Barclays favours nickel in 2014, bearish on gold and oil

"Base metals, led by nickel, appear set to trend higher in 2014 due to tighter supplies, while unfavorable economics should keep pressure on gold and oil and prompt investors to avoid much of the commodity complex, Barclays said on Monday".

In another negative outlook on commodities from a major investment bank, London-based Barclays PLC said that outflow of money from the sector will not end soon, at least not in the first quarter.

It cited a litany of reasons, including comfortable supply levels in most raw materials; a still-sluggish global economy and the likely scaling back of the Federal Reserve's stimulus that had supported commodities.

"It is unlikely investors will warm to commodities in the near term," said Barclays, which until a few years ago was one of the biggest proponents of the sector. Goldman Sachs, often regarded Wall Street's most authoritative voice on commodities, and Citigroup have issued similarly sanguine outlooks in recent weeks".

"Barclays projected oil's benchmark Brent crude to average $101 per barrel in the first quarter, versus Monday's level of nearly $110. It forecast a high of $108 for the final quarter of 2014. Brent is down almost 2 percent this year.

For U.S. crude, the projection was $95 a barrel in the first quarter, versus current prices near $98, and a high of $99 by the year-end. U.S. crude is up about 6 percent this year, outperforming Brent".

"In the case of gold, Barclays advised investors to "short", or bet on a fall in prices, the precious metal after March, its target period for any reduction in the Fed stimulus".

"In spite of that, the bank had a higher price expectation for gold in 2014 versus Monday's traded levels -- a discrepancy it did not explain.

Barclays said gold was likely to average $1,350 an ounce in the first quarter, although it forecast a drop to $1,270 by the end of 2014. The spot price of gold hovered at $1,240 on Monday, down 26 percent so far this year and heading for its first yearly loss since 2000".

Source: Mineweb

PriceWaterhouseCoopers: Gold, Silver, Copper Report

The worst performing metal this year has been silver, says PwC’s new Gold,Silver and copper report, as prices plummeted 40% in 2013.

Despite silver’s poor performance, only 9% of silver miners expect the price of the precious metal to decline next year.

Meanwhile, although gold surpassed $1,900 per ounce in 2011, it fell to around $1,200 this summer. And fewer gold producers expect the gold price to increase in the next 12 months, says the report.

“Expectations for where the gold price is headed are conservative, with the exception of a few very bullish companies,” said PwC. Among the gold miners surveyed, 47% said they expect the price to increase in the next 12 months, which is down from 88% a year ago.

This year, 7% said they expect gold prices to further decline this year while 46% expect the price to remain the same.

When asked what gold prices companies are using to determine reserves, the average among respondents was $1,251 per ounce with a range of between $900 and $1,500. For resources, the average was $1,284, with a range of between $800 and $2,000.

“Today, most companies are focused on near-term pricing data to estimate their reserves,” said PwC. Reserve prices are based on internal estimates, historical average prices, forward curve, spot and consensus pricing as three-year trailing average price is becoming less relevant.

The PwC survey revealed 39% of gold producers believe their costs will be similar in the year ahead, while 28% expect them to fall. Only 12% anticipated costs to increase.

“With margins squeezed by the decline in commodity prices, investors and analysts increasingly want more transparent disclosure of total costs,” observed PwC. “’Improved reporting’ means increased transparency (more information), and consistency of definitions across the industry.”

A PwC survey of the top 40 global mining companies by market cap determined only seven companies provide an all-in cost figure. Only six companies—Barrick, Goldcorp, Gold Fields, Kinross, Newmont and Vale—disclose their definition of sustaining capital.

“Transparency on costs can help management make the case for difficult decisions, such as workforce reductions, care-and-maintenance announcement and divestitures,” said the report. “The prospect of continuing tight margins for the foreseeable future suggests that analysts and shareholders will keep up the pressure on miners for improved disclosure.”

SILVER

“Silver has had a terrible year: It started at around $32 per ounce, but then fell to around $18 by mid-year: That’s a reversal from 2012, when silver was the best-performing metal, ranging in price between about $26 and $37,” said the report.

“Oversupply is partially to blame for the drop in silver prices in 2013,” said PwC. “Its correlation with gold as a store of value for some investors also contributed to its price depreciation in recent months.”

Among survey respondents, 53% said they expect the price of silver to increase in the next 12 months while 38% expect it will remain at current levels. Only 9% predict a further decline in price.

The average price to determine silver reserves was $22 per ounce, ranging from a low of $17 to a high of $28. For resources, the average price was $22, with a range of between $19 and $28, said the report.

About two third of silver miners expect their cash costs to remain the same in 2014 while 21% are preparing for higher costs and 18% for lower costs.

COPPER

“Among the three key metals discussed here, copper clearly outperformed in 2013,” said PwC. “Still, the drop in price—from about $3.70 per pound at the start of the year to just above $3 as we finish the year—has weighed on margins for copper companies.”

“Much of the price drop seen in 2013 is said to be the result of a demand and supply imbalance, which is expected to continue into 2014,” the report advised.

“Many copper producers are anticipating another challenging year as copper inventories remain high and the global economy struggles to gain traction,” said PwC.

Copper companies are using an average price of $2.77 per pound, with a range of between $1.87 and $3.26 to determine copper reserves. For resources, the average was $2.87 per pound, ranging from $2 to $3.50, according to the report.

When it comes to cash costs, 47% of the copper miners expect theirs to remain at similar levels in the next 12 months, while 20% expect costs to increase moderately. Thirty percent of respondents expect their costs to decrease in 2014.

Source: Mineweb

Chang'e-3 moves into closer lunar orbit

China's lunar probe Chang'e-3 has moved a step closer to the moon. The probe descended from a 100 kilometer-high lunar orbit to an elliptical orbit with its nearest point, just 15 kilometers from the moon's surface.

The State Administration of Science, Technology and Industry for National Defense says the transition was made while the probe transited the dark side of the moon at 9:20 p.m. on Tuesday, Beijing time. The transition took around four minutes. Chang’e-3 will now prepare for a soft-landing on the moon’s surface. T

The probe, which is carrying the moon rover "Yutu", was successfully launched on December the 2nd, from China’s Xichang Satellite Launch Center. The moon landing is set to take place around mid-December, the first time a Chinese spacecraft has made a soft landing on a non-earth surface.

