watch, which starts at 18,800 Swiss francs ($19,337). It´s also introducing a model for about 200,000 francs that includes a tourbillon, a spinning mechanism considered one of the most difficult features to make. "Ultrathin is our religion," Chief Executive Officer Philippe Leopold-Metzger said in an interview in his office in Plan-les-Ouates, near Geneva. "People are returning to elegance. For a long time, there was a premium for bad taste." Watches are becoming thinner again after a trend toward flashier, thicker timepieces before the credit crunch, the executive said. Piaget, a unit of Cie. Financiere Richemont SA since 1988, anticipates sales growth of more than 10 percent in the year ending March 2012 after the tourbillon watch is introduced.
-0- Jan/13/2011 00:35 GMT
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