CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSL License Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.
Mogi: Australian and Chinese markets closed on Monday, October 4 on national holidays. Asian market holidays to December 2010.
Japan to Increase Rare-Earth Imports From Mongolia, Asahi Says
Oct. 3 (Bloomberg) -- Japan, the world's biggest importer of rare earths, plans to buy more of the minerals from Mongolia to reduce dependence on China, the Asahi newspaper reported.
Prime Minister Naoto Kan and his Mongolian counterpart Sukhbaatar Batbold met yesterday in Tokyo and agreed to begin an effort to locate rare-earth mines, with test drilling to start in November, the newspaper said, without saying where it got the information.
Japan depends on China for 90 percent of its rare-earth supply and aims to cut that proportion to 70 percent, the report said. China controls more than 95 percent of the global supply of the minerals, which are used in radar, high-powered magnets, hard drives in laptop computers, catalytic converters for vehicles, electric-car batteries and wind turbines.
China imposed a de facto ban on exports of the minerals to Japan last month, Japanese Economy Minister Banri Kaieda said Sept. 28, as ties between the two nations soured over the detention of a Chinese boat captain whose ship collided with two Japanese Coast Guard vessels in disputed waters.
Chen Rongkai, a spokesman for China's Ministry of Commerce, said Sept. 28 the nation didn't impose any export ban.
China slashed its exports of rare earths to 7,976 metric tons in the second half of this year from 22,283 tons in the first half and 28,417 tons a year earlier, according to Japan's Trade Ministry. Japanese demand for the minerals was estimated at 20,518 tons in 2009, down from 32,064 tons in 2008, it said.
Toyota, Honda
China ended the effective ban on rare-earth exports to Japan late last month when it began accepting customs applications, the Asahi newspaper reported Sept. 29, citing unidentified Japanese companies.
Japan accounts for 65 percent of Chinese rare-earth exports, according to a Sept. 24 report by Macquarie Group Ltd. Prices for the metals have risen this year with surging demand and cuts to China's export quotas, affecting automakers such as Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., which require the elements for vehicle development, Macquarie said.
Japan's Trade Ministry plans to assist in developing technologies and alternative materials to reduce or replace minerals such as cerium, used in polishing glass for hard-disk drives and as a catalyst to reduce car emissions, the ministry said Oct. 1.
Related articles:
Japan, Mongolia to Cooperate on Rare Earth
October 3 (WSJ) TOKYO—Japan will cooperate in promoting projects to develop rare-earth minerals in Mongolia as it seeks to diversify sources of materials needed for high-tech products.
Japanese Prime Minister Naoto Kan and Mongolian Prime Minister Sukhbaatar Batbold agreed on such cooperation during a meeting in Tokyo on Saturday evening, Japan's foreign ministry said in a release. Japan is heavily dependent on imports from China, which had curbed exports to Japan amid a diplomatic spat.
"Development of mine resources in resource-rich Mongolia will benefit both countries. Our country's research team will launch exploration of rare metals this month," Mr. Kan said.
The move comes as Japan looks to broaden sources of rare-earth minerals after some Japanese companies late last month reported delays in receiving shipments from China due to more stringent customs checks by Chinese authorities. China has denied any interference. The most affected imports were rare-earth minerals, which are critical in making some high-tech products such as batteries for mobile phones and electric cars.
The reported delays in imports came as a row between China and Japan intensified recently, triggered by collisions between Japanese coast guard ships and a Chinese fishing trawler. The incident was followed by the cancellation of some cultural-exchange programs and meetings between government officials of the two countries. Japan's Economic and Fiscal Policy Minister Banri Kaieda said in a recent interview that Japan should diversify sources by accelerating the development of alternative materials outside China. Japan depends on China for 96% of its rare-earth minerals, while China controls more than 90% of the world's output.
Japan will help Mongolia look for rare-earth minerals and other metals with its technologies under the agreement. Executives from some Japanese companies also attended the meeting, the foreign ministry said, including those from trading companies such as Itochu Corp., Sumitomo Corp., Mitsui & Co. and Mitsubishi Corp.
Japan, Mongolia agree to cooperate in rare earth metal development
October 3, TOKYO (Kyodo) -- Prime Minister Naoto Kan on Saturday agreed with Mongolian Prime Minister Sukhbaatar Batbold to cooperate in promoting development projects of rare earth mineral mines in Mongolia, Japanese officials said.
