Stocks will be seriously overvalued if the SET Index reaches 760 points, the Securities Analysts Association warned yesterday, while the market got a downฌgrade from overweight to neutral by MFC Asset Management.
The SET Index has rallied about 90 per cent from the year's trough at about 380 points and it would have doubled at 760, SAA secretarygenฌeral Sombat Narawuttichai said.
At that point, it would risk a steep correction from profittaking, he said.
Even at 700 the SET exceeds its fundamental value based on pricetoearnings (P/E) and discounted cashflow analyses.
The economy can support the SET at only 630-650, some analysts have said.
About 40 per cent of all market securities are overvalued, 50 per cent are undervalued and 10 per cent are in line with their fundamentals.
Thai shares have jumped 61 per cent so far this year, underperforming the Asian region.
Vietnam's Ho Chi Minh Stock Index has gained 84 per cent, Jakarta Composite Index 81 per cent and India's Sensex 74 per cent.
Even though the SAA and MFC Asset Management said the SET Index over 700 points is overvalued, Asia Plus Securities CEO Kongkiat Opaswongkarn and ING Funds (Thailand) managing director Maris Tarab recently estimated that shares would reach 800 within this year.
Sombat said 91 per cent of analysts responding to the SAA's survey were moderately confident in the government's Strong Thailand economic stimulus package, and 9 per cent were highly confident.
Altogether 23 securities analysts answered the questionnaire after the SAA and analysts met Finance Minister Korn Chatikavanich on September 11.
About threefourths of the respondents have medium confidence and the others have high confidence.
Four per cent of the respondents are not confident that the government's investment scheme can go on until 2012 as planned regardless of political changes, 43 per cent have low confidence, 48 per cent have medium confidence and the rest have high confidence.
The analysts agreed unanimously that construction and building material companies would benefit from the scheme but some stocks were overvalued.
After meeting with Korn, some analysts started preparing to upgrade the country's 2010 gross domestic product forecast by about 1 percentage point from the SAA's current consensus of 3 per cent.
Supakorn Soontornkit, senior executive vice president of MFC, told reporters that his company downgraded the stock market as it exceeds his company's base and bestcase scenario for 2009 at 675 and 720 points, respectively.
"I expect that funds flow will continue and shortterm investors can still pile up on stocks but they must be prudent. The SET Index will not reach the 800 level. However, it will not fall below 700 points," he said.
MFC forecasts the SET at 680 in the worstcase, 750 in the basecase and 820 in the bestcase scenarios for next year.
His company recommends investing in three to four-year debt instruments offering coupon rates of 3.54 per cent but avoiding putting money in shorter debt instruฌments as yields are going up.
It is also slightly overweight on commodities and real estate investment trusts.
Pichit Akrathit, president of MFC Asset Management, said his company is marketing the I-Emerging 10 Fund until Monday.
The fund's policy is to invest in equities, debt instruments and deposits in emerging countries worldwide, depending on market conditions.
MFC plans to launch a property fund investing in an office building in Bangkok as well as the Thailand Creativity Fund, investing in innoฌvative businesses.
Friday, September 25, 2009
BIG QUESTIONS THAT NEED QUICK ANSWERS
World leaders will meet at the G-20 Summit with time running out to prevent the recession worsening
The G-20 Summit in Pittsburgh, which will begin today and end on Friday, opens up an opportunity for world leaders to find a way out of the current financial mess. Prime Minister Abhisit Vejjajiva is also participating in this summit, as chair of the Association of Southeast Asia Nations.
Five months ago, the world was reeling under unprecedented financial turmoil. Many were predicting that an economic depression was on the horizon, after decades of global imbalances and financial bubbles. A concerted action by the G-20 helped stave off the crisis, with some US$12 trillion having been poured into the global economy and financial system to prevent a systemic collapse.
High on the agenda of the G-20 - the member countries of which control about 85 per cent of the world's gross domestic product - is a joint economic programme to arrest the recession, coordination efforts on financial policy to prevent another crisis, how to curb bank executives' pay to prevent them from taking excessive risks, and an exit strategy from the government intervention into the economies.