The future of China's economy

As the new year is drawing near, the future performance of China’s economy is increasingly in focus. At the ongoing CCTV annual financial forum, our reporter spoke with key business delegates, let’s hear their predictions for 2014.

"Reforming financial sector, pushing forward urbanization and boosting domestic demand by consumption are all very challenging but with positive results. For example, if we could really boost demand by consumption, China’s economy will enter a positive circle. The 3rd plenum has set the direction, but the path is still rocky. I believe things are changing for the better in 2014, but I believe in 2015 we can see a prosperous situation." Liu Chuanzhi, CEO of Lenovo said.

"Three key points in the future: Rural land liberalization combined with urbanization..If processed properly this will add fuel to China’s GDP growth. Second, the over-capacity issue. If resolved well, the excessive capacities can become China’s new motor of development. Thirdly, the financial reforms. Especially the marketization of interest rate. This will better the allocation of resources in the market." Dong Wenbiao, President of China Minsheng Banking Corp., ltd said.

"I believe the economic meeting will help to develop China’s modern agriculture. Agriculture in China is not only about offering food, but it’s also linked to the employment of millions of agricultural producers." Liu Yonghao, CEO of New Hope Group said.

Source: CCTV

China to step up clean energy use to ensure quality growth

China will step up its efforts in saving energy and reducing emissions in the coming two years in a bid to improve quality of econoic growth. The country’s top economic planner says it’s facing an urgent task of energy conservation and emission reduction.

Fighting pollution and climate change have been proving a tough job. Despite all efforts throughout the years, China Nitric oxide emission has risen rather than dropped in 2011 and 2012.

"During the first two years of the 12th Five-Year Plan (2011-2015), China’s aggregate energy consumption per unit of GDP dropped by 5.5 percent, only meeting 32.7 percent of the Five-Year Plan target; and the nitrogen oxide emission actually increased by 2.8 percent. To realize the 12th Five-Year Plan goal, China must reduce its annual energy consumption by 3.84 percent and annual nitrogen oxide emission by 4.3 percent over the next three years." Xie Zhenhua, Vice Minister, Nat'l Dev't and Reform Commission said.

The country has been trying to step up use of green energies, such as wind, nuclear, and solar, but the outcome is less than satisfying. According to the commission, consumption of non-fossil energy only accounts for 9.4 percent of the country’s total primary energy use in 2012. This means China needs to improve clean energy consumption by 2 percent in the next two years, in order to reach its goal of 11.4 percent. The NDRC said the use of fossil energy has badly damaged air quality.

"Unbalanced industrial development of regional economies is an important reason for air pollution. For example one third of the country’s coal power production comes from the region including Beijing, Tianjin and Hebei province. This region’s steel and coking productions have each taken up a half of the national total. " Xie Zhenhua said.

Xie points out industrial integration is essential to solve the problems. He said 2014 will be a critical year to achieve the energy saving and emission reduction target, with 100 million tons standard coal to be saved. He also calls for controlling coal consumption and preparing for more strict standards for motor vehicle exhaust emissions.

 Source: CCTV

China 12 years in WTO

In 2001, the first year as a WTO member, China’s exports and imports each ranked sixth largest in the world. Then under the WTO framework, the country’s trade began to expand gradually. By this September, China’s exports and imports climbed to number one and two, respectively, around the globe.

Entering the WTO also helped Chinese firms to develop in other countries and regions. Last year, China’s direct investment overseas hit a record high of 84 billion U.S. dollars, just behind the United States and Japan.

Meanwhile, the country’s currency, the yuan, has been gaining power over the years. More than 220 countries and regions have signed agreements to allow a two-way flow of yuan. 23 of them inked bilateral currency swap agreements with China. In October, the yuan surpassed the euro, to become the world’s second largest trade settlement currency.

Source:  CCTV

Oppositions react harshly to Ishiba's secrecy law remark

Opposition parties criticized Liberal Democratic Party Secretary-General Shigeru Ishiba's remark on Wednesday that publishing designated state secrets by media organizations would be subject to punishment under the newly enacted state secret protection law.

Though he soon denied that media reports on state secrets will be punished, remarks such as the one Ishiba made earlier "will wither news gathering activities," a middle-ranking member of the Democratic Party of Japan said, adding Ishiba could have expressed his real thought.

A senior official of Your Party said that the remark was made because parliamentary discussions on the law were insufficient. The opposition party accepted the secrecy bill upon agreement with the ruling camp on its revision but walked out before the final parliamentary vote on the legislation on Friday, arguing the LDP was trying to enact it too hastily.

Source: Jiji Press

Japan: Ruling bloc set to cut taxes on daily necessities, unclear on when

Japan's ruling parties will vow to reduce taxes on daily necessities "at a time when the (sales) tax rate is 10 percent" to end political discord over the issue, lawmakers said Wednesday.

The plan will be outlined in the tax reform outline for fiscal 2014, the lawmakers said, but it is unclear whether such a rate cut would be implemented immediately upon the consumption tax rise in October 2015 or at some stage after the hike.Prime Minister Shinzo Abe's Liberal Democratic Party remains reluctant to introduce the reduced tax rate, but the party decided to partly accept a proposal of its coalition partner the New Komeito Party that is eager to take more measures to prevent the tax hike from hurting households.

Source: NewsOnJapan

Japan to introduce early-warning aircraft in new defense program

Japan will strengthen its surveillance capabilities in response to China's growing assertiveness over a territorial dispute by introducing new early-warning aircraft and airborne warning and control systems, an outline of a new medium-term defense program showed Wednesday.

Japan wants to reflect the changes in the envisioned program, set to cover a five-year period from April next year, as tensions with China remain high over a row about the sovereignty of the Japanese-controlled Senkaku Islands in the East China Sea. China claims the islands and calls them Diaoyu.The government also wants to list the acquisition of surveillance drones in the envisioned program which is set to be adopted next Tuesday along with the new longer-term defense policy known as the National Defense Program Outline.

