Overnight Markets-Leading News

Asia Stocks Rise After China Premier Says Growth Is Focus

http://www.bloomberg.com/news/2012-05-21/asia-stocks-rise-after-china-premier-says-growth-is-focus.html

What the Chinese Want

Apple has taken China by storm. A Starbucks can be found on practically every major street corner in coastal cities and beyond. From Nike to Buick to Siemens, Chinese consumers actively prefer Western brands over their domestic competitors. The rise of microbloggers, the popularity of rock bands with names like Hutong Fist and Catcher in the Rye, and even the newfound popularity of Christmas all seem to point toward a growing Westernization.

But don’t be deceived by appearances. Consumers in China aren’t becoming “Western.” They are increasingly modern and international, but they remain distinctly Chinese. If I’ve learned anything from my 20 years working as an advertising executive in China, it is that successful Western brands craft their message here to be “global,” not “foreign”—so that they can become vessels of Chinese culture.

Understanding China’s consumer culture is a good starting point for understanding the nation itself, as it races toward superpower status. Though the country’s economy and society are evolving rapidly, the underlying cultural blueprint has remained more or less constant for thousands of years. China is a Confucian society, a quixotic combination of top-down patriarchy and bottom-up social mobility. Citizens are driven by an ever-present conflict between standing out and fitting in, between ambition and regimentation. In Chinese society, individuals have no identity apart from obligations to, and acknowledgment by, others. The clan and nation are the eternal pillars of identity. Western individualism—the idea of defining oneself independent of society—doesn’t exist…

http://online.wsj.com/article/SB10001424052702303360504577408493723814210.html?mod=WSJ_hp_mostpop_read

European Stocks Rebound From Last Week’s Drop; Renault Rallies

European stocks climbed, rebounding from last week’s biggest selloff since September, as China’s pledge to boost growth outweighed concern that Greece may be forced to leave the euro area.

Carmakers paced advancing shares as analysts recommended Renault SA (RNO) and Fiat SpA. (F) Barclays Plc rose after saying it plans to sell its entire $6.1 billion stake in BlackRock Inc. Carlsberg A/S (CARLA), the world’s fourth-biggest brewer, dropped 5.9 percent after ING Groep NV advised investors to sell the stock.

The Stoxx Europe 600 Index gained 0.7 percent to 240.46 at 4:30 p.m. in London, recouping some of last week’s 5.2 percent drop. The gauge has lost 12 percent from this year’s high on March 16, amid mounting concern Greece will fail to implement austerity pledges and Spanish banks will need to be rescued.

“There is going to be an element of bargain hunting as investors look to top up their holdings on the basis of slightly lower prices,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers in London. “Politically, if not financially, the markets are kind of back to square one. If you take a more bottom-up approach, the picture is brighter.”

National benchmark indexes climbed in 12 of the 18 western European markets. The U.K.’s FTSE 100 gained 0.9 percent and Germany’s DAX increased 1.1 percent, while France’s CAC 40 rose 0.8 percent. Italy’s FTSE MIB lost 0.3 percent as 29 of the gauge’s companies traded without the right to their latest dividends…

http://www.bloomberg.com/news/2012-05-21/european-stock-futures-little-changed-ryanair-may-fall.html

 Spain: no need for European funds to help banks

MADRID (AP) — Bankia, the nationalized Spanish bank which had to reassure savers last week to fend off a reported run on its deposits, needs to strengthen its capital defenses by as much as €7.5 billion ($9.56 billion), the economy minister said Monday.

The minister, Luis de Guindos, said Bankia needed to find around €7 billion to €7.5 billion to meet the Spanish government’s new provisioning requirements designed to strengthen the country’s banking industry against further economic shocks. If Bankia cannot raise the money itself, it will have to tap the state bank rescue fund, FROB. This could increase the government’s bill for keeping Bankia afloat to €12 billion.

Like other banks, Bankia has until June 11 to tell the government how it plans to come up with the money for stronger defenses.

