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Weaker oil and rate decision send rouble to all-time low

September 15, 2014 - reuters.com

(Recasts, adds comments) By Alexander Winning and Lidia Kelly MOSCOW, Sept 15 (Reuters) - Russia's rouble currency hit a new low against the dollar on Monday, hit by falling oil prices and a decision by the central bank not to raise interest rates despite investor concern over the economic effect of the Ukraine crisis. Russian assets took a beating last week after the United States and European Union imposed new sanctions over Moscow's role in the separatist conflict in Ukraine, further limiting access to foreign capital for some of Russia's top companies. In the first hour of trading on Monday, the rouble fell to a new all-time low of 38.00 roubles per dollar. By 0900 GMT it had extended losses to trade 0.81 percent weaker against the dollar at 38.09 RUBUTSTN=MCX and 0.55 percent lower at 49.21 versus the euro EURRUBTN=MCX . "There are three factors weighing on the rouble: emerging-market currencies are under pressure, oil prices are weak and the Russian central bank did not raise rates last week," VTB Capital foreign exchange analyst, Maxim Korovin, said. Global oil benchmark Brent LCOc1 slumped to a more than two-year low on Monday as lacklustre economic data from China, the world's top energy consumer, cast a shadow on the outlook for oil demand amid abundant global supplies. ID:nL3N0RG1NT Russia relies on oil and gas for about two-thirds of exports and half of federal budget revenues. Korovin said the rouble might fall still further over the coming week, noting that rates for Russian companies looking to park their foreign currency holdings at the central bank remain low, reflecting weak demand. The Russian central bank left its key interest rate on hold at a regular meeting on Friday, signalling a dovish shift in policy which may mean that a recent cycle of rate hikes is over. The bank aims to move to a freely floating rouble this year. ID:nL5N0RD1XA Emerging market currencies are under pressure as markets have brought forward the risk of an earlier interest rate hike by the U.S. Federal Reserve, making lower-risk assets more attractive. The rouble has weakened about 15 percent against the U.S. currency this year, spurring inflation, which was running at an annualised 7.6 percent in August, well above the central bank's official 5 percent target. RUCPIY=ECI An added worry for investors in Russian assets is that President Vladimir Putin has said Russia is considering how to retaliate against the latest round of Western economic sanctions. "If our government refrains from radical steps, we can expect the (rouble-dollar) pair to return to 37.50," Golden Hills Capital investment firm's chief analyst, Natalia Samoilova, said in a note. Russia retaliated to an earlier round of sanctions by banning food imports from many Western countries. Ratings agency Moody's said on Monday that the latest Western sanctions are credit negative for Russia as they exert pressure on the economy's long-term growth potential and may undermine its fiscal and external position. Moscow-listed shares also fell on Monday, with top lender Sberbank SBER.MM - seen as a barometer for the wider Russian economy - down 1.1 percent after being included in the latest round of U.S. sanctions. The dollar-denominated RTS index .IRTS eased 1 percent to 1,200 points by 0900 GMT, while its rouble-based peer MICEX .MCX traded 0.5 percent lower at 1,451 points. For rouble poll data see FXRUB FXEURRUB FXRUS For Russian equities guide see RU/EQUITY For Russian treasury bonds see 0#RUTSY=MM Russia in graphics: http://link.reuters.com/dun63s (Editing by Elizabeth Piper and Louise Ireland) ((lidia.kelly@thomsonreuters.com; +7 495 775 1242; Reuters Messaging: lidia.kelly.reuters.com@reuters.net)) Keywords: RUSSIA MARKETS/

London platinum/palladium 0945 fix - Sept 15

September 15, 2014 - reuters.com

MIDEAST MONEY-U.S. rate hikes to trim inflation, expose weak finances in Gulf

September 15, 2014 - reuters.com

* Gulf better able to handle U.S. rate hikes than most regions * But currency pegs mean GCC c.banks will follow Fed quickly * Low pass-through rates mean little impact on GDP growth * Inflation, money supply growth likely to be affected more * Bahrain and Oman budgets, Dubai property market may be losers By Martin Dokoupil DUBAI, Sept 15 (Reuters) - Most of the Gulf's rich oil exporting economies will cope comfortably with an era of rising interest rates, but fund flows within the Gulf may shift and fragile state finances in the less wealthy countries will become more exposed. Economies and markets around the world are bracing for the first U.S. interest rate hike in more than eight years, which is likely to be the first of a series as the Federal Reserve slowly returns to normal policy after the global financial crisis. A Fed meeting this week will release fresh economic and interest-rate projections that, some analysts believe, could open the door to a rate hike as soon as March. That could start a mass migration of money into U.S. dollar assets, sucking liquidity from other economies. ID:nL1N0RB1GL As a whole, the Gulf is better equipped to withstand this threat than almost any other region in the world. Its huge current account and state budget surpluses mean it does not need to rely on external financing, so it does not need to fear tighter global liquidity as many other emerging markets do. But the Gulf will be compelled to imitate U.S. rate hikes because of its currency pegs to the U.S. dollar - allowing large interest rate gaps to open up could be destabilising. Higher interest rates look certain to slow economies to some degree. And within the Gulf, some countries and markets will fare better than others. Bahrain and Oman, which don't have big surpluses, may be among the relative losers. Dubai, its economy heavily dependent on its interest rate-sensitive real estate sector, may also fare less well. "Growth will be slower, inflation lower and capital inflows higher," James Reeve, deputy chief economist at Samba Financial Group in London, said of the Gulf. Saudi Arabia, the region's biggest economy, will continue growing but "with oil prices expected to drift, I think the rate hike will come at a time of slowing growth, which is obviously not ideal." <----------------------------------------------------------- Gulf GDP growth vs the U.S. http://link.reuters.com/nax72w Gulf money mkts, Fed policy http://link.reuters.com/qax72w Gulf inflation, Fed policy http://link.reuters.com/rax72w -----------------------------------------------------------> DEVIATION When the U.S. rate hikes start, Gulf central banks are expected to follow suit quite quickly - some of them within days, local central bank officials and money market traders say. Kuwait has slightly more freedom than the others because it does not have a direct currency peg to the dollar but uses an undisclosed currency basket, which analysts believe is dominated by the dollar. When U.S. interest rates were falling in 2008, some central banks in the six-nation Gulf Cooperation Council were able to delay following the Fed. For example, Qatar's central bank did not change its policy rates between September 2008 and August 2010 even after the Fed slashed its rates near zero. But when U.S. rates are on the way up, Gulf central banks are expected to respond much more quickly, in order to eliminate the possibility of capital outflows destabilising their markets. "GCC central banks can afford some deviation from U.S. monetary policy, but this is relatively small and cannot be sustained over time given the peg to the dollar," said Farouk Soussa, Citigroup's chief economist for the region. "So rising Fed rates will mean a rise in GCC rates, whenever that happens." The impact on economic growth in the GCC looks likely to be minor, however. That is because Gulf interbank money markets are still shallow and primitive compared to markets in developed countries, limiting the impact on local deposit and lending rates of official rate hikes - especially at the start of a tightening cycle, economists say. Since GCC banks are less dependent on the money markets than their foreign counterparts, obtaining cash through other means such as deposit growth and retained earnings, corporate lending rates in the Gulf may not rise as abruptly as in other regions. A 2012 working paper on monetary policy transmission in the GCC by the International Monetary Fund found a 1 percentage point jump by the Fed funds rate would tend to reduce non-oil gross domestic product in the GCC by only around 0.1 percent - not much for economies growing at rates of around 4 percent. Fiscal policy remains much more important than monetary policy in driving GCC economies. The budget surpluses of major Gulf governments suggest state spending will stay strong - even if growth slows from recent years' rapid pace - unless oil prices fall steeply for a long period. The biggest impact of interest rate hikes in the Gulf would probably be on inflation; M2 money supply would be reduced by 0.6 percent and consumer price levels by 0.8 percent 10 quarters after the interest rate shock, the IMF study estimated. This could actually be welcome for some booming Gulf countries which might already have begun tightening policy if their currency pegs had permitted it. Inflation in Qatar, where heavy infrastructure development is heating up the economy, rose to 3.8 percent in August, the highest since 2008. ID:nL5N0RA0J6 WEAKNESSES Dearer money will be less welcome for the GCC's two smaller, weaker economies, however. Bahrain and Oman both lack the ample oil reserves of their bigger neighbours so they have less room to maneouvre if global market conditions become more difficult, even though they can count on aid from allied Gulf nations in emergencies. Rate hikes "could be timely for Qatar, whose economy is showing signs of overheating. However, for countries with fragile balances like Bahrain, it could be bad news," said Selim Cakir, chief economist for Turkey and the GCC at BNP Paribas. Bahrain's state budget deficit is already expected to swell to a five-year high of 5.0 percent of GDP next year from an estimated 3.7 percent in 2014, according to analysts polled by Reuters. Higher interest rates would make financing that gap more expensive. GULFPOLL1 Oman has been running budget surpluses, but the oil price which analysts estimate it needs to balance its budget has now risen to $102 per barrel, from just $61 in 2009. That is above the current Brent crude price LCOc1 of about $96. The result is that Oman is likely to have to expand its government borrowing programme and as soon as next year resort to debt sales in the international market for the first time since 1997 - at a time of rising interest rates. Tighter monetary policy could also prove inconvenient for Dubai, which has boomed in the last several years on the back of a spectacular recovery in its property market. Real estate and construction accounted for over 22 of the emirate's GDP in the first quarter of this year, a high ratio. This summer there have been signs that the market's uptrend is slowing as prices return to levels hit before Dubai's 2009 financial crisis; higher interest rates could ultimately put a cap on prices and real estate activity. ID:nL6N0PV070 U.S. rate hikes "could hurt the recovery in the real estate sector of Dubai and would increase the cost of financing for the new and existing projects," Cakir said. Rising interest rates could also make it more expensive for Dubai to refinance the debt mountain left over from the 2009 crash; the IMF estimates the emirate's government and state-linked firms face some $85 billion of debt maturing in 2015-2019. Some of Dubai's debt restructuring plans, particularly the $25 billion deal for state-owned conglomerate Dubai World DBWLD.UL , depend on future sales of global assets which may become harder as interest rates climb. ID:nL5N0RB3GX The outcome may be a shift of money flows within the GCC, away from Dubai where frothy markets have benefited from years of rock-bottom interest rates, and towards economies - like Saudi Arabia's - which can cope most comfortably with an era of more expensive money. (Editing by Andrew Torchia) ((Martin.Dokoupil@thomsonreuters.com; +971 4 362 5832; Reuters Messaging: martin.dokoupil.thomsonreuters.com@reuters.net)) Keywords: MIDEAST INTEREST RATE/ECONOMY