"Mongolia has high potential in mineral material development and this will serve the two countries' national interests," Kan was quoted as saying at a meeting with his Mongolian counterpart.
Batbold said Mongolia will be able to produce value-added products by introducing Japan's advanced technology, according to the officials.
Senior officials from major Japanese trading houses and other Japanese firms also joined the meeting.
Batbold is visiting Tokyo to attend Sunday's retirement ceremony for Mongolian former yokozuna Asashoryu, who left sumo in February.
The agreement came a day after Japan unveiled a set of policies to secure rare earth minerals that include studying stockpiling and diversifying supply sources away from China.
Rare earth metal imports from China had stalled following maritime collisions in September involving a Chinese fishing boat and Japan Coast Guard patrol boats near disputed islets, which heightened bilateral tensions.
Kan last met with Batbold in late September in New York on the sidelines of U.N. General Assembly meetings.
Rare earths consist of 17 elements such as neodymium, dysprosium and cerium, and are used in the production of high-tech products such as cellphones, digital cameras, flat-panel televisions and hybrid vehicles.
China accounts for about 97 percent of the world's rare earth supply and Japan is almost 90 percent dependent on China, according to the Ministry of Economy, Trade and Industry.
An industry ministry official has said there are rare earth reserves in countries such as Kazakhstan and Vietnam, and Tokyo will try to acquire stakes in mines outside of China to ensure supply.
Charlie Rose Talks to Mongolia's Prime Minister
Sukhbaatar Batbold heads one of the last places on earth with huge, untapped metal ore reserves. The IMF says Mongolia will be one of the fastest-growing economies over the next decade
September 30 (BusinessWeek) ---
What do you expect Mongolia's growth rate to be over the next five years?
Despite losses in agriculture—we had a very hard winter and lost almost one-fifth of our [livestock]—we're still anticipating almost 8 percent GDP growth this year. And according to World Bank and IMF estimates, for the next five years we are expected to have growth above 10 percent per annum.
I just interviewed the President of Chile. Its largest market isChina—especially for copper. Give us a sense of what the market is for minerals in Mongolia.
We are already the No. 4 exporter of coal to China. We are a quite serious exporter of copper to China, and with our copper and gold project with Rio Tinto (RTP), we would easily double and triple [copper] exports to China. There is huge potential. On top of that, we have new commodities to export to China—iron ore, zinc—and we do have some prospects for oil and gas and important reserves of uranium. But we are a landlocked country...and transit costs equal almost 10 percent of GDP. So with encouragement from my government, we are [looking beyond the export of raw materials] to adding value in processing and putting more priority on industrialization, which will create jobs.
Are you entertaining the idea of nuclear power?
Not at this moment, but we are working closely with France, the U.S., Japan, Russia, and China, because we have so many reserves of uranium. We have lots of other sources of energy. Mongolia is, interestingly enough, the world's richest wind tunnel.
So wind power could be a huge?
Wind power could be a major opportunity for Mongolia and for export to China.
You're opening a national bourse that I think will be managed by the London Stock Exchange.
It's not decided yet...but the London Exchange is one of the strong candidates because it is a mining-specialized exchange. That decision will be made by an independent board.
Here's what I hear you saying. You have a country the size of Western Europe, a small population, lots of mineral resources, a developing market system, and predicted double-digit growth in GDP. What's the problem?
The big problem is: How do we manage this wealth? We have about 4 or 5 percent unemployment. That is the official number, but a substantial segment of the population is not registered yet. And the poverty level is above 35 percent. So we need to channel this wealth to combat poverty.
And eliminate the possibility of social tension?
Absolutely.
What's the economic model? Is it more like the U.S. or China? Or is it some hybrid?
After 20 years of transition, we're trying to define which would be the best model for us. And we have seen the Chilean model, because Chile is a mining country. We are looking now at Canada and what it has achieved because although there are big differences in development and other things, there are a lot of natural similarities between Mongolia and Canada. We're cold countries with vast territories, smaller populations relatively, and mining and agriculture are key. And we're next door to major neighbors like the U.S., China, and Russia.
Do you have influence with North Korea?
To say influence is a little difficult. What we have are very good relations. We have an embassy in Pyongyang; they have one in Ulan Bator. We have cultural-exchange events on a continuing basis. And we even have economic and trade commissions that work together. We try to keep this channel warm.