There are dilemmas facing the G-20 leaders. The fiscal stimulus programmes may prevent economies from weakening any further, but they have created enormous burdens on public-sector debt. The loose monetary policy to assist banks and corporations in resuming their business might ignite fears of inflation. When is the appropriate time for the G-20 to exit from its heavy-handed involvement in the global economy and global financial system so that the private sector can take charge again?
There are signs that the global recession is fading. But most G-20 leaders, and the International Monetary Fund, are not rushing to bet on that. Gordon Brown, the UK prime minister, said it is premature to conclude that the recession is over, and it is still necessary for the UK to continue its fiscal stimulus programme. US President Barack Obama said unemployment in the US will continue to worsen over the next couple of months. Canada is pledging a fiscal stimulus package equivalent to about 4 per cent of its gross domestic product, just to keep the economy humming. It has called for the G-20 to continue the fiscal programmes to help lift the world out of the recession.
Most interesting will be how China plays its cards at the summit. China would like to have a greater say in the International Monetary Fund. It has said it is willing to subscribe to the tune of $50 billion in the IMF's $500 billion recapitalisation programme, to increase its lending capacity to needy countries facing balance of payments crises. The US and the European Union, however, are still cautious over China's attempt to exert its newfound influence in the international financial institutions.
Moreover, China also wants to reform the IMF away from its current make-up, which has been around since the end of World War II. Along with Brazil, India and Russia, China has called for the international monetary system to steer away from the US dollar as the predominant reserve currency. China is relying on a two-track strategy on this front. It would like the role of the Special Drawing Rights - a currency unit of the IMF - to play a greater role in global financial transactions. At the same time, it is boosting the role of its renminbi, gradually taking steps to liberalise its financial system to allow greater convertibility of the currency.
These are the big issues that the G-20 leaders will have to address to prevent this recession from deepening and the financial turmoil from getting any further out of control. If the global economy is to face a double dip, it will be difficult for them to pull it out of trouble a second time, given the massive resources they have already poured in to support it.
Moreover, if the G-20 leaders do not have the courage to rein in control over the financial services, which have gone out of control, financial turmoil will return to haunt us all again.
The G-20 Summit in Pittsburgh, which will begin today and end on Friday, opens up an opportunity for world leaders to find a way out of the current financial mess. Prime Minister Abhisit Vejjajiva is also participating in this summit, as chair of the Association of Southeast Asia Nations.
Five months ago, the world was reeling under unprecedented financial turmoil. Many were predicting that an economic depression was on the horizon, after decades of global imbalances and financial bubbles. A concerted action by the G-20 helped stave off the crisis, with some US$12 trillion having been poured into the global economy and financial system to prevent a systemic collapse.
High on the agenda of the G-20 - the member countries of which control about 85 per cent of the world's gross domestic product - is a joint economic programme to arrest the recession, coordination efforts on financial policy to prevent another crisis, how to curb bank executives' pay to prevent them from taking excessive risks, and an exit strategy from the government intervention into the economies.
There are dilemmas facing the G-20 leaders. The fiscal stimulus programmes may prevent economies from weakening any further, but they have created enormous burdens on public-sector debt. The loose monetary policy to assist banks and corporations in resuming their business might ignite fears of inflation. When is the appropriate time for the G-20 to exit from its heavy-handed involvement in the global economy and global financial system so that the private sector can take charge again?
There are signs that the global recession is fading. But most G-20 leaders, and the International Monetary Fund, are not rushing to bet on that. Gordon Brown, the UK prime minister, said it is premature to conclude that the recession is over, and it is still necessary for the UK to continue its fiscal stimulus programme. US President Barack Obama said unemployment in the US will continue to worsen over the next couple of months. Canada is pledging a fiscal stimulus package equivalent to about 4 per cent of its gross domestic product, just to keep the economy humming. It has called for the G-20 to continue the fiscal programmes to help lift the world out of the recession.
Most interesting will be how China plays its cards at the summit. China would like to have a greater say in the International Monetary Fund. It has said it is willing to subscribe to the tune of $50 billion in the IMF's $500 billion recapitalisation programme, to increase its lending capacity to needy countries facing balance of payments crises. The US and the European Union, however, are still cautious over China's attempt to exert its newfound influence in the international financial institutions.
