theforex

Forex : Japan opposition cautiously forex intervention

noreply@blogger.com (de_kerinchi) — Thu, 16 Jul 2009 11:27:00 +0000

Forex money - Japan should not intervene in the forex currency markets unless exchange rates fluctuate abnormally, a senior opposition lawmaker said Thursday when asked about the recent strength of the yen against the dollar.

The main opposition Democratic Party has its best chance to win Prime Minister Taro Aso's ruling Liberal Democratic Party (LDP) and its smaller coalition partner in an imminent national election, ending half a century of almost uninterrupted by the conservative LDP .

"forex Currency rates should not be moved artificially, as they reflect the strength of the economy. If Japan's economy is strong, so is the yen and weaker than if the U.S. economy, the dollar will strengthen . It is very natural, "Hirohisa Fujii, a senior adviser to the Democrats, told Reuters in an interview.

"Unless the forex currency moves are abnormal, I do not think we should intervene in forex currency markets."

Fujii, 77-year-old former finance ministry official, is seen by political analysts and party members from running for a key position in economic policy if the Democrats win the elections to be held in October.

He served as finance minister in an anti-LDP coalition, from 1993 to 1994.

It is not clear that a government of the Democratic Party to be appointed as finance minister. Masaharu Nakagawa, the finance spokesman for the party, Fujii and touted as potential candidates, but analysts say that the post could go to other veterans.

Japan has a long history of trying to stop the intervention by the yen to buy dollars, but has remained outside the market from 35 trillion yen ($ 373 billion) a year over 15 months ending March 2004 .

The yen touched a maximum of five months of 91.80 yen per dollar last week, raising concern about the impact on Japan, which depend on the export economy as it emerges from its deepest recession since the Second World War.

Fujii also said that Democrats see no need to change in Japan's $ 1 trillion dollars of foreign exchange reserves, second largest in the world after China.

"It is a fact that confidence in the dollar remains high and is very natural for Japan to manage its reserves which it is hoped the majority of (the markets)," he said.

"The same applies to the currencies and stocks, and we must acknowledge as a fact in a free market economy."

Fujii shrugged the comments made by Nakagawa said that Japan should avoid the purchase of forex dollar-denominated U.S. bonds because of forex currency risk.

"About 60-70 percent of the way it is implemented should not be changed, this is a condition for a change of government. If it has changed 100 percent, which would be a revolution," said Fujii.

"The weight of the dollar in reserves is one of those topics that should not be changed only by a change of government happens."

He also said that the Democrats what they consider to cut wasteful spending in Tokyo from $ 160 billion stimulus measures, which he said includes expenditures such as construction projects, to reduce new bond issues totaling a record 44.1 trillion yen in the fiscal year that began April 1.

"The supplementary budget (for the current fiscal year to next March) is a fake," said Fujii. "It is important to reduce more than 10 percent of new government bond issues. This is important both for the fiscal health of Japan and JGB markets." ($ 1 = 93.74 Yen) - Reuters - Forex money

U.S. dollar, yen slide as risk appetite rises

noreply@blogger.com (de_kerinchi) — Sat, 02 May 2009 06:29:00 +0000

NEW YORK, May 1 (Reuters) - The U.S. dollar and yen fell on Friday as increasing risk appetite sparked by better-than-expected U.S. economic data pared demand for both currencies as a refuge against the global slowdown. The dollar fell for a fourth straight session versus the euro, while the yen dropped to a two-week low against both the euro and dollar, with volumes thin given the May Day holiday in Europe. Higher-yielding currencies such as the Australian and New Zealand dollars were some of the biggest movers on the day, moving in tandem with higher U.S. stocks.

New data on Friday reinforced the view that the worst of the recession may have passed, making investors more comfortable with risk-taking. Reports showed U.S. consumers felt more upbeat about the economy in April while a key gauge of manufacturing suggested the sector was gradually emerging out of a prolonged recession. The numbers were consistent with the Federal Reserve's less bleak outlook on the U.S. economy issued on Wednesday.

"Risk appetite is definitely coming back and the data this morning was phenomenal," said Melvin Harris, a market analyst at Advanced Currency Markets in New York.

"The reports are supportive factors to truly build the case that while things are not completely better yet, we are moving in a positive direction. Economic fundamentals will become more important in the next couple of months."

In late afternoon trading, the euro rose 0.3 percent against the dollar to $1.3262 and touched a two-week high against the yen at 132.33 yen . The euro last traded at 131.64, up 1.0 percent from late on Thursday.

On the week, the euro was up 2.8 percent versus the yen.

The ICE Futures' dollar index, a measure of the greenback's value versus six major currencies, fell 0.3 percent to 84.569 .DXY.

YEN FALLS; AUSSIE, KIWI RISE

The dollar, however, gained 0.7 percent against the yen to 99.28 , having hit a two-week high around 99.58 yen, according to Reuters data.

The Australian dollar rose 0.7 percent against the U.S. dollar to US$0.7299 . The New Zealand dollar also climbed, up 0.8 percent against the greenback to US$0.5697 , while the Canadian dollar was also firmer, with the U.S. dollar down 0.7 percent at C$1.1849 .

Investors were also encouraged by data overnight showing Chinese manufacturing gained further momentum in April, as well as by Friday's better-than-expected UK manufacturing survey.

Optimism was further stoked in the United States after St. Louis Fed President James Bullard said on Friday the U.S. unemployment rate will likely crest above 9 percent but not reach levels set in the early 1980s.

Still investors remained cautious as the financial markets remain in an uncertain environment. Next week's announcement of the outcome of U.S. stress tests on top banks is an unknown.

Results from tests of the health of the 19 largest U.S. banks are expected Thursday, May 7, and will include information on estimates of losses for certain categories of loans and resources to absorb those losses. [ID:nWAT011386]

Sentiment also remains vulnerable to any hint on whether a spreading flu outbreak may turn into a pandemic that would be severe enough to dent global economic recovery.

Investors will also be looking to next week's U.S. nonfarm payrolls report for April, another potential risk for the markets. Analysts are expecting job losses of 630,000 last month, according to a Reuters poll.

"Although the pace of U.S. economic decline should be considerably less severe in the second quarter, the best contemporary tracking measures still point to a decline," said Avery Shenfeld, senior economist at CIBC in Toronto.

"How hard can we cheer about a more cushioned fall when another 600,000 drop in non-farm payrolls shows up in Friday's report?"

Dollar extends gains as investors debate forex data

noreply@blogger.com (de_kerinchi) — Fri, 01 May 2009 05:38:00 +0000

The dollar rose on Thursday as investors began to react positively to U.S. data, seeing signs of a recovery which would bolster demand for U.S. assets. The dollar was also helped by month-end flows as investors who had been betting against the dollar and dollar-denominated assets were forced to buy to reduce losses.

U.S. weekly jobless claims decreased in the latest period even as continued claims notched a fresh record high, a sign some investors took as stabilization of the labor market. A separate report showed business activity in the U.S. Midwest contracted at a less severe rate than expected in April. "If the U.S. economy starts to show signs of sustained stabilization, the dollar may begin to perform better, though it's probably a bit premature to say this now," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

The euro was last down 0.2 percent at $1.3235 while the dollar was 0.9 percent higher against the yen at 98.33 yen .

A rise in euro zone unemployment to 8.9 percent in March from an upwardly revised 8.7 percent in February underlined the view that the euro zone economy remains weak. Other data showed that euro zone inflation remained at a record low of 0.6 percent year-on-year in April

Moves in the dollar were also being dictated by month-end fixing related flows tied in part to equity-related adjustments.

"The dollar is up because of overall demand for the greenback," Kathy Lien, director of currency research at GFT Forex in New York. "A lot of month-end dollar negative flows are ending as it is the last day of trading" for the month.

Other data showed the weak U.S. job market continued to pressure incomes and spending in March, government data showed on Thursday. A report from the Commerce Department showed consumer spending fell 0.2 percent in March after a 0.4 percent increase in February, initially reported as a 0.2 percent rise. Spending, which accounts for over two-thirds of U.S. economic activity, had also risen in January.

Personal income slipped 0.3 percent after declining 0.2 percent in February, the Commerce Department said. Personal income has declined in five of the last six months.

Savings increased to an annual rate of $455.3 billion. The savings rate climbed to 4.2 percent in March from 4 percent in February.

Inflation was moderate in March, with the personal consumption expenditures price index, excluding food and energy, up 1.8 percent on a year-over-year basis, the same as in February. [ID:nN30506091]

Moves were also exaggerated by thin market conditions ahead of the May Day holiday tomorrow and the start of the Golden Week Holiday in Japan. (Additional reporting by Steven C. Johnson in New York)

Yen rises as Japanese buy

noreply@blogger.com (de_kerinchi) — Mon, 09 Feb 2009 05:55:00 +0000

TOKYO, Feb 9 (Reuters) - The yen rose against the dollar on Monday with demand from Japanese exporters lending support after it earlier hit a one-month low as gains in stock markets pointed to an easing of risk aversion.

The dollar hit a one-month high against the yen earlier as the Japanese currency carried over its weakness from Friday, when U.S. shares rallied even as data showed that U.S. job losses in January were the deepest in 34 years.

"The rise in equities caused risk aversion to wane and triggered selling of the yen," said a trader for a Japanese bank.