HKMA prepares for greater yuan demand before stock connect scheme

September 15, 2014 - reuters.com

(Adds details and comments) * HKMA to launch renminbi intra-day repos * Yuan daily conversion limit will be lifted * China to further facilitate foreign investments By Michelle Chen and Hongmei Zhao HONG KONG, Sept 15 (Reuters) - The Hong Kong Monetary Authority (HKMA) said on Monday it plans to launch a 10 billion yuan ($1.6 billion) intra-day repurchase facility to meet increasing demand for the Chinese currency when a landmark stock connect scheme kicks off in October. The city's de facto central bank is also seeking to lift the daily conversion limit for its residents, now capped at 20,000 yuan, to facilitate investments in China's domestic stock market. The stock-connect programme between Shanghai and Hong Kong - a big step in China's efforts to open up its markets - is widely expected to fuel more demand for yuan assets and market participants are racing to test mechanisms to ensure readiness. "We estimate demand for renminbi will be huge after the stock connect scheme, though it is difficult to quantify it. We've talked with banks and believe the 10 billion yuan repo quota should be enough," Norman Chan, chief executive of the Hong Kong Monetary Authority, said on the sidelines of a financial market summit. A list of five to six banks will be announced in the coming weeks to act as primary market liquidity providers and the HKMA will conduct repos with them, Chan added. Hong Kong's central bank has already started to offer overnight and one-day cash to banks involved in the offshore yuan trade since last July to safeguard against any cash tightness in the offshore market. ID:nL4N0FV1P8 Growth in yuan deposits in the former British colony lost steam in the past few months following a sharp weakening of the currency engineered by China's central bank to shake out hot money and prepare for further market reforms. As an indication of tighter offshore yuan liquidity, the one-year USD/CNH cross currency swap (CCS) has risen by 150 basis points (bps) in the past six months and is now hovering around more than one-year highs. ID:nL3N0RB1B1 China announced in April it would allow cross-border stock investment between Shanghai and Hong Kong. Northbound investment in mainland stocks would be limited to an overall quota of 300 billion yuan and a daily quota of 13 billion yuan. While non-residents can convert unlimited daily quantities of yuan since 2012, the conversion limit for residents still exists primarily because regulators wanted to prevent rampant currency speculation among residents, analysts said. "My colleagues have just communicated with the counterparts at the People's Bank of China, who said there would not be any problem to lift this limit. We are seeking to implement this arrangement before the stock connect scheme," said Chan. At the same summit, Xu Hao, deputy direct-general at the fund and intermediary supervision department of China Securities Regulatory Commission (CSRC), said Beijing would further facilitate foreign investment in China and enable connections with other markets. "We will relax restrictions on QFII and RQFII participants, streamline investment procedures and increase quotas for these investors," Xu said. QFII and RQFII are among the very few channels through which foreign investors can tap China's onshore market at present. China accelerated its pace to expand RQFII quotas to countries such as France, Germany and Luxemburg in the past few months. ($1 = 6.1417 Chinese yuan) (Reporting by Michelle Chen; Editing by Jacqueline Wong) ((michelle.chen@thomsonreuters.com; +852 2843 6587; Reuters Messaging: min.chen.thomsonreuters.com@reuters.net)) Keywords: YUAN/HKMA

India fwd/annualised dlr premia-Sep 15

September 15, 2014 - reuters.com

SNAPSHOT-India stocks, bonds, rupee, swap, call at 0826 GMT

September 15, 2014 - reuters.com

STOCKS .BSESN .NSEI ---------------------- India's broader NSE index .NSEI is down 0.65 percent, tracking weak global stocks ahead of U.S. Federal Reserve meeting later in the week. .BO GOVERNMENT BONDS IN084024G=CC ------------------------------- India's benchmark 10-year bond yield down 1 basis point at 8.49 percent after a sharp fall in core CPI data. IN/ RUPEE INR=D2 -------------- The partially convertible rupee weaker at 61.05 versus its previous close of 60.65/66, tracking falls in Asian currencies against the dollar. INR/ INTEREST RATE SWAPS INROIS MIOIS= ------------------------------------- The benchmark five-year swap rate down 4 bps at 7.96 percent, while the one-year rate down 2 bps at 8.43 percent. CALL MONEY INROND= -------------------- India's cash rate at 8.20/8.25 percent against Friday's close of 7.90/7.95 percent. (Compiled by Indulal PM) ((indulal.p@thomsonreuters.com; +91-22-6180-7183; Reuters Messaging: indulal.p.thomsonreuters.com@reuters.net)) Keywords: INDIA SNAPSHOT/

Turkish lira weaker, Bank Asya shares fall after resuming trade

September 15, 2014 - reuters.com

ISTANBUL, Sept 15 (Reuters) - The Turkish lira TRYTOM=D3 weakened on Monday and hovered near five-month lows as expectations of a policy shift from the U.S. Federal Reserve this week hampered appetite for riskier assets. Bank Asya ASYAB.IS shares slumped after resuming trade. The lira has fallen since last week as the dollar has risen against major currencies as investors positioned for a slightly more hawkish shift from the Fed this week. Turkish assets are especially responsive to changing expectations about global liquidity tightening because its large current account deficit is financed by foreign capital inflows. The lira fell below 2.22 against the dollar earlier on Monday and traded at 2.2180 against the dollar by 0750 GMT, from 2.2135 late on Friday. "With the U.S. 10-year yield elevating above 2.61 percent, the market is already pricing in some further hawkish bias, which is putting further downward pressure on emerging markets," said Erkin Isik, a strategist at TEB-BNP Paribas. The main share index .XU100 rose 0.09 percent to 77,887.06, compared with a 0.63 percent drop in the emerging markets index .MSCIEF . Shares in participation bank Bank Asya fell 11.3 percent to 1.10 lira as trading resumed after a suspension of more than a month due to uncertainty regarding its ownership. ID:nL6N0QK1FF The benchmark 10-year government bond yield tTR240724T0=IS rose to 9.36 percent from a previous close of 9.30 percent. (Reporting by Seda Sezer; Editing by Ayla Jean Yackley and Susan Thomas) ((seda.sezer@thomsonreuters.com; +90 212 350 7062; Reuters Messaging: seda.sezer.thomsonreuters.com@reuters.net)) Keywords: MARKETS TURKEY/

