Financial Communique » finance

The Eurozone banks are competing for 2 trillion EUR in 2012

Viliyana Filipova — Sat, 03 Dec 2011 14:54:31 +0000

The European banks to compete with the governments of the euro area to recruit 2 trillion. dollars next year because of the need for refinancing of reaching maturity bonds. In 2012 the Eurozone governments have to repay 1.1 trillion. euros and short-term bonds and 519 billion of this amount are Italian, French and German bonds reaching maturity in the first half of the year. In the first half of next year, European banks need to service their debts to 665 billion dollars by the end of December, 370 billion dollars, revealed details of Citigroup Inc.
“Serious investors flee as the bonds of European banks and government securities of euro area countries”, said Mark Grant, director of Southwest Securities Inc. “The quality of the financial performance of both the asset class is in question and nothing is being done to tackle Europe’s debt crisis”. In 2012, the European banks need to refinance an average of 230 billion dollars every three months, said Lisa Hintz, an analyst at Moody’s Corp. in New York. For comparison, the 11 quarters September 30, 2011 banks have repaid an average of 132 billion dollars, she said.
“In such a situation of scarce funding banks to compete effectively with governments,” said Hitntz. “Just look at their business model. What soft loans could obtain an Italian or Spanish bank, when the price of its financing is similar to that of government bonds, or about 7% and above? “she said.

China should reduce the inflation and the budget deficit

Viliyana Filipova — Sat, 05 Mar 2011 13:53:17 +0000

Fighting the inflation is a key economic priority for China this year because the government aims to limit the risk of social unrest, Prime Minister Wen Jiabao in a speech to the country conditions.
“We can not afford the price increases to affect the normal life of people with low incomes,” said Wen in the report the annual meeting of The Chinese meeting of MPs in Beijing today. “This problem affects the welfare of the people has common interests and concerns social stability.”
The 64-year-old Wen confirmed targets 4 percent inflation for the whole year and 8% growth against attempts by the Communist Party to provide support for the 61-year rule. Over the past two weekends government sent hundreds of police in Beijing and Shanghai after the Internet calls for protests, inspired by bunks in the Middle East and North Africa.
“Inflation has the potential to trigger social unrest,” said Liu Li-Gang, an economist at Australia & New Zealand Banking Group in Hong Kong. The government should increase interest rates on loans and deposits by 0.75 percentage points by year’s end, and to raise wages and to grant aid the poor, he said.
Among the major problems of society Wen highlighted the illegal seizures of land, food safety, “excessive” increases in housing prices and “massive corruption” in some places. The government will oppose inflation “decisively” and would turn it into a “top priority for macroeconomic control,” the Chinese premier.
Lower budget deficit
The budget deficit may be 900 billion yuan (137 billion dollars) in 2011, or 2% of GDP by 150 billion yuan less than the target for 2010, said Wen Jiabao. He confirmed that the country supports “proactive” fiscal policy and “prudent” monetary policy. Yesterday the Shanghai Composite index rose to a four-peak because of investor expectations for measures to support consumption. The Chinese government plans to reduce dependence on exports and investment and strengthen consumer spending – a move that could help reduce global economic imbalances blamed for financial crisis.
“Increasing the domestic demand is a long term strategic basis,” said Prime Minister in the report. The granting of subsidies for urban population with low incomes and for farmers and conservation incentives for the purchase of household appliances in rural areas will contribute to increased costs, he said. The government also provides support for private investment. To control inflation, the government will manage liquidity to ensure agricultural production and will resort to price controls when required, said Wen Jiabao. According to him, state officials will limit speculation in real estate and will “adjust and improve the” fiscal policies in the property.
“The main challenge to control inflation bubble in property prices that comes from too free cash terms to the price of assets,” said economists days ago in a report from China International Capital Corp. Ltd.

