Malaysia

Malaysia Scores Higher In CG Watch. Prime Minister Datuk Seri Najib Razak said Malaysia has set an example by being the only Asia-Pacific country to have consistently improved the scores in the Corporate Governance Watch Report (CG Watch) in its past four surveys. According to a report by the Asian Corporate Governance Association, in collaboration with CLSA Asia-Pacific Markets, Malaysia achieved an overall score of 58% this year compared with 49% in 2007, maintaining its fourth rank in the region. The report drew attention to the sustained and concerted efforts by Malaysia in driving governance reforms, resulting in the country becoming the only market out of the Asia-Pacific countries that consistently improved its scores in each of the last four surveys. (NST)

Asia

China Inflation Slips To Near Five-Year Low, More Stimulus Measures Expected. China's consumer inflation slowed more than expected in September to a near five-year low, adding to concerns that global growth is cooling fast unless governments take bolder measures to shore up their economies. The consumer price index (CPI) rose 1.6% in September from a year earlier, the National Bureau of Statistics said on Wednesday, missing market expectations for a 1.7% rise and down from 2% in August. (Reuters)

BOK Cuts Rate To 4-Year Low As Lee Risks Capital Outflows. The Bank of Korea cut its benchmark interest rate to a four-year low as Governor Lee Ju Yeol risks spurring capital outflows in his effort to bolster the economy. The central bank lowered the seven-day repurchase rate to 2% from 2.25%, the second reduction in two months, and downgraded its estimates for growth and inflation. Twelve of 22 economists surveyed by Bloomberg forecast the rate cut, while nine projected no change. (Bloomberg)

Indonesia Faces US$6.2b Tax Revenue Shortfall. Indonesia faces a US$6.15b tax revenue shortfall this year, a finance ministry document shows, raising concerns that the fiscal deficit could bust a legal limit, and place President-elect Joko Widodo into an early budget and political crisis. Joko, known widely as “Jokowi,”, takes office next Monday knowing that he has to act swiftly to boost revenue collection and cut spending to ensure the deficit does not breach 3% of gross domestic product (GDP). “Jokowi is pragmatic. When he saw the data, he thought there is this ‘fiscal cliff’ in front of our eyes,” said an economic adviser to the president-elect. Officials, however, say they are confident that reduced spending will help avoid the deficit breaking the legal limit. (Reuters)

USA

U.S. Retail Sales, Producer Prices Give Cautionary Signs On Economy. U.S. retail sales declined in September as consumers pulled back on spending for a range of items, a worrisome economic signal that helped fuel a sell-off on Wall Street. The report on Wednesday, along with data showing a drop in producer prices, led investors to bet the Federal Reserve would delay hiking interest rates until late 2015 at the earliest to keep support for the economy in place. Retail sales, which account for about one-third of consumer spending, dropped 0.3% last month, the Commerce Department said. It was the first decrease since January. In a separate report, the Labor Department said prices received by U.S. producers actually fell 0.1% in September, the first decline in more than a year. (Reuters)

U.S. Budget Deficit Hits Lowest Since 2007 On Revenue Jump. The budget deficit in the U.S. shrank in the last fiscal year to the lowest level as a share of the economy since 2007 as faster growth and falling unemployment boosted tax receipts, the Treasury Department said. The shortfall was $483.4b in the 12 months to Sept. 30, compared with $680.2b a year earlier, the Treasury said today in Washington. That’s about a third of the record $1.4tril deficit reached in 2009. Revenue jumped 8.9% and spending gained 1.4%, the figures showed. (Bloomberg)

U.S. Mortgage Applications Rise In Latest Week: MBA. Applications for U.S. home mortgages rose last week as interest rates dropped to their lowest level since June 2013, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 5.6% in the week ended Oct. 10. "Growing concerns about weak economic growth in Europe caused a flight to quality into U.S. assets last week, leading to sharp drops in interest rates," said Mike Fratantoni, MBA's chief economist. (Reuters)

US Growth 'Modest To Moderate', Says Fed Beige Book. The US economy grew at a "modest to moderate" pace, the Federal Reserve's latest Beige Book reports. Gains in consumer spending, manufacturing and commercial construction helped deliver the growth. The survey of the 12 Federal Reserve Districts said six regions reported "modest" growth and five "moderate". One, Boston, said activity was uneven. The Fed also said some districts reported "modest" wage growth. Several areas saw upward wage pressures in industries like construction and manufacturing. (BBC)