FOREX-Swedish crown slips to 2-month low, Aussie weakens on China data

September 15, 2014 - reuters.com

(Recasts, adds details; changes dateline from SYDNEY) * Swedish crown dips to two-month low against euro after election * China's factory output grows at weakest pace in nearly 6 years * Fed meeting, Scotland independence vote major risks ahead By Anirban Nag LONDON, Sept 15 (Reuters) - Sweden's crown fell to a two-month low against the euro on Monday after the country elected a minority government, which could lead to a political impasse in Scandinavia's biggest economy. In brisk trade the crown softened to 9.2750 per euro EURSEK=D4 in Asian trading, its lowest since early July, and down 0.15 percent. Sweden's centre-left Social Democrats emerged as victors in the election but fell short of a parliamentary majority, while the anti-immigrant far right emerged as the third-biggest party to hold the balance of power. ID:nL6N0RF05L "The post-election uncertainty and a potential for protracted negotiations about a new government is an obstacle to the Swedish crown's near-term fortunes," said Petr Krpata, currency strategist at ING. "This may add to expectations that Riksbank is unlikely to change its dovish bias any time soon," he added. The crown's drop against the euro was limited though, as traders said the European Central Bank's ultra-loose monetary policy was pinning down the common currency. Furthermore, if the new Swedish government pushes ahead with its tax hike plans it may add to inflationary pressures next year and make the Riksbank less dovish in 2015, helping the Swedish crown in the medium term, analysts said. Swedish bank SEB said in a note that it expected the government's fiscal policy stance to be neutral to slightly expansionary. That means monetary policy is likely to move in a slightly hawkish direction. AUSSIE DROPS The Australian dollar slid to a six-month low on worries about slower Chinese economic growth. Investors took aim at the Aussie, often used as a liquid proxy for China plays, after data showed factory output in Asia's economic powerhouse grew at the weakest pace in nearly six years in August. Growth in other key sectors also cooled. ID:nL3N0RF02J The Aussie fell below 90 U.S. cents for the first time since March 20 to trade at $0.8996 AUD=D4 . It has tumbled four cents in the past week. "The performance of the Aussie unsurprisingly matches up, given its exposure to China risks," Morgan Stanley said in a morning note. "If the People's Bank of China is unable to come in and provide adequate easing, the Aussie could come under further pressure." Part of the Aussie's drop has also been because of a rising greenback. The U.S. dollar has been rallying in recent weeks as markets brought forward the risk of an interest rate hike by the Federal Reserve as data continues to suggest a sturdy U.S. recovery. As a result, U.S. Treasury yields have risen and that in turn has boosted the appeal of the greenback. Just last week, the benchmark 10-year yield US10YT=RR posted its biggest weekly rise in over a year. The Fed holds its next policy review on Sept. 16-17. Sterling remained on the defensive before the Sept. 18 referendum on independence for Scotland, with polls showing both "Yes" and "No" camps pretty much neck-and-neck. A win for the "Yes" campaign could end the 307-year-old union with England and the break-up of the United Kingdom. ID:nL1N0RE0YF The pound was softer at $1.6240 GBP=D4 and remained vulnerable after last week's drop to a 10-month low of $1.6052. (Additional reporting by Ian Chua; Editing by Hugh Lawson) ((anirban.nag@thomsonreuters.com; +44 20 75428399; RM: anirban.nag.thomsonreuters.com@reuters.net)) Keywords: MARKETS FOREX/

Greek bond yields edge lower after rating upgrade

September 15, 2014 - reuters.com

* Investors welcome S&P ratings lift * PM Samaras says Greece will not need third bailout * Fed meeting, Scotland vote pose volatility risks By John Geddie LONDON, Sept 15 (Reuters) - Greek bond yields edged lower on Monday after a credit rating upgrade from Standard and Poor's, which said the country remained on track to emerge from a six-year recession. ID:nL5N0RC4FQ The upgrade to B from B- late on Friday brought S&P into line with the other main agencies, and is a boost for Greece's fragile coalition government which is hoping to escape the constraints of its EU/IMF bailout programme. Greece is expected to hold negotiations with its lenders on further debt relief later this year, and Prime Minister Antonis Samaras told a weekend newspaper he is confident the country will not need a third bailout. ID:nL5N0RE0ZF Greek 10-year bond yields GR10YT=TWEB dipped 3 basis points to 5.70 percent at Monday's open, while all other euro zone equivalents were flat or a touch higher. "The upgrade was by-and-large expected, but it explains the slight outperformance this morning," said Rainer Guntermann, a rates strategist at Commerzbank. Fitch raised Greece's rating to B in March and Moody's upgraded it to 'Caa1' in August. In keeping with the broad trend of ratings upgrades for peripheral Europe, analysts are now predicting Moody's will lift Slovenia's rating when it reviews the country on Friday, pulling it up into investment grade. Before then, markets are awaiting the U.S. Federal Reserve's meeting on Wednesday for hints of when it may raise interest rates in response to the country's economic rebound. ID:nL5N0RE0AB Any rate hike - which would be the first in more than eight years - would ripple across global markets, sending borrowing costs for euro zone countries higher despite the ultra-loose monetary policy employed by the European Central Bank. More immediate market volatility in the euro zone could also stem from a closely-fought referendum on Scottish independence being held on Thursday. One weekend poll showed the No vote 8 points in front, while another showed the same lead for the Yes camp and two others a 51-49 percent and 53-47 percent split respectively in favour of sticking with the union. Analysts say a 'Yes' vote could hurt bond markets in countries like Spain and Belgium which also have separatist movements, resulting also in an investor flight towards safe haven assets such as German Bunds. (editing by John Stonestreet) ((John.Geddie@thomsonreuters.com; +44 20 7542 3486; Reuters Messaging: john.geddie.thomsonreuters.com@reuters.net))

Keywords: MARKETS BONDS/EURO

Sterling jitters set to last as Scots vote goes to the wire

September 15, 2014 - reuters.com

LONDON, Sept 15 (Reuters) - Sterling slipped on Monday after another round of polls showed Thursday's vote on Scottish independence still too close to call, keeping one-week implied volatility at its highest in four years. The cost of hedging against near-term swings in the pound jumped to four-year highs on Friday and it remained around the same levels - implying volatility in annualised terms of 15.363 percent. GBPSWO=R While that is some measure of the potential shift lower if the Scots vote to break off their union with the United Kingdom, it also encapsulates the risk that the market will snap back after a "No" vote. Within a month the options market shows volatility GBP1MO= falling back to just over 9 percent. After what is already the roughest month for the pound in more than a year, that is double what it was a month ago. "While likely to be highly volatile, sterling should hold above last week's lows ahead of, and then rise following, the confirmation of a 'No' outcome from Thursday's Scottish referendum," Credit Agricole analysts said in a note. "Clearly however the result is tight, and a surprise "yes" outcome could produce a significant decline in the pound's nominal effective exchange rate." Dutch bank ING noted that sterling risk reversals against the dollar showed the highest demand for puts - betting on weakness - compared to calls since Dec 2011. The weekend's opinion polls did little to ease concerns among investors about a referendum with potential wide-ranging implications for politics, finance and government in Britain. One poll showed the "No" vote 8 points in front, while another showed the same lead for the Yes camp and two others a 51-49 percent and 53-47 percent split respectively in favour of sticking with the union. The Scots vote is likely to overshadow a heavy week of UK economic data and other releases, with Tuesday's inflation numbers followed on Wednesday by the minutes from the Bank of England's last policy meeting and a day later by employment, wage and retail sales numbers. Sterling traded 0.2 percent lower against the dollar at $1.6240 GBP=D4 , staying above last week's 10-month low of $1.6052. The euro gained around 0.1 percent to 79.64 pence. (Reporting by Patrick Graham, editing by John Stonestreet) ((patrick.graham@thomsonreuters.com)(+44207 542 9429)(patrick.graham.thomsonreuters.com@reuters.net)) Keywords: MARKETS FOREX/STERLING

