Malaysia

Central Bank: M'sia Well Prepared To Face Us Quantitative-Easing. Malaysia is well positioned to manage and intermediate volatile capital flows resulting from the potential tapering of the US quantitative-easing (QE) programme, said Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz. “We have to take the tapering (of the US monetary policy) as an eventuality,” Zeti told reporters. She noted that the long-anticipated QE tapering was a sign that the US economy was recovering, and therefore, it should be taken as a positive development for the rest of the world. (The Star)

IMF: BNM Strategies Help Make Malaysia's Financial System Resilient. Bank Negara Malaysia's (BNM) strategies in avoiding excessive volatility has helped make Malaysia's financial system resilient to withstand potential stresses. Mission Chief for Malaysia of the International Monetary Fund based in Washington, Alex Mourmouras, said Malaysia's nonperforming loans were relatively low and asset quality has been improving over the years. "Nevertheless, ongoing global volatility, high household debts and other risks warrant continued vigilance. "In that context, the mission welcomes steps taken by authorities to strengthen financial supervision. Since November 2010, BNM has implemented a series of macroprudential policy measures to slow down property price inflation and credit growth," he told in a media briefing on the IMF findings here today. (Bernama)

Report On Illicit Financial Outflows Grossly Overstated: BNM. Bank Negara Malaysia has come out to defend against claims of substantial illicit financial outflows in the country, saying that the methodology used in an updated report by an external NGO continues to grossly overstate estimates of unrecorded financial outflows. Global Financial Integrity last week released "Illicit Financial Flows from Developing Countries: 2002-2011," which stated that illicit financial outflows from developing world was up 13.7% from 2010 in 2011. In a statement yesterday, Bank Negara Malaysia said while the report in question acknowledged that the use of re-export hubs overstates the measure of trade mispricing, the removal of re-exports via Hong Kong is not significant for Malaysia as Malaysia's trade with Singapore for re-export, is more than thrice the size of Malaysia's trade with Hong Kong. Importantly Bank Negara said, the entire errors and ommissions figure should not be attributed to illicit activities. Malaysia's cross-border statistics have consistently met all the international standards set by the International Monetary Fund (IMF) and the World Bank, it said. (The Sun Daily)

GST Will Mitigate Trade Mispricing, Says BNM. The trade mispricing issue will be mitigated by the introduction of the Goods and Services Tax which requires reporting of value-added at the various stages of production, says Bank Negara Malaysia (BNM). The central bank said the government has undertaken wide-ranging measures to combat illegal activities to reduce such financial flows. "Recognising the importance of addressing financial flows associated with irregular activities, continued concrete and coordinated efforts between the enforcement agencies including across borders will continue to be pursued to ensure the integrity and stability of the Malaysian financial system," it said in a statement issued Monday. (Bernama)

ETP Attracted RM220bil Investments In 3 Years. Prime Minister Datuk Seri Najib Tun Razak today said the Economic Transformation Programme (ETP) has attracted RM220bil’s worth of investments in three years. He said the RM220bil total committed investments are projected to contribute RM144bil to the Gross National Income (GNI), create 435,000 new jobs and generate a knock-on effect that will catalyse the larger universe of economic activities in the country. Despite the global outlook continuing to be uncertain as developed markets grapple with challenges, Najib said Malaysia is targeted to achieve between 5% and 5.5% gross domestic product next year, with private investments expected to grow 12.7% to RM153bil. (Bernama)

Nov Vehicle Sales Fall 2% On-Year To 52,252 Unit. Sales of passenger and commercial vehicles in November declined to 52,252 units from 53,365 units recorded in the same period last year, said theMalaysian Automotive Association (MAA). In a statement here today, MAA said the passenger vehicle segment recorded lower sales of 45,749 units during the month under review, compared with 46,392 units in the corresponding month last year. MAA said when compared with October, the sales volume of both passenger and commercial vehicles in November was 2,826 units, or five per cent lower. "The decline is due to technical glitches in mySIKAP system which slowed down vehicles' registration process," it said. It also said another reason was the usual year-end seasonal decline in consumers' interest to purchase vehicles. (Bernama)

Asia

Tankan: Japanese Business Mood Rises To Six-Year High. Japanese business confidence has soared to its highest level in six years, according to the Bank of Japan's latest Tankan survey. The big manufacturers' index rose to plus-16 from plus-12 in September's survey, exceeding market forecasts. Large companies also plan to increase their capital spending by 4.6% next year, the survey showed. The results indicate the government's stimulus policies, aimed at spurring growth, may be starting to take effect. (BBC)

