Europe tensely awaits Greek voters' decision

BERLIN - German Chancellor Angela Merkel and other EU leaders await with trepidation the outcome of a referendum in Greece Sunday that is already dividing opinion in Europe and could even shape its future.

After months of fruitless talks with its creditors, Greece's dramatic bid to place a bailout decision in the hands of its people will have an impact far beyond the heavily-indebted country's borders, analysts warn.

The vote on whether to support Greece's radical left-led government in its tough anti-austerity line is a "signpost" for future negotiations, said Julian Rappold of the German Council on Foreign Relations.

With fears a "No" vote could lead to Greece exiting the eurozone -- a so-called "Grexit" -- Pawel Tokarski of the German Institute for International and Security Affairs said its impact would reach much further.

It will "determine the future trajectory of European integration," he said.

Merkel, seemingly sanguine last week in remarking that Europe could "calmly" await the result of the referendum because the bloc was "strong," has been at the forefront of efforts to resolve the crisis.

Now, the head of Europe's biggest economy is "faced with a dilemma," Rappold said.

If Greece were to leave the euro, it would signify the failure of Europe's crisis management that Merkel has championed though years of economic turbulence.

"She would not like it to be said that she pushed Greece out of the euro," Rappold added.

She also fears unforeseen economic consequences, a boost for anti-euro groups in some countries and that a "No" vote would be seen as a sign of weakness by nations such as Russia or China, he added.

But if Greek voters defy Tspiras and vote "Yes," Merkel must win parliamentary approval for negotiations on a new aid program for Greece amid growing dissent within her conservative party on the Greece issue.

She would also have to win over a bailout-weary public tired of picking up a lion's share of the bill.

'Nein', 'Oxi'

But the referendum is not just dividing Greeks.

Germany's Bild mass-market daily, which has taken a tough line with Athens since the start of the crisis, held its own referendum, asking readers if they wanted to go on supporting Greece with billions of euros.

It said the response indicated that 89 percent of the 200,000 people who took part said "Nein."

Thousands of Greece supporters meanwhile took to the streets of Barcelona, Paris, Dublin, and Frankfurt to show solidarity with the Greek people and hit back at European policies.

Merkel was greeted by placards stating "Oxi" (no, in Greek) at an event in Berlin Saturday for her Christian Democratic Union party's open day.

In Spain, which has endured its own economic crisis, allies of Greece's Syriza party see the referendum as an historic opportunity to change Europe, months before the country holds its own polls.

Parties on the political right however fear a spread of radical leftist policies.

If Italians were called to vote like the Greeks, 51 percent would support tough measures imposed by Europe to avoid crashing out of the euro, while 30 percent would vote against, according to a recent poll by Ipsos.

And Britain, too, where voters will be called to decide on its future in Europe, sees a particular resonance in the Greek bid.

Different interpretation

Elsewhere among Europe's leadership, European Central Bank chief Mario Draghi will also dread a "No" vote.

He is not accountable to voters but nevertheless is in "an extremely difficult situation," Tokarski said.

Through its emergency funding, the ECB is keeping Greek banks afloat. If it were to stop these loans, it would risk pressing the "Grexit" button -- a decision its chief wants to leave to the politicians.

For now though, the post-referendum scenario is far from clear, especially as the question being posed is open to wide interpretation.

Athens argues it means saying "No" to new austerity measures proposed by creditors in return for aid.

But this proposal has in the meantime expired, leaving others to interpret the referendum as a vote for or against the euro.

"Whatever the result, it will be interpreted differently by political forces in Greece and in the eurozone," Tokarski warned.

source: interaksyon.com

Asian shares, dollar cheered by upbeat U.S. data

TOKYO - Asian stocks started the week on a brighter note on Monday, after solid U.S. data and earnings calmed tumult in global financial markets and reassured investors worried about the health of the world economy.

The Thomson Reuters/University of Michigan index of consumer sentiment was surprisingly strong in early October, rising to more than a seven-year high. Other data also showed new housing starts rose more than expected last month, suggesting U.S. economic growth was solid.

