Malaysia

RM48.6bil Invested In East Coast Economic Region. Over RM48.6bil in investments have been committed by local and foreign investors to set up various kinds of industries at the East Coast Economic Region (ECER) which is touted to be the “Klang Valley of the east coast.” The foreign investors are from several countries including China, the United States, Germany, Australia, France, South Korea and Japan. “We are in various stages of discussions with more investors and expect RM11bil in investments this year,” said Datuk Jebasingam Issace John, the CEO of East Coast Economic Region Development Council (ECERDC), which is the body undertaking the development. “The private sector will lead the development and once fully developed, it should be like the west coast’s Klang Valley. That will give rise to jobs and stop the migration of people out of the states to other regions for jobs,” he told StarBiz. ECER’s overall target is RM112bil in investments to create 500,000 jobs and with RM48.6bil, “we are near the halfway mark”, said Jebasingam. ECER, which was mooted in 2007, will create economic activities and jobs in the manufacturing, tourism, agriculture and petrochemical sectors. (The Star)

Asia 

Central Banks Optimistic On Regions Resilience.  East Asia-Pacific central banks have expressed their optimism on the resilience of the region’s economies at the just-concluded 18th Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP) Governors’ Meeting, according to Bank Negara. “Robust macroeconomic policies and wide-ranging reforms to the financial system and the increasing regional integration reinforce this trend,” it said in a statement. Bank Negara said the 11 EMEAP member central banks and monetary authorities participated in the meeting, which was chaired by governor Tan Sri Dr Zeti Akhtar Aziz. (Bernama) 

Singapore Takes Further Steps To Cool Housing Market. Singapore's central bank on Friday introduced rules to ensure that a property buyer's monthly payments do not exceed 60 % of his income, a move aimed at cooling the housing market and ensuring investors are not caught out by a rise in interest rates. "The TDSR (total debt servicing ratio) will apply to loans for the purchase of all types of property, loans secured on property, and the re-financing of all such loans," the Monetary Authority of Singapore (MAS) said in a statement. The new requirement, which takes effect on Saturday, will also help strengthen credit  underwriting practices by banks and encourage financial prudence among borrowers, MAS added. (Reuters)

Chinese Banking System Stable, Says Regulator. China's banking system is stable, despite ongoing fears of a "credit crunch" spooking financial markets, according to the country's top regulator. "The issue with tight liquidity in the interbank market has started to ease," said the head of the China Banking Regulatory Commission, Shang Fulin. Fears over bad bank loans sent Chinese stocks to a four-and-a-half-year low last week. Concern over bad loans in the economy led to a spike in interbank rates, which are the interest rates banks charge each other on a  daily basis and a sign of how much faith that banks have in each other. (BBC)

China Finds 'Violations' In Lending By State-Owned Banks. China's National Audit Office (NAO) has said that some state-owned banks "violated" lending regulations. It said said 28.4bn yuan ($4.6bn) of loans had been issued by some banks for projects without proper procedures or necessary guarantees. The regulator also reported that 18.4bn yuan was "embezzled" by clients, according to the Xinhua news agency. China has been trying to impose more discipline on its banks amid fears of bad loans impacting its economy. (BBC) 

USA

US Consumer Sentiment Comes In Higher Than Expected In June. U.S. consumer sentiment improved in late June, ending the month close to a near six-year high set in May, as optimism among higher-income families rose to its strongest level in six years, a survey released on Friday showed. The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment was 84.1 points, just slightly below a near six-year high of 84.5 in May. The late-June figure was higher than the preliminary reading of 82.7. Economists polled by Reuters had forecast the final June reading of 82.8. (Reuters)

Pending Home Sales Soar 6.7 % To Reach 6-Year High. Signed contracts to buy previously owned homes rose to the highest level in six years. Rising interest rates may be causing some buyers who were on the fence to get in quickly before they are priced out. The Pending Home Sales Index from the National Association of Realtors rose 6.7 % in May from April, and is now up 12.1 % from a year ago. A shortage of homes for sale has weighed on the market this year, even as demand increases. Contracts to buy newly built homes rose to a five-year high in May, according to the U.S. Census. (CNBC)

Central Banks Sell Record Sums Of US Debt. Central banks sold a record amount of US Treasury debt last week and bond funds suffered the biggest investor withdrawals on record as global markets shuddered at the prospect of the US Federal Reserve ending its quantitiative easing program. Holdings of US Treasuries held at the Fed on behalf of official foreign institutions, dropped a record $32.4 billion to $2.93 trillion, eclipsing the prior mark of $24 billion in August 2007. It was the third weekly outflow in the past four weeks and came as Japanese investors, who are big holders of US Treasury debt, sold a net $12 billion of foreign bonds last week, their biggest sale in 14 months. Bond funds tracked by EPFR Global, a data provider, saw total redemptions of $23.3 billion in the week to June 26. US funds were the worst hit, with withdrawals totaling $10.6 billion, but emerging market debt funds also saw record redemptions of $5.6 billion. (Financial Times)