Moreover, China also wants to reform the IMF away from its current make-up, which has been around since the end of World War II. Along with Brazil, India and Russia, China has called for the international monetary system to steer away from the US dollar as the predominant reserve currency. China is relying on a two-track strategy on this front. It would like the role of the Special Drawing Rights - a currency unit of the IMF - to play a greater role in global financial transactions. At the same time, it is boosting the role of its renminbi, gradually taking steps to liberalise its financial system to allow greater convertibility of the currency.
These are the big issues that the G-20 leaders will have to address to prevent this recession from deepening and the financial turmoil from getting any further out of control. If the global economy is to face a double dip, it will be difficult for them to pull it out of trouble a second time, given the massive resources they have already poured in to support it.
Moreover, if the G-20 leaders do not have the courage to rein in control over the financial services, which have gone out of control, financial turmoil will return to haunt us all again.
CRISIS NOT BEHIND US, SAYS IMF
The G-20 summit will kick off today in Pittsburgh with the leaders pledging to hold on to government stimulus measures to avoid interrupting the economic recovery because the cirsis is not over yet.
The agenda at the September 24-25 summit includes possible curbs on financial industry pay, joint economic policies anad whether to start winding down stimulus spending.
However, British Prime Minister Cordon Brown indicated that the global economy had yet to ffel the biggest impact of the government-led spending programmes to stimulate demand and reiterated concerns about removing them too early.
"The stimulus that we have still got to give the world economy is greater than the stimulus we have already thad," Brpwm said. "What we want to do is safefuard a recovery from a recession we feared would develop into a depression."
Politicians in Britain are calling for the government to put the brakes on spending and to fucus on curbing the budget deficit that next year will exceed 12 per cent of gross domestic product, the most in the Group of 20.
But International Monetary Fund Manageing Director Dominique Strauss-Kahn called on leaders from the G-20 nations to maintain efforts to pull the world economy out of a recession, warning that the crisis is not over yet.
"This recovery will be rather sluggish, at an average lower than growth we had befor the crisis," Strauss-Kahn said in an interview in Washington. "It's too early to say the crisis is behind us."
The IMF chief also urged policy-makers to seize the opportunity to address imbalances in trade and investment flows blamed for contributing to the credit collapse.
Giving China a bigger role in the fund will help bolster cooperation, he said, as policy-mamers seek agreement to pare US borrowing and buttress domestic demand in nations with trade surpluses.
Brown is seeking support for a formal series of meetings among world leaders to coordinate economic policies and tackle problems ranging from trade imblances to bonus pay earned by bankers.
Brown said economic recovery was not yet guaranteed, addomg tp cp,,emts from IS President Barack Obama, who this week said the unemployment rate "could even get a little bit worse, over the next couple of months".
French Finance Minister Christine Lagarde, who will also be in the Pennsylvania city along with President Nicolas Sarkozy, echoed those sentiments.
The G-20 needs to "give a very strong signal that they will continue the stimulus plans", Largarde said on France Inter radio. "We've stopped the free-fall, but we must continue to underpin the economy."
The UK and the US are proposing similar measures to get national governments to steer economic policy so that futhure imbalances can be worked out before they damage the system.
At the same time, Beijing is pressing for a bigger voice in the IMF and says G-20 leaders should start making good on promises to give developing countries more IMF votes.
A deputy governor of China's central bank proposed the creation of a multinational sovereign wealth fund to help developing countries, in a report released ahead of the G-20 summit.
"Considerations can be [given] to setting up a "suprasovereign wealth investment fund' to help channel captital inflow into the developing would so that these countries can serve as new engines in global recovery," said the official.
The agenda at the September 24-25 summit includes possible curbs on financial industry pay, joint economic policies anad whether to start winding down stimulus spending.
However, British Prime Minister Cordon Brown indicated that the global economy had yet to ffel the biggest impact of the government-led spending programmes to stimulate demand and reiterated concerns about removing them too early.
"The stimulus that we have still got to give the world economy is greater than the stimulus we have already thad," Brpwm said. "What we want to do is safefuard a recovery from a recession we feared would develop into a depression."