TABLE-Foreign trading in South Korean stocks

September 15, 2014 - reuters.com

RPT-INVESTMENT FOCUS-As Fed looms, emerging markets may evade 2013-style rout

September 15, 2014 - reuters.com

(Repeats, without changes, story first published on Friday) By Sujata Rao LONDON, Sept 12 (Reuters) - Just as vaccines work by stimulating the body's immune system, last year's selloff may have helped emerging markets build defences against the damage they have suffered during past U.S. rate rise cycles. This week's market moves are rekindling memories of past emerging market crises, after a paper from the San Francisco branch of the U.S. Federal Reserve sparked a surge in the greenback and U.S. yields, an issue which is likely to be debated at next weekend's G20 meeting of world powers. The paper confirmed what many have long suspected - markets have been too conservative in pricing rate rises. Fed officials expect rates to be 1 percent and 2.5 percent by end-2015 and end-2016 respectively, a quarter percentage point above what was priced. Just how bad a hawkish Fed can be for emerging markets is well-documented. Last year a mere hint from it about cutting back - or tapering - bond buying - set off a storm that knocked 10 and 20 percent respectively off emerging currencies and stocks. Local bond yields surged 200 basis points on average. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC on EM in 2013: http://link.reuters.com/vyn82w FACTBOX on EM 2013 moves vs current levels: ID:L5N0RD31W ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> For market participants, 1994 is etched in memory as the year when a shock rate rise crushed U.S. Treasuries, eventually sparking Mexico's "tequila" crisis and paving the way for the Asian crash of 1997. Similarly, Fed action in 1999 had a role in the Russian, Brazilian and later Turkish and Argentinian crises. So emerging market investors should be running scared. Instead, many appear remarkably sanguine. "Investor appetite is in favour of emerging markets more than at any time in the past 12 months," said Valentijn van Nieuwenhuijzen, head of multi-asset investing at ING Investment Management who moved his portfolio into an overweight on emerging debt and equities at the end of March this year. He reckons the sector could rebound in 2015, especially if reforms succeed in big economies such as India and Indonesia. "Investors are realising that valuations are cheap, there have been multiple years of outflows (from emerging funds) and positioning is still relatively light," van Nieuwenhuijzen said. Emerging market funds meanwhile have taken in new cash in most weeks since April, after around $80 billion in outflows in 2013 and the first three months of this year. Even in the past turbulent week, investors poured $3.4 billion into emerging equity funds tracked by EPFR Global, data showed on Friday. Swiss private bank UBP is overweight EM in its portfolio, says Denis Girault, head of emerging debt, adding: "There are now less things that could go wrong than last year." TROUBLES Emerging markets won't escape unscathed because a rising greenback and Treasury yields make it less attractive for investors to hold non-U.S. assets. Growth momentum in the developing world moreover remains subdued. So currencies have shuddered this week and options markets are pricing more weakness ahead. Stocks have come off three-year highs .MSCIEF and if U.S. yields go up, emerging bond yields must also rise if they are to hold on to investors. But for the most part they already have. JPMorgan's GBI-EM index of emerging domestic bonds yields an average 6.6 percent compared with 5.2 percent just before the selling storm kicked off in May 22. In markets such as India and Brazil, yields are 150-250 basis points above last May's levels. "There is a lot of carry in some EM rates curves," said Kieran Curtis, a portfolio manager at Standard Life Investments. He was referring to the yield premium investors can earn by buying emerging assets at the expense of low-yield currencies. "There is a big cushion if you look at yield spreads between emerging bonds and U.S Treasuries; it's bigger than what we have typically seen for past 10 years," Curtis added. That's partly a consequence of last year's meltdown. From Turkey to Indonesia, central banks raised interest rates by hundreds of basis points and many, spooked by the selloff, started to enact long-delayed reforms such as curbing subsidies that had blown out their current account deficits. In India, once part of a group dubbed the Fragile Five, the deficit has snapped in to 1.7 percent of annual economic output, from 5 percent a year ago. Currency reserves in big emerging markets, not counting China, have risen by over $100 billion since January, with Indian reserves alone up $25 billion. Research from RBC predicts a 3-6 percent depreciation on emerging currencies versus the dollar; pretty big but less than the 9 percent of 2013, the bank says. OTHER SUPPORT? There has also been the odd occasion when emerging markets dealt well with Fed tightening - in 2005 for instance, when they enjoyed big surpluses and were benefiting from recent reforms. A Societe Generale study that examined 16 episodes of rising U.S. yields between 2000-2013 concluded the 2013 shock was exceptional in its ferocity, possibly because of the calm that prevailed for the three preceding years on Treasury markets. The prior episodes had on average fuelled a modest 0.4 percent weakening on emerging currencies and a 25 bps rise in domestic bond yields, the study found. "It is unlikely the severity of the May/July correction will be replicated in the period ahead," said Benoit Anne, SocGen's head of emerging markets and co-author of the study. Anne warns however of risks to markets such as Turkey and South Africa, that remain reliant on foreign stock and bond flows and have made few changes to their economic model. For these countries, with slow growth and funding gaps still in excess of 5 percent of GDP, it could be 2013 all over again. (Additional reporting by Chris Vellacott; Editing by Ruth Pitchford) ((sujata.rao@thomsonreuters.com; 44 20 7542 6176 ; Reuters Messaging: sujata.rao.thomsonreuters.com@thomsonreuters.net)) Keywords: MARKETS INVESTMENT FOCUS/EMERGINGMARKETS

DIARY- Turkey - to Dec 24

September 15, 2014 - reuters.com

South Africa's rand under pressure ahead of CPI, rate call

September 15, 2014 - reuters.com

JOHANNESBURG, Sept 15 (Reuters) - South Africa's rand extended recent losses to a fresh seven month low against the dollar on Monday, and was expected to remain under pressure ahead of inflation data and the central bank's rate decision later in the week. The rand has weakened more than 2 percent over the past week, reflecting a stronger dollar as investors bet on the U.S. Federal Reserve tightening policy sooner than earlier expected. The rand ZAR=D3 hit a trough of 11.0690, its softest since Feb 20, and was at 11.0665 by 0650 GMT, down 0.5 percent from Friday's close in New York. Government bonds weakened alongside the currency, pulling the yield on the 2026 benchmark ZAR186= 3 basis points higher to 8.29 percent. The South African Reserve Bank's policy statement on Thursday will be key, with the majority of economists polled by Reuters expecting the benchmark repo rate to stay on hold at 5.75 percent after a 25 basis point increase in July. ID:nL3N0RB4TD This could weigh on the rand, particularly if the U.S. Federal Reserve issues a hawkish statement on Wednesday. South African inflation numbers are due the same day. "After the recent strong (U.S.) data and hints from policy makers, there is a chance that the Fed might change its guidance on when it will raise rates," Rand Merchant Bank analyst John Cairns said. "If they do, expect a push higher in U.S. yields and a push stronger in the dollar - and significant rand weakness." (Reporting by Stella Mapenzauswa; Editing by Joe Brock) ((stella.mapenzauswa@thomsonreuters.com; +27117753161; Reuters Messaging: stella.mapenzauswa.thomsonreuters.com@reuters.net)) Keywords: MARKETS SAFRICA/CURRENCY

Czech Republic - Factors To Watch on Sept 15

September 15, 2014 - reuters.com

Sri Lanka rupee firmer on exporter dlr sales, remittances; stocks slip

September 15, 2014 - reuters.com

COLOMBO, Sept 15 (Reuters) - The Sri Lankan rupee traded firmer on Monday, recovering from the previous session's near-7-week low as remittances and dollar sales by exporters helped boost the local currency amid a lack of importer demand for the greenback, dealers said. The rupee LKR=LK was traded at 130.26/30 per dollar at 0615 GMT, compared to Friday's close of 130.29/31, its lowest close since July 21. "The (importer) demand which we have seen last few days is not there," said a currency dealer, asking not to be named. Dealers said there has been a pick-up in imports ahead of the 2015 budget scheduled for November, but they expect the rupee to appreciate in the long term. The central bank will absorb the proceeds of National Savings Bank's (NSB) $250-million bond sale, an official at the banking regulator said on Wednesday. Foreign investors bought a net 3.2 billion rupees ($24.57 million) worth of government securities in the week ended Sept. 10, official data showed. At 0623 GMT Sri Lankan shares .CSE were down 0.44 percent at 7,186.95, slipping from their highest since June 10, 2011. Stockbrokers attributed the fall to a market correction and profit-taking. Turnover stood at 579.9 million Sri Lankan rupees (4.45 million US dollar), with 39.9 million shares changing hands. (1 US dollar = 130.2600 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair) ((ranga.sirilal@thomsonreuters.com; +94-11-232-5540; Reuters Messaging: ranga.sirilal.thomsonreuters.com@reuters.net; www.twitter.com/rangaba)) Keywords: MARKETS SRI LANKA/