Europe

EU 'First Step' To Help Europe's Jobless Youths. EU leaders have ended their summit in Brussels by agreeing to put 6bn euros (£5bn; $8bn) into youth training schemes amid record unemployment. They also agreed to promote lending to credit-starved small businesses, using an extra 10bn euros in funding. Nearly a quarter of jobseekers aged 18 to 25 in the EU have no work. Critics say the schemes will have little impact until countries return to growth but Austrian Chancellor Werner Faymann said they were a "first step". In another development, outlined in the official summit conclusions, EU leaders confirmed they wanted agreement by the end of the year on a way to wind up failed banks at European rather than at national level. They also approved accession talks for Serbia by January at the latest, as well as formalising Croatia's entry into the EU on Monday. (BBC)

New BOE Boss Faces Stimulus Battle. Mark Carney begins his job as governor of the Bank of England (BoE) today, joining an institution divided on whether to pump out more cash stimulus to boost Britain's fragile economic recovery. Carney, who made his name as head of the Bank of Canada where he helped to guide the nation's economy through the global financial crisis relatively unscathed, is replacing Mervyn King, who led the BoE since 2003.  The 48-year-old Canadian is the first foreigner to lead the Bank of England and takes charge after the central bank was recently granted new regulatory powers over Britain's troubled commercial banking sector. Carney will participate in his first Monetary Policy Committee meeting on Thursday, when the bank is widely expected to maintain rates and level of stimulus. (AFP) 

Spain Announces Tax Hikes To Combat Economic Slump. Spain announced tax hikes on alcohol, tobacco and some fuel, and limitations on corporate tax deductions on Friday,  as part of the government's battle to raise public revenue hit by an economic slump. The tax measures are worth increased revenue of 1 billion euros ($1.30 billion) this year, Treasury Minister Cristobal Montoro said at the government's weekly news conference. (Reuters)

Cyprus Debt In Default Over Bond Swap. Cyprus's debt ratings have been downgraded to "default" after it announced it would delay paying back 1bn euros ($1.3bn) of bonds. Standard & Poor's lowered the island's credit ratings to "selective default" from CCC/C. Cyprus will swap government bonds maturing in 2013 through to the first quarter of 2016 with new debt that matures at between five and 10 years. The EU country has to do the bond swap to meet the terms of its bailout. S&P said on Friday that the "exchange materially changes the terms of the affected debt and constitutes what we consider a distressed exchange". "We view the extension of maturities without what we find to be adequate offsetting compensation as the exchange of new debt on less favourable terms to the existing debt." (BBC)

Currencies

Dollar Rises, But Nets Monthly Loss Against Rivals. The U.S. dollar soared against major rivals on Friday, pushing above 99 Japanese yen for the first time in three weeks, but netted a monthly loss. The ICE dollar index, which measures the U.S. unit against six other major currencies, rose to 83.194 from 82.901 late Thursday. As of late afternoon in North America, the dollar index posted a monthly loss of 0.22% for June, the third loss in six months. But the index was up 0.25% in the second quarter. The dollar bought ¥99.26 in recent trade, up from ¥98.35 late Thursday in North America. The dollar’s push above ¥99 on Friday marked the first time at that level since the close of June 5, according to FactSet data. Still, the dollar has lost 1.3% against the yen this month, though it remains nearly 15% higher versus Japan’s currency on a year-to-date basis. In other market moves, the euro fell to $1.3013 from $1.3044 on Thursday. The European currency gained 0.1% against the dollar in June and 1.6% in the second quarter. The British pound also fell, trading recently at $1.5206 compared with $1.5259 late Thursday and was up 0.1% against the greenback  for the month. The Australian dollar slipped to 91.53 U.S. cents from 92.76 cents and  ended the month down more than 4% against the U.S. currency. (Market Watch) 

Commodities

Brent Posts 3rd Quarterly Loss, Premium To US Oil Lowest Since 2011. Brent crude oil futures fell in choppy trading on Friday to close lower for the third straight quarter, the longest stretch of quarterly declines in 15 years. Trade ended Friday with the premium of Brent to U.S. oil futures at the $5.57 a barrel, the narrowest level since January 2011, marking a near $15 drop in the spread since the start of the year. Brent crude oil futures shed 66 cents a barrel to settle at $102.16 by 12:45 p.m. EDT (1645 GMT), closing the quarter down $7.86 a barrel and down $8.95 a barrel for the first half. U.S. crude oil gained 8 cents on the day to $97.13 a barrel, ending the quarter down 10 cents but up $5.31 from the close of 2012. (Reuters)

Gold Posts Worst Quarter On Record. Gold surged more than 2 % on Friday on end-of-quarter short-covering, but bullion still posted its largest quarterly loss in at least 45 years due to selling amid fears the U.S. Federal Reserve may wind down its stimulus programme. Spot gold was up 2.2 % at $1,226.46 an ounce by 2:38 p.m. EDT (1838 GMT), rebounding sharply from a low of 1,180.71 an ounce, which marked the cheapest price since August 2010. Among other precious metals, silver rose 5.9 % to $19.53, rebounding sharply from a near three-year low at $18.19 an ounce. Platinum rose 1.7 % to $1,335.49, while palladium  also gained 1.7 % to $655.85. (Reuters)

Source: Kenanga