Spain has essentially taken over Bankia by turning a €4.5 billion aid injection made in 2010 into shares in Bankia’s parent company. Many Spanish lenders are heavily exposed to Spain’s imploded real estate bubble, and Bankia is the worst off of all, with €32 billion in toxic assets.

Last week Bankia had to fend off a newspaper report that its savers were rushing to withdraw their funds since the bank was taken over by the government. Its shares dropped as much as 27 per cent on Thursday, before recovering the following day. Bankia’s shares were 2.8 per cent higher in afternoon trading Monday at €1.81.

De Guindos Monday also dismissed comments from the new French President Francois Hollande that Spain’s banks might need money from European recapitalization funds to stay in business. The minister said Hollande “probably knows the French banking sector better than the Spanish one.”

Spain is in the eye of the storm of the eurozone debt crisis amid worries that its banks are overexposed to an imploded real estate bubble and the government, fighting recession and a nearly 25 percent jobless rate, could not afford to bail them out if it needed to. A major concern is that bank failures might swamp public finances and that the government will be unable to carry through its austerity measures and reforms.

The government has also introduced a raft of harsh austerity measures aimed at slashing its deficit from 8.9 percent of economic output to below the maximum level set by the European Union of 3 percent by 2013. For this year, the goal is 5.3 percent.

The interest rate of Spain’s benchmark ten-year bond, which can be used as a measure of investor confidence, was up a further 0.03 percentage point to 6.23 percent Monday — anything above 7 percent is widely-considered to be unsustainable in the long-run.

De Guindos was speaking following the announcement by the Spanish government late Friday that Spain’s 2011 budget deficit was higher than expected — the second upward revision in recent months. The minister said the increase in the 2011 deficit figure from 8.5 percent of national income to 8.9 percent was due to overspending by four regions, which had not been “totally transparent” in providing figures initially.

De Guindos also said the Spanish economy, which has contracted by 0.3 percent in each of the past two quarters, will shrink by about the same amount in the second quarter of 2012. The forecast is for it to decline 1.7 percent for the year.

http://finance.yahoo.com/news/spain-no-european-funds-help-083424632.html

Hedge Funds Rebuild Euro Bear Bets on Greek Exit Banks Weigh

The euro has weathered the worst financial crisis since the Great Depression, bailouts of Greece, Ireland and Portugal, and falling interest rates. Now, investors are betting like never before that a Greek exit would be too much to keep the 17-nation currency above its long-term average.

Hedge funds and other large speculators, which pared trades that would profit from a drop in the euro to the lowest levels since November, rebuilt them to a record high last week, figures released May 18 by the Washington-based Commodity Futures Trading Commission showed. The premium for options that grant the right to sell the euro has more than doubled since March…

Germany insists no eurobonds to solve debt crisis

ERLIN (AP) — A German official made clear on Monday that Berlin continues to oppose the idea of jointly-issued bonds for the 17-nation eurozone, which France’s new president had suggested could be used to create much-needed economic growth and ease the region’s financial crisis.

At the weekend’s Group of Eight summit, German Chancellor Angela Merkel joined French President Francois Hollande and U.S. President Barack Obama in signing on to a statement that called for adding growth-promoting measures to painful cutbacks to fight the eurozone crisis.

How exactly to do that has become a topic of heated debate among European leaders, who will meet Wednesday in Brussels to try to find common ground. Hollande has pushed for issuing debt backed by financially strong countries like Germany to finance growth in weaker countries like Greece or Portugal.

But Germany has long resisted so-called eurobonds, arguing they would lessen pressure for heavily indebted countries to get their finances in order. They would also likely raise borrowing costs for countries in better fiscal shape such as Germany, which currently pay very low interest rates.

Eurobonds would be “a prescription at the wrong time with the wrong side-effects,” Steffen Kampeter, a deputy finance minister, told Deutschlandfunk radio.

“We have always said that as a first step we need solidity in European finances, and that is the fiscal compact,” a budget-discipline pact that Merkel championed and Hollande has criticized, he said.

