New Zealand hikes interest rates to seven-year high

WELLINGTON - New Zealand's central bank on Wednesday delivered its eighth consecutive interest rate hike, sending the country's borrowing costs to their highest level in more than seven years, as it joins a global battle against surging inflation.

The Reserve Bank of New Zealand stayed true to its course of the past 18 months, unveiling another 50 basis point increase in its key rate to 3.5 percent -- a level not seen since May 2015 -- and warned of more rises in a bid to stymie price rises.

The move came as its counterparts in the United States, Europe and elsewhere ramp up rates to curtail decades-high inflation, fuelling concerns they could trigger a prolonged global downturn.

The central bank warned inflation could climb beyond the current 7.3 percent rate, which is already a 32-year high.

Wednesday's announcement came on the same day New Zealand's government unveiled a better financial position than expected in its accounts to the end of June.

A rise in tax revenue and slower growth in spending resulted in a deficit of NZ$9.7 billion (US$5.6 billion), considerably less than the forecast deficit of NZ$19 billion.

Agence France-Presse

Japan Q2 GDP blows past expectations on robust domestic demand

TOKYO - Japan's economy grew in the second quarter at the fastest pace in more than two years as consumer spending and capital expenditure both rose at the fastest in more than three years, highlighting stronger domestic demand.

Gross domestic product expanded an annualized 4 percent in April-June, government data showed, more than the median estimate for 2.5 percent annualized growth and the biggest increase since January-March 2015.

Compared to the previous quarter, the economy expanded 1 percent, versus the median estimate for 0.6 percent growth.

Annualized GDP for previous quarter was revised to a 1.5 percent increase, while quarterly real (inflation adjusted) GDP was revised up to 0.4 percent growth from a 0.3 percent increase.

Economic growth is expected to continue in coming quarters, offering the Bank of Japan (BOJ) the hope that a tight labor market is finally starting to boost consumer spending, which in turn makes it easier to generate sustained inflation.

The economy grew for 6 straight quarters in April-June. The last time the economy had a run of six consecutive quarters of growth was January-March 2005 through April-June 2006.

Private consumption, which accounts for about two-thirds of GDP, rose 0.9 percent from the previous quarter, more than the median estimate of 0.5 percent growth.

That marked the fastest expansion in more than 3 years as shoppers splashed out on durable goods, an encouraging sign that consumer spending is no longer the weak spot in Japan's economic outlook.

Capital expenditure jumped by 2.4 percent in April-June from the previous quarter, versus the median estimate for a 1.2 percent increase. That was the fastest growth in business investment since January-March 2014.

External demand subtracted 0.3 percentage point from GDP growth in April-June in part due to an increase in imports. This is notable because Japan usually relies on exports to drive growth.

Since launching quantitative easing in April 2013, the BOJ has pushed back the timing for reaching its 2 percent inflation target 6 times in part due to weak consumer spending.

The GDP data for April-June show private consumption is finally starting to move in the direction that the BOJ and other government ministers have long predicted.

source: news.abs-cbn.com

Stock market seen testing 8,100 points

MANILA – The stock market is expected to test last year’s high of 8,100 points with sentiment boosted by robust economic growth and strong corporate earnings, EastWest Bank First Vice President and Trust Officer Angel Pacis says. – ANC, Market Edge with Cathy Yang, July 12, 2016

source: www.abs-cbnnews.com

Markets to stay jittery amid deluge of economic data

Expect a lot of 'short-term' noise to keep investors on edge and on the sidelines this week, as focus shifts to economic data out of the US, China, and Japan.

On Tuesday, Japan's Abenomics gets another pulse check, as household spending, employment and retail sales data are released, industrial production numbers are out on Wednesday. Friday will be a big day --- the Bank of Japan releases its business sentiment survey -- the Tankan Survey, China manufacturing and services index are also out, while the US releases non-farm payrolls for March. A Reuters poll shows payrolls are expected to have increased by 200,000 jobs in March, below February's 242,000 gain.

Angel Pacis, First Vice President & Trust Officer at East West Bank says the 'markets are living on day-to-day data' when it comes to the actual policy the Fed will be taking going forward.

"They call it the 'sweet spot' in terms of data, good enough to signal the US economy is continuing its current track, but not strong enough to encourage more aggressive rate hike stance from the Fed. That's what the market is looking for to continue its upward trajectory."

CONGLOMERATE PLAY : ALPHA PLAY

In the meantime, Pacis is placing her bets on conglomerates this year, which she says will continue to benefit from strong economic growth and domestic dependence, as well as incentives for infrastructure play.