Do you have any national security concerns?
We do have a standing army in a certain limited way. But we do not have major political and territorial problems with our neighbors, China and Russia.
So when you're not running the country, what's the most fun thing to do in Mongolia?
For me, the fun is probably sports. I like playing basketball and tennis. The fantastic thing is to go out to the countryside and see how beautiful my country is, how different the landscape is because it's a vast land. This is one of the most untapped and wildest countries in terms of nature. On top of that, we still maintain the traditions of our nomadic culture.
Any golf courses over there?
Yes, we have one.
Canada announces funds for projects at Centerra mine
September 30, TORONTO (miningweekly.com) - The Canadian government will contribute C$270 000 in funding to support social projects near Centerra Gold's Boroo mine site, in north-central Mongolia, International Trade Minister Peter Van Loan announced this week.
Mongolian Prime Minister Sukhbaatar Batbold is in Canada this week, and met with Prime Minister Stephen Harper, as well as Minister Van Loan.
The C$270 000 in funding, which is being contributed through the Government of Canada's Investment Cooperation program, will support environmental and vocational training and community development initiatives at the Boroo mine.
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The two countries are in negotiations towards a foreign investment promotion and protection agreement (FIPA), and announced earlier this week that they had reached new agreements to improve trade and market access and to strengthen both agricultural cooperation and Mongolia's democratic governance and institutions.
At the end of 2009, Canadian direct investment in Mongolia totalled C$601-million. Bilateral merchandise trade between Canada and Mongolia has grown more than 60-fold in the decade between 2000 and 2009, from C$2,6-million in 1999 to C$163,8-million in 2009.
A bilateral FIPA would provide greater predictability and certainty for Canadian investors considering investment opportunities in Mongolia, the Canadian government commented.
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Centerra operates the Kumtor mine in Kyrgyzstan and the Boroo mine in Mongolia. It also has a second project in Mongolia, called Gatsuurt.
MSE No Longer Best in World
October 3 (Sunday Observer, Sri Lanka) Sri Lanka's stocks closed up 2.1 percent Friday becoming the best performing market in the world, up 110.9 percent so far according to Bloomberg newswires data, beating Mongolia at 109.7 percent. Bangladesh was a distant third at 56.4 percent.
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Related article on Asian Tribune
FACTBOX-Key political risks to watch in Mongolia
BEIJING Oct 1 (Reuters) - Landlocked Mongolia sits on vast quantities of untapped mineral wealth and analysts say it could be one of the fastest growing economies of the next decade, as well as a key investment target for global mining giants.
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Following is a summary of key Mongolia risks to watch:
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Prophecy Investor Conference Call (Audio)
September 30 (Prophecy Resources) – Update on the company's international operations.
Mongolian Parliament opens fall session
ULAN BATOR, Oct. 1, 2010 (Xinhua News Agency) -- Mongolian Parliament opened its fall session Friday after lengthy summer recess.
Demberel Damdin, speaker of the Parliament said "This parliamentary session is opening in time when Mongolian economy is picking up again. Annual economic growth reached 7.4 percent. Government revenue is expected to exceed planned level. Price of major export commodities such as gold, copper, iron ore and cashmere increased in the world market. Foreign currency reserve reached 1.6 billion U.S. dollars."
Fifty-four lawmakers out of 76 lawmakers were present during the opening ceremony. About 20 draft laws are on the agenda of the fall session. The parliament is expected to debate on important issues such as development of mega mining project of Tavan Tolgoi coking coal deposit and development of heavy industrial complex in Eastern Gobi province and other mining projects.
Mongolia has abundant mineral resources including gold, copper, coal and uranium reserves.
Something Up in Mongolia?
September 30 (Resource Investor) Sometimes a little detail turns out to be critical.
I know of gold deposits discovered because someone asked what an old native name on an out-of-the-way part of the map meant. The translator looked and replied, "Mountain of gold." Survey crews were dispatched, and found the area to be just that. No one had ever asked about the name before.
Here's another little detail that caught my eye this week. One that just might have some significant implications for mining.
Mongolian Prime Minister Sukhbaataryn Batbold is in my hometown Vancouver this week. Tonight a dinner is being hosted in his honor.