Source: NewsOnJapan

Japan's wholesale prices up 2.7% in November on year

Japan's wholesale prices rose 2.7 percent in November from a year earlier for the eighth straight month of increase and the biggest gain in five years, as a weaker yen and higher energy prices led to rises in a wide range of items, the Bank of Japan said Wednesday.

The index of corporate goods prices stood at 102.6 against the 2010 base of 100, the central bank said in a preliminary report. The year-on-year rise of 2.7 percent, which followed a 2.5 percent gain in October, was the highest since October 2008, according to the BOJ.Due to the yen's depreciation and rising energy prices, electricity, gas and water bills grew 10.8 percent, lifting wholesale prices. Iron and steel prices rose 4.4 percent as manufacturers factored in rising energy and material prices into product prices, a BOJ official said.

Source: NewsOnJapan

China watches for Japan's security, defense plans

 China is watching closely Japan's security strategy and latest defense plan, Foreign Ministry spokesman Hong Lei said on Wednesday.

On Wednesday, Japan released drafts of its first national security strategy and a long-term defense guideline, which promised to "respond calmly and resolutely to the rapid expansion and step-up of China's maritime and air activities."

The drafts said the Japanese government should step up its maritime defense in the southwestern, following China's declaration of the East China Sea Air Defense Identification Zone (ADIZ).

China's normal growth of national defense capacity does not pose a threat to any country, Hong said, reaffirming China's peaceful development path and defense policies in defensive nature.

"China advocates resolving territorial and maritime disputes through dialogue and negotiation. Meanwhile, we will never allow any country to infringe upon China's territorial sovereignty," Hong said.

Hong refuted Japan's groundless charge, saying "Japan has hidden political agendas in hyping up the so-called China threat."

He urged Japan to prioritize its neighbors' concerns, follow the trend of the times and take a peaceful development road so as to improve China-Japan ties and maintain regional peace and stability.

Asked to comment on Japan's claims that China changed the status quo by establishing the ADIZ, Hong denounced it was Japan itself that stirred up trouble over the Diaoyu Islands and East China Sea and Japan's accusation is "wrong and baseless."

China's ADIZ is in line with international law and norms, Hong said.

China is willing to keep in touch with relevant parties over technical issues and to maintain flight safety and order on the basis of equality and mutual respect, he said.

He urged Japan to correct its attitude and stop provocation in order to create conditions for managing disputes through dialogue.

Source: Xinhua

Chinese banks to launch 19-bln-yuan deposit certificates

Five of China's biggest banks announced on Wednesday that they plan to issue up to 19 billion yuan's (3.11 billion U.S. dollars) worth of interbank certificates of deposit (CDs), a response to the country's latest move to liberate interest rates.

China Construction Bank (CCB) and Bank of China (BOC) plan to issue 5 billion yuan of CDs each, while Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC) and China Development Bank each plan an issuance of 3 billion yuan, according to a statement posted with Shanghai Clearing House.

The maturity of the CDs issued by CCB, BOC and ABC will stand at three months. ICBC will launch CDs with a maturity of one month and China Development Bank will issue CDs maturing at six months.

China's central bank on Sunday published guidelines on interbank CDs, a money market instrument that will allow banks to borrow at more stable costs on the interbank market.

The guidelines required financial institutions to report their annual plans for the issuance of deposit certificates to the People's Bank of China before entering the market.

It marks another step by China to relax control on the interest rates market following the country's move in July to scrap the floor limit of lending rates.

Source: Xinhua

Trade talks in Singapore end without agreement

Ministers in the Trans-Pacific Partnership free trade talks have failed to meet a deadline to strike a deal this year.

The trade ministers from 12 Pacific Rim countries ended 4-day talks in Singapore on Tuesday.

They said in a joint statement that although they made substantive progress and the participating countries confirmed common ground on unsolved issues, they will continue to work flexibly on outstanding ones.

The statement says a high-level, ambitious agreement will be important for the nations in promoting economic growth and creating jobs.

It says the ministers will meet again next month, following additional work by negotiators.

Source: NewsOnJapan

China gives 20.7 bln yuan to rural schools

The central government has allocated 20.7 billion yuan (3.4 billion U.S. dollars) this year to disadvantaged schools in the countryside.

The money will be used for equipment, books and reconstruction. Funds of this kind have totalled 65.7 billion yuan from 2010 to 2013, according to the Ministry of Finance on Wednesday.

An executive meeting of the State Council, China's Cabinet, last Wednesday decided to improve basic schooling standards in compulsory education.

In three to five years, school buildings must meet safety requirements, such as anti-earthquake and fire control standards, facilities should be able to meet the basic educational and living needs, and the quality of teachers should meet the basic needs of compulsory education.

All Chinese children are entitled to nine years of free education, covering primary and junior high schools.

Source:Xinhua

Shanghai overtakes Hong Kong to become China’s most competitive city

Shanghai overtook Hong Kong for the first time to become China's most competitive city this year mainly due to the establishment of its pilot free trade zone, according to a ranking by the China Institute of City Competitiveness yesterday.

With a score of 16,163.08, Shanghai topped the list which measures comprehensive competitiveness based on the cities' economic, social stability, environmental and cultural conditions.

Shanghai was followed by Hong Kong, the champion in the past 11 years but scoring 16,099.80 this time.

Beijing, Shenzhen and Guangzhou took the next few spots.

Gui Qiangfang, president of the institute, said it brings no surprise for Shanghai to surpass Hong Kong in the ranking.

"The establishment of the first state-level free trade zone in Shanghai is a powerful driver to enhance the city's competitiveness," Gui said. "Considering Hong Kong's limited potential for further economic growth, more cities in the Chinese mainland will exceed Hong Kong in this list in the future."

In terms of economic output, Shanghai outmatched Hong Kong in 2011, while Beijing managed to do so last year.

But Hong Kong still led concerning regulatory system and the ownership of professionals, Gui said.

Source: Shanghai Daily

Mainland spokeswoman blasts Taiwan opposition's air zone stance

A Chinese mainland spokeswoman on Wednesday criticized the stance of Taiwan's opposition Democratic Progressive Party (DPP) on the East China Sea Air Defense Identification Zone as "a departure from the correct national stand."

