The Star Online: Business
The Star Online: Business |
- Asia still sees red
- Dexia prepared to sell £12.58 billion in assets: Les Echos
- Larger Europe bailout fund could weigh on ratings:S&P
| Posted: 25 Sep 2011 07:56 PM PDT KUALA LUMPUR: Asia continued to trade in the red as sentiments of unresolved global uncertainties over-spilled into the new week. Hwang DBS Vickers Research said in its market preview that "our Malaysian bourse will be hoping to regain its footing after falling by 65.0-point or 4.5% last week. Nonetheless, we reckon any technical rebound will likely be mild in the near term". It also included that "stocks that could see a relief rally today include beaten down heavyweights such as Maybank, Sime Darby and Genting. Proton shares may also attract interest after a weekly business reported that there has been renewed interest in a takeover exercise in the national automotive company". The FBM KCLI traded at 1347.14 at 10.06am, dipping 18.8 points or 1.38%. It opened at 1357.74, losing 8.20 points, or 0.6%. Locally, market volume was relatively thin with 131.25mil shares traded at 10.10am worth RM173.77mil. Decliners outpaced advancers 413 to 53 while 155 counters remain unchanged. The gainers were led by United U-Li Corp Bhd, rising 18 sen to RM1.03; Hil Industris Bhd gaining 14 sen to hit RM4.09 and QSR Brands Bhd gaining 11 sen to RM5.44. On the other end, the losers in morning trade were Kuala Lumpur Kepong Bhd, sliding 56 sen to RM 20.14; Public Bank Bhd falling 48 sen to RM11.96 and blue chip Dutch Lady Milk Industries Bhd dipping 36 sen to RM17.66. Within the region, bourses traded in the slight negative. Tokyo's Nikkei 225 lost 1.65% to 8419.36; Hong Kong's Hang Send Index was recorded a 0.31% dip at 17614.51; Shanghai A index was down 0.12% to 2430.13 while Taiwan's Taiex slid 0.73% to 6994.53 and Korea's Kospi fell 1.2% to 1677.12. Closer to home, Singapore's Straits Times Index fell 1.05% to 2670.38. Nymex crude oil was unchanged at US$79.85. Spot gold lost US$15.16 to US$1641.57 while silver dipped 98 cents to US$30.17. The ringgit continued to weaken against the American dollar at 3.1877 and 4.2786 against the euro. |
| Dexia prepared to sell £12.58 billion in assets: Les Echos Posted: 25 Sep 2011 05:54 PM PDT PARIS (Reuters) - Franco-Belgian bank Dexia is ready for the "rapid" sale of 12.58 billion in assets deemed too costly to fund in the current market environment, French newspaper Les Echos said in a preview of its Monday edition. The bank may also seek to free up capital in the "externalization" of 80 billion euros' worth of loans to local government, though the exact method has yet to be determined, Les Echos added in a short item released late on Sunday. A spokesman for Dexia declined to comment on any specific details but said the bank was committed to dealing with loans it had placed in a run-off portfolio. "Dexia has already exceeded its annual target for the first half of 2011 but is not committing to numerical targets for the rest of the year," the spokesman told Reuters. Such a sale would come after similar pledges to sell assets from France's BNP Paribas and Societe Generale after a turbulent three months on the stock market, with fears of a Greek default pushing up European banks' funding costs. |
| Larger Europe bailout fund could weigh on ratings:S&P Posted: 25 Sep 2011 05:53 PM PDT WASHINGTON (Reuters) - Europe's efforts to ramp up its fight against the euro zone debt crisis could potentially trigger credit rating downgrades in the region, a top Standard & Poor's official warned. David Beers, the head of S&P's sovereign rating group, said it is still too soon to know how European policymakers will boost the European Financial Stability Facility, how effective that will be and its possible credit implications. But he said the various alternatives could have "potential credit implications in different ways," including for leading euro zone countries such as France and Germany. European officials, seeking more resources to protect the euro zone against fallout from its debt crisis, are considering ways to increase the impact of the 440 billion-euro fund by leveraging, although it remains unclear exactly how. Beers said it was evident, however, that policymakers cannot leverage the EFSF without limits. "There is some recognition in the euro zone that there is no cheap, risk-free leveraging options for the EFSF any more," Beers told Reuters. Some analysts say at least 2 trillion euros would be needed to safeguard Italy and Spain if the Greek crisis spreads. "We're getting to a point where the guarantee approach of the sort that the EFSF highlights is running out of road." Beers said in an interview late on Saturday. Euro zone member states provide guarantees to the EFSF, which makes loans to struggling member countries such as Greece. But countries such as Germany have signaled they will not commit to making more of their own money available. Beers said that reluctance is why policymakers are now discussing options such as leveraging the fund via the European Central Bank or via markets, or even the possibility of deeper fiscal integration in the euro zone. Beers declined to comment on implications of each of the scenarios for boosting the EFSF. However, one option could involve backing up the fund with money from the European Central Bank, eliminating the need for politically unpopular cash injections from hard-up European governments. That solution, although potentially reducing the impact on sovereign ratings, would probably increase liabilities in the ECB's balance sheet and possibly leave euro zone countries on the hook for restoring the bank's capital in the event of losses caused by an euro zone default. Leveraging the EFSF could also result in a downgrade of its own AAA credit rating. A deeper fiscal union between members of the euro zone, on the other hand, would increase borrowing costs for core European countries such as France and Germany, while providing relief to the more debt-heavy peripheral countries. S&P's warning echoes concerns expressed by some European policy-makers at semiannual meetings this weekend at the International Monetary Fund and World Bank in Washington . "We should not think of leveraging a public pot of funds as a free lunch," ECB Governing Council member Patrick Honohan told reporters. S&P, which cut Greece's credit rating deeper into junk territory in July, believes European policymakers are also finally realizing that Greece's debt restructuring will take place with significant haircuts. "Therefore, there are going to be some banks that might require additional capital," Beers said. S&P believes, however, that banks can still raise money in the market rather than relying only on government support. "The banks have to go out and talk with potential investors. There have been interesting developments this year, certainly banks in Europe have been raising capital," Beers said in the interview. RECESSION RISK On the economic outlook, S&P sees rising risks of recession in the United States and parts of Europe as their economies struggle to recover at the same time that major emerging market countries such as China and India tighten monetary policies. The implications of a double-dip recession for ratings of developed countries would depend on how governments respond to the crisis of confidence that is at the root of the economic weakness, Beers said. That response, he added, needs to go beyond lowering fiscal deficits and should include addressing market concerns about bank capital cushions and focusing on the structural drivers of the fiscal deficits, typically health care and state pensions. "If governments are unable to focus on the long-standing impediments to growth, then austerity alone is not going to give you growth," Beers said, citing the case of Italy. He also had a warning for Germany. Many economists, he said, had initially overestimated the country's growth performance for this year and are finally realizing that its fate is "inexorably linked to that of all its neighbors." |
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