The interesting thing is, who is hosting him. The dinner is being sponsored by consolidated mining major Teck Resources.
This is odd. Teck has no operations in Mongolia. Not even exploration (as far as I know). In fact, the company has almost no operations outside of the Americas. Mongolia is a long way from home.
And yet they're covering dinner for the Mongolians. Could this be a sign of something in the works? Years back, Teck was rumored as a potential buyer/partner in Ivanhoe Mines' giant Oyu Tolgoi deposit, but that never materialized. Might there be something else piquing Teck's interest today?
Of course it's possible that Teck is simply being altruistic in supporting the Mongolian delegation. The company also sponsored the Vancouver Olympic games this past winter, without any apparent mining-related angle.
But the association does seem odd. You heard it here first. (Although to be fair, I heard it first from my friend Julian Dierkes, also known as Mr. Mongolia. If you're interested in this country, Julian is a "front-line" contact who knows the ground. He also tends an excellent blog on Asian politics, one of the many sources I check daily in preparing this letter.)
Here's to those little things.
Dave Forest is managing director of Notela Resource Advisors Ltd. and writes on crude oil, natural gas, geopolitics, gold and other commodities at Pierce Points.
MPRP leaders say criticism is welcome, but not insults
October 2 (news.mn) Speaking on behalf of the MPRP Managing Council, the party's Secretary-General, U. Khurelsukh, told a press conference on Thursday that the ensuing 26th General Assembly would discuss other issues, besides those related to changing the party's name and ideology. As the party that has been in power for 16 of the last 20 years, the MPRP will critically evaluate the progress of the country. Since it hopes to be in power in the coming years, too, it will also determine its policy in the next 20 years, he said.
He made it clear that in the event of the party changing its name, there would be no question of another party calling itself MPRP. The party was called MPP when it was established in 1921 and among its members were Bogd Javzandamba and Zaya Gegeen. The MPP added the word "revolutionary" to its name in 1925. No political organization named MPP has been in the register since 2002, so there will be no legal problem if the MPRP were to claim the name now.
Members of the Managing Council answered some questions from journalists.
What do you think about the recent debate organized by former President N.Enkhbayar?
We had been invited to a previous similar debate and Secretary Ts.Sukhbaatar had also participated in it, but this time there was no invitation. Party members are free to gather and talk about the party affairs and ideology.
Have you taken note of the comments and criticism of the party leadership in the debate?
We always take notice of criticism so that we can improve our performance. Nobody is perfect and the party leadership can make mistakes. We are not afraid of fair criticism but are not prepared to be insulted. Patriots who gave their lives for independence and development were all members of the MPRP, and no one should be derogatory to the party.
How do you react to the opposition of former MPRP leader Enkhbayar to changing the party's ideology?
He has revived his MPRP membership after stepping down as President. We give him the respect due to a former President. We also invited his views as a former party chairman and experienced politician on the change of name and ideology. As a matter of fact, he had talked about reverting to the old name MPP when he was party leader. We have always been behind him and also nominated him for the Presidential election. Unfortunately he lost, but it was an individual's defeat, not of the MPRP.
What about the criticism that the MPRP is run by a coterie and ordinary members' views receive no consideration?
If there is no public debate, one will say it is rule by coterie. If there is open debate, one will say the MPRP is full of factions. The record of the coalition government shows how things have been run in a spirit of harmony. Cooperation is better than criticism for its own sake.
Inflation will not be more than 10%, assures Mongol Bank chief
October 2 (news.mn) The President of Mongol Bank, L. Purevdorj, answered media questions on Thursday after submitting the monetary policy document to Parliament Speaker D. Demberel. A selection of questions and answers follows.
What are the main features of the monetary policy next year?
Before coming to them, let me give you some data about the situation now. Inflation stood at 16-17% in the beginning of the year so we raised the policy interest rate by 1%. The result is that inflation has been brought down to 11%. We expected this to fall further, around 8% by the end of the year, but now it is clear we cannot reach this goal. But it should not be more than 10%.
Credit supply has gone up 30% over last year and has supported economic development. The total amount borrowed is expected to reach MNT400-500 billion by the end of 2010.
The Mongol Bank has been successful in regulating the currency conversion rates and our foreign exchange reserves have grown to stand at a very healthy USD1.6 billion. We should end the year with some more.