Big changes in financial reporting

Viliyana Filipova — Mon, 02 Aug 2010 11:34:16 +0000

The coalition of businesses, regulators, accountants, stock exchanges and NGOs launched an initiative to revise the standards for international financial reporting in order to prevent a new financial crisis, writes Financial Times. The crisis raises many questions about how to rely on corporate statements. Annual reports and financial statements of banks have been particularly criticized for not having warned investors about the risks that companies take. International Integrated Reporting Committee, using the accumulated discontent as a result of the crisis, wants to make a radical change in financial reporting. The proposed new reporting model will consider not only the company’s financial position, but will also include comments on leadership, corporate policy, payment, and issues related to environmental and social responsibility. Investors focus increasingly on issues such as the impact that could have climate change on the finances of a company. Among participants in the initiative are Nestlé, Aviva, EDF, HSBC, Tata, big four auditing companies PwC, Deloitte, Ernst & Young and KPMG, a number of universities, including Harvard Business School, and influential non-governmental organizations such as Global Reporting Initiative and Accounting for Sustainability Initiative.
It is crucial to the support of International Accounting Standards Board and U.S. Financial Accounting Standards Board, which sets rules for financial reporting in the U.S. and International Organization of Securities Commissions, which develops international standards for regulation of financial markets. The coalition wants to publish an integrated framework for global financial reporting model that will allow easy comparison of financial statements from different countries this year. The framework will be presented to the G20 in 2011. G20 have already supported the idea of establishing uniform rules for financial reporting and support of the G20 is considered crucial for their application.

Big expectations for financial reports of Alcoa, Intel and JPMorgan

Viliyana Filipova — Sat, 09 Jan 2010 08:38:25 +0000

Disappointing data on the reduction of employment in the U.S. economy in December, however, failed to wipe out the economic optimism of investors. He was a driver of the rally on Wall Street over the past ten months, together with the measures of governments and central banks to combat the effects of financial and economic crisis. The next few weeks, will be much more dynamic with the beginning of the first corporation to the new year season. Three of the largest companies in the index of blue chip Dow Jones IA – Alcoa, Intel and JPMorgan Chase, will publish its financial results for the fourth quarter of last year over the next five days, police CNN. On the economic front, the most important will be data on retail sales in the U.S. in December, and those for consumer confidence, industrial output and trade balance. The indexes reached new 15-month highs earlier this year, their rally would depend largely on the financial performance of the stock companies that would be indicative of the actual state of the economy. For the last quarter of 2009 is expected to increase the profits of companies in the S & P 500 by over 200% yoy. However impressive forecast is due largely to the sharp deterioration in financial results over the last comparable quarter of 2008, when the crisis hit very companies most like those suffered from the automotive and financial sectors. Week, and corporate season will begin with reports of aluminum giant Alcoa, which is expected earnings per share of 6 cents to a loss of 28 cents a year ago. On Tuesday, after the end of the session and the results will come out of the technology company Intel, which is expected to more than seven times greater earnings per share from 30 cents.
On Tuesday, expect the first week of economic data that will be on the trade balance the United States in November. Projections indicate that it will expand to nearly 35 billion dollars. On Wednesday the data does come out of the U.S. government deficit, which is estimated to be approximately $ 85 billion in December compared to 120 billion dollar deficit for December. Then as usual and expected data for U.S. oil stocks, and etc. “Beige Book” for economic development in different regions of the country. Very important will be data on retail sales in December, which goes on Thursday and are expected to show growth of 0.4 percent compared to November, when it rose by 1.3 percent on a monthly basis. On Thursday and will publish data on new applications for unemployment benefits last week, and those on business inventories in November. On Friday before the session is expected to JPMorgan reported profit per share from 63 cents, which is much more of the 7 cents a year ago. Before the start of stock trading will put the data for the index of consumer prices in December, which is expected growth of 0.2 percent and industrial production data, which is projected monthly growth of 0.6 percent in December.
Shortly after the session will come up and the index of consumer confidence in the University of Michigan in January, which is expected to increase to 73.8 points. Consumer attitudes are a leading benchmark for consumer spending, which are the source of most of the gross domestic product.

European indexes grew

Viliyana Filipova — Thu, 26 Nov 2009 17:50:55 +0000

The European indexes closed in positive territory, trading, fell after concerns about the effect of the Dubai requested postponement of debt payments. Shares of Royal Bank of Scotland, which provided the greatest amount of loans of the Dubai government investment holding company Dubai World from January 2007 onwards, jumped 5.2 percent after yesterday fell to a seven-month minimum. Michelin and Volkswagen shares up led by the automotive sector yesterday after the industrial group of companies for cars and auto parts, included in the index Dow Jones Stoxx 600 slipped 4.3 percent. Stoxx 600 ended the session with an increase of 1,3 percent to 242.85 points, after earlier in the day lost 1.8 percent. Index yesterday reported the strongest decline since April because of the news from Dubai. Major national indexes rose in all 18 western European markets except Luxembourg and Iceland. The UK’s FTSE rose 1% to 5245.73 points, the French CAC 40 advanced by 1,2 per cent to 3721.45 points while the German DAX added 1.3 percent to 5685.61 points.
Analysts say Dubai is the case and not a systemic risk. British Prime Minister Gordon Brown said he debt problems of Dubai are normal and not crisised.