Alfred Woody's Kewl Blog [ 椼森 ]

Monday, January 14, 2013

Asia stocks mostly gain, with China in lead

By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) — Hong Kong and Shanghai stocks rose to outpace gains for other Asia markets Monday, with financials among the top-gaining sectors.

The Shanghai Composite Index CN:000001 +3.06% jumped 2.6%, while Hong Kong’s Hang Seng Index HK:HSI +0.64% climbed 0.6%.

Australia’s S&P/ASX 200 index AU:XJO +0.22% edged up 0.2% and South Korea’s Kospi KR:SEU +0.52% ,rose 0.5%, while on the downside, Singapore’s Straits Times Index SG:STI -0.53% fell 0.4%.

Japanese markets were closed Monday for Coming of Age day, though Nikkei Stock Average futures traded 1.6% higher in Singapore as the Japanese yen lost more ground against major rivals.

Ben Kwong, chief operating officer at KGI Asia, said that other Asia markets were also feeling the effect of yen weakness. Japan is a source of cheap money, he said, ensuring that “liquidity-driven trade continues.”

In that environment, “investors are looking for excuses to buy rather than sell,” he said, and are focusing on an economic recovery in China and the subsequent better performance of mainland Chinese yuan-denominated stocks, known as A-shares.

“A-shares are up, and companies involved in A-shares benefit from that,” Kwong said, giving brokers and insurers as examples.

China may increase the quota for foreign investors to invest in its domestic equity market, according to China’s securities regulator chief, according to reports.

Among Shanghai-listed financials, Citic Securities Co. CN:600030 +6.92% surged 6.1%, Bank of China Ltd. CN:601988 +1.71% BACHY -0.51% gained 1.7%, China Construction Bank Corp. CN:601939 +2.59% CICHF -2.96% rose 1.9%, and China Merchants Bank Co. CN:600036 +4.22% CIHHF -1.29% traded 3.7% higher.

Great Wall Motor Co. CN:601633 +6.18% climbed 5.4% in Shanghai after a Xinhua news report Saturday cited a company spokesman as saying the vehicle maker was targeting sales of 700,000 units this year, up from 620,000 units in 2012. Read: Great Wall shares jump on upbeat guidance report.

Financials were also outperformers in Hong Kong trade, where HSBC Holdings PLC UK:HSBA -0.13% HBC +0.28% rose 1%, Bank of China HK:3988 +1.37% added 1.4%, and broker China Everbright Ltd. HK:165 +7.16% CEVIF +13.37% gained 4.8%.

Insurers were also supporting the Hong Kong index with AIA Group Ltd. HK:1299 +1.00% AAGIY -0.70% up 1.2% and Ping An Insurance Group Co. HK:2318 +2.91% PNGAY -2.54% gaining 2.4%, while China Life Insurance Co. HK:2628 +2.88% LFC -2.57% climbed 3.5%.

On the downside in Hong Kong, logistics giant Li & Fung Ltd. HK:494 -15.42% LFUGY -14.21% plunged 15.1% after warning core operating profit for the past year could tumble as much as 40%.

South Korean trading saw LG Chem Ltd. KR:051910 -1.70% LGCLF -39.13% fall 1.7% and Kia Motors Corp. KR:000270 -0.37% KIMTF -1.81% lost 0.4%, offsetting a 1.5% advance for Hyundai Motor Co. KR:005380 +1.46% HYMTF -4.69% and a 1.2% gain for Samsung Electronics Co. KR:005930 +1.24% SSNLF 0.00%

The Australian market saw some buying for real-estate firms, with Mirvac Group AU:MGR +1.29% MRVGF +12.66% up 1.3%, Stockland Australia AU:SGP +1.44% STKAF +1.23% adding 1.4%, and Fkp Property Group AU:FKP +3.15% FRKPF 0.00% , up 3.2%.

The Asia moves came after U.S. stocks ended Friday’s session little changed, with investors pausing after pushing the S&P 500 index SPX -0.0048% to a five-year high earlier in the week. Read: Huge stock fund flows have Wall Street abuzz.

Wells Fargo & Co. WFC -0.85% kicked off the fourth-quarter reporting season for major U.S. banks Friday, posting revenue and earnings that topped analyst expectations, but with lower net interest income. Read: This week could make or break financials’ rally.