But the dollar later shed its gains against the yen due to selling by Japanese exporters, traders said.

The dollar fell 0.3 percent against the yen to 91.73 yen. The dollar earlier rose to 92.42 yen on trading platform EBS, its highest since early January.

In the near term, currencies are seen likely to take their cues from how the stock market reacts to President Barack Obama's financial stability plan, to be outlined by Treasury Secretary Timothy Geithner in a speech at 1600 GMT on Tuesday. The stabilisation steps were initially due to be unveiled on Monday, but the the Obama administration pushed back the announcement as it pressed lawmakers to settle their differences over a huge economic stimulus package.

Market players said the dollar broke above a triangle pattern against the yen on technical charts late last week, suggesting it may have more room to rise.

One possible scenario is for the dollar to rise towards 94.00 yen within a week, but whether that will be the case remains to be seen, said Minoru Shioiri, chief manager of foreign exchange trading for Mitsubishi UFJ Securities. "That is what technical factors suggest, but if you ask whether there are other factors out there that lend credence to that view, or whether this is a situation where people can head openly toward risk-taking, that's difficult," Shioiri said.

Besides the market's reaction to the U.S. financial stabilisation measures, another focal point will be whether there is fund repatriation by Japanese investors, Shioiri said.

Since February is a month when there is a relatively large amount of coupon payments on U.S. Treasuries, there is focus on the potential for dollar selling by Japanese players, he said.

Some $25 billion in coupon payments in U.S. Treasuries are due on Feb. 15, according to U.S. Treasury Department data. In addition, there is $36 billion in maturing coupon securities due that day.

Market players are focusing on whether Japanese institutional investors will try to repatriate overseas assets ahead of their financial year-end book closings at the end of March.

There was little currency reaction to data showing that Japan's current account surplus fell 92.1 percent in December from a year earlier, and that Japan's core private-sector machinery orders fell by a smaller-than-expected 1.7 percent in December.

Forex Trading Strategies

noreply@blogger.com (de_kerinchi) — Sun, 11 Jan 2009 09:55:00 +0000

Leverage strategy: Forex trading strategies help achieve success in forex trading or online currency trading. Forex trading differs from trading stocks and the use of forex trading strategies help the person to gain more profits in a very short period. There are many forex trading strategies adopted by the investors, the most useful among these strategies is called as the leverage. This forex trading strategy allows the online traders to get more funds than the deposited amount; by adopting this strategy the benefits are maximized. This strategy helps in utilizing the amount deposited in the account even up to 100 times against any forex trading by backing high yield transactions very easily and better results are got. This leverage forex trading strategy is used by the traders on a regular basis to take advantage of fluctuations happening in the forex market in short term.

Stop loss order strategy: Stop loss order forex trading strategy is also used commonly among forex traders. This strategy protects the investors and creates a situation called the predetermined point, not allowing press launch investor to trade when it is reached. This forex trading strategy minimizes the losses. Sometimes this strategy might backfire and make the investor to run the risk of stopping their trading leading to a higher loss, hence it is up to the trader to use or not to use this forex trading strategy.

Automatic entry order strategy: An automatic entry order forex trading strategy is also one of the widely used strategies. school homework help strategy allows the investors to participate in the trading activity when the price is suitable for them. Here the price is already determined and when the situation is reached the investor enters into the forex trading automatically.

Apart from the above strategies, there are certain basic rules to be followed as strategies to gain profits in forex trading:

The amount exposed in the foreign currency trading should always be kept in track to ensure to be within the accepted levels. While trading, the trader should not be very greedy or breach when keeping the returns free press releases which is expected out of the transactions. The main objective should be kept in mind; it might be either capital appreciation or constant returns or high profits. Keeping track of ones own experience will reward at a later stage.

Investment should be within the affordability to lose. Also relying on expert’s opinions, history prices, and analytical statements may be effective some time rather than going by their own instincts.

FOREX-US dollar rebounds as jobs data not bad as feared

noreply@blogger.com (de_kerinchi) — Sun, 11 Jan 2009 09:36:00 +0000

The dollar rallied across the board on Friday in volatile trading, with investors relieved by data showing U.S. job losses in December were not as dismal as many had feared. Traders had positioned themselves for a gruesome non-farm payrolls number following a U.S. private sector jobs report earlier this week which showed hefty losses of 693,000.

However, many of those short trades were squeezed when the government reported a headline figure of 524,000, slightly better than the market's revised 550,000 forecast. "The dollar has dodged an economic bullet," said Nick Bennenbroek, head of currency strategy, at Wells Fargo in New York.

"Even though the report was generally discouraging, the headline payrolls decline was broadly as forecast. And perhaps most significantly for the dollar, we don't think today's report will accelerate further monetary easing from the Federal Reserve."

The euro hit session lows versus the dollar at $1.3588. It was last at $1.3615 , down 0.8 percent on the day.

The single euro zone currency had hit session highs immediately after the data's release.

Against the yen, the dollar was flat at 91.04 , off session lows at 90.55.

The ICE Futures' dollar index .DXY, a gauge of the greenback's value versus six major currencies, rose 1 percent to 82.371.

Despite the dollar's rebound, analysts said there is plenty in the jobs report that bodes ill for the U.S. economy and its currency.

The 7.2 percent unemployment rate was the highest in nearly 16 years and the upward revisions in November and October have pushed total job losses in the last four months to 1.9 million.

Total job reductions for 2008 were 2.6 million, the largest decline in 63 years.

"There was nothing good in the report," said Kathy Lien, director of currency research at GFT Forex in New York. "The U.S. is in recession and in previous recessions, job cuts have lasted for at least 15 months."

So far Lien said the U.S. economy has only seen 12 consecutive months of job losses which suggests that non-farm payrolls will not turn positive until the second half of the year.

Earlier, data showed showed a bigger-than-expected drop in French industrial output, adding to the argument that the euro zone economy is further deteriorating, and keeping selling pressure on the euro.

The euro ultimately received little support from an unexpected rise in euro zone retail sales, as the outlook for consumer demand remains weak amid plunging business morale and growing unemployment.

* Dollar rises vs euro after jobs data

* U.S. job loses at 524,000; unemployment rate at 7.2.pct

* Euro pressured by mixed euro zone economic data (Recasts, adds comments, U.S. data, updates prices, changes byline, dateline; previous LONDON)

Wall Street looks to '09 with relief after terrible '08

noreply@blogger.com (de_kerinchi) — Thu, 01 Jan 2009 12:41:00 +0000

NEW YORK (AP) - The last trading day of 2008 on Wall Street provided a merciful end to an abysmal year _ the worst since the Great Depression of the 1930s, wiping out $6.9 trillion in stock market wealth. Six years of stock gains disappeared as the economy crumbled and markets crashed around the globe, shaking the confidence of professional and individual investors alike.

But the year's chaos went far beyond the stock market. Credit markets that drive lending became paralyzed, plunging the country further into recession and touching off an unprecedented rush for the safety of Treasury bills, notes and bonds.

Commodities markets, usually ignored by most investors, soared on speculative buying and then collapsed when it became clear that the world economy was in trouble and that record high prices, including oil's peak above $147 a barrel, were unjustified.

"It was a feeling of flailing,'' said Jerry Webman, chief economist at Oppenheimer Funds Inc.

"People couldn't get a grasp because there were not obvious historical precedents.''

By the year's end, many market analysts were predicting that 2009 would be better, but that recovery would be slow as investors, shaken by the devastation to their portfolios, U.S. companies and the overall economy, remain reluctant to buy.

"I think this may be much more of a show-me market than we're used to. The market is going to be looking for some stabilization, increases in earnings, a few more positives before it begins to recover,'' said Webman.

Wall Street's stats for 2008 provide evidence of how stunningly terrible the year was:

_ The average price of a share listed on the New York Stock Exchange plunged 45 percent to $41.14 by the end of the year from $75.01 a year earlier.

_ The Dow Jones industrial average fell 33.8 percent for the year and 38 percent from its record close of 14,165.53 in October 2007, making it the Dow's worst year since 1931, when the country was in the midst of the Great Depression.

_ The Standard & Poor's 500 index, the indicator most watched by market pros, slumped 38.5 percent in 2008 and 42.3 percent from its 2007 high of 1,565.15.

_ Investors lost $6.9 trillion as relentless selling reduced the value of stocks across the market. That amount, measured by the Dow Jones Wilshire 5000 Composite Index, represented 38 percent of the total value of U.S. stocks at the start of 2008.

Yet the last week of the year was almost serene.

On Friday, the Dow rose 108.00, or 1.25 percent, to 8,776.39.

Broader stock indicators also rose.

The Standard & Poor's 500 index gained 12.61, or 1.42 percent, to 903.25. The Nasdaq composite index rose 26.33, or 1.70 percent, to 1,577.03 and ended the year down 40.5 percent.

It's down 44.8 percent from its recent peak in October; the Nasdaq's record high close of 5,048.62 came in March 2000 just before the end of the dot-com boom.

The Russell 2000 index of smaller companies rose 16.68, or 3.46 percent, to 499.45.

The tranquility was a welcome change in a year that was rocky from the start as worries about the financial system were fed by reports that banks had suffered billions of dollars in losses on securities tied to defaulting mortgages.

The forced-sale of Bear Stearns Cos. in March unnerved Wall Street, yet it still managed to right itself through the spring.