How do you see the financial situation in 2011?
Inflation will not be under 10%. There will be more monetary liquidity and credit will be easier to access. The economy has to grow faster than it has done in 2010. Much depends on what form the State Budget takes when it is approved by Parliament.
The success of the monetary policy we have proposed and of the economic policy to help improve people's life will depend on the final directions of the budget. If budgetary spending is much increased, resulting in a deficit, we may be forced to change our formulations. We have suggested to the Government that if expenses have to be increased, it may be better to raise the money from sale of domestic bonds than increasing the budget deficit.
However, we shall continue to ensure that the MNT remains stable and that the foreign exchange reserve grows. We have told the Government and Parliament that the MNT will remain stable for two years but the situation will change in 2013 when output from Oyutolgoi goes on sale. A strong MNT is good for us as it makes imports cheaper. But it also means less profit from exports and affects the competitiveness of our traditional export sectors.
What will be your preferred policy interest rate?
We see the possibility of lowering it but a decision can be taken only after watching how the economy behaves. We shall publish a monthly report.
The combined budgets have an income in trillions. Salaries will rise and more money will be distributed from the Human Development Fund(HDF). Have you considered the risks?
The Government has kept expenses under control and we do not anticipate any inflationary pressure because the budget deficit has been reduced.
MNCCI brings MPs and CEOs together to discuss PPP
October 1 (news.mn) Members of Parliament and senior executives of top enterprises, including CEOs and Directors, recently came together at a meeting on Development-Investment-Public-Private-Partnership (PPP) organized by The Mongolian National Chamber of Commerce and Industry (MNCCI). MNCCI Chairman S. Demberel said he had given this name to "the summit" as "there can be no development without investment, and there can be no investment without the public and private sectors coming into partnership".
The meeting identified areas of development where PPP could be useful, clarified the mechanism for this, and chose programs where cooperation can begin immediately. Demberel said business owners and private sector entrepreneurs were not satisfied with the progress of the Government's plans to reform the business environment in 2010. A few improvements have taken place, but much more could have been achieved in areas like enhancing competitive capacity, stabilizing the business environment, and increasing access to credit.
Minimum wages likely to be raised
October 2 (news.mn) An official of the Ministry of Social Welfare and Labor has indicated that minimum wages will be raised from the present MNT108,000. Parliament is likely to take a decision to make this effective from the beginning of 2011. Different sectors such as agriculture, mining, education and construction could settle for different rates.
The Government will not impose any amount but would leave it to a tripartite agreement between the trade unions, employers and the Government.
STOCK EXCHANGE WEEKLY REVIEW
October 3, Ulaanbaatar, Mongolia, /MONTSAME/ Five stock trades were held at Mongolia's Stock Exchange (MSE) during the week from September 27 to October 1. In overall, 1.2 million shares of 34 JSCs were sold totaling 369.1 million MNT trade.
Index top-20 was 12980.70 points increasing by 925.55 units, or 7.7%, against the week earlier. The total market capitalization was set at MNT 162.8 billion increasing by MNT 85.0 billion or 7.9%.
Shares of "Sharyn gol" JSC (32.4%), "Mogoin gol" (25.0%) and "Tavan tolgoi" (21.7%) were increased, but, "Takhi-ko" (12.3%), "Eermel" (10.3%), and "Mongolian telecommunication" (10.0%) JSCs were decreased at the MSE. A total of 34 shares were sold. Of them, rate of 17 shares were increased, rate of 12 shares were decreased, and rate of five shares were stable.
Shares of "Hermes center" JSC (567.6 thousand units), "Khokh gan" (354.6 thousand units) and "Remikon" (92.4 thousand units) JSCs were actively traded in terms of trading volume, but in terms of trading value "Tavan tolgoi" (MNT 145.9 million), "Khokh gan" (MNT 53.2 million) and "APU" (MNT 33.0 million).
Amendments to Labor Law submitted
October 2 (news.mn) Of the 2,600 civil cases resolved in 2008, some 600 were related to labor disputes. Many consider that the present Labor Law, passed in 1999 and amended five times between then and 2008, does not any longer meet the requirements of a vastly changed economic structure.
Some draft changes have been submitted to Parliament, covering, among other things, the practices of employment without contract, non-cash payments, not paying extra for overtime work, and child labor. Most of the violations are seen in the private sector.