Crédit Agricole’s Hong Kong-based strategists said that earnings out this week, especially from the financial sector, would help dictate the direction of global stock-market action and appetite for risk-taking over the coming days.

“Hope and faith in global economic recovery, helped by data releases in the U.S. and China in particular, have helped to calm markets, while there is little angst as yet about the looming debt-ceiling/spending-cut negotiations in the U.S.” they said.

Sarah Turner is MarketWatch's bureau chief in Sydney. Follow her on Twitter @SarahTurnerMKTW.

Gold reaches 80% of Mali exports

Geologists at the Diokeba Gold Project, western Mali

afrol News, 16 June - According to Mali's Mining Minister, gold is y now representing 80.5 percent of the nation's export earnings. But even though gold prices are record high, Mali's low taxation rates leave the country with little earnings.

Mali's Mining Minister Abu Bakr Traoré this week presented the 2009 estimates of the increasingly important sector at a Bamako conference this week, revealing the growing dependence on the volatile sector. By 2009, Mali received 80.47 percent of its export earning from gold mining.

Gold mining has slowly grown in importance. Four years ago, gold represented 72 percent of Malian exports. During the last decade, gold production has reached over 50 tonnes yearly, out of which around 90 percent is produced in seven major industrial mines and the rest comes from artisanal production.

According to Minister Traoré, the major importance of the gold mining sector is in the wages paid out to Malian residents and citizens. The sector employs almost 8,000 persons, contributing with US$ 163 million (euro 133 million) in taxable wages.

But a report published by the International Monetary Fund (IMF) last month, looking into the taxation of Mali's mining sector, reveals that the country's major mineral riches only to a small degree benefit Malians. Mali's very low taxation level to a large degree follows IMF recommendations, aiming at attracting foreign investments.

Mali's current fiscal regime set for the gold mining sector consists of a mixed taxation system based on royalties, a profit tax and depletion allowance on profits. Following IMF recommendations, Mali's government decided to reduce the royalty rate applied to gold mining companies from 6 to 3 percent in order to encourage investment in this sector.

Mining firms further benefit from a five-year profit tax holiday after first investments, even in the highly profitable sector of gold mining. But by now, even the IMF paper acknowledges that "the state has not been able to collect its full share of revenues" due to this measure, and in fact recommends eliminating tax holidays granted to mining companies in Africa.

According to the IMF paper, in 2008 gold production in Mali was worth almost US$ 150 million. Applying a royalty rate of 3percent, the government would have raised US$ 4.5 million. If the government had applied the previous 6% rate it would have reached US$ 9 million.

Maria Victoria Garcia Ojeda from the European Network on Debt and Development (Eurodad) holds that even 6 percent is a too low royalty rate for a sector thus profitable as gold mining. "If the rate applied had been 12 percent, as considered in the report 'Golden profits on Ghana's expense', the revenue collected by the government in royalties would have been US$ 18 million in 2008," Ms Garcia holds.

While gold represents 80 percent of Mali's total exports, it accounts for only 8 percent of the country's GDP. "Mali's gold exports have more than tripled in the last decade yet its citizens have so far seen little benefit from mining revenues," Oxfam America holds. Also IMF paper recognises that the gold mining sector has a very limited positive spill-over to the Malian economy.

With such low royalties and low corporate profit tax plus a weak contribution to employment and a low added value, Ms Garcia asks the difficult question: "who is profiting from the exploitation of Mali's principal natural resource?" It is "certainly not the Malian people," she answers.

By staff writer

Citi Reveals The Most Likely Debt Ceiling Endgame, And Why It's Bad News For The US Dollar

flickr / Shardayyy

Citi currency guru Steven Englander has a new note out this evening titled: No coin + temporary debt ceiling extension + sequester = US Dollar negative. In it he notes that the rejection of the trillion dollar coin idea to avert the debt ceiling is not alone a market moving event, but that the hard language taken by the White House that the choices boil down to clean lift or default raises the odds of a debt ceiling breach.
His take:

So it is possible that we will get a technical default for a few days, but more likely that Congress will give in, vote the debt ceiling up temporarily, and let the automatic sequesters kick in. Mounting risk of a technical default was USD positive in 2011 because it led to cutting of long-risk positions and the USD/Treasury market remained safe havens. However, it also occurred in an environment of slowing EM growth and intensifying euro zone sovereign risk pressure, so the USD support came from external forces as well. Given that investors are now somewhat long risk again, the position cutting is again likely to be USD positive, however, unattractive US assets were. As was the case in 2011, it is very unlikely that the Treasury will not pay its bills, although even a technical default could have very unforeseen consequences, given the multiple functions that Treasuries play in global financial markets. The more likely scenario of sequester plus grudging debt ceiling rise is USD negative. It will put more pressure on the Fed to keep pumping liquidity into the US economy without giving any reassurance to investors that long-term fiscal issues are close to resolution.