The surging price of oil and other commodities dealt another blow to the market.

As a barrel of crude leaped from $112 at the beginning of May to a once-unthinkable $147.27 on July 11. With retail gasoline prices soaring above $4 a gallon, stocks fell amid fears that consumers would have to cut back their spending because of higher energy prices.

But the market again stabilized - until the September bankruptcy of one of the most venerable Wall Street investment firms, Lehman Brothers Holdings Inc., set off a panic on Wall Street and in the credit markets.

Banks, fearing that other financial institutions would be unable to repay, stopped lending to each other.

The market for short-term corporate debt known as commercial paper was frozen. Interest rates soared.

The only thriving part of the credit markets was government debt. Investors desperate for safety poured money into Treasury issues, particularly short-term bills.

The yield on the three month bill plunged to zero, and briefly to a negative return, as investors decided no return or a slight loss was better than the losses on Wall Street or in commodities.

Wall Street's crash in 2008 didn't come in one day like the famous 22.6 percent plunge of Oct. 26, 1987. In many ways it was more nightmarish than Black Monday because there wasn't a quick end to the selling and record volatility.

From Sept. 15 to Nov. 20, when the Dow fell to a close of 7,552.29, the depths it had reached in the bear market of 2002, the blue chips rose or fell by triple digits 41 trading days out of 49.

Relative stability returned to the market during December.

But Wall Street's horrific performance has cast a new mold for modern bear markets, often defined as a decline of more than 20 percent, and made expectations for 2009 so low that any reduction in the economic bloodletting would be considered a victory.

"Everyone is so down in the dumps about everything that I do think it gives you the opportunity to have a positive surprise if maybe the economy does turn quicker,'' said Bill Stone, chief investment strategist at PNC Wealth Management.

Wall Street is hoping for signs of recovery by the second half of 2009, including evidence the housing market has hit bottom, increased lending by banks and a drop in unemployment accompanied by increased consumer spending.

But for the near future economists and market experts predict more bad news.

"I have yet to see anyone who anticipates that the first half of next year is going to be rosy,'' said Dean Junkans, chief investment officer at Wells Fargo Private Bank.

But even a modest improvement in the economy, which has been in recession since last December, could help stocks extend their recent run.

"If you're standing still, walking is a pickup of speed,'' said Alan Levenson, chief economist at T. Rowe Price Associates Inc.

The government has helped calm markets with a $700 billion rescue of the financial sector and by agreeing to provide financing to the major U.S. automakers.

The Federal Reserve slashed its benchmark interest rate to near zero to reduce borrowing costs.

Cheaper oil prices - it settled at $44.60 a barrel on Wednesday - are expected to help bolster the economy, draining less money away from consumers and businesses.

The declining prices of other commodities, which have come down in response to rapidly waning demand for raw materials around the world, should also help.

In addition, some analysts believe the market will improve because so many investors have pulled out, leaving little room for more selling.

"Given the nasty carnage how much further risk is there?'' said David Darst, chief investment strategist for Morgan Stanley's global wealth management group.

Still, the credit markets remain nearly stagnant as banks continue to be anxious about lending.

Corporate forecasts in January could help shape investor sentiment, even as expectations are modest.

David Kelly, chief market strategist at JPMorgan Funds, said the prospects for the market are "exceptionally uncertain.''

For the market to hold its advance from November he contends the calmer trading of the past month must continue and president-elect Barack Obama's plan to boost the economy with spending on infrastructure must show it is working quickly.

"The great risk is we are in a wait-and-see economy,'' Kelly said. "What Obama needs to do is turn this into a do-it-now economy, give people a reason to buy.''

Asia's bull run ends in 2008 with record falls

noreply@blogger.com (de_kerinchi) — Thu, 01 Jan 2009 12:38:00 +0000

From Tokyo to Mumbai, Asian stocks plunged by record amounts this year as the region's powerhouse economies lost steam and foreign investors pulled billions of dollars from its once-booming markets. Dizzying losses felt around the world were all the more painful in Asia, whose stocks had long been seen as a safe haven from financial turmoil in the West - another myth that burst along with the housing, credit and commodities bubbles in the global crisis of 2008.

In many cases, markets that benefited most during a bull run that gathered momentum from 2006 were hit hardest as it ended. In China, the benchmark Shanghai Composite Index plummeted 65 percent - its largest-ever annual drop - becoming the year's second-worst performing market after Russia, where a key index fell about 72 percent.

The Shanghai index had soared more than 300 percent over 2006 and 2007.

Japanese shares also suffered their biggest yearly decline, with the Nikkei 225 dropping 42 percent as world's second-largest economy slid into recession.

That outpaced a 39 percent decline in 1990 after Japan's so-called "bubble'' economy of the 1980s burst.

In Hong Kong, also in recession, the Hang Seng Index closed the year 48 percent lower, its second-biggest drop to date and its worst since the global oil shock of the early 1970s. India's main index in Mumbai retreated about 52 percent.

"It was ferocious, it was an unprecedented move down,'' said Lucinda Chan, director of the private wealth division at Macquarie Securities in Sydney.

"The domino effect was so quick and so swift.''

Major Western benchmarks were down far less, with the Dow off nearly 35 percent and Britain's FTSE 100 slipping 32 percent.

As a whole, Asia fell harder than most other regions as measured by two key MSCI Asian stock indices, both down more than 52 percent for the year.

Averages for Group of Seven major developed countries and global stocks lost a little over 40 percent of their values; Europe dropped almost 48 percent.

Sputtering growth in Asia's export-driven economies was a big reason for the region's decline, analysts say.

As a meltdown of the U.S. housing market mushroomed into a global slump in consumer spending and industrial production, foreign firms yanked billions from Asia to repay debts back home and funds liquidated their holdings to meet redemptions.

At the country level, the pace of initial public offerings that fueled rises in mainland China and Hong Kong bourses fell off.

A surging yen added to the woes of Japanese mega exporters such as Toyota Motor Corp. - down more than half for the year - and Sony Corp. - down 60 percent.

Political upheaval weighed on Thailand's market.

Some of the damage was self-inflicted - shares in companies that lost big on hedging contracts, such as Hong Kong conglomerate Citic Pacific Ltd., were punished as a result.

But markets across the region may have been bound to fall short of the lofty expectations set by investors who bid valuations ever higher as they rushed to cash in on Asia's emerging market boom.

"No one saw an end to the bull run,'' said Kirby Daley, senior strategist at Newedge Group in Hong Kong.

"What many failed to see was an endgame to the leveraged world we were living in and an endgame to the consumption driven economy that the world had become.''

Along the way, investors, big and small, got burned.

In China, only 6 percent of the 25,000 investors participating in one survey reported this week said they had made a profit from stock trading in 2008.

Nearly two-thirds said they had lost 70 percent of their investments or more, according to the survey by the Shanghai Securities News, a newspaper affiliated with the stock exchange.

Many Asian hedge funds, meanwhile, took a drubbing and closed shop by the dozens, with their traditionally long bets on the markets' moves souring amid the furious sell-off.

Whether 2008's lows, reached mostly in October and November, hold in 2009 is a matter of debate.

But most investment strategists have written off any chance of a major rebound in at least the first six months of the new year, when company earnings could prove especially bleak.

And there could be more violent swings if companies aren't done with the massive clean up of debt-laden balance sheets that began last year.

Trillions of dollars in assets may still need to be shed in the global financial system because there may not be enough capital to shore it up, said Paul Schulte, a chief Asia equity strategist at Nomura International in Hong Kong.

How China's economy shapes up will also be closely watched. Fourth quarter growth in 2008 is already forecast to drop to as low as 2 percent from nearly 12 percent in 2007.

"China's economy is obviously at a turning point. There are too many uncertainties, and past huge losses have made investors increasingly cautious,'' said Cheng Weiqing, an analyst at Citic Securities in Beijing.

Asia's fortunes could depend greatly on the mood of consumers - especially in the U.S. - whose appetite for cars, electronics and other goods have been the lifeblood of regional growth.

Credit markets still haven't returned to normal.

Traders are hopeful economy-boosting measures worth hundreds of billions of dollars by governments around the world will help on that front, bringing about some recovery by the second half.

"The landscape has been completely changed,'' said Chan of Macquarie.

"People's confidence needs to be rebuilt, and that has to come through the stimulus packages around the world that are being put out by various governments.''

Many still are bracing for even more selling.

"For 2009, we will see a lot more pain in Asia,'' said Daley, who doesn't see stock markets rebounding until 2010, at the earliest.

"The desperate hunt for a bottom is futile, because when we get to the bottom, get used to it,'' he said. "We're going to be here for a while.''

FOREX-China regulator vows to help exporters

noreply@blogger.com (de_kerinchi) — Thu, 11 Dec 2008 13:37:00 +0000

BEIJING, Dec 11 (Reuters) - China's foreign exchange regulator pledged on Thursday to improve its services to the country's exporters, who have been hit hard by weakening demand overseas, while promoting balance in international payments overall. The State Administration of Foreign Exchange (SAFE), in a statement on how it would implement the conclusions of the Central Economic Work Conference that wrapped up on Wednesday, said that it would also keep an eye on the international financial crisis and cross-border capital flows.