"Ayala Corp is into infrastructure, it's a good proxy for the Philippine economy, plus it's also in sectors that are expected to grow faster like education and power. While we like Metro Pacific because of valuations."

SM investments is also a stock pick.

These companies are expected to outpace expected average growth of 10% this year.

East West bank's year-end forecast is at 7400.

RCBC BACK IN SPOTLIGHT

Pacis believes while sentiment on RCBC will continue to take a hit, triggering retail selling, she says overall -- the bank won't see any big negative impact on bottomline. She adds, banks in general are in a stable position.

"This is what I call noise. The Philippine Banking Sector is in a very stable position and any selldown which brings it to fair value should be an opportunity to pick up stocks."

The Senate resumes its third hearing on the alleged $81-M Money Laundering case, on Tuesday, March 29.

source: www.abs-cbnnews.com

APEC leaders to condemn terror attacks

MANILA - Asia-Pacific leaders called for increased international cooperation and solidarity against terrorism as they condemned recent terrorist attacks that killed hundreds in France and Lebanon and downed a Russian airliner over Egypt.

“Under the shadow cast by the terrorist attacks in Paris, Beirut, and against Russian aircraft over the Sinai, and elsewhere, we strongly condemn all acts, methods, and practices of terrorism in all their forms and manifestations,” said the 21 leaders representing member-economies of the Asia-Pacific Economic Cooperation (APEC).

“We stress the urgent need for increased international cooperation and solidarity in the fight against terrorism.”

The “urgent call” was contained in a draft of the statement the APEC leaders are scheduled to issue late Thursday, at the end of their 2-day meeting in Manila.

Although APEC is primarily concerned with lowering trade barriers, facilitating investments, and integrating the region’s economies, the leaders took note of the link between terrorism and economic growth.

“We will not allow terrorism to threaten the fundamental values that underpin our free and open economies,” they said. “Economic growth, prosperity, and opportunity are among the most powerful tools to address the root causes of terrorism and radicalization.”

The APEC leaders’ last major statement on terrorism was in Shanghai in 2001, shortly after the 9/11 terrorist attacks in the United States. At that time, the terrorism statement was in a separate document from their main statement on lowering of trade barriers and facilitating investments.

In APEC 2015, the reference to terrorism is incorporated in the main declaration.

The leaders also welcomed APEC members’ efforts to counter terrorism, especially measures to combat terrorist financing and prevent the travel of foreign terrorist fighters.

“We further encourage economies to implement fully the APEC Consolidated Counter-Terrorism and Secure Trade Strategy and to continue taking collective and individual actions and sharing best practices to secure infrastructure, travel, supply chains, and financial systems from terrorist activities,” they said.

ADVANCING FREE TRADE
The leaders of the APEC forum members gathered in Manila on Wednesday to hold a two-day meeting. A major agenda item was how to push ahead with their ultimate goal of establishing a broad free trade zone under the Free-Trade Area of the Asia-Pacific (FTAAP) framework.

Discussions will be intensified in particular after 12 countries, all APEC members, concluded years of negotiations last month to create the Trans-Pacific Partnership (TPP) trade bloc that covers 40 percent of the global economy.

"We reaffirm our commitment to advance the process in a comprehensive and systematic manner towards the eventual realization of the FTAAP as a major instrument to further APEC's regional economic integration agenda," the draft joint declaration reads.

The TPP and other regional trade pacts under negotiation have been considered as fundamental steps toward creating the ambitious FTAAP free trade zone.

"We note the recent development on the free trade agreements in the region and the progress of the possible pathways to the FTAAP, including the finalization of Trans-Pacific Partnership negotiations," the draft notes.

It goes on to say the members also "encourage the early completion of negotiations for (the) Regional Comprehensive Economic Partnership" which is seen as another huge multilateral trade initiative that the Association of Southeast Asian Nations, China, Japan and India, along with three other partners, are seeking to establish.

A summit of the 12 countries involved in the U.S.-led TPP was also held Wednesday on the sidelines of the APEC summit.

"While our focus is on approval and implementation of the results of negotiations with our current partners, we have also seen interest from a number of economies throughout the region," the leaders said in a statement issued after the TPP meeting.

The trade treaty "isn't (just) about boosting exports between our countries in the Asia-Pacific. The TPP is also helping to write the rules of global trade for the 21st century," U.S. President Barack Obama, the chair of the meeting, said.

The 12 TPP countries will need to ratify the agreement before bringing it into force.