Australia
| Close: Mongolia Related ASX Listed Companies, October 1, 2010 | ||||||||
| HUN | 0.880 | -0.010 | 0.880 | 0.890 | 0.890 | 0.895 | 0.880 | 100,750 |
| VOR | 0.022 | 0.001 | 0.021 | 0.022 | 0.022 | 0.022 | 0.021 | 3,295,095 |
| LRL | 0.185 | -0.005 | 0.185 | 0.195 | 0.195 | 0.195 | 0.185 | 233,988 |
| AKM | 0.145 | 0.005 | 0.140 | 0.145 | 0.140 | 0.150 | 0.140 | 1,502,618 |
| GMM | 0.145 | -0.015 | 0.150 | 0.170 | 0.155 | 0.155 | 0.145 | 125,000 |
| LEI * | 32.830 | -0.230 | 32.800 | 32.830 | 33.280 | 33.390 | 32.420 | 786,532 |
| RIO | 77.070 | 0.300 | 77.050 | 77.080 | 77.390 | 77.700 | 76.580 | 1,956,146 |
| BHP * | 39.460 | 0.550 | 39.460 | 39.470 | 39.490 | 39.660 | 39.260 | 11,651,495 |
An * next to the security code indicates there has been an announcement today relating to that security. Click on the * to view the list of today's announcements.
Source: asx.com.au
Banks pull shares down
October 1 (AAP) Close Australian shares reversed early gains to close slightly weaker after investors used an early rise to book profits and sold out of the major banks.
The benchmark S&P/ASX200 index slipped 3.7 points, or 0.1 per cent, to 4579.2, while the broader All Ordinaries index fell 2.2 points to 4634.7.
Financial stocks led the market down, dropping 0.8 per cent, while minerals gained 0.7 per cent and energy shares rose 0.6 per cent.
need2know:
- European shares climb at the open
- The dollar hovers below 97 US cents
- Asian shares rise to chalk up weekly gain
- Gold firms above $US1310
- Oil trades little changed around $US80
- Dow futures are 24 points higher at 10,747
The market climbed higher at the open this morning as investors moved in to snap up a few bargains, CMC Markets analyst David Taylor said.
"Once that play was exhausted, the market really had no staying power and drifted back into negative territory."
Among the major banks, National Australia Bank fell 34 cents to $25.00, Westpac descended 31 cents to $22.93, Commonwealth Bank sagged 27 cents to $50.90 and ANZ lost 17 cents at $23.51.
Banks signalled they may raise their lending rates at a faster pace than the central bank, as they look to pass on rising wholesale funding costs to customers.
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Gold miner Newcrest Mining finished 33 cents up at $40.00.
The top-traded stock by volume was base metals explorer Avanco Resources, with 133.3 million shares worth $13.33 million changing hands. Avanco was 1.6 cents higher at 11 cents.
Preliminary national turnover was 2.15 billion shares worth $3.94 billion, with 529 stocks down, 519 up and 342 unchanged.
Global
Asian Stocks Rise for Fifth Week on U.S., China Economic Data
Oct. 2 (Bloomberg) -- Asian stocks rose for a fifth straight week as government and industry reports from the U.S. and China fueled confidence in a global economic recovery.
BHP Billiton Ltd., a mining company that counts China as its biggest market for sales, rose 1.1 percent in Sydney as commodity prices gained after reports showed Chinese manufacturing increased in September. Korea Zinc Co. gained 6.5 percent in Seoul. Fuji Heavy Industries Ltd., a Japanese carmaker that counts North America as its biggest market, leapt 11 percent in Tokyo after U.S. reports on capital-goods orders, economic growth, unemployment and business activity.
The MSCI Asia Pacific Index rose 1.2 percent this week to 127.06 after climbing to a five-month high. It gained 8.4 percent in September, the largest monthly advance since July 2009. The 12 percent climb in the three months ended yesterday was the biggest quarterly increase of the past year.
"Rising capital investments in the U.S. is a positive sign that shows companies expect demand to increase in the next few months," said Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management Co., which has $123 billion in assets globally. "The stock rally may continue given that valuations are fair, but we have to watch whether the improvements in economic data are sustainable."