'We will greatly improve forex services, facilitate trade and investment, support foreign trade and exports and make it more convenient for firms, especially small and medium-sized ones, to obtain trade finance,' SAFE said on its website (www.safe.gov.cn).

The agency did not provide detailed policy prescriptions. China's exports fell 2.2 percent in the year to November, the first monthly drop in seven years. Actual foreign direct investment into China fell 36.5 percent in November compared with a year earlier.

(Reporting by Zhou Xin; Editing by Victoria Main)

EUR (Euro) Forex Technical Analysis

noreply@blogger.com (de_kerinchi) — Thu, 11 Dec 2008 13:33:00 +0000

Click to see a forex chart

The pre-planned breakout variant for buyers was realized with attainment of basic assumed targets. OsMA trend indicator, having marked strengthening tendency of pair overbought gives risk of further buying positions supports but considering the lack of sustained bearish resistance and considering the chosen strategy there are reasons for supporting bullish planning priority direction for today as well. Hence aiming at decreasing trading risks we assume the possibility of rate return to close 1.3000/20 supports, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term buying positions on condition of formation of topping signals the targets will be 1.3060/80, 1.3120/40 and/or further breakout variant up to 1.3180/1.3200, 1.3260/80, 1.3320/40. An alternative for sells will be below 1.2920 with targets 1.2840/60, 1.2780/1.2800, and 1.2420/40.

FOREX-Dollar dips as auto bailout hopes boost risk tolerance

noreply@blogger.com (de_kerinchi) — Thu, 11 Dec 2008 13:30:00 +0000

NEW YORK, Dec 10 (Reuters) - The dollar fell to a two-week low against the euro on Wednesday and the yen weakened as U.S. lawmakers reached tentative agreement to extend emergency loans to the ailing auto industry, helping to calm investor anxiety.

Stocks rose and investors' rush into safe-haven assets such as U.S. Treasury debt slowed, temporarily undermining the dollar's appeal and lifting other currencies such as the euro.

The low-yielding yen also fell as the pendulum swung back in favor of currencies and assets that offer a higher return.

The impetus for Wednesday's moves was news the White House and Congressional Democrats had reached a deal in principle on a $15 billion plan to help automakers restructure and avoid bankruptcy For details, see [ID:nN10505833].

"It's safe to say risk appetite has improved somewhat, and that has a lot to do with talk of an imminent bailout for the U.S. auto industry," said Omer Esiner, chief market analyst at Ruesch International in Washington.

With the year winding down, Esiner also said investors are taking profits on the dollar's recent rise. That has added to pressure on the U.S. currency and may persist into January.

Late afternoon, the euro was up 0.8 percent at $1.3022 after earlier hitting a two-week high of $1.3070. It rose 1.4 percent to 120.70 yen while the dollar added 0.6 percent to 92.64 yen .

The yen also fell sharply against the Canadian dollar , the Swiss franc and the pound , according to Reuters data.

Analysts said fears of Bank of Japan intervention to prevent too much yen strength also weighed on the currency after BoJ Governor Masaaki Shirakawa said on Wednesday he was watching forex moves carefully. [ID:nTKF003197]

Sterling rose 0.4 percent to $1.4789 while the dollar fell 0.6 percent to 1.1985 Swiss francs .

Analysts were quick to point out, however, that the uncertainties facing the global economy meant a relapse into risk aversion was still likely.

One sign of just how parlous the economic outlook is came when China said its exports and imports shrank unexpectedly in November, sparking fears that global demand has vanished. [ID:nPEK31604]

In the United States, while an auto deal looked set to pass the House of Representatives, some Republicans sowed doubts about possible snags in the Senate [ID:nWEN162].

That weakened stock markets and helped the dollar and yen pare some of the losses seen earlier in the session, though both remained down on the day.

In the longer run, though, analysts expect the dollar's rise to fade next year as markets stabilize and investors stop seeking relative safety in the U.S. currency.

"If you analyze why the dollar has strengthened, it has more to do with the rest of the world than with the U.S.," said Mohamed El-Erian, co-chief of Pacific Investment Management Co, at a Reuters Investment Summit in New York on Wednesday.

The euro and sterling, for instance, fell sharply as the euro zone and British economies slowed and their central banks cut interest rates.

He said when "that stock adjustment is over, which we believe will be in 2009, the dollar (will fall)" but added that it's still premature to bet against the greenback.

"You don't want to be 'shorting' the dollar until you have evidence the de-leveraging has run its course. Our sense is that ... three-fourths of the de-leveraging has taken place." (Additional reporting by Nick Olivari; Editing by Chizu Nomiyama)

Forex - Dollar hits record low vs euro

noreply@blogger.com (de_kerinchi) — Wed, 16 Jul 2008 05:11:00 +0000

The dollar briefly plunged to a record low against the euro as concerns mounted over the U.S. mortgage market and its impact on the wider economy. The euro jumped to an all-time high of $1.6038 as confidence on financial markets continued to plummet after the U.S. government on Sunday announced plans to bail out mortgage lenders Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ).

Investors are nervous that a Federal Reserve bail-out could add billions of dollars to the U.S. national debt, and lower the country's credit rating. 'Traders continue to fall out of favour with the dollar, looking for safer currencies instead,' said CMC Markets analyst James Hughes.

'Sunday's announcement by the Fed regarding its mortgage bail-out plan for Fannie Mae and Freddie Mac remains somewhat derided in the market -- it's apparently done little more than underline the perilous state of the U.S. economy,' he added.

The market jitters drove the euro higher despite a drop in the German ZEW institute's economic expectations index for July to a record low, while the pound breached the $2.00 mark. In addition, the yen rose to highs not seen in more than a month, even though the Bank of Japan has stressed the need of maintaining a neutral stance on interest rates amid increased uncertainties.

The BoJ, as expected, maintained its overnight call rate target unchanged at 0.5 percent for the 20th meeting running. Attention will now turn to the release of U.S. retail sales and the producer price index, and Federal Reserve chairman Ben Bernanke's semi-annual testimony to the Senate Banking Committee.

'Bernanke might provide some conciliatory words to provide support to the market, but given the current softness of the dollar, the data releases will also be crucial,' said an analyst at BNP Paribas (other-otc: BNPQY.PK - news - people ). Elsewhere, the pound remained well bid against the dollar, briefly hitting a three-and-a-half month high following stronger-than-expected CPI inflation data.

Official figures showed the key annual CPI rate jumping to 3.8 percent in June from 3.3 percent in May, beating forecasts for a more moderate rise to 3.6. 'The punchy headline number is likely to ensure that the pound remains well bid for now,' said Daragh Maher, senior forex strategist at Calyon.

The data has kept in place expectations that the Bank of England is unlikely to cut interest rates before the end of the year while inflation remains well above its 2.0 percent target.

'Inertia appears the most likely monetary policy stance for now,' said Maher.

Forex: Dollar Rises Versus Yen, Euro

noreply@blogger.com (de_kerinchi) — Tue, 10 Jun 2008 15:10:00 +0000

The dollar rose to a three-month high against the yen and climbed versus the euro after Federal Reserve Chairman Ben S. Bernanke said economic risks have faded, spurring traders to boost wagers interest rates will rise. Bernanke said late yesterday that the central bank will ``strongly resist'' any waning of public confidence in stable prices. ``Strong'' economic fundamentals will translate to dollar strength, Treasury Secretary Henry Paulson said today in a Bloomberg Television interview in Washington.

"The Fed and the Treasury have signaled what they want: a stronger dollar,'' said Jeff Gladstein, global head of foreign- exchange trading at AIG Financial Products in Wilton, Connecticut. "There's potential for dollar appreciation.'' The dollar rose to 107.14 yen, the highest since Feb. 27, at 10:29 a.m. in New York, from 106.31 yesterday. Against the euro, the dollar climbed to $1.5509, from $1.5646. Japan's currency traded at 165.88 per euro from 166.33 yesterday.

Futures on the Chicago Board of Trade show a 55 percent chance the Fed will raise its 2 percent target rate for overnight lending between banks by at least a quarter point at its Aug. 5 meeting, compared with 9 percent the previous day. The contracts show a 95 percent chance the Fed will increase the rate by December, up from 67 percent odds a week ago.

The dollar has fallen 11 percent against the euro and 7.2 percent versus the yen since September, when the Fed began to lower borrowing costs from 5.25 percent.

China Talks

"The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so,'' Bernanke said in a speech at a Boston Fed conference. "The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations.''

The Fed is "aware'' that the weak dollar boosts inflation, Dallas Fed President Richard Fisher said in response to questions after a speech at the Council on Foreign Relations in New York today.

Paulson repeated comments made yesterday that currency intervention is a tool for policy makers. He also urged China to loosen government controls on energy prices and the value of the country's currency.

The yuan traded near the highest level since a dollar peg was scrapped in 2005. The currency was little changed at 6.9255 per dollar in Shanghai, compared with 6.9230 on June 6, according to the China Foreign Exchange Trade System.
Central Bank Focus

Canada's dollar gained as the Bank of Canada unexpectedly kept interest rates unchanged at 3 percent because energy prices may push inflation past the top of its target band later this year. The loonie strengthened to C$1.0204 per U.S. dollar from C$1.0233 yesterday after touching 1.0323 before the rate announcement, the lowest in more than two months.