The upbeat U.S. data has brought some calm to markets after a week of turbulence as signs of softening global growth rattled investors, sending volatility spiking to levels not seen in years.

"Sentiment has seemingly been unaffected by the market volatility," strategists at Barclays said in a note to clients.

MSCI's broadest index of Asia-Pacific shares outside Japan was up about 0.6 percent in early trade, and Japan's Nikkei stock average surged about 2.6 percent, retaking some of the 5 percent it shed in the previous week.

On Wall Street on Friday, all major stock indexes climbed more than 1 percent, though the S&P 500 posted its fourth straight weekly decline, its longest streak in more than three years.

U.S. earnings will remain in the spotlight this week, with results due from 128 S&P 500 companies, including six Dow components.

Out of the 81 S&P 500 component companies that have already reported third-quarter results, 64.2 percent have beaten expectations, a rate slightly below the average over the past four quarters but better than the past 20 years.

Asian investors will also pay attention to developments in Hong Kong, where pro-democracy protests entered their fourth week and demonstrators appeared increasingly willing to confront police.

U.S. Treasuries posted their second straight day of declines on Friday, and their rising yields added to the dollar's appeal.

The yield on benchmark 10-year notes stood at 2.198 percent in Asian trade, steady from Friday's U.S. close of 2.199 percent and well above 17-month lows plumbed last week.

Speculators boosted their bullish bets on the dollar in the week ended Oct. 14 to their largest since late May last year, still showing optimism for U.S. economic prospects, data from the Commodity Futures Trading Commission showed on Friday.

The value of the dollar's net long position increased to $43.04 billion from $40.91 billion the previous week. Net dollar-long positions notched their fourth straight week of rises, and totaled at least $30 billion for the ninth straight week.

The euro was last down about 0.1 percent at $1.2748, while the dollar added 0.2 percent against the yen to 107.12 yen.

The yen's drop to a six-year low against the dollar of 110.09 on Oct. 1 followed a rapid decline of 8 percent over three months, and sparked fears at some Japanese companies. Nearly half of Japanese firms think the government should start defending the yen at this month's dollar high of 110, according to a Reuters survey released on Monday.

In commodities trading, Brent crude rose about 0.3 percent to $86.44 a barrel, bouncing from last week's nearly four-year lows as investors bought back into a market they said was oversold. U.S. crude rose about 0.8 percent after logging its third weekly decline.

Spot gold inched down abut 0.1 percent to $1,235.90 an ounce, after marking its second straight weekly gain.

source: interaksyon.com

JPMorgan Chase on US default: 'You don't want to know'

WASHINGTON - Top US banker Jamie Dimon of JPMorgan Chase warned Saturday that the United States needs to avoid defaulting on its debt, saying the possible repercussions are unfathomable.

"You don't want to know," Dimon said when asked what would happen if the US is forced into default because Congress did not raise the country's borrowing limit.

"It would ripple through the world economy in a way that you couldn't possibly understand," he said at a discussion held by the Institute of International Finance, a leading forum for the world's banks.

He said it would shock the money market, where trillions of dollars in cash are invested in ostensibly top-quality securities like US debt based on expectations that the borrowers will not default.

"You don't know the ripple effect of that through money-market funds," stressed Dimon, head of the largest US bank by assets.

"The money markets are the most fickle markets in the world, they're like a rabbit."

Dimon was speaking as the White House and congressional Republicans remained deeply at odds over passing a budget and raising the US debt ceiling, a move needed to ensure the government can continue to pay its bills.

The US Treasury has repeatedly warned that as soon as October 17 it will be short of cash and forced to default on its obligations, though not saying whether it would skip debt payments or others, like social security payments to retired Americans.

With no compromise apparent, and the government partially shut down now for 12 days due to lack of a budget, Dimon warned that the deadline was looming.

"As you get closer to it, the panic will set in," he said.

On the other hand, he emphasized: "The US cannot default. I think every responsible person knows that."

source: interaksyon.com

Unease over US Fed leaves global markets at one-month low

LONDON - World shares sank to their lowest level in more than a month on Tuesday as unease about an expected cut in U.S. stimulus and a related rise in bond yields left markets on edge.