In addition to the informal meeting of European Union leaders Wednesday in Brussels, there will be a summit at the end of June at which the issues of economic growth and austerity will likely be the main point of debate. Merkel said last week that “it will be very important that Germany and France present their ideas together at this summit.”

Hollande pledged during his election campaign to renegotiate the fiscal compact with a view to placing greater emphasis on growth, but left open when he visited Merkel last week whether he will now stick to calling for a full renegotiation.

“We need the fiscal compact, we need budget discipline, we need investments in the future,” Kampeter said.

Underlining the allergic reaction that the idea of being dragged into issuing eurobonds arouses on the center-right in Germany, Michael Meister, a senior lawmaker with Merkel’s party, wrote on Twitter: “no one is preventing Hollande going ahead with joint bonds for France and (Italian Premier Mario) Monti for Italy.”

Merkel has spoken increasingly about growth over recent months but argues that it makes no sense to try to achieve it by running up still more debt. Government spokesman Georg Streiter said she was very satisfied that the G-8 didn’t call for lighting an “economic policy straw fire by throwing tax money into stimulus programs.”

France’s new finance minister, Pierre Moscovici, was expected in Berlin later Monday for his first meeting with German counterpart Wolfgang Schaeuble.

At home, Merkel needs support from the opposition to ratify the fiscal compact, which requires a two-thirds majority in the German Parliament. It is angling for concessions, such as a commitment to introduce a tax on financial transactions whose proceeds could be used to stimulate growth.

Merkel’s party has been calling for quick passage of the budget-discipline by the end of June, and wants Parliament to vote on it at the same time that it approves the eurozone’s permanent rescue fund.

Merkel has invited the party and caucus leaders of the parties in Parliament to discuss “the fiscal compact, Europe and everything linked to that” at the chancellery on Thursday, Streiter said.

http://finance.yahoo.com/news/germany-insists-no-eurobonds-solve-072121938.html

 

Schaeuble Seeks Crisis Resolution With France’s Moscovici

German and French leaders meet this week to map out a revised plan for the euro as the Group of Eight exposed disagreement on a rescue strategy, Greece lurched toward a possible exit and Spain’s budget deficit widened.

German Finance Minister Wolfgang Schaeuble will for the first time discuss the 17-nation currency with his newly installed French counterpart, Pierre Moscovici, in Berlin today as European Union leaders prepare for a summit meeting in Brussels on May 23. After three shorter meetings in the last week, Chancellor Angela Merkel and French President Francois Hollande will seek to balance France’s desire to jump-start growth with Germany’s preference for spending cuts.

We’re all very pleased that France wants to offer new initiatives with its newly elected president,” Schaeuble told the Bild am Sonntagnewspaper in an interview yesterday. “The German government is ready to talk about anything,” Schaeuble said, though he ruled out measures that would raise debt.

G-8 leaders on May 19 urged Greece to stay within the euro area as polls in the country showed a close race between parties supporting and opposing the EU’s bailout deal. The country is preparing for June 17 elections, following an inconclusive May 6 ballot. Spain revised its 2011 deficit upward — even as its borrowing costs approached levels that prompted bailouts in Greece, Ireland and Portugal…

http://www.bloomberg.com/news/2012-05-20/euro-crisis-resolution-sought-by-france-germany-following-g-8.html

 

Wen Growth Pledge Spurs Speculation of China Stimulus

Chinese Premier Wen Jiabao’s pledge to focus more on bolstering growth spurred speculation the government will step up efforts to combat a slowdown in the world’s second-largest economy.

Wen called for “putting stabilizing growth in a more important position” and didn’t mention concern about inflation in remarks published yesterday by the official Xinhua News Agency. China may announce stimulus actions in the near term, according to a front-page commentary today in the China Securities Journal, which is published by Xinhua…

http://www.bloomberg.com/news/2012-05-21/wen-growth-pledge-spurs-speculation-of-china-stimulus.html

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