"The focus of the Fed and now the Bank of Canada has gone from preventing a second depression to all of a sudden inflation is an issue,'' said Win Thin, a currency strategist with Brown Brothers Harriman & Co. in New York. ``That's good for the dollar.''

The U.S. dollar climbed to 94.59 cents per Australian dollar, the highest since May 16, before trading at 94.75 cents. Against the New Zealand dollar, the U.S. currency gained to 75.49 cents, near the strongest in a month. The British pound slid to $1.9563 from $1.9751 after data showed U.K. house prices dropped in May.

Trade Deficit

A report today showed that the U.S. trade deficit widened in April as the surging cost of oil boosted imports to a record, overshadowing the biggest gain in exports in four years. The gap grew 7.8 percent to $60.9 billion the Commerce Department said.

The Standard & Poor's 500 Index fell 0.7 percent and the two-year U.S. Treasury yields rose 16 basis points to 2.87 percent. The yield advantage of a German two-year bund over a comparable Treasury has narrowed to 1.81 percent from 2.26 percent on June 6.

Finance ministers of the Group of Eight industrialized countries may consider joint action to deflate the price of oil and prop up the dollar at their meeting June 13-14 in Japan, said DBS Group Holdings Ltd. in a report to clients.

The last time the major industrialized countries intervened was on Sept. 22, 2000, when they bought the euro after it tumbled 27 percent from its 1999 debut. They last propped up the dollar in 1995, when it sank almost 20 percent in four months against the Japanese yen to a post-World War II low of 79.95 yen.

The greenback dropped 1.4 percent against the euro last week, the most since March, after Trichet said on June 5 that policy makers may raise borrowing costs in July to contain inflation and the U.S. Labor Department reported the next day that the jobless rate increased the most in May in more than two decades. Crude oil today climbed to $137.98 a barrel in New York. The price more than doubled in the past year.

FOREX-Yen rises broadly amid waning risk demand

noreply@blogger.com (de_kerinchi) — Fri, 16 May 2008 09:12:00 +0000

The yen rose across the board on Thursday as investors reduced demand for riskier assets such as stocks after a series of weak U.S. economic data added to anxiety over the country's growth picture.

Analysts said that while market indicators pointed to the Federal Reserve being close to the end of its interest rate cutting cycle, there were nagging doubts on whether the economy would be able to cope without further policy easing.

"It's a yen story. Industrial production was weak and capacity was down. Although the Philly Fed improved, it's still negative and jobless claims were not good," said Ashraf Laidi, chief forex strategist at CMC Markets in New York.

"We cannot just dismiss these numbers by saying manufacturing is a small component of the economy. It is irresponsible for the market to reduce or eliminate the possibility of a rate cut by the Fed."

The dollar slumped to a session low of 104.44 yen and was last trading at 104.64 yen, down 0.4 percent on the day. The euro fell 0.5 percent to 161.72 yen , while sterling dropped 0.4 percent to 203.68 yen .

The low-yielding yen tends to attract flows during periods of uncertainty as the low interest rates reflect Japan's capital surplus.
Factory activity in the U.S. mid-Atlantic region shrank for a sixth straight month in May, while manufacturing in New York State also declined, according to reports by regional Federal Reserve banks.

U.S. interest rate futures continued to signal the expectation the Fed would raise the benchmark federal funds rate by a quarter percentage point by the end of the year to 2.25 percent. They were pricing in a 92 percent perceived chance that the central bank would leave rates steady in June.

Analysts also attributed the yen's advance to a reversal of the previous session's decline and the dollar's failure to break through the 105.20 mark against the Japanese currency.

"There still seems to be pretty good interest to sell U.S. dollars and buy yen at the 105 area," said Shaun Osborne, chief currency strategist at TD Securities in Toronto.

"People continue to view the market as being prone to financial risk and volatility. I still think they are trying to pick up the yen on the dips."
In afternoon trading, the dollar rebounded versus the euro as U.S. stocks .DJI extended gains. A further drop in oil prices CLc1 boosted equities and eased some pressure on the dollar. Crude oil for June delivery fell more than 2 percent.

The euro was last down 0.1 percent at $1.5462 after hitting a session high earlier of $1.5547.

Earlier in the session, the euro zone currency rose as data showed strong first-quarter growth in France and Germany. But the market's enthusiasm was dampened by European Central Bank chief Jean-Claude Trichet's warning that the pace might not be as flattering in the months ahead.

The ECB's refinancing rate is at 4 percent and the interest rate differential between the euro zone and the United States has been the main driver behind the dollar's decline.

The market largely shrugged off data showing that the United States suffered net capital outflows of $48.2 billion in March after attracting inflows of $48.9 billion in February.
"There is a predisposition right now in the market to buy dollars. We need a proper catalyst to do that," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York.

Who is participating in forex market trades?

noreply@blogger.com (de_kerinchi) — Mon, 14 Apr 2008 00:10:00 +0000

The forex market is all about trading between countries, the currencies of those countries and the timing of investing in certain currencies. The FX market is trading between counties, usually completed with a broker or a financial company. Many people are involved in forex trading, which is similar to stock market trading, but FX trading is completed on a much larger overall scale. Much of the trading does take place between banks, governments, brokers and a small amount of trades will take place in retail settings where the average person involved in trading is known as a spectator. Financial market and financial conditions are making the forex market trading go up and down daily. Millions are traded on a daily basis between many of the largest countries and this is going to include some amount of trading in smaller countries as well.

From the studies over the years, most trades in the forex market are done between banks and this is called interbank. Banks make up about 50 percent of the trading in the forex market. So, if banks are widely using this method to make money for stockholders and for their own bettering of business, you know the money must be there for the smaller investor, the fund mangers to use to increase the amount of interest paid to accounts. Banks trade money daily to increase the amount of money they hold. Overnight a bank will invest millions in forex markets, and then the next day make that money available to the public in their savings, checking accounts and etc.

Commercial companies are also trading more often in the forex markets. The commercial companies such as Deutsche bank, UBS, Citigroup, and others such as HSBC, Braclays, Merrill Lynch, JP Morgan Chase, and still others such as Goldman Sachs, ABN Amro, Morgan Stanley, and so on are actively trading in the forex markets to increase wealth of stock holders. Many smaller companies may not be involved in the forex markets as extensively as some large companies are but the options are stil there.

Central banks are the banks that hold international roles in the foreign markets. The supply of money, the availability of money, and the interest rates are controlled by central banks. Central banks play a large role in the forex trading, and are located in Tokyo, New York and in London. These are not the only central locations for forex trading but these are among the very largest involved in this market strategy. Sometimes banks, commercial investors and the central banks will have large losses, and this in turn is passed on to investors. Other times, the investors and banks will have huge gains.

Next Week Ringgit To Be Rangebound Against U.S. Dollar

noreply@blogger.com (de_kerinchi) — Sat, 05 Apr 2008 09:25:00 +0000

FOREX: Ringgit vs U.S. Dollar

The ringgit is likely to be rangebound against the U.S. dollar next week, with market participants staying on the sidelines due to ongoing fears over the U.S. subprime meltdown, a dealer said.

He expects the local unit to move within a tight range of between 3.1880 and 3.1950 against the greenback next week.

"Market players are staying away from lower yield currencies as the U.S. economy moves closer to a recession due to the deepening subprime mortgage woes," he said.

On a positive note, he expressed optimism over the near-term outlook of the ringgit given rising expectations that the U.S. Federal Reserve will cut its key interest rate by as much as 50 basis points at the next policy meeting scheduled for the end of this month.

"This would further weaken the U.S. dollar, prompting players to invest in countries where interest rates are higher so as to reap better returns on their investments," he said.

He also said that Bank Negara Malaysia will likely allow the ringgit to strengthen further to RM3.10 per U.S. dollar by year end after the 6.7 percent and 7.1 percent gains in 2007 and 2006 in order to contain inflationary pressures.

Noting that Malaysia’s benchmark interest rate is currently at a premium to that of U.S., the dealer said Malaysia's overnight policy rate could be kept steady so that the interest rate differential factor will remain in the ringgit’s favour.

"This will provide a good injection for the further strengthening of the ringgit along with other Asian currencies in the near term," he added.

He added that the strengthening of the local currency will also be in tandem with the expected continued rise of the local stock market.

On a week-to-week basis, the ringgit appreciated against U.S. dollar at 3.1920/1940 compared with the previous Friday's 3.1950/2000.

It was higher against the Singapore dollar at 2.3045/3090 from 2.3142/3197 and was also stronger against the Japanese yen at 3.1155/1187 from 3.1928/1984.

Against the British pound, the ringgit however, weakened at 6.3827/3896 from 6.3772/3882 but it appreciated against the euro at 5.0137/0178 from 5.0344/0432 previously.

Dollar eases vs majors, spotlight on payrolls

noreply@blogger.com (de_kerinchi) — Sat, 05 Apr 2008 09:12:00 +0000

The dollar ticked lower versus other major currencies on Friday in technically-led trade ahead of a key U.S. jobs report.

Signals for non-farm payrolls have been mixed, with a surprise gain in private sector jobs in March offset by news that first-time applications for U.S. jobless benefits rose last week to a 2-1/2 year high.

But overall, investor sentiment has improved in recent sessions, and markets are now only expecting a 25 basis point rate cut from the Federal Reserve this month.