Speaking at a press conference, Fan Liqing, of the State Council Taiwan Affairs Office, said individuals from the DPP "had ulterior motives" to provoke confrontation between the Chinese mainland and Taiwan, but what they have said and done will be met with opposition from people on both sides.

Fan made the remarks when asked to comment on DPP leaders' proposal to take joint action with the United States to protest the establishment of the East China Sea Air Defense Identification Zone and demand that the mainland cancel its establishment.

"Compatriots on both sides of the Taiwan Strait are one family, and should join hands to safeguard the overall interests of the Chinese nation,as well as the family property left by our ancestors," Fan said.

"To safeguard the overall rights and interests of the Chinese nation is in line with the common interests of both sides across the Taiwan Strait," she said.

Source: Xinhua

Shoplifting accounts for 10 percent of all criminal offenses in Japan

The number of shoplifting cases accounted for nearly 10 pct of all criminal offenses recognized by Japanese police, with the rate increasing, a National Police Agency survey showed Wednesday.

By age group, the number of charged shoplifters increased only among people aged 65 or over. "Measures to prevent the elderly from being isolated are necessary because the rise is not due chiefly to economic hardship," the agency said.After hitting a peak of some 2.85 million cases in 2002, the total number of criminal offenses recognized by police dwindled to some 1.38 million in 2012.

Source: Jiji Press

China: Zhejiang's choking days rise by 20 times

Zhejiang Province, an economic powerhouse in the Yangtze River Delta, now has over 20 times the number of hazy days as it did 50 years ago, a research report has revealed.

The average number of hazy days in Zhejiang from the 1960s to the early 1990s was around seven. The figure rose to almost 200 after the millennium, said a report on the province's hazy weather.

Vehicle exhaust and industrial fume are blamed as the biggest causes, said the report by the Environmental Science Research and Design Institute of Zhejiang Province, which is in east China.

A project team collected and analyzed data from the provincial and local environmental and meteorological departments covering the past half a century.

Heavy smog shrouded north and east China on Saturday, with highways closed and flights delayed or canceled.

Cities in Zhejiang and its neighboring Shanghai municipality have been enveloped in grey sky for several days. Many pedestrians have been wearing masks.

The coastal province is known for its prosperous local economy. Private enterprises took off in the 1980s when China started with its market economic reforms.

But along with industrialization has come more smog.

Zhejiang's capital city Hangzhou and other industrial cities, such as Wenzhou and Huzhou, had on average over 40 hazy days annually before 2000.

"The number of hazy days showed an explosive growth after 2000," said Jin Jun, the team leader of the project and the deputy director with the institute.

"Some major cities in Zhejiang have seen an annual average number of 150 hazy days. In some cases about 200 hazy days -- about 30 times the number before reform and opening at the end of the 1970s," said Jin.

Vehicle exhaust is the primary cause of the increasing smog in downtown areas, the report said.

Though the report is based on Zhejiang, it is representative of the country. The main components of the haze are vehicle emissions and industrial sewage which are formed by dust, sulfuric acid and vitriolic acid, said Jin.

Diesel vehicles are the "prime culprit" that cause emissions of PM 2.5, a key indicator of air pollution. Oxynitride which is released from gasoline vehicles easily become particle pollutants, which also worsens air quality, said the report.

"Zhejiang used about seven million tonnes of gasoline and nine million tonnes of diesel last year, which makes the province the second largest consumer of these two fuels nationwide," said Wu Jian, a senior engineer with the institute.

At the end of June, Zhejiang had 13.38 million registered vehicles, and about 8.39 million were gasoline cars.

In the past 13 years, the number of gasoline cars in the province has increased 12-fold.

Planning and construction of the urban transportation network has failed to meet the surging number of cars. Cars in traffic jams release four to five times more emissions than running cars do, said Jin.

But it is not just vehicles.

Industrial pollution is also blamed for the smog, Jin added.

Both industrialization and car ownership have led to Zhejiang's serious air pollution issue in the past two to three decades, he said.

"It is critical we are aware of this serious environmental issue," said Jin.

Both central and local governments are trying to cut pollution by accelerating "green transport" and implementing controls on industry.

Zhejiang also suffers from air pollution around the province as industrial sewage and pollutants caused by winter heating in northern China have flowed into Zhejiang.

The province's island cities of Zhoushan and Shengsi suffer from hazy weather even though they have small populations, few vehicles and little industrial pollution.

"According to our analysis, it is likely that their hazy weather is caused by a dust haze belt from northern China," said Jin.

"The continuous hazy weather in north China's Hebei Province and nearby regions are characteristics of cross-regional pollution," said Guo Bin, deputy director with the Environmental Science and Engineering College of Hebei University of Science and Technology.

Pollutants float in the air and overlap with those in other regions, which spreads pollution to vast areas of China, he said.

The State Council has vowed to restrict high energy-consuming and polluting industries, adjust energy structure and enhance control of PM 2.5 in regions suffering from serious air pollution.

It set a goal of reducing key industries' emissions of major air pollutants by at least 30 percent by the end of 2017.

Source:XINHUA

Italy sees fragile economic recovery in 3rd quarter

The struggling Italian economy witnessed flat growth in the third quarter, as National Statistics Institute, or ISTAT, on Thursday revised up an earlier estimate of a 0.1 percent contraction from the prior quarter.

Italian Prime Minister Enrico Letta hailed the news from ISTAT as "encouraging" and Economy Minister Fabrizio Saccomanni said, "This shows we're at a turning point in the business cycle."

Saccomanni, joined by a number of economists, also predicts slightly positive growth in the final quarter of 2013, as well as for 2014 as a whole.

"One way or another, the recovery is returning and is affecting several production sectors," said Employment Minister Enrico Giovanni.

It was the first time that Italy had pulled out of an economic contraction over the past two years. If Saccomanni is correct in his economic estimates about next year's growth between 0.4 percent and 1.1 percent, it will be the first time in four years the economy actually grows positively for an entire year.

Despite the adjustment to the growth figure, the Italian economy is now 7.4 percent smaller than it was five years ago, while the population has grown 1.4 percent over the same period, which means an average Italian is about 9 percent poorer than in 2008.

Given that commodity prices have risen by more than 10 percent during the period, there is an even bigger erosion in the nation's purchasing power.