Japanese Prime Minister Shinzo Abe urged the partners to work on the necessary procedures promptly. The TPP pact would be "pie in the sky" if it does not take effect, he said.

The APEC forum, established in 1989, groups Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Taiwan, Thailand, the United States and Vietnam. -- with a report from Kyodo News

source: www.abs-cbnnews.com

BSP keeps rates on hold

The Philippine central bank kept its benchmark interest rate unchanged at a record low on Thursday, saying the economy needed less support with strong domestic demand seen extending into next year, but it saw risks from strong capital inflows.

The rate decision was in line with a Reuters poll in which 12 of 13 economists had predicted the Bangko Sentral ng Pilipinas would keep the overnight borrowing rate  at 3.5 percent.

"The Monetary Board's decision is based on its assessment that current monetary settings remain appropriate, as the cumulative 100-basis-point reduction in policy rates (earlier) in 2012 continues to work its way through the economy," Governor Amando Tetangco told a media briefing.

The Philippines' economy, like many of its Southeast Asian neighbours, has remained largely resilient in the face of the global slowdown as strong domestic demand and government spending largely offset the impact of weaker exports.

Highlighting its view that price pressures will remain moderate despite robust economic growth, the central bank trimmed its forecast for average inflation in 2012 to 3.2 percent from 3.3 percent. It also lowered its 2013 inflation forecast to 3.1 percent from 3.9 percent and its 2014 forecast to 2.9 percent from 3.1 percent.

It set an inflation target of 2-4 percent for 2015-2016.

Economists have contrasting views on where interest rates are headed in the later part of 2013, with some not ruling out further cuts if the global economic outlook deteriorates, and others predicting as much as 50 basis points in hikes to guard against demand-pull inflationary pressures.

Some analysts are concerned the central bank could be underestimating price pressures.

"The marked downward revision in next year's inflation estimates might be downplaying risks, in light of firm domestic demand, commodity price shocks and utility price adjustments," said Radhika Rao, economist at Forecast PTE in Singapore.


RESILIENT SOUTHEAST ASIA

Philippine gross domestic product (GDP) expanded by a faster-than-expected 7.1 percent in the third quarter from a year earlier, making it likely it will surpass the official 5 percent to 6 percent growth target for the full year.

Despite strong domestic consumption, inflation has remained under control so far, helped in part by a strong peso . The average annual inflation rate in the 11 months to November was near the bottom of the central bank's 3 percent to 5 percent target band for the year.

That has allowed the central bank to cut interest rates by a total of 100 basis points this year to boost domestic demand to make up for the weakness in exports as global demand sputters.

The peso has risen about 7 percent against the U.S. dollar this year to become Asia's second-best performing currency as foreign investors attracted by its growth story snap up Philippine assets such as stocks and bonds.

Strong capital flows have fuelled a 33 percent jump in the benchmark share index  this year, but are a worry for policymakers given their potentially destabilising impact.

"We see the threat of capital flows," Diwa Guinigundo, deputy governor of the Bangko Sentral ng Pilipinas told reporters, adding that non-monetary tools, like macroprudential measures, may be more effective in managing such risks rather than monetary policy.

The country is targeting faster growth of 6 percent to 7 percent in 2013, banking on further increases in domestic consumption and higher government spending.

The central bank said it expects imports to grow by 12 percent next year against 7 percent this year, supporting domestic expansion, which would cut the country's balance of payments surplus.

The government has set aside a record of more than 400 billion pesos ($9.8 billion) for infrastructure projects and capital outlays under next year's 2.01 trillion pesos budget.

source: abs-cbnnews.com

Philippine economy outstrips expectations, is second-fastest in Asia, after China

The Philippine economy grew by 6.4 percent in the first quarter of the year, making it Asia's second fastest-growing economy after China's.

The Philippines' first-quarter expansion was also the fastest among Asean member-countries, according to Malacanang deputy spokesperson Abigail Valte.

"The better than expected economic growth was due to sustained private sector confidence and accelerated government spending. There were healthy increases in the services sector, complemented by growth in exports and increases in household expenditures," Valte said.

"The first quarter GDP figure validates the optimistic outlook of the President and his economic team," she said.

The Palace spokesperson said the country's first-quarter growth is also the highest in a non-election year since 2006.

"We are confident that the positive trajectory of our GDP will be sustained in the latter quarters of the year, which have traditionally shown more robust and dynamic economic performance," Valte said.

Socioeconomic Planning Secretary Arsenio Balisacan said the Philippines should be on track to meet, if not exceed, the 2012 growth target of five to six percent.

source: interaksyon.com