Knot that tightens under pressure

- A + A (June 23): Singapore’s key inflation gauge accelerated for a third month to the fastest in almost 14 years, bolstering the case for further monetary policy tightening and stronger action to buffer consumers from the drag of rising prices. The central bank’s closely watched core inflation print, which excludes private transport and accommodation, rose by 3.6% from a year ago in May, according to a joint statement on Thursday (June 23) from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI). That pace, the fastest since December 2008, matches the median estimate in a Bloomberg survey, and compares with 3.3% in April. The increase was due to inflation across food, services, retail goods and energy, they said in the statement. They also repeated a warning from last month that prices will pick up in the coming months before easing toward year end as external pressures recede, while flagging upside risk from geopolitical … [Read more...] about Singapore’s faster inflation adds pressure to tighten policy

UOB: Room for Bank Negara to hike OPR by another 50bps before end-September - A + A KUALA LUMPUR (June 22): There is growing pressure on Bank Negara Malaysia to hike rates faster in the face of an aggressive US Federal Reserve, while there is widening consensus that global food and energy prices will continue to stay elevated for longer, with any potential supply shocks seen capable of driving prices and inflation even higher. In a note on Wednesday, UOB Global Economics and Market Research cautioned that the key takeaway is that "doing nothing or acting too slow" could sow seeds of more persistent and elevated inflation in the future, with more negative effects on demand and the economy. "Rate hikes would then also need to be sharper and more abrupt in that scenario. There may also be a need to act faster now in order to have sufficient policy buffers in preparation for the next recession (when it happens). A lagged policy response by BNM relative to peers … [Read more...] about Growing pressure on Bank Negara to hike rates faster

Share to Twitter Share to Linkedin If you’ve pumped gas, bought groceries, traveled or dined out in recent months, you don’t need me to tell you that inflation is having a significant impact on your purchasing power. While many of today’s workers have never seen inflation this high during their lifetimes, most people in or nearing retirement age remember it well. In fact, I was just beginning my career as a wealth advisor the last time we experienced rates this high. Yet, the current rate of 8.3% pales in comparison to the rates we saw in the late 1970s and early 1980s. By 1980, inflation had topped 14%, and unemployment was over 7.5%, based on historical data from the Federal Reserve (Fed). While most economists do not expect broad inflation measures to reach double-digits, the current environment has been challenging for many individuals and families trying to find creative ways to make their budgets stretch further. Because the forces behind inflation are … [Read more...] about Debunking 6 Inflation Myths

- A + A BENGALURU (June 23): The Indonesian rupiah held steady on Thursday (June 23) after the country's central bank left interest rates at a record low, while the Philippine peso hovered near its lowest level in 16 and a half years following a 25-basis-point rate hike. The rupiah was 0.2% higher, clinging to its earlier levels after Bank Indonesia (BI) acted as widely expected, balancing the need to support economic growth while maintaining stability in the currency. The BI's decision will put further pressure on the currency, said Fakhrul Fulvian, an economist at Trimegah Securities. "Stability in IDR (the rupiah) can only be achieved once BI clearly states its intention to start the tightening cycle seriously," he said. "Commodity windfall, rupiah's relative outperformance as well as a higher subsidy budget have provided room for BI to bide time and not join regional peers, for instance the Philippines, in tightening policy reins," said Radhika Rao, a senior … [Read more...] about Philippine peso hovers near 16-1/2-year low, Indonesian rupiah steady

Representative Image Dollar-rupee onshore forward premiums have seen a steady fall of late and the market has seen heightened volatility. The one-year onshore forward premium narrowed to 220 paise on June 22, its lowest level since December 2011. Currently, the one-year premium is at 244 paise compared to 356 paise at the start of this year. In the last two weeks, this has dropped by as much as 60 paise. Assessing the impact of falling forward premiums on the outlook for the rupee is important, especially against the backdrop of persistent foreign outflows, a widening trade deficit and soaring price pressures. The rupee closed at a record low of 78.3862 on June 22 and is down over 5 percent against the dollar so far this year. Also read: RBI present in forex market, will not allow jerky moves in rupee, says Deputy Governor Patra First, what are forward points? Close The forward point is the interest rate differential between two countries. These … [Read more...] about Explained | Why are dollar-rupee onshore forward premiums falling? Five key questions answered