And worse is that fixed investments are down by nearly 25 percent over the past five years, while a host of key indicators, including consumer confidence, debt levels, interest rates on Italian bonds and major indexes of the Milan Stock Exchange, are all worse off than in 2008. Repairing the economic damage of recent years will take years, observers said.

"We can't really say we're out of the crisis yet," said Giorgio Squinzi, chairman of Confindustria, Italy's leading industry lobby group.

Yet the worst news of all is the unemployment rate remains stubbornly above 12 percent, its highest level in a decade.

That is likely to slow the perception of an economic recovery though ISTAT has reported a recovery is under way. And if the public fails to feel things are improving, it could undermine people's support for the Letta government and its reform policies.

"That economic growth restarts is important but perhaps more important is that middle class Italians feel the change in their pocketbooks," said Antonio Bolzano, an economist with ABS Securities in Milan. "Unfortunately, that part of the recovery may not be coming soon."

Hate speech campaigns causing conflicts in Japan: police

Hate speech campaigns have intensified in Japan, causing increased conflict with opponents, the National Police Agency said Wednesday.

The agency said in its annual review on the country's public safety that such campaigns and conflicts are expected to continue well into 2014.

Right-wing groups with extreme nationalist and antiforeign views have been campaigning for several years, but extreme behavior became more prominent this year, including hate speech to stir up discrimination and violence, the agency noted.

Source: Jiji Press

Asian telecom operators have potentials to grow further albeit challenges

As China's Ministry of Industry and Information Technology (MIIT) issued 4G licenses for China Mobile, China Unicom and China Telecom this week, analysts believed Asian telecom operators still have rooms for growth although they have to grapple with a number of challenges such as competitions and pricing structure amid network shift.

While issuing licenses, MIIT also called on the three wireless carriers sharing the 4G network to avoid repetitive construction and waste on resources. Indeed, the statement for the three Chinese wireless carriers highlighted the common concerns among investors and analysts about the operating outlook of Asian telecom operators in the face of 4G transition and asymmetrical regulations.

Nomura Research said "We find competition and high penetration levels have limited some of the upside (for Asian telecom operators). This is particularly true as telecom operators are still transitioning from voice to data, which is not an easy one."

The Japanese research house observed that despite rising incomes in most parts of Asia over the past 3 years, traditional telecom operators in the region had not been able to capture higher share of discretionary spend. Most of them are trying to tilt this back in their favor through data re-pricing initiatives, but so far with limited success.

According to Nomura, total telecom revenue as a percentage of Gross Domestic Product (GDP) in Asia was on average 2.8 percent in 2012 and this has been flat for the past three years. Within this, South Korea, Japan and Thailand are the only ones that have seen an increase during the period.

This is mainly attributed to their faster total revenue growth in the telecom sector versus their GDP growth rates. But for the rest of Asia, they have all seen a decline, largely due to a combination of dismal growth rates, which are also impacted by competition and other issues.

As HSBC Global Research sees it, the key sector level challenge for Asian telecoms operators is to monetize the rapid shift in traffic and revenues to data. A shift towards more flexible and innovative pricing is the key to driving higher network utilization rates, and in this aspect, HSBC is optimistic on the developed Asian markets of South Korea, Japan, and Thailand. In contrast, the research house is cautious on China's Hong Kong, India, and most of Southeast Asian countries given their competitive market structure and regulatory obstacles.

HSBC said while China is the largest smart-phone market in the world today, the current de-facto restrictions on flat rate data pricing have made the Chinese mobile carries hard to stimulate data growth, and the government is likely to continue to push for lower voice pricing.

Thus, the two important factors that dictate the levels of Asian telecom returns are regulation and market structure. Without a rational and balanced regulatory framework, telecoms markets devolve into excess competition due to too many licensees, and under-investment due to the difficulty of earning a return on additional capital expenditure.

HSBC suggested for the Asian telecom operators to dynamically and effectively adjust data pricing to load data networks for 4G transition, they should improve their legal, technical, and organizational skills which may require them to upgrade their hardware and software systems, and their sales and customer care teams.

Source: Xinhua

Now's the time to follow the fundamentals . Jeb Handwerger

Corrections take longer than people expect, says Jeb Handwerger but, the longer and the deeper the base, the more powerful the eventual upswing.

   You should read first this paragraph with extreme attention,because it is the main point of this article:
"If you believe the dollar is strong and healthy, then you should avoid these precious metals and mining stocks. If you think that the U.S. and all the European nations can deal with these astronomical debts and will pay it down, then sell your precious metals and miners. If you believe that there is no significant chance of inflation, then get out of these sectors. But if you think the opposite and decide to stay in the sector, rotating to the higher-quality outperformers, you'll see potentially phenomenal gains. Eventually, there will be a return of the masses and retail investors. Combine renewed accumulation with short covering and you get a parabolic potential spike".

The Mining Report: Jeb, you've been in the resource market since 1996. Based on what you've seen, what are the current trends?

Jeb Handwerger: I first came into this sector when everyone was chasing the dot-com stocks. This was after the Bre-X scandal, where they were falsifying the assays. No one wanted to touch the gold miners, especially exploration stocks. They ran into the dot com sector and energy. Many people quit their jobs to become day traders. Gold had been in a correction since 1981 for 20 years. What we're seeing right now is very similar to what we saw back at that 30-year low earlier this decade—miners hedging production, miners cutting off production because of low prices, miners laying off workers, write-downs, initial public offerings of tech stocks with ridiculous valuations and zero earnings.

The resource market is basing. There are benefits to this process. You can see which companies are outperforming and you can see which companies have a strong balance sheet to weather the storm. You can see which companies are getting attention from investors and institutions and which companies are still advancing.

Some people I talk to are thinking about leaving the sector. That's not the right approach. Gains could be exponential. The right approach is to rotate into situations that will outperform, even if gold and silver stay flat. Stick to advisors who are finding the most compelling situations. Corrections take longer than people expect—the longer and the deeper the base, the more powerful the eventual upswing. It could be huge with the record amount of cash on the sidelines and the large number of shorts who may need to cover their position.

TMR: How can investors know which companies are going to outperform?