South African Markets - Factors to watch on Sept. 15

September 15, 2014 - reuters.com

The following company announcements, scheduled economic indicators, debt and currency market moves and political events may affect South African markets on Monday. DIARY For South Africa corporate diary, click on ZA/EQUITY For southern and South Africa diary, click on ZA/DIARY ECONOMIC EVENTS No major events scheduled. COMPANIES No major companies reporting results SOUTH AFRICAN MARKETS South African shares ended flat on Friday, but AngloGold Ashanti ANGJ.J regained some of the sharp losses posted this week triggered by a planned demerger and $2.1 billion rights issue. Africa's top bullion producer ended 2.24 percent higher after falling over 14 percent on Wednesday and dipping further on Thursday after it announced a plan to split up its global and South African operations. .J ZAR/ GLOBAL MARKETS Asian stocks stumbled to their lowest in five weeks on Monday after a batch of weak data out of China raised the spectre of a sharp slowdown in the world's second-biggest economy. The Australian dollar, considered a liquid proxy for China plays, also took a hammering and slumped to a six-month low. MKTS/GLOB WALL STREET U.S. stocks fell on Friday as energy shares extended their recent slide, while rising bond yields drove down high-dividend paying shares. .N GOLD XAU= Gold edged higher on Monday as Asian equities tumbled but the metal continued to struggle near an eight-month low due to weak physical demand and fears the Federal Reserve may signal an early interest rate increase at this week's policy meeting. GOL/ EMERGING MARKETS For the top emerging markets news, double click on urn:newsml:reuters.com:*:nTOPEMRG - - - - Some of the main stories out in the South African press: BUSINESS DAY - Eskom, formerly designated the "owner and operator" of South Africa's nuclear programme, will not be involved in the upcoming nuclear procurement, say Department of Energy officials, except as the purchaser of power from a new - possibly foreign - nuclear entity. - A package of measures including tariff increases, an equity injection, increased borrowing and managed load-shedding has been approved by the Treasury to help Eskom out of its financial crisis. BUSINESS REPORT - The U.S. Department of Agriculture has proposed new rules to enable imports of citrus fruit from more regions in South Africa. Keywords: MARKETS SAFRICA/DAYBOOK

Investigators turn bankers into informants in forex probe - WSJ

September 15, 2014 - reuters.com

Sept 15 (Reuters) - U.S. investigators have turned several bank employees into informants to gather evidence against some of their colleagues in the probe of possible manipulation of currency markets, the Wall Street Journal reported, citing people familiar with the matter. Britain's Financial Conduct Authority (FCA) and U.S. regulators are investigating allegations that dealers at major banks colluded and manipulated key reference rates in the $5.3 trillion-a-day foreign currency market, the world's biggest and least regulated. ID:nL5N0RA1TM Investigators from the U.S. Justice Department and Federal Bureau of Investigation (FBI) are preparing to seek criminal charges against individual traders as early as next month, the Journal reported. (http://on.wsj.com/1qPzF5W) The Journal report said it isn't clear which banks had secret informants cooperating with the government investigation. Ethical standards in the foreign exchange market have been put under a harsh spotlight since investigators in the United States, Europe and Asia started examining whether small groups of traders colluded to rig prices by sharing information about their clients' orders. The global inquiry has not yet concluded but the review has shaken the industry, with dozens of top dealers put on leave or fired and banks under pressure to sharpen up oversight of their traders. The FBI and U.S. Justice Department were not immediately available for comment outside regular U.S. business hours. (Reporting by Arnab Sen in Bangalore; Editing by Gopakumar Warrier) ((arnab.sen@thomsonreuters.com; within U.S. +1 646 223 8780, outside U.S. +91 80 6749 3081; Reuters Messaging: arnab.sen.thomsonreuters.com@reuters.net)) Keywords: FOREX INVESTIGATION/BANKERS

Turkey - Factors to Watch on Sept 15

September 15, 2014 - reuters.com

ISTANBUL, Sept 15 (Reuters) - Here are news, reports and events that may affect Turkish financial markets on Monday. The lira TRYTOM=D3 eased to 2.2190 against the dollar by 0559 GMT from 2.2135 late on Friday. Istanbul's main share index .XU100 fell 1.45 percent to 77,820.83 points on Friday. The benchmark 10-year government bond yield tTR200324T0=IS ended at 9.17 percent in spot trade on Friday and was at 9.24 percent in Monday-dated trade. GLOBAL MARKETS Asian stocks stumbled to their lowest in five weeks on Monday after a batch of weak data out of China raised the spectre of a sharp slowdown in the world's second-biggest economy. The Australian dollar, considered a liquid proxy for China plays, also took a hammering and slumped to a six-month low. ID:nL3N0RG00R TAV AIRPORTS TAVHL.IS Turkish airports company TAV Havalimanlari said on Monday it had signed an accord with Limak on the purchase of their 40 percent stake in Istanbul airport Sabiha Gokcen in a deal worth a maximum 285 million euros ($369 million). ID:nL6N0RG0C2 BUDGET DATA TRBUD=ECI The treasury will release budget data for July and August (around 0800 GMT). UNEMPLOYMENT TRUNR=ECI The statistics institute will release jobless data for the May-July period (0700 GMT). AGAOGLU PLANS ISLAMIC BONDS Construction-to-energy Agaoglu Group plans to raise around $300 million by issuing sukuk, or Islamic bonds, the latest Turkish corporate seeking to tap the market for dollar-denominated Islamic debt. ID:nL6N0RG03C TURKIYE FINANS Islamic lender Turkiye Finans Katilim Bankasi plans to establish a presence in Bahrain, in what would be its first overseas foray and a welcome addition to the Kingdom's Islamic banking sector. ID:nL6N0RG02Z Note: For a list of forthcoming events, see TR/DIARY . For other related news, double click on: Turkish politics TR-POL Turkish equities TR-E Turkish money TR-M Turkish debt TR-D Turkish hot stocks TR-HOT Forex news FRX All emerging market news EMRG All Turkish news TR For real-time quotes, double click on: Istanbul National-100 stock index .XU100 , interbank lira trading IYIX= , lira bond trading 0#TRTSYSUM=IS (Writing by Daren Butler) ((daren.butler@thomsonreuters.com; +90-212-350 7122; Reuters Messaging: daren.butler.thomsonreuters.com@reuters.net)) Keywords: TURKEY FACTORS/

COLUMN-The real problem for commodity nations is currency, not prices: Russell

September 15, 2014 - reuters.com

--Clyde Russell is a Reuters columnist. The views expressed are his own.-- By Clyde Russell LAUNCESTON, Australia, Sept 15 (Reuters) - The pressing problem for some resource-rich countries isn't that prices for commodities have dropped sharply, it's that their currencies haven't dropped in tandem. The plight of Australia and Indonesia, the major commodity exporters in the Asia-Pacific region, is driven home by the fact that their currencies have actually gained against the U.S. dollar this year, even as commodity prices have plunged. This is a body blow to earnings in those countries and defies both economic logic and precedent, which should have seen the Australian dollar AUD= and Indonesian rupiah IDR= start to drop as revenue from resource exports declined. While the Australian dollar did slip almost 4 U.S. cents last week to trade around 90 cents early on Monday, it is still stronger than it was at the end of last year, when it fetched 89.03 cents. In contrast, Australia's two major export earners, iron ore and coal, have dropped dramatically. Spot Asian iron ore .IO62-CNI=SI has fallen 39 percent so far this year, hitting $82 a tonne on Sept. 12, a five-year low. Thermal coal at Australia's Newcastle Port GCLNWCWIDX , an Asian benchmark, dropped to $66.07 a tonne in the week ended Sept. 5, a five-year low and down 23 percent from the start of the year. What is clear is that commodity currencies have failed to respond this year to weaker commodity prices in the way they did in the 2008 global recession. CORRELATION BREAKDOWN When Newcastle coal dropped from its record high of $194.79 a tonne in July 2008 to $60.30 by March 2009, the Australian dollar dropped from 97 cents to near to 60 cents between July and October 2008. However, as coal and iron ore prices recovered, the Australian dollar rallied with them. Coal more than doubled from its 2009 low to reach $136.30 a tonne by January 2011, while iron ore went from $59.50 a tonne in October 2008 to $191.90 by February 2011. The Australian dollar rose some 83 percent from its 2008 low to reach a record high of just above $1.10 by July 2011. If the relationship between coal, iron ore and the Australian dollar in the 2008 crash and recovery had been replicated in the present commodity price weakness, the Australian currency should be somewhere around 75 U.S. cents. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic of Australian dollar vs. iron ore price http://link.reuters.com/ruz94s ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> Things are slightly better for Indonesia, the world's largest exporter of thermal coal, but its currency has also outperformed the decline in commodities. Like the Australian dollar, the rupiah depreciated against the greenback as commodity prices slumped after the 2008 financial crisis and then rallied as global stimulus measures boosted commodity prices. The rupiah peaked around 8,495 to the dollar in July 2011 and has since lost nearly 40 percent to trade around 11,876 in early trade on Monday. This is a bigger depreciation than the Australian dollar's roughly 18 percent drop against the dollar since its 2011 peak, but it is still short of the 52 percent decline in thermal coal prices since the 2011 high. ADVANTAGE SOUTH AFRICA? The situation is better for another major coal exporter, South Africa, whose rand ZAR= has dropped by around 68 percent from its post-2008 peak of 6.56 to the dollar in April 2011 to about 11.04 on Monday. While this is positive for South African coal producers, the reasons for the rand's underperformance are probably a long-term negative, given investor concerns about political and economic stability in the country. The question for Australia and Indonesia is whether the relationship between their currencies and the prices of the commodities they export is likely to be re-established any time soon. The reason it has broken down may be due in large part to the unprecedented monetary policies being followed in the developed world, led by the U.S. Federal Reserve's zero interest rate policy and quantitative easing. As the signs mount that the Fed is moving towards a more normal monetary policy, the expectation is that the U.S dollar will start to appreciate, especially against so-called commodity currencies. Where the risk lies for countries like Australia and Indonesia is whether this currency adjustment will come quickly enough, or be big enough, to compensate for lower commodity prices. (Editing by Alan Raybould) ((clyde.russell@thomsonreuters.com)(+61 437 622 448)(Reuters Messaging: clyde.russell.thomsonreuters.com@reuters.net)) Keywords: COLUMN RUSSELL/COMMODITIES CURRENCY