Economists forecast the U.S. economy likely cut 60,000 jobs in March for its third straight month of losses, with the unemployment rate seen rising to 5.0 percent, from 4.8 percent in February. The data is due at 1230 GMT.

"It's pre non-farm payrolls trading. Even if the figure comes in around zero, from a fundamental point of view that's still negative for the dollar because that will not stop the uptrend in the unemployment rate," said Antje Praefcke, currency strategist at Commerzbank Corporates & Markets in Frankfurt.

By 0749 GMT, the euro was up 0.2 pct on the day at $1.5718, but well off March's record peak above $1.59.

Hourly technical charts showed the euro breaking through a 200-hour moving average located at $1.57. The dollar was steady at 102.32 yen. It was down at 1.0073 Swiss francs.

SHRUGGING OFF WEAK ECONOMY?

The Fed has chopped rates since September by a total of 3 percentage points to 2.25 percent, to deal with the credit crisis and shield the economy from an ailing housing sector.

Late on Thursday, San Francisco Fed President Janet Yellen echoed comments on the economy made by Fed Chairman Ben Bernanke earlier this week, saying the U.S. economy has "all but stalled and could contract" in the first half of 2008.

But the dollar took the comments in its stride.

"We think it's possible for the U.S. dollar to strengthen despite a weak economy, providing that euro zone data continues to deteriorate and that the Federal Reserve does not take action that would suggest a monetising of mortgage-backed securities woes," UBS (nyse: UBS - news - people ) said in a research note.

"We continue to target euro/dollar at $1.55 over one month and $1.47 over three months."

Elsewhere, the Australian dollar fell 0.2 percent to US$0.9140 after February retail sales unexpectedly dipped 0.1 percent from the previous month.

Reserve Bank of Australia Governor Glenn Stevens said on Friday that growth in domestic demand was moderating despite uncomfortably high inflation, suggesting that interest rates had risen enough for now.

U.S. dollar mixed in Sydney morning forex trade

noreply@blogger.com (de_kerinchi) — Mon, 31 Mar 2008 03:14:00 +0000

The U.S. dollar was trading mixed against major currencies on Monday although traders said it is likely to remain under pressure until investors see a credible end to the financial and economic problems in the U.S.

While the U.S. economy is seeing continued weakness the euro zone's economic fundamentals remain sound and Japan is showing some strength with inflation on the rise although investors are waiting for the release of the Bank of Japan's Tankan report on Tuesday, traders said.
Key focus for the Tankan report will be investment intentions though overall the report is likely to

provide mixed signals, providing headaches for foreign exchange markets, they said.

'Monday is month-end and financial yearend in Japan, so most players will look to remain on the sidelines,' said John Noonan of Thomson IFR.

'Overall the U.S. dollar should remain under pressure, until the market sees a credible end to the current financial and economic problems in the U.S.'

At 10.20 am (2320 GMT) the dollar was trading at 99.19 yen from 99.22 in late trade in New York on Friday while the euro was at 1.5789 dollars from 1.5795.

ANZ senior currency strategist Tony Morriss said the yen is being supported by risk aversion following a weak performance by U.S. stocks on Friday.

'It is also the end of the Japanese financial year which has supported a bit of an inflow in recent weeks but today I think the yen will be in demand just on risk aversion,' Morriss said.

He said the euro continues to be supported by a better outlook in the euro zone and a still hawkish view on inflation by European Central Bank officials.

Morriss said the Australian dollar is likely to be under pressure because of less appetite for risk as well as softer commodity prices. The market has already factored in the Reserve Bank of Australia leaving interest rates steady after tomorrow's policy meeting.

Activity will pick up during the week due to a number of key US data releases, including the

Institute for Supply Management's manufacturing data on Tuesday, service sector ISM data on Thursday, factory orders on Wednesday and non-farm payroll numbers on Friday.

As well, Federal Reserve chairman Ben Bernanke will testify before a joint house economic committee on Wednesday.

Peak Possibilities.

noreply@blogger.com (de_kerinchi) — Mon, 18 Feb 2008 15:04:00 +0000

IN JULY 2006, THE WORLD'S OIL RIGS pumped out crude at a rate of nearly85.5 million bbl. a day. They haven't come close since, even as prices have risen from $75 to $98 per bbl. Which raises a ques¬tion of potentially epochal significance: Is it all downhill from here?

It's not as if nobody predicted this. The true believers in what's called peak oil—a motley crew of survivalists, despisers of capitalism, a few billionaire investors and a lot of perfectly respectable geolo¬gists—have long cited the middle to end of this decade as a likely turning point.

In the oil industry and the govern¬ment agencies that work with it, such talk is usually dismissed as premature. There have been temporary drops in oil pro¬duction before, after all—albeit usually during global economic slowdowns, not boom times. In most official scenarios, production will soon begin rising again, peaking at more than r ro million bbl. a day around 2030.

That's alarming enough in itself. Even the optimists think we have less than three decades to go? But at industry confer¬ences this fall, the word from producers was far gloomier. The chief executives of ConocoPhillips and French oil giant Total both declared that they can't see oil production ever topping roo million bbl. a day. The head of the oil importers' club that is the International Energy Agency warned that "new capacity additions will not keep up with declines at current fields and the projected increase in demand."

This isn't quite the same as saying that oil production has peaked and is about to start declining sharply—the view of the true peakists. In "peak lite," as some call it, the big issues are not so much geologi¬cal as political, technical, financial and even human-resource-related (the world apparently suffers from a dearth of quali¬fied petroleum engineers). These factors all delay the arrival of oil on the market, meaning that production would not so much peak as plateau. But with demand rising sharply, especially from China and India, even a plateau could be precarious.

It's not that the world is running out of oil. There are massive reserves avail¬able in Canadian tar sands, Colorado shale, Venezuelan heavy oil and other unconventional deposits. The problem is that most of this oil is hard to extract and even harder to refine, and it isn't likely to account for a significant share of global production anytime soon. Almost everybody agrees that the pump¬ing of conventionally sourced oil outside the Organization of Petroleum Export¬ing Countries (oPEc) has already peaked or will peak soon, a reality that even discoveries like the recent 8 billion–bbl. find off the coast of Brazil can't alterbecause production from so many exist¬ing fields is declining.

The big question mark is OPEC, which represents the oil powers of the Middle East and a few other big exporters and currently accounts for 410/0 of world oil production. Every optimistic scenario assumes that this share will rise dramati¬cally in the coming decades. That is, if things turn out well, the U.S. will become substantially more dependent on Saudi Arabia and its neighbors. Great!

Then there's the gloomy view. In his 2005 book 71vilight in the Desert, energy-industry investment banker Matt Sim¬mons opened up a still raging debate over whether Saudi Arabia, OPEC's top produc¬er, really can pump much more oil than it does now. Since the book appeared, Saudi output has dropped from 9.6 million bbl. a day to 8.6 million, despite rising prices.

Saudi officials used the occasion of an OPEC summit in Riyadh in mid-November to say they could up produc¬tion at any time. But that raises the pesky question of why they don't. So far, the answer from OPEC leaders has been that high prices are the fault of speculators and the falling dollar, not low produc¬tion. They're not just blowing smoke. Lynn Westfall, chief economist of refiner Tesoro Corp., says there's more than enough oil for sale right now. The price pressure, he explains, "is coming from fi¬nancial participants in futures markets."

If oPECS members are not able to boost production in coming years, though, it will be impossible to keep blaming the traders as prices rise. What happens then? "If we had better data, we could hold a global summit and say, 'Gentlemen, it's nobody's fault, but we've peaked,"' says Simmons. "We've got to embrace some conservation practices that are draconian, or we will be at war with each other."
Among the peakists, war and econom¬ic breakdown are favorite themes. They figure that cheap oil is the essential fuel of modern capitalism, which will found¬er without it. A more hopeful take is that innovation is the essential fuel of modern capitalism and that high oil prices will drive rapid advances in conservation and alternative energy. Either way, the begin¬ning of the end of the oil era may be upon us, well ahead of schedule

A Market Mood Swing

noreply@blogger.com (de_kerinchi) — Fri, 08 Feb 2008 14:53:00 +0000

TANG WEISHA NG IS EMBARRASSED to admit that he might have made a mistake. Just over a year ago, the 27-year-old sales executive thought he could make a better living trading stocks listed on the Shanghai bourse full-time. He started investing in 2002 with $33,700, and he says he has done pretty well. So, after convincing his wife that he could make enough money to support them, he quit his job and stayed home every day, trading stocks via the computer in the bedroom of the couple's Shanghai apartment.

Now, says Tang glumly, his wife is "telling me almost every day that maybe it's time to go back to a regular job." These days who could blame her? After a furious 18-month run that saw shares of listed Chinese companies more than triple in value, the country's bull market is stumbling. Indexes in Shanghai and Shenzhen are both down about 15% from their October peaks, and recent moves by the government to cool China's runaway economic growth appear to have deflated the mania for stock investing that has gripped urban Chinese, from maids who quit their jobs to devote their time to trading stocks, to pensioners who plunked their life savings into the markets. Almost daily, myths that were pervasive among neophyte Chinese investors—that what happens to the U.S. economy doesn't matter to China, that the government in Beijing will always prop up the market—get exploded. The giddiness of the bubble is starting to be replaced by pervasive gloom. Fear is getting the better of greed. "This is reality," says Tian Junxiao, a 52-year-old investor who has been day trading for a living for six years. "Younger people are learning that the market can go up as well as down. It's a hard lesson, but it's a necessary one."