China Manufacturing Index Unexpectedly Drops. A Chinese manufacturing index unexpectedly fell to a three-month low as output gains eased and employment weakened, suggesting the world’s second-largest economy is vulnerable to a slowdown. The preliminary reading of 50.5 for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with a final figure of 50.8 in November and the 50.9 median estimate in a Bloomberg News survey of 11 analysts. A number above 50 indicates expansion. (Bloomberg)

India Inflation Speeds Up To 14-Month High Of 7.52%. India's headline inflation surged past analysts' expectations to a 14-month high of 7.52 percent in November, government data showed on Monday, after food prices rose at the fastest clip since June 2010. The wholesale price index's annual rise compared with a 7 percent jump forecast by economists in a Reuters poll. In October, wholesale prices, India's main inflation measure, rose 7 percent. (Reuters)

North America

Production Gain Shows U.S. Factories To Spur Growth. American assembly lines churned out more cars, electronics and furniture in November, showing manufacturing will help the world’s largest economy strengthen in 2014. Factory production climbed 0.6 percent last month following a 0.5 percent gain in October that was larger than previously estimated, according to figures from the Federal Reserve issued today in Washington. Total industrial output jumped 1.1 percent, the most in a year and propelled by a rebound in utility use as temperatures dropped. (Bloomberg)

Canada Consumer Sentiment Falls On Waning Housing Outlook. Canadian consumer sentiment faded last week as the outlook wanes for the economy and real estate prices, according to the Bloomberg Nanos Canadian Confidence Index. The weekly sentiment measure fell to 58.3 in the period ended Dec. 13, the lowest in more than a month. The index had averaged 59.1 the previous four weeks. The share of respondents who think real estate prices will increase over the next six months dropped to a nine-week low of 36.9 percent. (Bloomberg)

Europe

PMI Surveys Raise Fears That France May Be Back In Recession. The eurozone's recovery is continuing, a survey of businesses has suggested, but it has also revealed a widening divergence in economic performance between France and Germany. The latest purchasing managers' index (PMI) from Markit rose to 52.1 in December from 51.7 last month. A figure above 50 indicates expansion. The eurozone as a whole has started to grow again after a long recession. But Markit's Chris Williamson said the recovery was "lopsided". Germany's solid PMI reading of 55.2 underlines the country's central role in driving the improvement across the region. France was a very different story, with its PMI reading falling to a seven-month low of 47.0. The figure suggests an accelerating contraction, and point to a decline in economic activity for the current three-month period. (BBC)

Portugal Passes 'Troika's' Bailout Review Of Its Economy. Portugal has moved a step closer to exiting its bailout programme after the international lenders that saved the country from bankruptcy approved a review of the economy six months early. The European Union and International Monetary Fund have been monitoring the country's economic reforms, a condition of the 2011 78bn-euro bailout. Portugal hopes to leave the bailout agreement in the middle of next year. (BBC)

Currencies

Dollar Falls Broadly Ahead Of Fed Meeting. The dollar fell broadly on Monday ahead of the start of the Federal Reserve’s two-day meeting. The euro rose to $1.3764 from $1.3731 on Friday. The ICE dollar index , which compares the U.S. unit with six rivals, fell to 80.074 from 80.224 late Friday in North America. The dollar declined to ¥103.00 from ¥103.22 on Friday. Meanwhile, the British pound edged up to $1.6304 from Friday’s $1.6294. The Australian dollar bought 89.42 U.S. cents, down from 89.61 U.S. cents on Friday. (Market Watch)

Commodities

Oil Rises On Libyan Outages, EU Data Signals Demand. Brent crude oil rose by 1.5 percent on Monday, lifted by expectations for rising demand that sprang from stronger European economic data, while supplies from Libya remained sharply curtailed. Brent futures for January settled $1.64 higher at $110.47 after rising to a high of $110.80. The contract breached the 10- and 15-day moving averages of $110.35 and $110.51 for the first time in five sessions. U.S. crude oil futures ended the day 88 cents higher at $97.48 per barrel. (Reuters)

Gold Rises On Short-Covering Rally, Fed In Focus. Gold rose for a second consecutive session on Monday as crude oil's gains and a dollar drop prompted funds to buy back their bearish bets as they adjusted positions ahead of a U.S. Federal Reserve policy meeting later this week. Spot gold was up 0.5 percent at $1,244.46 an ounce by 1:54 p.m. EST (1854 GMT). In other precious metals, silver rose 2.1 percent to $20.06 an ounce, platinum was down 0.2 percent at $1,358.25, and palladium edged up 25 cents to $714.25. (Reuters)