African Markets - Factors to watch on Sept 15

September 15, 2014 - reuters.com

REFILE-Commodities brace for more woe ahead of Fed rate decision

September 15, 2014 - reuters.com

(Refiles to give full title of first graphic) SINGAPORE/NEW YORK, Sept 15 (Reuters) - Major commodity markets, many already trading near multi-year lows, could face more pressure should the U.S. Federal Reserve fuel fresh gains in the U.S. currency this week, weighing on dollar-priced raw materials. The mere prospect of a climb in U.S. interest rates has lifted the dollar to multi-month highs, and it may rise further if the Fed confirms on Wednesday after its policy meeting that a rate hike may come sooner rather than later. This would be bad news for commodities, analysts and investors said, due to their strong negative correlation with the U.S. dollar. Precious metals may be the most susceptible, as gold prices in recent days have shown their strongest negative correlation with the dollar in two years, at over minus 0.94, indicating a nearly matching fall in gold as the dollar rises. Silver and platinum have also displayed strong negative correlations, suggesting the precious arena could suffer as a whole if the dollar gains. "Gold and silver are the most sensitive to dollar moves," said Victor Thianpiriya, an analyst at ANZ Singapore. "The biggest concern for gold right now is the dollar strength." "The markets are positioned for something that could be a little bit more hawkish (from the Fed). If that is confirmed, we will see some more dollar strength." Other sectors have also been highly correlated, with Brent crude, corn and sugar prices all showing correlations of minus 0.80 or more against the dollar in recent days. "In the short run, I think it's the correlation trades tied to the dollar that weigh on commodities," said Peter Sorrentino, senior portfolio manager at Huntington Funds in Columbus, Ohio, which manages about $2.8 billion in client money. In the longer term, however, the stronger dollar would also put pressure on emerging economies that had to pay for commodity imports priced in U.S. dollars, Sorrentino said. "My concern is that we're being set up effectively for a capitulation in commodity prices going into the end of the year, brought on partly at least by a stronger dollar," he said. Gold XAU= is up slightly for the year to date, but is not far off its lowest levels since mid-2010, while silver XAG= is approaching a four-year low. Rubber JRUc6 and palm oil FCPOc1 have hit five-year lows, while iron ore .IO62-SI=CNI has slumped 40 percent so far this year. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic of commodity markets correlations with U.S. dollar: http://link.reuters.com/wup82w Graphic of commodity prices vs U.S. dollar index: http://link.reuters.com/xup82w Graphic of commodity prices in yen vs U.S. dollars: http://link.reuters.com/zup82w ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> INSULT TO INJURY A stronger dollar looks set have its biggest effect on importers like Japan. "It's already having an impact with yen at 107. Yen's really weakened against the dollar. It's like adding insult to injury," said Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp. The Japanese yen JPY= has eased from about 102 yen to the dollar a month ago to its current level of 107.22 yen. "Crude prices were high enough and with cheap yen, energy costs are higher ... The stronger the dollar gets, the more expensive dollar-denominated commodities get, and that will put down demand and push oil prices down," he added. Societe Generale downplayed the role of the U.S. dollar, arguing in research note that there was widespread understanding that the dollar's strength was due mainly to the prospect of sustained economic growth - a positive driver for commodities. And others point to slowing emerging market demand growth and abundant new energy and crop supplies as more important bearish factors. Yet for most commodity trackers the dollar's trend will remain a critical guidepost for determining market potential. "We're watching the dollar extremely closely because it's in a very fluid situation that is driving a lot of things," said Walter 'Bucky' Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama. (Reporting by Barani Krishnan in NEW YORK, Florence Tan and A. Ananthalakshmi in SINGAPORE and Ratul Chaudhuri in BANGALORE; Writing by Gavin Maguire; Editing by Richard Pullin) ((gavin.maguire@thomsonreuters.com; 312 408 8651;)) Keywords: COMMODITIES MARKETS/DOLLAR

INDICATORS - Kazakhstan - Sept 15

September 15, 2014 - reuters.com

MOSCOW, Sept 15 (Reuters) - Kazakhstan's economic indicators based on data provided by the State Statistics Agency, government institutions, the central bank and exchanges: * updated today CURRENCY/INTEREST RATE LATEST PREVIOUS *Tenge/dollar 0#KZFX=KZ KZT= 181.95 181.95 *Multi-currency basket 133.23 133.36 Cbank refinancing rate (pct)Aug 6, 2012 5.50 6.00 MONEY Monetary base(trln tenge) July 31 3.86 June 30 3.72 C.bank net gold/forex reserves ($ bln) Aug 31 27.1 July 31 26.4 National Fund ($bln) Aug 31 77.2 July 31 76.8 Money supply(M3)(trln tenge) July 31 13.42 June 30 13.41 GDP DATA Jan-Dec'13 Jan-Dec'12 Jan-Dec'11 Jan-Dec'10 GDP (trln tenge) 33.521 30.072 27.334 21.815 GDP (pct) +6.0 +5.0 +7.5 +7.3 MONTHLY DATA PERIOD CURRENT PREVIOUS YEAR-AGO MONTH *Ind output (pct) Aug +7.0 -0.4 +5.7 Ind output (pct) Jan-Aug -0.1 -0.3 +2.0 Inflation (pct) Aug +0.4 +0.1 +0.2 Inflation (pct) Aug/Dec +5.4 +4.9 +3.1 Unemployment (pct) Q1 5.1 5.2 5.3 Oil production (mln T) July 6.9 6.2 7.0 Oil production (mln T) Jan-July 46.7 39.7 47.4 Copper output ('000 T) July 26.5 24.1 33.9 Copper output ('000 T) Jan-July 157.8 131.4 221.9 Zinc output ('000 T) July 27.5 26.6 27.3 Zinc output ('000 T) Jan-July 188.8 161.3 184.5 Trade balance ($ bln) Jan-June +22.6 +20.0 +20.1 Exports ($ bln) Jan-June 41.8 39.5 42.7 Imports ($ bln) Jan-June 19.2 15.5 22.6 FORECASTS FOR 2014 GDP growth (pct) 6.0-7.1 Annual inflation (pct) 6.0-8.0 Budget deficit (bln tenge/pct GDP) 942.4/2.4 Budget revenues (bln tenge) 5,761 Budget spending (bln tenge) 6,703 Industrial output (pct) 2.7 Oil and condensate output (mln T) 81.7 Grain harvest (mln T, clean weight) 14-15 mln T ANNUAL COMPARISONS 2013 2012 2011 2010 2009 2008 2007 2006 2005 GDP +6.0 +5.0 +7.5 +7.3 +1.2 +3.2 +8.9 +10.7 +9.7 Ind output (pct) +2.3 +0.5 +3.5 +10.0 +1.7 +2.1 +4.5 +7.0 +4.6 Inflation (pct) +4.8 +6.0 +7.4 +7.8 +6.2 +9.5 +18.8 +8.6 +7.6 Yr-end M3 (trln tenge) 11.60 10.52 n/a 8.55 7.49 6.27 4.61 3.72 2.07 Yr-end unemployment (pct) 5.2 5.3 n/a 5.5 6.6 6.7 7.3 7.8 8.2 Grain harvest (mln T, clean weight) 18.2 12.9 27.0 12.2 20.8 15.6 20.1 16.5 13.8 Oil and gas condensate output (mln T) 81.7 79.2 80.0 79.5 76.4 70.7 67.1 65.0 61.9 Copper output ('000 T) 351 367 338 323 368 398 406 428 419 KAZAKHSTAN'S LONG-TERM RATINGS S&P (June 13, 2014) BBB+ negative outlook Moody's (Sept 24, 2013) Baa1 positive outlook Fitch (May 9, 2014) BBB+ stable outlook (State Statistics Agency website www.stat.kz, Stock Exchange www.kase.kz/eng/ Central Bank www.nationalbank.kz/...) (Almaty Newsroom) ((almaty.newsroom@thomsonreuters.com)(+7 7272 508 500))