Japan's Nikkei 225 Stock Average lost 0.7 percent. Tokyo Electric Power Co., Asia's largest electricity generator, tumbled after saying it will sell shares. Takefuji Corp., a consumer lender, plunged 97 percent after filing for bankruptcy protection. Nintendo Co., the world's largest maker of portable video-game players, tumbled 13 percent after cutting its profit and dividend forecasts.
Chinese Stocks Advance
China's Shanghai Composite Index rose 2.5 percent and Hong Kong's Hang Seng Index increased 1.1 percent in their holiday- shortened weeks. South Korea's Kospi index advanced 1.6 percent.
Australia's S&P/ASX 200 Index dropped 0.5 percent. Nufarm Ltd., the country's largest supplier of farm chemicals, plunged after UBS AG cut the company's investment rating to "sell" from "neutral."
BHP Billiton, the world's largest mining company and Australia's biggest oil producer, gained 1.1 percent to A$39.46 in Sydney. Korea Zinc jumped 6.5 percent to 303,000 won in Seoul and Jiangxi Copper Co., China's No. 1 producer of the metal, rose 5.9 percent to HK$19.66 in Hong Kong.
Oil and metals increased this week after reports showed manufacturing accelerated in China in September. HSBC Holdings Plc and Markit Economics released their purchasing managers' index on Sept. 29, and China's logistics federation and statistics bureau released its manufacturing gauge on Oct. 1.
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U.S. data on Sept. 30 showed the economy grew at a 1.7 percent annual rate in the second quarter, faster than the 1.6 percent previously estimated. Initial jobless claims fell to 453,000 in the week ended Sept. 25, less than the median forecast of economists surveyed by Bloomberg News. The Institute for Supply Management-Chicago Inc. said its business barometer climbed to 60.4 in September, exceeding the highest estimate of economists surveyed by Bloomberg News.
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European Stocks Post Biggest Weekly Decline in Three Months
Oct. 2 (Bloomberg) -- European stocks posted the biggest weekly drop in three months, with banks leading declines amid concern the region's economy is slowing as the sovereign-debt crisis curbs growth.
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The Stoxx Europe 600 Index lost 1.9 percent to 259.09 this past week, the most since July 2. The regional gauge is 4.8 percent below this year's high in April amid speculation that economic growth will slow as European nations slash spending to rein in their budget deficits. The cost of insuring against default on Ireland's government debt surged to a record this week, signaling deterioration in the country's creditworthiness.
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European Economy
Expansion in Europe's manufacturing industry slowed in September and export orders weakened as a cooling global recovery restrained demand. The reports overshadowed better- than-forecast data on Chinese manufacturing and U.S. growth.
All 19 industry groups on the Stoxx 600 rallied in the third quarter through the end of September as the index posted a 6.7 percent climb amid optimism the Federal Reserve and other central banks will step in to provide more stimulus for the ailing recovery. Even so, New York University Professor Nouriel Roubini said there's a high probability of another U.S. recession, with Japan's "anemic" outlook underscoring risks to the global recovery.
National benchmark indexes declined in 14 of the 18 western European markets this week. France's CAC 40 and Germany's DAX lost 2.4 percent and 1.4 percent, respectively. The U.K.'s FTSE 100 Index slipped 0.1 percent.
The VStoxx Index, which measures the cost of protecting against declines in the Euro Stoxx 50 Index, surged 11 percent, the most since June.
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Banks Decline
European banking shares posted the worst performance among 19 industry groups in the Stoxx 600 this week, losing 4.5 percent. A statement issued after a meeting in Brussels yesterday said that finance ministers and central bank governors had "pointed out the risks related to the sovereign debt market that could have a contagious effect on the banking sector."
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U.S. Stocks Fall on Debt Concern to Snap Four-Week S&P 500 Rally
Oct. 2 (Bloomberg) -- U.S. stocks slipped, halting the longest streak of weekly gains since April, as lingering concern that Europe's government debt crisis may threaten the economic recovery trimmed the market's biggest September rally in 71 years.
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The Standard & Poor's 500 Index fell 0.2 percent to 1,146.24 over the past five days, halting four straight weeks of gains. The benchmark for U.S. stocks rallied 8.8 percent in September to erase its 2010 loss. The Dow Jones Industrial Average dropped 30.58 points for the week, or 0.3 percent, to 10,829.68.