Tian had an inkling the tide might be turning on Nov. 5. That's the day he sat in the private trading room that Shanghai Securities, his broker, makes available to their sophisticated clients and awaited the highly anticipated Shanghai-market debut of PetroChina, China's biggest oil-and-gas conglomerate. PetroChina was raising $8.9 billion, the largest initial public stock offering in China ever, and the buzz surrounding the listing was deafening. Tian thought the shares would quickly become overpriced, so he decided not to even try to buy. Indeed, PetroChina shares nearly tripled that first day, pegging the company's market capitalization at more that $ 1 trillion.

But the excitement didn't last. Since then, PetroChina shares have fallen by about 33%, resulting in significant losses for investors like Zhang Renfeng. A 63-year-old retiree, Zhang thought it was a no-brainer to buy into the big oil company. "All my friends were saying 'buy it,' so I thought, 'How could I lose?'" says the former schoolteacher, who sunk part of her life savings into stocks two years ago and often hangs out at a brokerage office near her home, watching the markets and playing cards with her friends. But her PetroChina play lost more than 12%, and her other investments have also fallen. In mid-November, Zhang gave up, selling all her shares. She says she lost 20% of the $13,500 she had invested. "That's enough," she says. "I won't invest in stocks anymore. I can't afford to lose my savings."

Whether the market malaise will frighten others into the same decision is uncertain. Chinese have few investment options—real estate markets are frothy in major cities and interest rates paid on bank deposits don't even keep up with the country's rising inflation rate. People were still pouring into the market a few months ago. In August, about 4 million new trading accounts were opened, but the numbers have been falling since, according to stock exchange officials in Shanghai.

A rush for the exits could pose problems for China's economy. According to a recent study by Merrill Lynch, China's investor class—an estimated 15o million people—has sunk 22% of its capital into the stock market, compared with 8% two years ago. Shanghai-based economist Andy Xie calculates that if the stock market drops by half, urban households will lose about 200/o of their overall net worth, putting a dent in consumer spending. Overall, economists figure that a 50% decline in equity values might lop 1-1.5% off China's double-digit GDP-growth rate.

Of course, it's impossible to predict where China stocks are headed. The Shanghai index quickly rebounded from a scary one-day plunge of nearly 9% on Feb. 27. But recently, the warnings that shares are overvalued have become difficult even for inexperienced investors, accustomed to quick scores and relentlessly rising share prices, to ignore. Last month, a top official at the China Securities Regulatory Commission, Tu Guang shao, said investors needed to "educate themselves" about market risks. "Some sort of correction was inevitable, and it's probably here," says economist Xie. Although many investors believed the government would do nothing to damage confidence in stocks before Beijing hosts the 2008 Olympics next summer, that belief has proven to be unfounded. In recent weeks, regulators ordered commercial banks to freeze lending activities through the end of the year—a major step calculated to curb the country's overheated economy that could have a knock-on effect on share prices.

Such actions are blows to even the most optimistic. So is the growing realization in Shanghai trading rooms that China is part of a global economy that could be in for a rough patch, due to the sub prime-credit crisis and the possibility of a recession in the U.S. A month ago, a relatively sophisticated investor such as Tian brushed aside any suggestion that U.S. markets, in turmoil since August, could effect equity values in China. "We're a separate market, a separate economy," Tian said on Nov. 5. Today, he concedes that the connection might be tighter than he imagined. "People are saying that if the U.S economy slumps it will hurt China—that is on the market's mind," he says. As if to reinforce the point, the government on Nov. 15 issued a report warning that a U.S. recession could be "devastating" to China's manufacturing sector.

Tang, the 27-year-old bedroom trader, is getting an education. He won't say how much he has lost in the market recently, but after three straight down days ending Nov. 19, he conceded that "it's possible" China might be experiencing the beginning of a bear market. "The market will come back—at some point," he says. But, prodded by his wife, he is now surfing online job sites for employment leads. He'll soon be working for a salary again. "Maybe [day trading] wasn't such a good idea," he says. "It was nice not to have to worry about having a boss. But it's over."

2008 Great falls on the Asian purses

noreply@blogger.com (de_kerinchi) — Thu, 24 Jan 2008 02:48:00 +0000

The sale of panic accelerated through the Asian purses yesterday while the investors emptied their wallets of actions in mass on fears which a recession in the USA would hammer the economies with fast growth of the area.

The shares in Hong Kong were the worst blow, with principal closing 8.6% of index of Seng of blow downwards as a larger loser of yesterday among the Asian purses. The index fell a total from the surplus the 14.1% two days of trade last this week in its two days more pointed decline in one decade. But in a movement of surprised before the bell of opening on Wall Street Tuesday, the federal reservation of the USA reduced interest rates of interest by 75 basic points to 3.5% in which analysts known as was an apparent offer to avoid a recession in the greatest economy of the world.

Taking the selection of the cut of rate, the European shares reversed their first losses, with stocks in Great Britain 2% of rise while the news burst. Earlier, the commercial feeling in Asia was continued by indications that stocks of the USA started for a great fall Tuesday, with the contracts in the long term on index of security prices moving to a dive 500-point for the industrial average of dow-Jones after one prolonged weekend.

In Japan, the index of Nikkei 225 broke down 5.6%, whereas Australian stocks descended 7% yesterday. None the open Asian stock exchange markets for the trade yesterday was saved, with the principal indices to the bottom at least of 1% of Seoul towards Sri Lanka. On before room, the index made up of kilolitre (KLCI) dégringolé with a bottom of intra-day of 1.340 points, but recovered slightly towards the end although it finished deeply in the negative territory.

The reference mark at the end of 54.12 points inferior, or swallows 3.8%, to 1.354.38, whereas the broader index of FBM Emas dropped 4% at the end at 9.179 points. "(the state of the market) necessarily does not translate into reduction in the economy. The KLCI has 6.3% fallen since the beginning the year, which was a relatively soft fall compared with the losses with two digits on other Asian markets, other than those Shenzhen, in Pakistan and Sri Lanka.

The index of Seng of the blow of Hong Kong was the worst interpreter, having the year-with-date fallen from 22%. "if the recession in the United States is serious, one binds to be negative effects on Asia, but Asia seems to be an area so robust that there are currently no danger or principal change of the economic growth.

The sad feeling on stocks also deviated at the market from the products, with gross prices of the oil of palm tree (CPO) prolonging losses at a third day in a line on derivatives of Bush. The contract in the long term for the delivery of April took blows, loser RM128 per ton, or almost 4%, with RM3,115 per ton. The contract reached high absolute RM3,420 per ton janv. 14. The majority of the analysts provided that CPO would make the average around RM2,800 per ton or moreover in 2008 after the prices increased last year 56%. The oil price crude also reprocessed yesterday, USS3 falls about it by barrel with USS87.60 in electronic hours of trade before the open market for the trade of New York.

Funds -like you to know

noreply@blogger.com (de_kerinchi) — Mon, 14 Jan 2008 01:49:00 +0000

ARE funds (forex/mutual/unit trust/actively managed funds) the way to go to invest for the long term?

There are numerous glossy and enticing advertisements by funds trumpeting excellent returns, but at the same time warning that past performance is no guarantee for future performance.

In the US, more than US$10 trillion is held by nearly 10,000 mutual funds. If you take out money market funds and bond funds, about US$5 trillion is in stocks.

Is funds investing safe and does it provide superior returns (relative to the relevant benchmark indices)?

Majority does not beat benchmark indices

Did your fund portfolio beat the benchmark? Congratulations, for you are in the minority.

In the book, Wall Street Versus America by Gary Weiss (formerly with Business Week), he said “if you had shares in an equity mutual fund on January 1, 1984, just as the bull market was taking off, and held on to it until December 31, 2003, the chances are better than 90% that your fund failed even to match the performance of S&P 500 stock index”.

Can you imagine – 90%? Even the betting tables at Genting Highlands offer better odds.

If you are going to put your money to work by investment pros, you should expect superior performance.

Isn't it difficult to believe that only 20% of funds have managed to beat the benchmark?

The fees charged put most funds on the back foot. Actively managed funds usually incur trading costs – front- and back-end loads, advisory fees, advertising campaigns, and commissions payable to sales and distribution channels. We are not even talking taxes yet.

The fees accruing to unit trust sales forces in Malaysia is a good example, hence it is very difficult to locate funds that actually provide superior returns from the personal EPF investing scheme.

Another issue affecting returns is churn rate, i.e. the number of times the total portfolio value was bought/sold in a year.

Some have a churn rate of less than 50% but some can register churn rates of more than 200%.

The higher the churn rate, the higher the fund's brokerage and related fees. On the other hand, a lower churn rate is no guarantee for better performance.

Scandals

In the US you have the late trading and market timing scandals in mutual funds. There have been many cases involving sales incentives for brokers to push in-house funds.

Some fund managers have been known to receive kickbacks in the form of a percentage of transaction orders given to certain brokers.

Front running by fund managers themselves ahead of placing big orders is also a problem (of course by using nominee accounts).

Soft-dollaring

Some funds have a high churn rate because it keeps the brokers/dealers happy, and some would get “soft-dollaring” arrangements if their transaction volume reaches certain predetermined levels (e.g. free terminals, research, online subscription services, computers, monitors, cables, network support, printers, maintenance agreements, etc.)