JH: It doesn't take a rocket scientist. Pull up a simple chart of which companies are beginning to outperform the index over different time frames, the Market Vectors Gold Miners ETF or PHLX Gold/Silver Sector. The charts are a reflection of the fundamentals. 

TMR: You also follow uranium. The sector is still way down since Fukushima. Is it too early to get in?

JH: Smart investors look for the biggest bang for the buck. Uranium recently hit eight-year lows, but the fundamentals show there are more reactors under construction today than there were before Fukushima. China, Saudi Arabia, and the U.S., for the first time in 30 years, are building reactors. All around the world there are new reactors being built to provide a diverse energy mix that's safe, clean and economic.

For Asian nations, natural gas is expensive. They're building huge liquefied natural gas (LNG) terminals in British Columbia to help bring down those costs. There is a huge energy boom in Canada, not only in the oil sands, but also in uranium.

The Athabasca Basin and Western Canada is an area that's going to be of great interest because the Chinese need energy. Talk about a boom—just look at some of the news coming out of Western Canada with the massive building of liquefied natural gas plants.

In addition, the last shipment from the Russian Megatons to Megawatts program has happened. That's 24 million pounds coming out of the uranium market that the U.S. had for more than 20 years. Utilities are going to have to look for new sources.

But it takes many years to build a mine in the Athabasca Basin. Cigar Lake, for example, has taken more than 30 years to build. We think the Athabasca Basin is a great area, but a lot of the activity is very early-stage stuff.

TMR: What are you doing to prepare your portfolio and readers for 2014?

JH: There are still stocks that are outperforming even during this bear market, as I highlighted above. You need to stick to the fundamentals and the companies with the potential to outperform the index. Focus on companies in stable jurisdictions with the ability to fund and build value in this tough financial environment.

TMR: Are there some questions that investors should ask themselves to determine how they should move forward?

JH: If you believe the dollar is strong and healthy, then you should avoid these precious metals and mining stocks. If you think that the U.S. and all the European nations can deal with these astronomical debts and will pay it down, then sell your precious metals and miners. If you believe that there is no significant chance of inflation, then get out of these sectors. But if you think the opposite and decide to stay in the sector, rotating to the higher-quality outperformers, you'll see potentially phenomenal gains. Eventually, there will be a return of the masses and retail investors. Combine renewed accumulation with short covering and you get a parabolic potential spike.

Euphoria will end in social media and bitcoins. The equity and real estate market are extremely overbought. Yet the commodity market and the precious metals market are still providing real value to investors. You have to go against the tide. Follow the value funds and the experienced investors. Master your emotions. The time to buy is when things couldn’t look worse. The worse things appear the better they will get.

TMR: I enjoyed chatting with you.

JH: My pleasure.

Source: Miniweb, original interview published in The Mining Report

The Big Picture, Global Macro Indicators

"Today’s grab bag of news from around the world mostly points to an easing in some of the risks confronting major economies in Europe and Asia. Fears of deflation in Europe were mollified somewhat, Chinese monetary conditions don’t seem as bad as markets had been signaling, Japanese firms are boosting their orders for machinery and India is gradually getting its problematic external balances under control".

"At the margins, developments such as these give greater confidence to policymakers–including at the Federal Reserve–that “headwinds” from problem spots in the global economy are softening. On balance, that works toward an eventual moderation in the extraordinary amount of monetary stimulus currently coming from major central banks. Specifically, it helps the case for the Fed to start tapering its bond-buying as early as next week’s meeting of its Open Market Committee". (MC)

"Chinese financial institutions issued 624.6 billion yuan ($103 billion) worth of new yuan loans in November, up from CNY506.1 billion in October and well above economists’ expectations of 550 billion yuan, data from the People’s Bank of China showed Wednesday. Total social financing, a broader measurement of credit in the economy, came to CNY1.23 trillion in November, up from CNY856.4 billion in October.

The surprising growth in loans and total social financing indicates that the monetary tightening implied by the sharply higher bond yields and interbank rates of recent weeks isn’t happening to the extent the market fears it. The news suggests the central bank is continuing to inject money into the system to counter hot-money inflows of the sort that recently have driven the yuan to record levels against the U.S. dollar. (MA)

INDIA: The trade deficit narrowed in November on a sharp fall in imports and a slight expansion in exports. November exports rose 5.86% on-year compared to 13.5% in October while imports contracted 16.4%, reducing the trade deficit to $9.2 billion in November from October’s $10.6 billion.

The sharp fall in imports is a direct result of efforts by the government and central bank to bring the country’s perilous current-account deficit–which scared away investors during the summer selloff from emerging-market assets–under control. The government last week took the unusual step of announcing the July-September current-account data earlier than expected, primarily to trumpet that the deficit had shrunk to a four-year low. The November trade data suggest that trend is likely to continue in the final quarter of calendar 2013''. (MA)

Source : WSJ

Investors dismayed as new Barrick chairman talks hedging

''Barrick Gold Corporation, investors have taken in stride news that the world's largest gold producer may consider hedging its gold exposure, but they are roundly panning its plan for more diversification into other commodities''.

''John Thornton, who was confirmed after markets closed on Wednesday as Barrick's next chairman, told reporters he would consider revisiting a hedging strategy for selling the company's output because of the volatility of gold prices.

He also said he thinks Barrick, which already has a copper sideline, is well placed to look more at copper and perhaps at other commodities, once it puts its recent troubles behind it''.

''That pronouncement stung some Barrick shareholders, many of whom are invested in the Toronto-based miner only because they see a bright future for the gold price.

Barrick's share price is stuck near 21-year lows, hurt by a drop in the price of gold and investor disappointment with governance and corporate missteps that include ballooning costs at its now mothballed Pascua-Lama gold project in the South American Andes and its pricey takeover of Africa-focused copper miner Equinox in 2011.

"We are distinctly positioned over the next decade or two, if we can execute, to take what's been built and not only extend it as the world's leading gold miner, but also to take a very serious look at copper, which we are in and possibly minerals beyond that too," Thornton said on Wednesday after Barrick announced a major boardroom shuffle.

Thornton's vision dovetails with that of Barrick's founder and long-time chairman, Peter Munk, who has faced bitter criticism for the C$7.3 billion ($6.9 billion) Equinox deal and other missteps.