Trade Watchlist Portfolio Message Set Alert live bse live nse live Volume Todays L/H More × The ongoing downturn in the domestic stock market has seen nearly 83 percent of the stocks forming the Nifty 500 index, a collection of the biggest companies in the country, deliver flat or negative returns in 2022 so far. Many of these stocks are hovering below their 52-week lows and their 200-day moving average (DMA), data compiled by Moneycontrol showed. So far this year, the Nifty 500 index lost 12 percent, while the BSE Sensex and Nifty 50 have declined nearly 10 percent each. Companies that have seen the most erosion in their stock prices since the start of this year include Dhani Services , Solara Active Pharma , Brightcom Group , Indiabulls Real Estate , Metropolis Healthcare , Hikal , Indiabulls Housing Finance , Dilip Buildcon , Welspun India , Nazara Tech , … [Read more...] about Bear Market Woes: 83% of Nifty 500 stocks give negative returns in 2022

Share to Twitter Share to Linkedin After months of zero-covid policy-inspired lockdowns, China declared it was open for business. Only days after this declaration, Shanghai and Beijing tightened pandemic measures and re-entered partial lockdown. China experts may argue whether this is a setback for President Xi Jinping or not. In the face of faltering growth and energy crises, this haphazard reopening will bring turmoil to global energy markets, but not for the reasons you may think. Optimists hoping that China even partially reopening will ease logistical woes and increase production are in for a rude awakening since it doesn’t appear the usual market mechanisms of Chinese consumption or production are applying. However, pessimists who fear the country’s reopening will strain the market through increased energy demand don’t have it quite right either. The unclear relationship between Chinese lockdowns and global energy turmoil stems from confusing and … [Read more...] about China’s Reopening is No Blossoming of Energy Markets

- A + A (June 23): Indonesia’s central bank held its policy rate at a record low again, opting to look through price shocks and currency weakness to continue supporting the economy. Bank Indonesia (BI) left the seven-day reverse repurchase rate unchanged at 3.5% on Thursday (June 23) as predicted by 24 of 33 economists surveyed by Bloomberg . The rest expected policymakers to kick off the monetary tightening cycle with a 25-basis-point hike. The move sets Indonesia apart from most of the region’s central banks, which have begun raising borrowing costs to counter surging inflation. While domestic price gains are set to breach BI’s 2%-4% target this year, the central bank has maintained that there’s no rush to tighten as state subsidies and higher reserve requirements are helping manage price pressures. Governor Perry Warjiyo on Thursday said inflation will continue to rise, but said it remains manageable. The monetary authority sees consumer prices returning to … [Read more...] about Bank Indonesia holds key rate as inflation seen manageable

Representative image A characteristic of the ongoing market correction has been heavy selling by foreign investors. Since October last year, they have withdrawn about net Rs 2.08 lakh crore equities, as per NSDL data. Not surprisingly, indices are trading lower by about 18 percent from their highs. Apparently the nine month long winter is likely to get even longer now. Commentaries from foreign money managers and expectations from domestic analysts suggest that it will take a lot of factors to culminate for them to come back. A couple of major reasons why foreign investors have been bearish on Indian markets are rising US dollar which has also led to more yields on bonds, and monetary tightening that is likely to have a negative impact on the economy. Concerns over near-term risks including tightening monetary conditions, a slowing economic outlook, likely earnings cut for the Nifty and headwinds from higher crude oil prices will likely keep them away, say analysts. BofA … [Read more...] about Long winter on the Street set to get longer! FIIs don’t seem to be coming back anytime soon

The markets are yet to find their trough, and real interest rates in the US (down 700bps from pre-pandemic levels) are likely to outgrow the hike in India (down only 300bps from pre-pandemic levels). This is likely to accelerate capital outflows and form a vicious cycle impacting the currency, inflation, real yields and causing further capital drain, believes IIFL Securities Chairman R Venkataraman. At an interview with Moneycontrol , he says that that markets are some way off from the bottom and there could be another 15 percent correction from here. "We suggest Cipla , SBI Life , HUL , ITC , Ashok Leyland , Persistent Systems , Deepak Nitrite , ICICI Bank as our top picks after a severe correction," Venkataraman shares. Excerpts from the interview: What is the message you get from the central banks that continued rate hikes and hinted more hikes to control inflation? Central banks worldwide were clearly taken by surprise at the violent inflationary … [Read more...] about Daily Voice | More capital drain on cards, expect 15% more correction, says R Venkataraman of IIFL Securities