Europe's main stock markets opened down 1 percent following a fourth straight day of falls on both Wall Street and in Asia to leave MSCI's global index, which tracks shares in 45 countries, at its lowest level since July 12.

Wednesday's minutes from the most recent Fed meeting could offer fresh hints on when the U.S. central bank will start winding down its $85 billion-a-month support program, a tricky process markets have been nervous about for months.

The uncertainty has broadly driven up bond market borrowing costs in recent weeks. The upward pressure on U.S. government bonds eased overnight, leaving the benchmark 10-year Treasury just off a 2-year high at 2.83 percent.

As has been the recent pattern, German government bonds, Europe's equivalent benchmark, moved in lockstep with yields edging down to 1.879 percent having topped 1.9 percent on Monday.

On European share markets, a 10.8 percent jump to 19.38 points in the Euro STOXX 50 Volatility Index .V2TX indicated uncertainty over the near-term outlook, though the measure remained below its 2013 peak of 26.80 points.

Ramin Nakisa, a global macro strategist for UBS in London, said market turbulence was bound to pick up as the Fed starts to switch the direction of its policy.

"We expect volatility... People will start to wonder whether there is anything in the fixed-income world that really is safe," he said adding that there was also likely to be another short selloff in share markets.

Emerging woes

The jitters about the U.S. moves continued to batter emerging markets where there are fears an end to cheap money and improvement outlooks in advanced economies could see a stampede of investment leaving already-strained markets.

Indonesia and India had another torrid session with their stock markets down 4 and 1 percent respectively as their currencies also continued to tumble.

Japan's Nikkei slumped too, falling 2.7 percent, reflecting the exposure of many Japanese companies to India and Indonesia.

"India's problems are nowhere near resolution because New Delhi has not done anything - there is no focus on improving productivity, infrastructure or getting FDI (foreign direct investment) back," said Nomura credit analyst Pradeep Mohinani in Hong Kong.

"It's all about stemming the flow of currency and that is not the cause of the problem."

Despite the focus on the Fed, the dollar was steady against a basket of major currencies. There was also little movement in the euro and sterling.

Emerging market volatility did spur the yen however. "The yen tends to attract buying when tensions in the market increase," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

In commodities, copper prices dropped to $7,264.75 per tonne, while gold eased to $1,361.66 per ounce after snapping a three-day winning streak on Monday and moving away from a two-month high hit that session.

Brent crude prices fell 0.5 percent to $109.36 a barrel, pressured by the Fed speculation but supported by the loss of Libya's oil exports as well as concerns that continuing unrest in Egypt could spread and interfere with supply.

source: interaksyon.com

China, Russia sound alarm on world economy at APEC summit

VLADIVOSTOK, Russia - China and Russia sounded the alarm about the state of the global economy and urged Asian-Pacific countries at a summit on Saturday to protect themselves by forging deeper regional economic ties.

Chinese President Hu Jintao said Beijing would do all it could to strengthen the 21-member Asia-Pacific Economic Cooperation (APEC) by rebalancing its economy, Asia's biggest, to improve the chances of a global economic recovery.

Russian President Vladimir Putin said trade barriers must be smashed down as he opened the APEC summit which he is hosting on a small island linked to the Pacific port of Vladivostok by a spectacular new bridge that symbolizes Moscow's pivotal turn to Asia away from debt-stricken Europe.

"It's important to build bridges, not walls. We must continue striving for greater integration," Putin told the APEC leaders, seated at a round table in a room with a view of the $1 billion cable-stayed bridge, the largest of its kind.

"The global economic recovery is faltering. We can overcome the negative trends only by increasing the volume of trade in goods and services and enhancing the flow of capital."

Hu told business leaders before the summit the world economy was being hampered by "destabilizing factors and uncertainties" and the crisis that hit in 2008-09 was far from over. China would play its role, he said, in strengthening the recovery.

