Global

Up to $3 Trillion in Over-Borrowing in Emerging Markets. The biggest risks to the global economy are now in emerging markets, where private companies have racked up considerable debt amid a fifth straight year of slowing growth, the IMF said Wednesday. "We estimate that there is up to $3 trillion in over-borrowing in emerging markets," Jose Vinals, a top IMF official, said. The risk is that shocks from bankruptcies in the developing world's private sector, particularly in heavily commodities-dependent Latin American economies, could be amplified in global financial markets. The worst-case scenario, said Vinals, is "a vicious cycle of fire sales and volatility." (AP)

Malaysia

Trade Balance Recovers to RM10.2b in August on Weak Ringgit Boosting E&E Receipts. Exports extended a rebound for the third month in August with a 4.1% YoY increase in total receipts. As in July, exports performed better than expected on currency translation gains from a weaker ringgit, boosting the value of electrical & electronic (E&E) exports. Imports fell sharply, by 6.1% YoY on weaker demand for intermediate and capital goods, which led to a recovery in the trade balance to RM10.2b from a nine-month low of RM2.4b in July. Total trade was down 0.8% YoY on the slump in imports. (See Economic Viewpoint: Malaysia External Trade)

Forex Reserves Fell US$2.0b in 2H Sep, at Lowest in Six Years. Fell by US$1.4b in September. Malaysia’s foreign exchange reserves fell by US$2.0b in the 2H of September after an increase of US$0.6b in the 1H. In total, reserves fell by US$1.4b during the month of September. According to Bank Negara, the latest decline in reserves was mainly due a quarterly adjustment for foreign exchange revaluation changes. As at 30th of September, the international reserves held by Bank Negara Malaysia totalled US$93.3b, which is the lowest since August 2009. (See Economic Viewpoint: BNM Forex Reserves)

Malaysia to Get Parliament Nod before Signing TPPA. Malaysia will need to get the Parliament's approval before signing the Trans-Pacific Partnership Agreement (TPPA), said International Trade and Industry Minister Datuk Seri Mustapa Mohamed Wednesday. He told a media conference on TPPA here today that the negotiations for the Trans-Pacific Partnership had concluded but Malaysia had yet to sign the agreement. (Bernama)

Cost Benefit Analysis for TPPA by End of November. The much awaited cost-benefit analysis is expected to be finalised two weeks after the Trans-Pacific Partnership Agreement (TPPA) text is made public early November, according to the minister of international trade and industry. The Malaysian Institute of Strategic & International Studies (ISIS) and PricewaterhouseCoopers (PwC) Malaysia are responsible for the cost-benefit analysis, which is an important reference for Malaysia on whether to join the pact. (The Sun Daily)

TPPA Provides Companies Greater Market Access. The Trans-Pacific Partnership Agreement (TPPA) provides Malaysian companies with greater market access and give exporters a competitive advantage over regional competitors, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said. He said electrical and electronics, chemical, palm oil, rubber, wood, textile as well as automotive parts and components exporters, can access Canada, Mexico, Peru and the United States with whom Malaysia does not have free trade agreements with. (Bernama)

ValueCap to Start Share Buying 'Spree' in November. State-owned Malaysian investor ValueCap Sdn Bhd is expected to start a spree of mopping up underperforming stocks on the local bourse in November, The Malaysian Reserve reported, citing Retirement Fund Inc (KWAP) Chief Executive Wan Kamaruzaman Wan Ahmad. KWAP is one of the three shareholders of ValueCap, into which the Malaysian government will inject 20 billion ringgit ($4.61 billion) to shore up the market. The other two shareholders are state funds Khazanah Nasional Bhd and Permodalan Nasional Bhd. (Reuters)

Asia

Bank of Japan Refrains from Adding to Record Stimulus. The Bank of Japan kept its record stimulus unchanged on Wednesday amid growing speculation that signs of a recession will press it to act at the end of the month. The BOJ’s key price gauge fell in August, along with industrial production, raising concern that Japan may have fallen back into a recession in the third quarter. 34 of 36 economists surveyed correctly forecast the central bank would leave its policy unchanged Wednesday to keep increasing the monetary base at an annual pace of 80 trillion yen ($660 billion). (Bloomberg)

Abe Reshuffles Cabinet, Adding Minister to Focus on Economy. Japanese Prime Minister Shinzo Abe reshuffled his Cabinet on Wednesday to focus on reviving the economy, adding a new minister to coordinate recently announced economic projects. New government minister Katsunobu Kato will steer programs aimed at strengthening the economy and increasing the birthrate so the population stabilizes. He will be responsible for overseeing and coordinating projects that involve multiple ministries. Finance Minister Taro Aso will retain his portfolios, while nine ministers were replaced. The programs in Kato's portfolio are based on new economic policies announced last month. (AP)

China's Foreign Reserves Post Record Quarterly Drop on Yuan. China’s foreign-exchange reserves fell by a record in the third quarter as the central bank sold dollars to support the yuan. The stockpile plunged by $180 billion in the three months through September to $3.51 trillion, according to calculations based on data released by the People’s Bank of China on Wednesday. The hoard shrank $43.3 billion in September, less than the $57 billion predicted in a survey, suggesting the pace of central bank intervention has eased. The monetary authority has been intervening in both the onshore and offshore markets to prop up its exchange rate. (Bloomberg)