Munk has long harbored an ambition to see Barrick become a big diversified miner in the mold of Rio Tinto Ltd   or BHP Billiton Ltd.

Barrick said on Wednesday that Munk, 86, and two other long-term directors, will step down from the board this spring, when Thornton will take over as chairman. Barrick also nominated four new independent directors.

Thornton's remarks on diversification struck a sour note with Christopher Mancini, an analyst at the Gabelli Gold Fund, which owns about 2.86 million Barrick shares.

"The comments overall are disconcerting," he said. "I would say that Barrick has too many mines already. The company needs to get smaller and less complex, not more so."

Source: Mineweb

Taper talk boosts gold. Is this a fundamental change in direction?

Does the recent upwards movement in the gold price on the suggestion that Fed tapering may be imminent constitute a major shift in gold market sentiment?
"But although gold did rise on the latest Fed data, and the suggestion that a taper decision might be made as early as next week, which is certainly a change in track for gold compared with previous such suggestions on tapering, the metal effectively still remains in a downtrend – and some of yesterday’s gains are already coming back down in the markets today. The gold price will need a return to higher levels, and sustain these, if it is to shake off the bears, and the bank analysts predicting lower prices still may yet be proved right. But if our reading of overall trends in the market is correct, gold will again have its place in the sun, but timing remains uncertain. If the Fed does announce a limited taper next week (which we feel is probably unlikely, but we could be wrong) then the impact on the gold price and the S&P and Dow will be interesting to see and could give a good guide as to where gold and the general stock markets are headed next".

Source: Miniweb, Lawrence Williams

Turmoil in Thailand Threatens Economic Recovery

  According to a report from the Wall Street Journal,on Wednesday, antigovernment protesters continued to demonstrate at the Government House, Ms. Yingluck's main offices, demanding that she and her interim government step aside and be replaced by an appointed assembly.

Appropriations for billions of dollars of projects—such as a high-speed rail line—have been slowed amid political upheaval that has included sit-ins at government buildings and massive traffic tie-ups. Meanwhile, instability creates risk, which investors dislike and which could damp growth until at least the second quarter of next year, analysts said.

"A lot of [economic recovery] hinges on whether we will have the elections and who will win," said Thanit Sorat, deputy chairman of the Federation of Thai Industries, a private group promoting Thai industries. "But a bigger question is then, 'Will there be peace?' Protesters who disapprove of the vote outcome may come out on the streets again in no time."

The Thai economy has been weak, with the Bank of Thailand's latest forecast predicting it will have grown 3% overall in 2013. Sluggish private consumption and investment have made government spending even more important to invigorating the economy, analysts said.

Government spending has slowed since October, when Ms. Yingluck's political problems escalated following a proposed amnesty bill. In October and November, government budget disbursements were below targeted goals, and 15.2% lower than the same period last year, according to FTI.

High-profile infrastructure investment projects—touted as the turbo driver of the economy—will be put on the back burner, said Benjamin Shatil, regional Asia economist at J.P. Morgan. These include the government's plan to borrow as much as 2.2 trillion baht ($68.75 billion) off budget to spend over the next seven years to improve the country's aging rail system, highways and ports.

The borrowing bill for these projects passed the lower house and the Senate last month, but hit a snag when the government's opposition asked the Constitutional Court to review its legality. If the bill survives the court's scrutiny, it still will have to be proposed for the king's approval by the new government, which wouldn't likely be fully functional earlier than the second quarter of next year—assuming elections take place as scheduled.

On Wednesday, antigovernment protesters continued to demonstrate at the Government House, Ms. Yingluck's main offices, demanding that she and her interim government step aside and be replaced by an appointed assembly.

China's think tank prediction divisive among economists

It's that time of the year when institutions issue 2014 forecasts, but one major think tank's report on China has analysts divided on its optimistic prediction.

The Chinese Academy of Social Sciences expects the country's GDP to grow by 7.5 percent in 2014.

"In general, the economic trend goes stably, and there should be no suspense to achieve the 7.5 percent growth. If China achieves that goal, its contribution to the world economy will be nearly 28 percent, higher than the US," Pan jiancheng, Deputy Director of China Economic Monitoring Center, says.

But some economists disagree, saying the unfavorable global picture makes that growth hard to achieve.

"The world economy is in recovery, especially the emerging economies which have seen a severe decline in growth this year. It is hard for China to maintain its economic growth under these circumstances," Yu Bin, Director of Macro Economy Research Department of State Council Development Research Center, says.

Other economists say China's change towards quality of GDP means it's more focused on other measurements than just growth rate. But the CASS report does note the Chinese economy faces challenges of high local government debt, employment and environmental issues.

Source: CCTV

China's economic policy expected to focus on reform, GDP quality

Central Economic Work Conference goes into day two. Reform is likely the keyword. The other highlight is quality of growth, rather than quantity.

Hard work, setting economic agenda at a time of economic restructuring.

"2014 will be the first year, and the most important year for China to implement the blueprint outlined by the CPC's 3rd plenary meeting. This year's Economic Work Conference will be guided by reform. This is the biggest highlight of the meeting," Liu Yuanchun, professor at Renmin University, says.

Analysts are waiting for the next batch of economic policies to see if reforms are as ambitious as promised.

"Previously, the government played a decisive role in resource allocation. Now China will let market play that role. This adjustment breaks a long-term system barrier to Chinese economy, and put it on track to transformation and upgrades," He Zhenhong, Director of China Entrepreneur magazine, says.

Accepting slower growth is the other key to China's economic transformation. Local governments will be measured on metrics like the environment, debt levels. It's a big change from the "fast growth above all else" mode of the past.

"The GDP growth target setting is the thing to watch, whether the government will set it at 7.5% or 7 %. If a lower target is adopted it will be good for China's reform and economic transformation," Pan Xiangdong, chief economist of Galaxy Securities, says.

The meeting comes as November economic data show signs of stabilisation, but economists warn fundamentals for a stable economic recovery still need consolidation. Challenges like overcapacity and fiscal risks mean officials at the conference will have their work cut out for them.

Source: CCTV

Eurogroup meeting ends

Three debt-laden European countries are set to get more aid payments, Greece, Cyprus and Ireland. Eurogroup chief Jeroen Dijsselbloem was positive on their reform progress, speaking after the ministerial meeting.