Politicians in Britain are calling for the government to put the brakes on spending and to fucus on curbing the budget deficit that next year will exceed 12 per cent of gross domestic product, the most in the Group of 20.
But International Monetary Fund Manageing Director Dominique Strauss-Kahn called on leaders from the G-20 nations to maintain efforts to pull the world economy out of a recession, warning that the crisis is not over yet.
"This recovery will be rather sluggish, at an average lower than growth we had befor the crisis," Strauss-Kahn said in an interview in Washington. "It's too early to say the crisis is behind us."
The IMF chief also urged policy-makers to seize the opportunity to address imbalances in trade and investment flows blamed for contributing to the credit collapse.
Giving China a bigger role in the fund will help bolster cooperation, he said, as policy-mamers seek agreement to pare US borrowing and buttress domestic demand in nations with trade surpluses.
Brown is seeking support for a formal series of meetings among world leaders to coordinate economic policies and tackle problems ranging from trade imblances to bonus pay earned by bankers.
Brown said economic recovery was not yet guaranteed, addomg tp cp,,emts from IS President Barack Obama, who this week said the unemployment rate "could even get a little bit worse, over the next couple of months".
French Finance Minister Christine Lagarde, who will also be in the Pennsylvania city along with President Nicolas Sarkozy, echoed those sentiments.
The G-20 needs to "give a very strong signal that they will continue the stimulus plans", Largarde said on France Inter radio. "We've stopped the free-fall, but we must continue to underpin the economy."
The UK and the US are proposing similar measures to get national governments to steer economic policy so that futhure imbalances can be worked out before they damage the system.
At the same time, Beijing is pressing for a bigger voice in the IMF and says G-20 leaders should start making good on promises to give developing countries more IMF votes.
A deputy governor of China's central bank proposed the creation of a multinational sovereign wealth fund to help developing countries, in a report released ahead of the G-20 summit.
"Considerations can be [given] to setting up a "suprasovereign wealth investment fund' to help channel captital inflow into the developing would so that these countries can serve as new engines in global recovery," said the official.
Funds stabilise as "vanished" cash returns
Thailand's fund industry has returned to normal, with net assets under management industry-wide projected to exceed 1.82 trillion baht in 2010, according to Pichit Akrathit, the president of MFC Asset Management.
The figure would represent a 3.73%increase from the 1.75 trillion baht now managed by local funds, and is based on a 2010 target for the Stock Exchange of Thailand index of 820 points.
Portfolio assets held by the asset management industry would fall to around 1.804 trillion baht assuming the SET index stayed at around 750 points in 2010.
he index closed yesterday at 730.52 points, up 6.15, in trade worth 32.5 billion baht.
Dr Pichit said that from August to November 2008,130 billion baht in assets vanished from the local fund industry.
The funds have since returned over the past four months, he said, adding that there was a 60% correlation between the SET and net asset values for the fund industry.
Local stocks also still have room to move upward, even with the more than 60% gain posted by the SET for the year to date.
Dr Pichit noted that over the past year, foreign investors had injected 40 billion baht in funds into local stocks,representing just 20% of the total outflows seen during the global crisis.
He added that Thailand's financial system had also shown signs of growing maturity, with fund assets now accounting for 27.8% of total bank deposits compared with 20% before the global financial crisis.
By the end of 2010, total net assets held by local funds is projected to rise to 28.8% of bank deposits.
Narongchai Akrasanee, the chairman of MFC Asset Management, agreed that global financial markets have largely normalised.
"Still, there remains a number of risk factors that deserve close monitoring,including the extent of financial losses post-crisis and the speed in which the real sector recovers," he said.
Supakorn Soontornkit, a senior executive vice-president at MFC Asset Management, cautioned that local stocks could see a short-term correction on profit-taking that could push the index to 680 to 700 points.
MFC plans to launch several new funds over the next few months, including a commercial property fund now in the filing process with the Securities and Exchange Commission.
The company also expects to see progress under the Thailand Creativity Fund,a new fund to be placed with institutional investors and emphasising investments in innovative companies.
The figure would represent a 3.73%increase from the 1.75 trillion baht now managed by local funds, and is based on a 2010 target for the Stock Exchange of Thailand index of 820 points.