Europe

Italy First-Quarter GDP Revised Up To Show Technically Not In Recession. Italy revised up its gross domestic product for the first quarter of 2014 to show a flat quarterly reading, data showed on Wednesday, indicating the euro zone's third largest economy is technically not in recession. ISTAT had previously reported a fall in output of 0.1% for the first quarter from the previous period, and a 0.2% decline in the second quarter, which was left unrevised. Two consecutive quarters of contraction technically constitute a recession. The revision was due to methodological changes being conducted across the European Union which are expected to raise this year's GDP, and give Prime Minister Matteo Renzi's government more leeway to keep the deficit below the EU's 3% limit. (Reuters)

Italy Approves 2015 Budget, Cuts Taxes By 18b Euros. Italy's cabinet approved a 2015 budget on Wednesday which reduces taxes by 18b euros, Prime Minister Matteo Renzi said on Wednesday. The tax cut is "the biggest ever done in the history of the Italian Republic", Renzi told a news conference after a 90-minute cabinet meeting to approve the budget. Renzi said the budget includes spending cuts of 15b euros ($19.22b) and 11b euros of extra borrowing. (Reuters)

Portugal 2015 Budget Bill Sees 1.5% Growth. Portugal's government expects a second year of economic expansion in 2015 after the country began to climb out of its debt crisis this year and exited an international bailout, its 2015 budget bill showed on Wednesday. The center-right government forecast gross domestic product would grow 1.5% next year after a 1% expansion in 2014 - Portugal's first full year of growth since it sought a bailout in 2011. Portugal imposed deep spending cuts and the largest tax hikes in living memory as it sought to bring its public finances under control during the bailout. (Reuters)

French Government Eyes 5-10b Euros In Asset Sales Over 18 Months. French Economy Minister Emmanuel Macron said on Wednesday he planned to sell between 5 and 10b euros ($6.33-12.66b) of government assets over the next 18 months. Speaking at a news conference outlining a series of economic reforms aimed at cutting the country's public deficit, he said there would be asset sales "in several sectors". (Reuters)

UK Unemployment Falls Below Two Million. The UK unemployment total has fallen below two million for the first time in almost six years, official figures show. The number of jobless people fell by 154,000 to 1.97 million in the three months to the end of August, the Office for National Statistics said. The drop, which is bigger than analysts expected, took the unemployment rate to 6%, its lowest level since late 2008. But wage growth remained stubbornly below the current 1.2% inflation rate. In total, there are now 30.76 million people in work. (BBC)

Currencies

Dollar Plunges After Weak U.S. Data Signal Delayed Fed Rate Hike. The U.S. dollar hit a three-week low against the euro and a more than one-month low against the yen on Wednesday after weak U.S. economic data on retail sales and producer prices heightened concerns that the Federal Reserve would delay its first rate hike. The euro was last up 1% against the dollar at $1.2783, just below a three-week high of $1.2885 hit earlier in the session. The dollar was last down 1% against the yen at 106.03 yen after hitting a more than one-month low of 105.21 yen earlier in the session. The dollar was last down 0.91% against the Swiss franc at 0.9448 franc after hitting a three-week low of 0.9361 franc earlier in the session. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.75% at 85.181. (Reuters)

Commodities

Brent Steadies Above $85 After Biggest Fall In Three Years. Brent crude edged higher on Wednesday, holding above $85 a barrel after its biggest daily fall in three years in the previous session, a drop of nearly $4 that pushed prices to the lowest since late 2010 in an oversupplied market. Brent for November ticked up 26 cents to $85.30 a barrel by 0612 GMT. In the previous session, the front-month contract had slipped below $85 a barrel for the first time since late 2010. U.S. crude gained 20 cents to $82.04 after posting its largest fall in a single session in nearly two years. (Reuters)

Gold Rises As U.S. Equities Sink; Outlook Weak. Gold rose on Wednesday, as global equities plunged and U.S. Treasuries prices surged following disappointing U.S. data, sparking economic fears and lifting bullion's safe-haven appeal. Spot gold was up 0.7% at $1,240.64 an ounce by 2:48 p.m. EDT (1848 GMT), having hit a one-month high of $1,249.30. Silver was down 0.1% at $17.41 an ounce. Platinum eased 0.3% to $1,255.99 an ounce. Palladium dropped 3.5% to $760 an ounce, as global growth worries sparked liquidation in the metal, which is mostly used in auto catalytic converters, analysts said. (Reuters)

Source: Kenanga