But the head of the group of 17 euro zone finance ministers warns that Greece needs to implement further fiscal measures to unlock 1 billion Euros of funding.

Inspectors check Athens regularly before giving the aid payments. They represent the "troika" of the European Central Bank, the International Monetary Fund and the European Commission.

 Source: CCTV

American Airlines and US Airways form biggest airline

The completion of the merger means American Airlines has risen from the ashes of bankruptcy. This means four major airlines control more than 80 percent of the U.S. air-travel market. But what are the challenges they face?

Ready for takeoff.

The New American Airlines Group is expected to deliver over $1 billion dollars in synergies by 2015.

"By combining the strengths of both companies, we will be delivering the most value to our owners and greatest benefit to our customers," Thomas Horton, Chairman of American Airlines, says.

But the merger survived a challenge from local governments on worries of monopoly practices.

And criticism from consumer groups that it will lead to higher prices.

"More and more mergers. Prices are worse. Choices are less,"  says a traveller in U.S.

The real challenge lies in the next two years is post-merger integration. Doug Parker, CEO for the brand new American Airlines says the two firms have different corporate cultures that need to be melded into one over time.

The other issue is size. Failures in the past have shown that bigger is not always better in the corporate world.

Source:CCTV

WSJ: European Stocks Roughly Flat

"European stocks were roughly flat in early trading on Wednesday as investors continued to express caution that the Federal Reserve could soon scale back its massive bond-buying program and digested news of a U.S. budget deal.

The pan-European Stoxx Europe 600 index edged up about 0.1% in early trading, reversing losses logged as soon as the market opened. The benchmark has been pressured in recent days in the face of strong employment data from the U.S., which has raised expectations that the Fed could start to withdraw its stimulus as early as in its December policy meeting next week.

Germany's DAX was up 0.04%, France's CAC 40 was up 0.5% and the U.K.'s FTSE 100 was up roughly 0.09%.

The moves come after House and Senate negotiators, in a rare bipartisan act, announced a budget agreement on Tuesday designed to avert another economy-rattling government shutdown and to bring a dose of stability to Congress's fiscal policy-making over the next two years. The deal is constructed to allow more spending for domestic and defense programs in the near term, while adopting deficit-reduction measures over a decade to offset the costs".

Asian markets Fall

    According to a report from the Wall Street Journal,"the Shanghai Composite and Hong Kong's Hang Seng Index closed 1.5% and 1.7% lower, respectively, after news that China's four state-owned banks and a former state policy bank will issue a total of 19 billion yuan ($3.1 billion) of negotiable certificates of deposit, the latest step in China's move toward less-restricted interest rates. Liberalization has prompted concerns that the banks will face short-term pressure on their profits".

"Unlike ordinary bank deposits, the interest rate on the new certificates requires the banks to negotiate the cost of capital among themselves.

In Hong Kong, Agricultural Bank of China and China Construction Bank fell 2% and 2.4%, respectively, while HSBC Holdings PLC, the single-largest constituent on the Hang Seng Index, fell 1.3% after it said it had agreed to sell its 8% stake in Bank of Shanghai to Spain'sBancoSantander SA . HSBC didn't say how much it was selling the stake for, but it valued the holding at $468 million on Sept. 30.

Speculation over when the Fed will start to roll back its $85 billion-a-month bond-buying program has been a persistent theme in Asia since the early summer, when it sparked a series of selloffs in the region. Recent employment data from the U.S. has been strong, which has raised expectations that the Fed could start to withdraw its stimulus when its next policy meeting convenes, next week, giving trading a general air of caution.

This caution could be seen in the dollar's movement against the yen, with the greenback losing a total of 0.4% against its Japanese counterpart overnight and last trading at ¥102.73 compared with ¥102.84 late Tuesday in New York.

The yen's strength weighed on Japanese stocks. The Nikkei closed 0.6% lower at 15515.06.

South Korea's Kospi fell 0.8% to 1977.97.

In Australia, the S&P/ASX 200 fell 0.8% to 5104.20, a 3½-month low, as investors continued to worry about the impact of a flurry of initial public offerings hitting the market before the end of the year".

Everbright's third attempt at IPO in Hong Kong expected to be a tough sell

China Everbright Bank will make its initial public offering in Hong Kong on the 20th of December. This is the third time the bank attempts to offer H-shares.

Two failed attempts at an IPO in Hong Kong and it still hasn't given up. China Everbright Bank's trying again, keen to prove that the third time's a charm.

China Everbright Bank called off both its previous attempts at an IPO, in 2011 and 2012, due to volatile markets. And while it once had visions of raising more than six billion U.S. dollars, the bank has significantly scaled back how much it can expect from investors in this third attempt.

Mizuho's Jim Antos says after all that's happened, Everbright's IPO is going to be a tough sell.

"We have a lot of small banks now, mid-sized banks now listing in the last couple of months, and it's not too surprising the shares don't trade very well after the listing, because actually, we're full up already. So this might be successful, it might not. But it doesn't look too hot," Jim Antos, Head of Banking Research of Mizuho Securities, says.

In an unexpected turn of events, JP Morgan Chase last month pulled out as adviser to the deal.

But that didn't keep Everbright from securing initial commitments, reports I-F-R. Of the one-point-four billion dollars in pledges, China Shipping reportedly made the largest commitment at 800 million US dollars.

Everbright would be the third Chinese bank to list in Hong Kong in the past month, as lenders race to meet stricter capital requirements on the Mainland. It’s planning to list on December 20th, eight days after China Cinda Asset Management goes public with its 2.5 billion dollar IPO. The timing couldn't be more ominous, says Antos.

"A year ago Cinda invited Standard Chartered and UBS to invest as long-term investors so they've had a year to do due diligence in a sense that gives a good housekeeping seal of approval. In the case of China Everbright Bank you don't have any of these things. You don't have these positive characteristics. And they may have cornerstone investors, but for sure it’s not Och-Ziff," Antos says.

The one thing going for Everbright? Valuations. Some say with a genuine discount on Everbright's A-shares in Shanghai, its H-shares in Hong Kong look like a big bargain.

Source: CCTV