Indonesia Cuts Some Fuel Prices for Industry in Fresh Stimulus Measures. Indonesia said on Wednesday it would cut energy prices and offer discounts for some companies as part of its latest economic stimulus measures. Darmin Nasution, the coordinating minister for economics, said diesel prices would be lowered by about 3% or 200 rupiah to 6,700 rupiah ($0.49) per litre, effective at the end of this week. Other energy prices, ranging from jet fuel to natural gas will also be lowered for industry, while households will pay less for liquefied petroleum gas (LPG), most commonly used for cooking. The government will also allow some firms to delay payment of 40% of their electricity bills until next year. (Reuters)

Taiwan Throws in Towel on 2015 Global Export Recovery. Trade-reliant Taiwan on Wednesday effectively wrote off any chances of a global export recovery this year after its September shipments tumbled more than expected, with weakening in all of its major markets, particularly China. The dismal report will reinforce signs of a growing chill in global demand. Taiwan is a major exporter of electronics and parts for gadgets, which are usually in strong demand heading into the year-end shopping season. September exports, however, showed a further deterioration in demand rather than any signs of a seasonal bounce, falling 14.6% from a year ago, worse than expectations for an 11.6% decline. (Reuters)

USA

US Consumer Borrowing Climbs to New Record in August. U.S. consumer borrowing advanced at a solid pace in August, as Americans took out more auto and student loans. The Federal Reserve said Wednesday that consumer borrowing rose by $16 billion in August, pushing the total to a fresh record of $3.47 trillion. The August advance was slightly below the July gain of $18.9 billion. Borrowing for car and student loans expanded by $12 billion in August. Economists are forecasting that consumer spending will remain strong in the coming months as households remain willing to take on more debt. (AP)

US Mortgage Applications Jump as Rates Dip. Applications for mortgages soared last week as homebuyers took advantage of slightly lower 30-year mortgage rates. The Mortgage Bankers Association said total mortgage applications climbed by 25.5% on a seasonally-adjusted basis in the week ending October 2, compared with a 6.7% dip the week prior. Applications for home purchases spiked 27.4%, while applications for refinancing soared 24.2%. (Financial Times)

Europe

Steep Drop in German Industrial Output. German industrial output posted its steepest drop in a year in August, suggesting Europe's largest economy may be losing momentum. The 1.2% drop announced on Wednesday defied expectations for a small rise and followed a sharp decline in August industrial orders data on Tuesday. Output declined across all sectors in August, except for intermediate goods where production was flat. (Reuters)

UK Manufacturing Picks up After Summer Shutdowns at Car Plants. British manufacturing output picked up in August after falling sharply in July as auto plants came back online after summer shutdowns, official data showed on Wednesday. Compared with August last year, manufacturing output was down 0.8%. Manufacturing rose by a monthly 0.5%, above economists' average forecast of a 0.3% rise. In the three months to August, British manufacturing output was down 0.9% compared with the previous three months, the Office for National Statistics said. (Reuters)

Currencies

Dollar Gains against Euro, Franc on Greater Appetite for Risk. Optimism about global economic growth boosted risk appetite and drove the U.S. dollar higher against the euro and Swiss franc on Wednesday, while the yen gained against the dollar after the Bank of Japan left monetary policy unchanged. The dollar was last down 0.24% against the yen at 119.950 yen. The euro was last down 0.22% against the dollar at $1.12475. The dollar was last up 0.54% against the franc at 0.97245 franc. The dollar index was last up 0.05% at 95.495. (Reuters)

Ringgit Jumps Most in 17 Years as Rupiah Surges on Stock Inflows. The ringgit strengthened the most since 1998 as Malaysia reported its biggest trade surplus in nine months and crude oil prices climbed, while resurgent global demand for Indonesian assets helped drive the rupiah’s biggest gain in six years. The ringgit jumped 3.5% to 4.2253 a dollar as of the close in Kuala Lumpur, trimming its loss for the year to 17.0%. The rupiah surged 3.1% to 13,828. Thailand’s baht was Asia’s next best performer with a 1.3% advance. (Bloomberg).

Commodities

Oil Down After Big U.S. Crude Build. Oil fell in volatile trading on Wednesday, snapping a three-day rally, after U.S. government data showing a large crude inventory build. The U.S. Energy Information Administration (EIA) said domestic crude inventories rose 3.1 million barrels last week, more than the 2.2 million-barrel build forecast by analysts in a survey. Brent settled down $0.59, or 1.1%, at $51.33 a barrel. WTI slid $0.72, or 1.5%, to settle at $47.81. Brent and WTI had gained around 8%, or about $4 a barrel, over the past three days. (Reuters)

Gold Falls Below 2-Week High on Firmer Dollar. Gold eased on Wednesday, falling from a two-week high on the firmer dollar while losses were capped on expectations that the U.S. Federal Reserve will delay raising interest rates until next year. Spot gold fell 0.1% to $1,145.86 an ounce by 1853 GMT, after touching $1,153.30, its highest level since September 24. Silver rose to a 3.5-month high at $16.10 an ounce, gaining 8.5% this month so far. Platinum also rose for the fourth straight session, climbing to the highest since September 25 at $952 an ounce. Palladium moved in the opposite direction, easing 1.1% to $694.75 an ounce. (Reuters)