"It's a slow growth, kind of anemic recovery," said Russ Koesterich, the San Francisco-based head of investment strategy for scientific active equities at BlackRock Inc., which oversees $3.36 trillion as the world's largest asset manager. "It's not clear that anything is going to change that in the near term."
The surge in equities since the end of August defied what is historically the worst month for stocks, with the S&P 500 falling 0.7 percent on average in Septembers since 1950, according to the Stock Trader's Almanac. The monthly rally brought the year-to-date return to 2.8 percent, though the gauge is still 5.8 percent below its 2010 high on April 23.
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Stocks fell the most this week on Sept. 27, when the S&P 500 slid 0.6 percent as investors bet that Ireland and Portugal's government finances are weakening, driving up the extra yield they demand to own the nation's debt instead of Germany's benchmark bunds to record closing levels.
Financials Slip
Financial shares in the S&P 500 lost 0.8 percent over the past five days for the biggest drop among 10 groups. Buffalo, New York-based M&T led the retreat after ending talks to combine with Santander's U.S. banking unit, people familiar with the matter said. The dispute was about who would have control of the combined institution, one person said.
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"We're at the tipping point where some companies will execute game plans well and there are others that are going to get dragged down by the sluggish recovery," said Alan Gayle, senior investment strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees $63 billion. "The market's encouraged we'll dodge the bullet of a double dip, but economic momentum is slowing."
Jobless Rate Probably Rose in September: U.S. Economy Preview
Oct. 3 (Bloomberg) -- The jobless rate probably rose in September for a second month as the year-old U.S. recovery failed to generate enough jobs to keep up with a growing labor force, economists said before a report this week.
Unemployment climbed to 9.7 percent from 9.6 percent in August, according to the median estimate of 62 economists surveyed by Bloomberg News ahead of an Oct. 8 report from the Labor Department. The data may also show companies added 77,000 workers to payrolls, and total hiring stagnated amid cuts in government staffing as the decennial census wound down.
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Misc
Poverty still stalks resource-rich Mongolia
October 3, ULAN BATOR (AFP) — Munkherdene should be in high school. Instead the 15-year-old Mongolian sifts through mountains of garbage each day at a rubbish tip in Ulan Bator, collecting scraps of steel, copper and plastic.
Munkherdene, his widower father and elder sister -- who moved into a traditional ger closer to the dump after his mother died -- sell their wares at the markets.
For his toil, the teen makes about 3,000 tugrik, or 2.70 dollars, a day.
"I couldn't enrol at a new school so it's easier for me to work at the tip," Munkherdene told AFP, explaining that when the family moved they lost their legal urban registration -- and with it the right to education and healthcare.
Mongolia, one of the poorest countries in Asia, is in the sights of foreign investors looking to cash in on the landlocked country's bounty of natural resources, including vast untapped mineral deposits.
Luxury brands including Louis Vuitton and Burberry have opened boutiques on Ulan Bator's Sukhbaatar Square, which is also home to the country's parliament. Hummers and European sports cars are commonly seen on the pot-holed streets.
But for most of Mongolia's 2.7 million citizens, poverty is still the reality. And 20 years after embracing democracy and capitalism, the government is struggling to meet the increasingly urban population's social needs.
More than 40 percent of the country's total population lives in Ulan Bator.
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<Mogi & Friends Fund A/C>
3rd day, so far so good
Mogi: So far so good. My Portfolio (well, actually it's just one stock) is up 5.32% on its 3rd day of trading, to make it 8.2% overall return. There was a slight scare when it dropped to the price I bought originally but came back up to cap the week with a nice gain. Penny stocks are nerve-wrecking sometimes aren't they. My stock's intraday high was 11% more than its intraday low. While the world's biggest mining company BHP's high-low gap on the same day was just a little over 1%. But you learn to be patient though in dealing with these highly speculative stocks.
Oh, remember that copper play in Brazil I mentioned? It gained a little more (well a lot actually, 17%) on Friday to make it 323% gain in 2 weeks. Hmmm, wish clients were a little more exposed to this.
This reminds me of a favorite quote from Warren Buffet: "Be greedy when others are fearful, and fearful when others are greedy!"
Hope you had a good weekend and see you back on next trading day!
Mogi
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"Mogi" Munkhdul Badral
Executive Director
CPS International
Email: mogi@cpsinternational.mn
Mobile: +976-99996779
CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSL License Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.
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