Depending on the country they are operating in, some of these soft-dollaring are not shown as savings to the actual fund but rather to the fund company's operational revenue and expense columns.

(Soft-dollaring is a new fangled way of referring to kickbacks. While “hard-dollars” refer to expenses coming out of the fund company's pockets, “soft-dollaring” involves using client's cash to pay for things.).

Certain funds even allow their broker to charge “higher commissions” (especially through OTC trades or off-market trades where prices can be negotiated) to get better soft-dollaring deals from the brokers.

Attrition of funds

A large fund management company will launch many funds, sometimes in the same sector or country exposure.

If they launch three country funds in Year 1, and another three similar funds in Year 2, and so on, the savvier funds companies will put different stocks into each of these funds.

Hence, you may notice that some funds provide superior performance while others do not. As a result, the company may close out the underperforming funds and let the “superior funds” run.

After a few years, these big funds management companies will always be able to tout “superior funds” for advertising purposes. Nobody will bring up funds that have been closed down.

The Journal of Finance (March 1997) reports a comprehensive study by Mark Carhart on mutual funds over the period from 1962 to 1993. He states that “by 1993 fully one-third of all mutual funds had disappeared.”

If you were to take into account the attrition, then the 90% under-performance figure by funds cited earlier might have even been worse.

Corporate governance

A fund's board of directors is supposed to look after investors' best interests. Still, some of these fund boards operate too much like an old-boys network.

We need stricter oversight. We need the chairman and at least 3 out of 4 members of the board not to be affiliated in any way to the fund management company.

This needs to be strictly enforced. A strong board is possibly the best hope for those who invest in these funds to ensure that these fund management companies “go the right way”.

In many cases, a fund's quick growth can hinder performance.

The bigger the fund, the harder it is for a portfolio to move assets effectively.

For example, a small-cap fund, which started with RM300mil may register superior performance in the first couple of years.

The company will advertise this fact to lure more investors into the fund. If the fund size expands to RM1bil, it will become increasingly difficult to match the returns of the past as locating decent sized exposure will be more difficult and the fund manager would have to hit more “home runs” now than previously.

Random walk

Many investors have wised up to most of the factors that I've mentioned above, hence the proliferation of indexed-funds over the last 5 years.

Most of them would rather just trail the index performance as they do not want to be slugged with exorbitant fees. Indexed funds have a much lower fee structure, hence their popularity.

But the fact that 90% fail to outperform their benchmarks lends a lot of weight to the random walk theory which imputes that you cannot consistently outperform the market over the long run.

That being the case, instead of active management (which is deemed eventually to be futile under random walk theory) the best way is to track the index.

With that, perhaps one should not rule out too hastily the pros of self-investing as long as they read up adequately and understand the market dynamics and investing fundamentals.

It's either that, or choosing wisely which fund management company to go with.

Individuals or committee?

At the risk of sounding like a broken record, investors need to ask insightful questions before deciding which funds to plough their hard-earned money into.

Needless to say, the merry go-round performance of fund managers affects their long-term performance.

Many funds say that investment decisions are deliberated and made by a committee, thus reducing the dependence on any individual.

Truth is, there are individual fund managers who outperform but it wouldn't serve the fund management company's interest to emphasise that fact, for what if he/she leaves the company?

Your query as an investor is – who are the fund managers at the company? How long have they been with the company?

You should even ask for their bio-data and resume. A fund management company with fund managers on short tenures may indicate a general failure to lure and keep good staff.

It's a realistic business. To chalk up superior and consistent performance, the company needs a dedicated team led by proven fund managers for a prolonged period.

Otherwise, investors may find that they have forked out their savings for some 20 year-olds to play and experiment with!

Worlds News

noreply@blogger.com (de_kerinchi) — Thu, 10 Jan 2008 10:45:00 +0000

JBIC in talks on environmental funds

TOKYO: The Japan Bank for International Cooperation (JBIC) is in talks with Mizuho Financial Group Inc and other financial institutions to set up environmental funds aimed at investing in projects to cut greenhouse gas emissions in Asia.

The total size of the funds could top US$2bil in five years, a JBIC spokesman said yesterday.

The government-owned bank has earmarked 15 billion yen (US$137.3mil) for investment in such funds in the initial year, starting in April, as it plans to contribute about 10 to 20% of the total, he said.

Gold an copper futures surge

SINGAPORE: Gold stormed to a fresh record high and copper futures hit a two-month peak yesterday as investors sought to hedge against inflation or to find alternatives to depressed equity markets.

Spot gold hit a record US$891.40 an ounce, surpassing the previous high of US$881.10 reached on Tuesday.

Oil prices were also firm, moving back towards US$100 a barrel as concern about equity markets persisted following a 1.9% drop on Wall Street on Tuesday.

"The speed of gold's rise is very fast but the market is focusing on taking gold towards US$900 in the near term," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo.

Bear Stearns chief exec to step down

NEW YORK: Bear Stearns Cos Inc leader James Cayne, under fire for the collapse of two hedge funds, will step down as chief executive and hand that role to the company's star investment banker, Alan Schwartz, the company said on Tuesday.

Cayne will remain as chairman of the fifth largest US investment bank, which suffered its first loss ever in the fourth quarter because of subprime mortgages.

SIA not giving up on China Eastern bid

HONG KONG/SINGAPORE: Singapore Airlines (SIA) said yesterday it would not walk away from a bid to buy a stake in China's third biggest airline, but called for a cooling off period as China Eastern considers its future.

Loss-making China Eastern's minority shareholders on Tuesday rejected the agreed sale of a 24% stake to SIA, the world's most profitable carrier, and its parent, state investment agency Temasek for US$920mil.

"China Eastern has some issues to work through with the supposed Air China offer. So we have to let them deal with it in time. There will be a little cooling off period," SIA spokesman Stephen Forshaw told reporters. But he insisted SIA would not get into a bidding war.

JBIC in talks on environmental funds

The total size of the funds could top US$2bil in five years, a JBIC spokesman said yesterday.

Oil prices extend decline on worries about US economy

noreply@blogger.com (de_kerinchi) — Mon, 07 Jan 2008 23:09:00 +0000

Oil prices fell Monday as a report of growing unemployment in the United States raised concerns of an economic downturn there that could curb demand for oil.

The U.S. Labor Department said the unemployment rate jumped to 5 percent in December _ its highest level in more than two years _ from 4.7 percent in November. Analysts had expected December unemployment at 4.8 percent.

"Many economists in the U.S. have talked about the potential of the U.S. getting into a recession,'' said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "This latest government report ... has added to the concerns about the economy.''

Light, sweet crude for February delivery dropped 65 cents to US$97.26 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell US$1.27 to settle at US$97.91 a barrel on Friday.

The government also said in the report that employers created just 18,000 jobs last month, less than the 70,000 analysts had expected and the smallest increase since August 2003.

Traders are becoming more concerned that record high energy prices are helping to push the economy into recession.

"If the U.S. goes into a significant downturn, that will impact oil demand there. If it goes into recession, that may also affect other economies, for example, demand in high-growth China could also slow down,'' Shum said.

Any slowdown in the U.S. economy would hurt exporters in Asia that rely heavily on American consumer demand for sales and growth. Energy traders could have interpreted the jobs data positively _ in recent months, oil prices have often moved higher after the government reported dismal economic data because traders believe signs of economic weakness raise the chances that the Fed will cut interest rates. Lower interest rates weaken the dollar, whose decline has contributed to more expensive oil.

But analysts say a recession is seen as much more important to long-term energy prices than the easy money that is a byproduct of lower interest rates.

In London, Brent crude futures fell 50 cents to US$96.29 a barrel on the ICE Futures exchange.

Heating oil futures fell 1.16 cents to US$2.6719 a gallon (3.8 liters) while gasoline prices dropped 1.1 cents to US$2.5 a gallon. Natural gas futures added 0.4 cents to US$7.845 per 1,000 cubic feet.

Japanese stocks start new year down amid US jitters, high oil prices

noreply@blogger.com (de_kerinchi) — Fri, 04 Jan 2008 23:42:00 +0000

TOKYO (AP): Japanese stock prices plunged Friday, losing ground in early transactions after jittery trade on Wall Street amid concerns about the U.S. economy and rising oil prices.

Japan's benchmark Nikkei stock index lost 430.13 points, or 2.81 percent, to 14,877.65 points on the Tokyo Stock Exchange shortly after opening Friday for a half-day session.

The TSE had been closed since Monday for the New Year's holidays. The exchange resumes full-day trading Monday.

Wall Street closed narrowly mixed Thursday after share prices plunged the previous day on weaker-than-expected data for the U.S. manufacturing sector and record oil prices. The Dow Jones industrial average rose 12.76, or 0.10 percent, to 13,056.72 Thursday, as oil set a fresh trading record of US$100.09 a barrel.

Tokyo's broader Topix index, which includes all shares on the exchange's first section, lost 38.90 points, or 2.64 percent, to 1,436.78.

In currencies, the U.S. dollar was trading at 109.54 yen at 8:50 a.m. Friday (2350 GMT Thursday), up from 109.33 yen late Thursday in New York. The euro fell to US$1.4738 from US$1.4744.