Portfolio assets held by the asset management industry would fall to around 1.804 trillion baht assuming the SET index stayed at around 750 points in 2010.
he index closed yesterday at 730.52 points, up 6.15, in trade worth 32.5 billion baht.
Dr Pichit said that from August to November 2008,130 billion baht in assets vanished from the local fund industry.
The funds have since returned over the past four months, he said, adding that there was a 60% correlation between the SET and net asset values for the fund industry.
Local stocks also still have room to move upward, even with the more than 60% gain posted by the SET for the year to date.
Dr Pichit noted that over the past year, foreign investors had injected 40 billion baht in funds into local stocks,representing just 20% of the total outflows seen during the global crisis.
He added that Thailand's financial system had also shown signs of growing maturity, with fund assets now accounting for 27.8% of total bank deposits compared with 20% before the global financial crisis.
By the end of 2010, total net assets held by local funds is projected to rise to 28.8% of bank deposits.
Narongchai Akrasanee, the chairman of MFC Asset Management, agreed that global financial markets have largely normalised.
"Still, there remains a number of risk factors that deserve close monitoring,including the extent of financial losses post-crisis and the speed in which the real sector recovers," he said.
Supakorn Soontornkit, a senior executive vice-president at MFC Asset Management, cautioned that local stocks could see a short-term correction on profit-taking that could push the index to 680 to 700 points.
MFC plans to launch several new funds over the next few months, including a commercial property fund now in the filing process with the Securities and Exchange Commission.
The company also expects to see progress under the Thailand Creativity Fund,a new fund to be placed with institutional investors and emphasising investments in innovative companies.
SCIB SHARE PRICE TO BE DECIDED EARLY NEXT YEAR
Siam City Bank has said its major shareholder, the Financial Institutions Development Fund, will be able to decide the bank's share price for potential buyers of its stake by early next year.The FIDF, which holds about 47 per cent of SCIB's shares, has been engaged in the process of selling its stake for years and is expected to conclude the sale once the price is set. The share sale is therefore now likely to be concluded by the midฌdle of next year.
"The FIDF expects it will get a financial advisฌer by October 22. It will have the adviser study all the information for about three to four weeks. Then, it will submit a prospectus to potential SCIB share buyers within another two weeks. So, we expect that we will know the final [share] price early next year," Chaiwat Utaiwan, presiฌdent and CEO of SCIB, said over the weekend.
Currently, the FIDF holds 47.58 per cent of SCIB, which is the seventhlargest bank in Thailand.
Early last week, the FIDF's board approved the hiring of a financial advisor in order to suggest strategy and a sharesale plan for SCIB. The adviser is expected to be appointed on October 22.
The Bank of Thailand said the entire process for the SCIB share sale was likely to be concluded within the second quarter of next year.
The share sale has attracted many buyers, including Thanachart Group, whose subฌsidiary Thanachart Bank's major shareholder is Canada's Scotia Bank. Other potential buyers include the Industrial and Commercial Bank of China, HSBC and Barclays.
Chaiwat added that once the FIDF submitted a prospectus to buyers, they would send their letฌters of intent to buy SCIB shares to the fund and propose their pricing.
The financial adviser and the FIDF will then consider the responses and allow buyers to conฌduct due diligence. The FIDF and the Finance Ministry will make the final decision on the purchaser.
SCIB has more than 400 branches with banking business licences and conducts universal banking via subsidiaries, includฌing insurance, life insurance, leasฌing and securities.
As of the end of June, SCIB's assets were accounted at Bt414 bilฌlion for separatฌed statement and Bt420 bilฌlion for consoliฌdated stateฌment. The bank's lending stood at Bt279 billion and deposits at Bt334 billion.
Chaiwat said the bank would not be able to extend credit as targeted this year at Bt18 bilฌlion, which would have repฌresented annual growth of 6 per cent. New lendฌing will instead be in the range of Bt8 billion to Bt15 billion.
He added that the bank had approved some large credits, but many corporate customers and small and mediumsized enterprise clients had not taken up their credit lines. In addition, these corporate and SME customers are repaying their existing debts.