UPDATE 1-Russia to create anti-crisis fund to aid sanctions-hit companies

September 15, 2014 - reuters.com

(Adds quotes, detail) MOSCOW, Sept 15 (Reuters) - Russia will create a multi-billion dollar anti-crisis fund in 2015 of money destined for the Pension Fund and some left over in this year's budget to help companies hit by sanctions, Finance Minister Anton Siluanov was quoted as saying on Monday. Several waves of Western sanctions against Moscow for its involvement in the Ukraine crisis have limited access to foreign capital for Russia's largest banks and key oil companies. Some companies have asked the government for help, including the country's top-oil producer Rosneft ROSN.MM which said it would need 1.5 trillion roubles ($39.70 billion) in aid. Siluanov was quoted as saying by Russian news agencies that the decision to stop transferring money to the Pension Fund would hand the budget an extra 309 billion roubles ($8.18 billion). He said not all of that sum would go into the anti-crisis fund, but that it would also receive at least 100 billion roubles of money left over in this year's budget. "This 100 billion roubles will be added to the (anti-crisis) reserve next year, which will allow us to help our companies," RIA news agency citied Siluanov as saying. "We are planning to create a reserve of a significant size." It was not clear how big the fund would be. It will be the second year running that Moscow has stopped transfers of funds from the budget to the Pension Fund, which provides benefits for Russia's pensioners, some invalids and families who have lost their breadwinners. (1 US dollar = 37.7850 Russian rouble) (Reporting by Lidia Kelly; Editing by Elizabeth Piper) ((lidia.kelly@thomsonreuters.com; +7 495 775 1242; Reuters Messaging: lidia.kelly.reuters.com@reuters.net)) Keywords: RUSSIA BUDGET/CRISIS

UPDATE 1-Reform paralysis, slow progress cloud Shanghai free trade zone project

September 15, 2014 - reuters.com

(Updates with zone deputy head leaving post in paragraphs 7-8) By Michelle Chen HONG KONG, Sept 15 (Reuters) - A disappointing first year for Shanghai's much-hyped free-trade zone, seen as a pet project of Premier Li Keqiang and billed as a reform laboratory, raises questions about China's commitment to opening up its markets as it wrestles with a slowing economy. The 29 square kilometre zone on the outskirts of China's commercial capital - hailed as Beijing's boldest reform in decades - was meant to test changes such as currency liberalisation, market-determined interest rates and free trade. But progress has been slow and policies vague as the political focus has turned from reform to shoring up growth, leaving foreign companies unsure of investing in the free-trade zone (FTZ). "There has been some progress in the Shanghai free trade zone, but the progress is much slower than the market had expected, especially in the financial market sector," said Zhu Haibin, chief China economist at JP Morgan in Hong Kong. In particular, China needs to transform government functions and release a list of which sectors are off-limits to foreign investors rather than assessing investments on a case-by-case basis, Zhu said. "If the progress is too slow on this front, it may risk turning out to be a failure." In another setback, the state-run Xinhua news agency said on Monday that the zone's deputy head, Dai Haibo, had left his post. The South China Morning Post paper, quoting sources, reported earlier that Dai was suspected of disciplinary violations and would be forced to step down. ID:nB9N0PP017 The administrative committee of the zone could not be immediately reached for comment. A broad reform agenda to remake China was unveiled to much fanfare in November 2013, but an unexpectedly sharp slowdown in the economy at the beginning of the year quickly saw attention refocused on ensuring the government's 7.5 percent growth target would be met. ID:nL4N0IX32P "We've seen some policies in the free-trade zone, but they are not relevant to my company and we haven't seen any benefits yet," said a corporate treasurer at a major foreign manufacturing technology company who asked for anonymity as she was not authorised to speak on the issue. On Wednesday, Premier Li said Beijing would review the development of the Shanghai FTZ. The FTZ was widely seen as Li's pet project, but he did not attend the opening ceremony last year. The heads of the central bank and the foreign exchange regulator were also absent. ID:nL4N0HP0A0 SLOW TAKE-OFF The free trade zone, part of wider financial reforms such as transitioning to a fully convertible yuan currency, is seen as an important step towards developing a more open economy regulated by policies similar to those in developed markets. Newly-registered foreign enterprises accounted for 12 percent of the more than 10,000 firms allowed to operate within the zone by the end of June, official data showed. But excluding Hong Kong and Taiwan, foreign companies comprised just 6 percent, or 643 entities, far less than expectations. Even local companies have frustrations. "We don't feel the policies that govern the Shanghai FTZ are attractive and we've had to wait for such a long time for new policies to be launched," said a senior manager from a Chinese company, speaking on condition of anonymity. The Shanghai FTZ's attractions have also been reduced by the roll-out of some policies on a nationwide basis, detracting from what was meant to be the exclusive nature of policies within the zone. Pilot schemes that have been made available nationwide include cross-border cash pooling and netting for multinational companies as well as cross-border trade settlement for individuals. "Some companies feel it's unnecessary to set up entities in the FTZ if the only purpose is for cross-border fund flows, since they can already do it now outside the FTZ," said Becky Liu, a strategist at Standard Chartered Bank in Hong Kong. A Shanghai government official familiar with FTZ matters, who asked not to be named as he was not authorised to speak to the media, downplayed concerns about the first year. "This is China. We make the announcement first, set the overall direction and then slowly implement policies around it." (Additional reporting by Pete Sweeney, Kazunori Takada and Adam Jourdan in Shanghai and Shanghai newsroom; Editing by Saikat Chatterjee and Jacqueline Wong) ((michelle.chen@thomsonreuters.com; +852 2843 6587; Reuters Messaging: min.chen.thomsonreuters.com@reuters.net)) Keywords: CHINA SHANGHAI/FTZ

PRESS DIGEST - Wall Street Journal - Sept 15

September 15, 2014 - reuters.com

Sept 15 (Reuters) - The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy. * International support for the U.S.-led military campaign against Islamic State gathered strength with the United Kingdom vowing to destroy the group after it killed a British aid worker, Arab States agreeing to participate in air strikes and Australia pledging forces. (http://on.wsj.com/1tTMjj6) * President Barack Obama plans to dramatically boost the U.S. effort to mitigate the Ebola outbreak in West Africa, including greater involvement of the U.S. military, people familiar with the proposal said. (http://on.wsj.com/1qVDFka) * Heineken NV HEIN.AS said Sunday that U.K.-based rival SABMiller Plc SAB.L has approached it about being acquired but that Heineken's controlling family intends to keep the company independent. (http://on.wsj.com/1BF0zkF) * A firm run by former AIG boss Hank Greenberg is suing the U.S. government over its bailout of AIG six years ago. A trial set to start late this month poses a risk for the insurer.(http://on.wsj.com/1uD4Wtc) * As vice chairwoman of the Federal Reserve, Janet Yellen was an unabashed advocate of easy money who pressed colleagues to embrace her view. As chairwoman she has taken a much different approach, becoming a restrained consensus seeker modeled after her predecessor, Ben Bernanke. (http://on.wsj.com/X4DpVn) * U.S. investigators have turned multiple bank employees into informants in a far-reaching probe of possible manipulation of currency markets, and are preparing to seek criminal charges against individual traders as early as next month. (http://on.wsj.com/1qPzF5W) * U.S. Treasury Secretary Jacob Lew warned his Chinese counterpart in a recent letter that a spate of antimonopoly investigations against foreign companies could have serious implications for relations between the two countries, according to people briefed on its contents. (http://on.wsj.com/Xl9Krm) (Compiled by Supriya Kurane in Bangalore) ((supriya.kurane@thomsonreuters.com; within U.S. +1 646 223 8780, outside U.S. +91 80 6749 6121; Reuters Messaging: supriya.kurane.thomsonreuters.com@reuters.net)) Keywords: PRESS DIGEST WSJ/

SNAPSHOT-India stocks, bonds, rupee, swap, call at 0430 GMT

September 15, 2014 - reuters.com

STOCKS .BSESN .NSEI ---------------------- Indian shares fall, with the broader NSE index down 0.8 percent, tracking weak global stocks ahead of U.S. Federal Reserve meet later in the week. .BO GOVERNMENT BONDS IN084024G=CC ------------------------------- India's benchmark 10-year bond yield down 2 basis points at 8.48 percent after sharp fall in core CPI data. IN/ RUPEE INR=D2 -------------- The partially convertible rupee weaker at 61.01 versus the previous close of 60.65/66, tracking weakness in Asian currencies against the dollar. INR/ INTEREST RATE SWAPS INROIS MIOIS= ------------------------------------- The benchmark five-year swap rate down 3 bps at 7.97 percent, while the one-year rate down 2 bps at 8.43 percent. CALL MONEY INROND= -------------------- India's cash rate at 8.10/8.20 percent against Friday's close of 7.90/7.95 percent. (Compiled by Abhishek Vishnoi) ((abhishek.vishnoi@thomsonreuters.com; +91 22 61807225; Reuters Messaging: abhishek.vishnoi.thomsonreuters.com@reuters.net)) Keywords: INDIA SNAPSHOT/