"We will work to maintain the balance between keeping steady and robust growth, adjusting the economic structure and managing inflation expectations. We will boost domestic demand and maintain steady and robust growth as well as basic price stability," he said.

Hu spelled out plans for China, whose economic growth has slowed as Europe's debt crisis worsened, to pump $157 billion into infrastructure investment in agriculture, energy, railways and roads.

Hu steps down as China's leader in the autumn after a Communist Party congress, but he promised continuity and stability for the economy.

Putin, who has just begun a new six-year term as president, said on Friday Russia would be a stable energy supplier and a gateway to Europe for Asian countries, and also pledged to develop his country's transport network.

RUSSIA LOOKS EAST

The relative strength of China's economy, by far the largest in Asia and second in the world to the United States, is key to Russia's decision to look eastwards as it seeks to develop its economy and Europe battles economic problems.

APEC, which includes the United States, Japan, South Korea, Indonesia and Canada, groups countries around the Pacific Rim which account for 40 percent of the world's population, 54 percent of its economic output and 44 percent of trade.

APEC members are broadly showing relatively strong growth, but boosting trade and growth is vital for the group as it tries to remove the trade barriers that hinder investment.

The European Union has been at odds with both China and Russia over trade practices it regards as limiting free competition. Cooperation in APEC is also hindered by territorial and other disputes among some of the members.

Putin, 59, limped slightly as he greeted leaders at the summit. Aides said he had merely pulled a muscle. Underlining Putin's good health, a spokesman said he had a "very active lifestyle."

Discussions at the two-day meeting will focus on food security and trade liberalization. An agreement was reached before the summit to slash import duties on technologies that can promote economic growth without endangering the environment.

Breakthroughs are not expected on other trade issues at the meeting, which U.S. President Barack Obama is missing. He has been attending the Democratic Party convention and Washington is being represented by Secretary of State Hillary Clinton.

U.S. officials say Clinton's trip is partly intended to assess Russia's push to expand engagement in Asia, which parallels Washington's own turn towards the Asia-Pacific region.

Also missing the summit was Australian Prime Minister Julia Gillard. Putin said she had dropped out because her father had died.

source: interaksyon.com

Asian markets higher despite eurozone uncertainty

HONG KONG - Asian shares edged higher in quiet trade Tuesday, shrugging off eurozone debt worries even after Germany and the European Central Bank dampened hopes for action to drive down borrowing costs.

Tokyo's Nikkei index added to the previous day's gains, rising 0.13 percent as the dollar held on to recent gains against the yen amid a continued shift away from the safe haven Japanese currency.

Hong Kong was flat, Sydney climbed 0.67 percent, Shanghai was up 0.55 percent, and Seoul gained 0.47 percent.

German news weekly Der Spiegel reported Sunday that the ECB was considering buying bonds issued by heavily-indebted eurozone countries in a move that would ensure borrowing costs did not rise beyond a pre-determined level.

But an ECB spokesman brushed aside the report as "absolutely misleading", while another at the German finance ministry said such an action would be "be very problematic."

Germany's central bank, the Bundesbank, said such bond purchases "should be viewed critically and entail, not least, substantial stability policy risks".

Borrowing costs for Spain and Italy have shot up towards levels that forced Greece, Portugal and Ireland to seek a bailout.

European markets had advanced in early trading on the Der Spiegel report but turned down after ECB and German officials dismissed the story.

US stocks closed flat in quiet trade that still had enough might to push Apple to become the world's most valuable company of all time with a total market value of $623.52 billion.

That surpassed the previous record of $619 billion set by software titan Microsoft in 1999, during the dot-com boom years.

The Dow Jones Industrial Average slipped 3.56 points to close at 13,271.64.

The S&P 500-stock index lost a bare 0.03 points at 1,418.13, while the tech-rich Nasdaq edged down 0.38 points to 3,076.21.

In oil markets, New York's main contract, West Texas Intermediate light sweet crude for September delivery, fell eight cents to $95.89 a barrel while Brent North Sea crude for delivery in October gained 19 cents to $113.89.