He expects the bank's lending growth for next year to either expand slightly from this year or remain flat, as it is currently under the process of a change in major shareholder. The change would affect the bank's organisation as well as business strategy and lendฌing growth, he said.
"The bank will not be able to extend credit as targeted this year at Bt18 billion, which would have represented annual growl of 6 per cent. New lending will instead be in the range of Bt8 billion to Bt15 billion."
"The FIDF expects it will get a financial advisฌer by October 22. It will have the adviser study all the information for about three to four weeks. Then, it will submit a prospectus to potential SCIB share buyers within another two weeks. So, we expect that we will know the final [share] price early next year," Chaiwat Utaiwan, presiฌdent and CEO of SCIB, said over the weekend.
Currently, the FIDF holds 47.58 per cent of SCIB, which is the seventhlargest bank in Thailand.
Early last week, the FIDF's board approved the hiring of a financial advisor in order to suggest strategy and a sharesale plan for SCIB. The adviser is expected to be appointed on October 22.
The Bank of Thailand said the entire process for the SCIB share sale was likely to be concluded within the second quarter of next year.
The share sale has attracted many buyers, including Thanachart Group, whose subฌsidiary Thanachart Bank's major shareholder is Canada's Scotia Bank. Other potential buyers include the Industrial and Commercial Bank of China, HSBC and Barclays.
Chaiwat added that once the FIDF submitted a prospectus to buyers, they would send their letฌters of intent to buy SCIB shares to the fund and propose their pricing.
The financial adviser and the FIDF will then consider the responses and allow buyers to conฌduct due diligence. The FIDF and the Finance Ministry will make the final decision on the purchaser.
SCIB has more than 400 branches with banking business licences and conducts universal banking via subsidiaries, includฌing insurance, life insurance, leasฌing and securities.
As of the end of June, SCIB's assets were accounted at Bt414 bilฌlion for separatฌed statement and Bt420 bilฌlion for consoliฌdated stateฌment. The bank's lending stood at Bt279 billion and deposits at Bt334 billion.
Chaiwat said the bank would not be able to extend credit as targeted this year at Bt18 bilฌlion, which would have repฌresented annual growth of 6 per cent. New lendฌing will instead be in the range of Bt8 billion to Bt15 billion.
He added that the bank had approved some large credits, but many corporate customers and small and mediumsized enterprise clients had not taken up their credit lines. In addition, these corporate and SME customers are repaying their existing debts.
He expects the bank's lending growth for next year to either expand slightly from this year or remain flat, as it is currently under the process of a change in major shareholder. The change would affect the bank's organisation as well as business strategy and lendฌing growth, he said.
"The bank will not be able to extend credit as targeted this year at Bt18 billion, which would have represented annual growl of 6 per cent. New lending will instead be in the range of Bt8 billion to Bt15 billion."
CHINA INVESTS $850M IN COMMODITIES TRADER NOBLE
China's sovereign wealth fund is buying a US$850-million (Bt28.6-billion) stake in Noble Group, one of Asia's biggest trading houses, to expand its commodities investments.
China Investment Corp (CIC), which manages a portion of Beijing's $2 trillion in foreign currency reserves, will own 12.91 per cent of Noble after the deal, Hong Kong-based Noble said in a statement.
Chinese companies, flush with cash from the country's economic boom, are investing abroad in mining, oil, agricultural commodities and other resources in hopes of profiting from future increases in demand.
Noble and CIC plan to jointly invest in infrastructure assets and supply chain management related to Noble's agricultural activities, the statement said. Noble's assets range from Australian iron mines to Brazilian sugar mills and cocoa processing in Africa.
Noble, whose shares are traded in Singapore, reported $36 billion in 2008 revenues but profit has been hurt by the decline in commodities prices, falling 33 per cent in the quarter ending on June 30 from a year earlier.
Among its other recent resource deals, CIC paid $1.5 billion in July for a 17-per-cent stake in Canadian mining Teck Resources LTd.
ON THE NET:
www.thisisnoble.com
China Investment Crop will own 12.91% of Noble. Noble's assets range from Australian iron mines to Brazilian sugar mills and cocoa processing in Africa.
China Investment Corp (CIC), which manages a portion of Beijing's $2 trillion in foreign currency reserves, will own 12.91 per cent of Noble after the deal, Hong Kong-based Noble said in a statement.
