Friday 27th March 2015
NEWS TICKER, THURSDAY MARCH 26th 2015: Moody's says that The Link Real Estate Investment Trust's (A2 stable) acquisition of the mid-end positioned EC Mall in Beijing is credit negative, but has no immediate impact on its ratings. The acquisition, while immediate EBITDA and cash flow accretive, will reduce liquidity and increase debt leverage, as measured by gross debt to EBITDA. This is Link's first venture into the Chinese retail market. Yesterday, Link announced that it will acquire EC Mall for a total consideration of RMB2.5bn. The transaction will close on April 1st - The outcomes of the March 19th-20th spring European Council will be debated with European Council President Donald Tusk and European Commission President Jean-Claude Juncker at 15.00 today. Agenda items at the Council include Energy Union, the EU’s economic situation, its eastern partnership, and the situation in Libya - -- The sharp fall in oil prices will have a positive, yet limited credit impact for most European asset-backed securities (ABS) collateralised by loans granted to small and medium-sized enterprises (SMEs), says Moody's Investors Service in a sector comment published today. "If we balance both direct and indirect exposures to the oil and gas sectors, which affect performance the most, the net effect is slightly positive," says Monica Curti, a Moody's Vice President and author of the report. The rating agency observes that securitised portfolios have very low direct exposure to the oil and gas industries, for which lower prices are credit negative. For pools where borrowers are indirectly exposed to these sectors, Moody’s says the oil price decline will be slightly positive in terms of credit performance due to its strong positive effect on sectors such as airlines, shipping and packaged food, which represent up to 12% of some European ABS SME portfolios. However, for over 60% of the ABS SME transactions that Moody's studied, the net effect of oil price exposures is negligible. In addition, the general positive effect of the oil price decline on economic growth will be mild. "While sustained lower oil prices would significantly boost economic growth in principle, their positive effect will be mild for European SMEs because of the euro area's low dependency on oil and the fact that oil prices have fallen in a subdued economy," says Ariel Weil, a Moody's vice president and co-author of the report - The Straits Times Index (STI) ended +5.76 points higher or +0.17% to 3419.02, taking the year-to-date performance to +1.60%. The FTSE ST Mid Cap Index gained +0.38% while the FTSE ST Small Cap Index gained +0.48%. The top active stocks were SingTel (+0.70%), UOB (+0.61%), DBS (-0.05%), Keppel Corp (+1.13%) and OCBC Bank (+0.29%). Outperforming sectors today were represented by the FTSE ST Utilities Index (+3.48%). The two biggest stocks of the FTSE ST Utilities Index are United Envirotech (+0.31%) and Hyflux (+1.14%). The underperforming sector was the FTSE ST Real Estate Holding and Development Index, which declined -0.33% with Hongkong Land Holdings’ share price declining -0.94% and Global Logistic Properties’ share price gaining +0.78%. – Reuters reports that Chicago-based CME Group had planned to debut an EU wheat-futures contract by the end of next month, but it has yet to reach agreements with local companies to guarantee sufficient deliverable capacity. Eric Hasham, senior director, CME Group is quoted as saying: "If for whatever reasons the parties that we are speaking to decide not to move forward ... we would not be making the contract available.” - Nigeria and Ivory Coast are looking to emulate Senegal's successful move into the market for Islamic bonds or sukuk, the head of the Islamic Corporation for the Development of the Private Sector (ICD) has said. Earlier this month the ICD, which is the private sector arm of the Jeddah-based Islamic Development Bank Group, signed an agreement with the African Export-Import Bank (Afreximbank) to cooperate in the development of the private sector in ICD member countries in Africa - Turkey received foreign direct investment worth $1.8bn in January, according to Turkey’s Economy Ministry. The energy sector was the largest recipient of international capital during the month with $735m worth of inflows. Foreign investment to the county increased by 44% in the first month of 2015 compared with the same month in the previous year, said the statement. Around a quarter of the investment came from European countries, a significant decrease (-76%) compared with January 2014. More than $420m in investments came from Asian countries, such as China and Malaysia. There were 175 new, foreign-funded companies established in the first month of the year, down from 410 in the same month of 2014. A total of 41,699 companies were operating in Turkey with international capital as of January 2015, with 24,612 of them operating in Turkey’s largest province, Istanbul, the ministry said. The report also said that of the total number of foreign-funded companies in Turkey, 6,054 were German-funded and 2,774 were financed by the United Kingdom. Turkey received a total of $12.4bn in foreign direct investment in 2014, down 1.7% compared with 2013.

Better inflation outlook in Asia, says SC corporate sentiment study

Wednesday, 11 January 2012
Better inflation outlook in Asia, says SC corporate sentiment study A survey of leading Asian corporations by Standard Chartered says Indonesian corporations and energy companies are the most optimistic and inflation has a better outlook in 2012 for most Asian economies. http://www.ftseglobalmarkets.com/

A survey of leading Asian corporations by Standard Chartered says Indonesian corporations and energy companies are the most optimistic and inflation has a better outlook in 2012 for most Asian economies.

Standard Chartered has issued the first of a series of quarterly surveys,  based on the views of 529 C-Suite executives from 7 Asian economies and 12 industry groups, 99% of whom are clients of Standard Chartered and business contacts of the equity research team.

According to the bank, the survey differentiates itself by structuring questions that draw out important links between economic variables such as corporate order books, costs and margins, as opposed to focusing on single-issue variables. Responses help build a more comprehensive  picture of the outlook for industry sectors and economies.



Analysis of the responses to the survey highlights a number of nuanced conclusions, says Clive McDonnell, chief equity strategies at Standard Chartered, with specific implications for investors. These include, the observation that buoyant new orders are centered on economies that are more domestically oriented, including Indonesia, India and Thailand. Capex and hiring plans are also biased towards these economies, whereas cyclical economies (with the exception of Korea) and sectors are less positive.

Equally, the RMB is gaining traction as a settlement currency, with 37% of the respondents using or intending to use it. Moreover, the biggest challenges faced by corporates are: the demand outlook (selected by 28% of respondents), cost pressures (25%) and regulation (19%).

 The energy sector is also expected to benefit from a wave of new capital in 2012, with 44% of respondents indicating their plan to tap into the debt market for raising new capital.  

Key challenges facing corporates in 2012 have also been identified in the survey. 28% of respondents see demand as their greatest challenge, closely followed by cost pressures, at 25%. Regulatory uncertainty took the third spot, with 19% of respondents indicating it as their biggest challenge. 

 “A likely recession in the West in 2012, as judged by our respondents, has failed to dampen bottom-up corporate sentiment in Asia. Our Aggregate Index signals a slight improvement in the lead indicators for business prospects in the year ahead, despite challenges of demand, cost pressures and regulatory obligations,” says  McDonnell. He adds:

“Investment implications from the survey support our recommendation for continued emphasis on companies that focus on domestic demand, particularly in Indonesia. We also expect margin pressure to ease in 2012, reflecting improvement in inflation expectations.”

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