MIDEAST STOCKS - Factors to watch - September 15

September 15, 2014 - reuters.com

DUBAI, Sept 15 (Reuters) - Here are some factors that may affect Middle East stock markets on Monday. Reuters has not verified the press reports and does not vouch of their accuracy. INTERNATIONAL/REGIONAL * GLOBAL MARKETS-Asian stocks tumble as China anxiety saps confidence MKTS/GLOB * Oil drops as ample supply overtakes demand O/R * Gold at 8-month low on fears of more hawkish Fed GOL-RTRS * MIDEAST STOCKS-Emaar lifts Dubai after launching malls unit IPO MEAST-STX * MIDEAST DEBT-Conventional banks' sukuk to push limits of Islamic finance MEAST-DBT ISLF-RTRS * S.Korea's Iran crude imports for August up 108.7 pct y/y -customs IR-KR-CRU * Several Arab countries offer to join air campaign on Islamic State, say U.S. officials MEAST-SECUR * Iraq's Allawi endorses PM, says will help win over Sunnis IQ-POL * Libya parliament dismisses cental bank chief LY-CEN * Growing foreign fund influence a risk for emerging markets-BIS EMRG-FUND * Jordan's August inflation rate drops slightly to 3.16 pct JO-INFL * Israel increases budget deficit target on defence spending IL-GFIN EGYPT * Egypt expects $425 mln from Islamic Development Bank, for refinery, airport EG-GFIN ISDBA.UL SAUDI ARABIA * Saudi Savola says to sell stake in property project for 593.5 mln riyals 2050.SE UNITED ARAB EMIRATES * BREAKINGVIEWS-Dubai Malls $1.6bln IPO offers bling at a discount EMAR.DU IPO-EMAR.DU * TABLE-Abu Dhabi Aug inflation edges up to 3.5 pct y/y AE-INFL * TABLE-UAE bank lending growth slows to 7.1 pct y/y in July AE-INFL * Dubai's Emaar looks to raise $1.58 bln from malls unit's IPO EMAR.DU AE-IPO KUWAIT * Kuwait's KNPC names NBK finance advisor for $12 bln refinery upgrade NBKK.KW PFC.L QATAR * Libyan PM accuses Qatar of sending planes with weapons to Tripoli LY-QA-PIA * Qatar-based cleric criticises US role against Islamic State QA-US BAHRAIN * Islamic lender Turkiye Finans eyes presence in Bahrain: BNA BH-ISLF TR-ISLF (Compiled by Dubai newsroom) ((dubai.newsroom@reuters.com)) Keywords: MIDEAST FACTORS

India Morning Call-Global Markets

September 15, 2014 - reuters.com

MUMBAI, Sept 15 (Reuters) - EQUITIES NEW YORK - U.S. stocks fell on Friday as energy shares extended their recent slide, while rising bond yields drove down high-dividend paying shares. The Dow Jones industrial average .DJI fell 61.49 points, or 0.36 percent, to 16,987.51, the S&P 500 .SPX lost 11.91 points, or 0.6 percent, to 1,985.54 and the Nasdaq Composite .IXIC dropped 24.21 points, or 0.53 percent, to 4,567.60 For a full report, click on .N - - - - LONDON - Britain's top shares rose for the first time in six sessions on Friday, helped by companies with exposure to Scotland, after another poll showed a majority would vote against independence next week. The blue-chip FTSE 100 index .FTSE closed up 7.34 points, or 0.1 percent, at 6,806.96 points. For a full report, click on .L - - - - TOKYO - Japanese markets are closed for a public holiday. For a full report, click on .T - - - - HONG KONG - Hang Seng Index .HSI is down 0.79 percent. For a full report, click on .HK - - - - FOREIGN EXCHANGE SYDNEY - The Australian dollar came in the cross hairs of sellers first thing on Monday, sliding to a fresh six-month low after a set of disappointing Chinese data weighed on already soft demand. In contrast, the dollar was flat against the yen, near a six-year peak of 107.39 JPY= set on Friday. The euro was also steady at $1.2961 EUR= , having drifted up from a 14-month trough of $1.2859 last week. For a full report, click on USD/ - - - - TREASURIES NEW YORK - U.S. Treasuries yields rose on Friday, with benchmark yields posting their biggest weekly increase in over a year after solid U.S. retail sales data bolstered expectations for a more hawkish statement from the Federal Reserve next week. The Commerce Department said retail sales increased 0.6 percent last month after an upwardly revised 0.3 percent gain in July. The August rise in retail sales, which account for a third of consumer spending, was in line with economists' expectations. For a full report, click on US/ - - - - COMMODITIES GOLD SINGAPORE - Gold dropped to fresh eight-month lows on Monday on fears that the U.S. Federal Reserve may signal an early interest rate hike at this week's policy meeting, while the strength in the dollar and weak physical demand also weighed on bullion. Spot gold XAU= fell to $1,225.30 an ounce, its lowest since January, early on Monday before steadying at $1,227.70 by 0020 GMT. Last week, the metal dropped 3 percent as the dollar index posted its ninth straight weekly gain. For a full report, click on GOL/ - - - - BASE METALS SYDNEY - London copper slipped towards three-month lows on Monday after growth at China's factories stumbled to its weakest in nearly six years in August, fuelling concerns over its metals demand. As well as weakening growth in China's factories, growth in other key sectors also cooled, raising fears the world's second-largest economy may be at risk of a sharp slowdown unless Beijing takes fresh stimulus measures For a full report, click on MET/L - - - - OIL NEW YORK - Crude oil prices fell on Friday on pressure from weak demand, ample supplies and a strong dollar. ICE Brent futures LCOc1 for October fell 97 cents to settle at $97.11 a barrel, the biggest weekly loss since the week to July 11. The contract expires on Monday, adding to pressure as traders roll positions. The November LCOc2 contract fell 90 cents to $97.96 a barrel. For a full report, click on O/R (Compiled by Indulal PM) ((indulal.p@thomsonreuters.com; +91-22-6180-7183; Reuters Messaging: indulal.p.thomsonreuters.com@reuters.net)) Keywords: MORNINGCALL INDIA

MIDEAST STOCKS - Factors to watch - September 14

September 14, 2014 - reuters.com

DUBAI, Sept 14 (Reuters) - Here are some factors that may affect Middle East stock markets on Sunday. Reuters has not verified the press reports and does not vouch of their accuracy. INTERNATIONAL/REGIONAL * GLOBAL MARKETS-Bets on hawkish Fed lift dollar, U.S. bond yields MKTS/GLOB * MIDEAST STOCKS-UAE markets rebound; Saudi, Egypt pull back MEAST-STX * Oil drops as ample supply overtakes demand O/R * Gold down 1 pct, hits 8-month low on weak physical demand GOL-RTRS * Iraq PM says will protect civilians after U.S.-Iraq air strikes against IS IQ-WAR-US * Islamic State video purports to show beheading of UK hostage David Haines SY-IQ-GB-POL * Kerry opposes Iran role in anti-Islamic State coalition US-IQ-IR-POL * Syria's Nusra Front releases UN peacekeepers in Golan SY-FJ EGYPT * Egypt's GDP growth reaches 3.5 pct in Q4 of 2013/14 fiscal year -fin min EG-GDP * Sisi says coalition must battle Islamic State and others EG-POL-IQ-SY * Egypt to ask IMF for first 'Article IV' consultations in 3 years EG-IMF * Egypt tourist numbers to rise 5-10 pct in 2014 -minister EG-TOUR * Egypt signs $500 mln World Bank gas loan EG-OILG UNITED ARAB EMIRATES * Dubai's Marka to list shares Sept. 25, first flotation since 2009 AE-STX * No decision yet on probe into Etihad's stake in Air Berlin-transport min AB1.DE * Dubai Aluminium approaches banks for rare corporate loan -sources AE-LOA * Sharjah sees sukuk issue as one-off for now - official SA-SUK QATAR * Prominent Muslim Brotherhood figures to leave Qatar QA-EG-POL * Qatar to take Airbus superjumbos; questions remain about A320 test QA-AIRL OMAN * UN rapporteur criticises Oman over right to assembly OM-POL * Oman's Renaissance to revive listing plans for Topaz arm-sources RSC.OM (Compiled by Dubai newsroom) ((dubai.newsroom@reuters.com)) Keywords: MIDEAST FACTORS

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