Chinese companies, flush with cash from the country's economic boom, are investing abroad in mining, oil, agricultural commodities and other resources in hopes of profiting from future increases in demand.
Noble and CIC plan to jointly invest in infrastructure assets and supply chain management related to Noble's agricultural activities, the statement said. Noble's assets range from Australian iron mines to Brazilian sugar mills and cocoa processing in Africa.
Noble, whose shares are traded in Singapore, reported $36 billion in 2008 revenues but profit has been hurt by the decline in commodities prices, falling 33 per cent in the quarter ending on June 30 from a year earlier.
Among its other recent resource deals, CIC paid $1.5 billion in July for a 17-per-cent stake in Canadian mining Teck Resources LTd.
ON THE NET:
www.thisisnoble.com
China Investment Crop will own 12.91% of Noble. Noble's assets range from Australian iron mines to Brazilian sugar mills and cocoa processing in Africa.
Tuesday, September 22, 2009
CHINA MAY BUY GOLD OFFERED BY IMF
China may purchase some of the 403.3 metric tonnes of gold being offered by the International Monetary Fund, Market News International reported yesterday, citing two unidentified government sources.
China will consider the purchase to diversify its reserves if the price is right and the potential return relatively high, the report said, citing one of the sources.
There is no indication China is seeking to buy all of the gold on offer, it said, citing no one.
The IMF board approved the sales, valued at about US$13 billion (Bt445 billion), pledging to avoid disrupting the market with the transactions and saying it would "stand ready to sell gold directly to central banks," according to a statement issued last Friday.
An official at the People's Bank of China declined to comment.
China, the world's biggest gold producer, has increased reserves by 76 per cent to 1,054 tonnes since 2003 and has the fifth-biggest holdings by country, Hu Xiaolian, head of the State Administration of Foreign Exchange, said in April.
China's foreign reserves, the world's largest, rose 9.1 per cent in the second quarter, climbing a record $178 billion, and totalled $2.13 trillion on June 30, according to the central bank. The bullion sales can occur any time, the IMF said. Selling directly to central banks, which have not yet expressed interest, would be faster, according to the IMF.
Bullion for immediate delivery declined as much as 1.2 per cent in Singapore to a low of $995.97 an ounce, the first day it traded below $1,000 since September 15.
It was priced at $999.30 ounce late afternoon in Singapore.
China may double the ratio of its gold holdings to its foreign-currency reserves over five years, Sun Zhaoxue, chairman of the China Gold Association, said on May 15.
The association "hopes" China will increase gold holdings to 3 per cent of foreign currency reserves in five years from 1.4 per cent now, Sun added.
China will consider the purchase to diversify its reserves if the price is right and the potential return relatively high, the report said, citing one of the sources.
There is no indication China is seeking to buy all of the gold on offer, it said, citing no one.
The IMF board approved the sales, valued at about US$13 billion (Bt445 billion), pledging to avoid disrupting the market with the transactions and saying it would "stand ready to sell gold directly to central banks," according to a statement issued last Friday.
An official at the People's Bank of China declined to comment.
China, the world's biggest gold producer, has increased reserves by 76 per cent to 1,054 tonnes since 2003 and has the fifth-biggest holdings by country, Hu Xiaolian, head of the State Administration of Foreign Exchange, said in April.
China's foreign reserves, the world's largest, rose 9.1 per cent in the second quarter, climbing a record $178 billion, and totalled $2.13 trillion on June 30, according to the central bank. The bullion sales can occur any time, the IMF said. Selling directly to central banks, which have not yet expressed interest, would be faster, according to the IMF.
Bullion for immediate delivery declined as much as 1.2 per cent in Singapore to a low of $995.97 an ounce, the first day it traded below $1,000 since September 15.
It was priced at $999.30 ounce late afternoon in Singapore.
China may double the ratio of its gold holdings to its foreign-currency reserves over five years, Sun Zhaoxue, chairman of the China Gold Association, said on May 15.
The association "hopes" China will increase gold holdings to 3 per cent of foreign currency reserves in five years from 1.4 per cent now, Sun added.
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