Gold was at $1,621.69 at 0310 GMT, compared to $1,615.20 on Monday.

In other markets:

-- Jakarta, Kuala Lumpur, and Manila were closed for public holidays.

source: interaksyon.com

Italian Brands Tap Asian Markets

MANILA, Philippines — While Italy remains “a place of style and inspiration,” in an increasingly globalizing retail environment, its brands are now looking East for expansion. The Italian casualwear chain Liu Jo, for example, is setting up more stores in different Asian territories for further brand growth.

“A lot of big companies now realize that when you need to grow, you have to come to Asia because it’s booming,” says Marco Marchi, one of the brand’s founders. “We also believe that the Asian region is currently the tiger of the world economy.”

The brand has put up Liu Jo Asia Pacific Limited, a division that specializes in penetrating Asian markets. Liu Jo opened its first Philippine store in 2010, in Ayala Center Cebu.

Fernando Fornaciari, managing director for Liu Jo Asia Pacific Limited, agrees that Asia is a burgeoning continent, but it’s “not just because the opportunities [for growth]” are in Asia recently. “We also want to build something that can grow and be stable in the long run,” adds Fornaciari.

In catering to a foreign continent, it seems that Fornaciari and his team are still observing what kind of merchandise fits properly into the Asian region. Women’s wear and ladies’ accessories remain core retail factors, aspects that the brand prefers to keep its business focus on for the time being.

Marchi recognizes that men worldwide are spending again for fashion, but the subject of menswear in Asian countries like the Philippines is still subject for conscientious evaluation. “We know that there’s good potential [for men’s items in Asia] but we have to be 100 percent sure [of it] first. We want to anticipate things for the meantime so maybe [we’ll bring menswear here] next year,” says Fornaciari.

Marchi and Fornaciari consider investing in the Philippines, though, as a viable measure, as they are enthusiastic about the brand’s local development despite “a small presence of Italian brands” in the country.

While most foreign brands venture into the Philippines by building stores in Metro Manila first, Fornaciari says that the first Liu Jo shop in the Philippines opened in Ayala Center Cebu last 2010 instead in order to discern a more diverse set of shoppers, which consists of Filipinos along with tourists from different countries like Japan and Russia.

“Cebu is an important international city,” relates Fornaciari. “There are a lot of international tourists in Cebu, so [it was a good opportunity for us] to [observe] local customers and foreign consumers as well. Metro Manila has a lot of foreigners but they’re expats, so they’re mostly [in the country just] for business.”

“Cebu is known as a tourist destination. Many international customers are familiar with Liu Jo and this presence supports our international visibility,” adds Marchi. Reception has been positive, with accessories representing 40 percent of total sales in the Cebu boutique.

Marchi and Fornaciari, who recently visited Metro Manila and Cebu, reveal that the brand is now ready to expand into Metro Manila. Liu Jo recently opened its accessories boutique at The Podium mall in the Ortigas business district, while a Liu Jo store is set to be launched at the Glorietta shopping center in Makati City later this year.

Marchi and his brother Vannis established Liu Jo in 1995, in the knitwear district that is Carpi, Italy. The aim is to sell clothes that are “in tune with the latest trends” for “feminine and confident” women. As Marchi relates, the brand’s name came from the words “Liu” and “Jo,” nicknames that he and a former girlfriend gave each other years ago, “and today it stands for my desire to convey a natural taste for beautiful things. It has been our [brand's] good luck charm over the years.”

Eventually, Liu Jo’s product portfolio extended into junior and baby wear, beachwear, underwear, shoes, accessories, and menswear. Possibilities for worldwide awareness are created through opening stores abroad, airing video commercials with an international mileage, and even starring supermodel Kate Moss for its recent Spring-Summer 2012 campaign.

Forward-thinking Italian companies, as Marchi puts it, also address heightening global presence through an extensive distribution network. A Liu Jo press note reveals that the brand currently has “over 190 mono-brand points of sales and almost 4,500 multi-brand stores ensuring the presence of the brand in 35 countries in [three] continents (Europe, Africa, and Asia).”

source: mb.com.ph