That seems reasonable. A debt ceiling hike + a full sequester, which would equal a weaker economy and more pumping.
With Europe healing and China rebounding, USD would be the big loser.

F-35 Marine model stress-testing halted after cracks discovered

By Tony Capaccio

Bloomberg News

WASHINGTON -- Durability testing on the Marine Corps' short-takeoff version of Lockheed Martin's F-35 was halted last month after "multiple" cracks were discovered in the fighter jet, according to a Pentagon's testing office report sent to Congress on Friday.
The previously undisclosed halt in high-stress ground testing involves the F-35B, the joint strike fighter's most complicated version, which must withstand short takeoffs and landings on carriers and amphibious warfare vessels, said the report by Defense Department testing chief Michael Gilmore.
Flight testing wasn't affected.
Development of the F-35, the Pentagon's costliest weapon system, has been marked by delays and cost increases. The Pentagon estimates the total price for development and production of 2,443 F-35s at $395.7 billion, a 70 percent increase since the initial contract with Lockheed was signed in 2001.
Durability testing is intended to stress an airframe, assessing its bility to achieve a projected aircraft lifetime of 8,000 "equivalent flight hours."
Testing on the Marine version progressed last year until the December halt "after multiple new cracks were found in a bulkhead flange" on the fuselage underside during an inspection after the equivalent of 7,000 hours of testing, the report to Congress said. The cracks were confined to that area.
Testing of the F-35B model had been restarted in January 2012 after a 16-month delay caused by the discovery and repair of a crack in the plane's bulkhead.
Analysis of the new cracks will continue so as to find the root cause, plan corrective action and determine whether the cracks had been predicted in modeling, the report said.
"We have implemented the fixes," said Lockheed spokesman Michael Rein, who went to say that static testing could resume as early as late next week.
"This had no impact on flight testing and this is normal engineering development and test work," Rein added. "This is why we do structural testing in the first place."
But Gilmore said in his report that the test results "highlight the risks and costs" of the Pentagon's F-35 concurrent-development strategy, which produces aircraft while they're still in development.
The aircraft have two more years of structural testing that may result in more "discoveries," he added.

Read more here: http://www.star-telegram.com/2013/01/12/4543095/f-35-marine-model-stress-testing.html#storylink=cpy

Snow on the way: 5 inches in the north and a dusting in London

The heaviest snowfall of the winter so far will bring travel chaos, with up to five inches falling in the north and even a light dusting in London.

A gritting lorry on duty in the snowy Scottish Borders Sunday afternoon

Snow will move down the middle of the country from Scotland overnight reaching London by the early morning.

Up to five inches (15cm) will fall on high ground in the north east of England. The snow is expected to last throughout the day with up to 2 inches (5cm) in most places, turning to sleet further south as the afternoon progresses.

Another front coming in from the east will bring flurries across Kent and East Sussex, causing more problems for commuter traffic.

Boris Johnson, the Mayor of London, was frustrated that Heathrow was not better prepared for snow amid warnings for passengers to regularly check the website to ensure flights are on time.

“Every time there is a slight problem, Heathrow cannot cope," he said.
Flood warnings remained in place in the South East, including on the Thames where high spring tides are already causing problems around Richmond.

The Met Office have issued a severe weather warning for the whole of the UK throughtout Monday.

Temperatures will remain below average, barely reaching 5C and freezing at night.

On Tuesday and Wednesday the worst of the weather will be in the east of the country with further flurries of snow expected. Temperatures could fall to -9C in remote rural areas.

The cold front is expected to last to the end of the week, with sunny periods. But a 'battle' is waging with warmer fronts to the south that could bring warmer, wetter air.

The RAC is expecting up to 56,000 breakdowns and widespread disruption.

Online retailer Amazon said sales of sledges had surged by 600 per cent, and customers were also investing in snow shovels.