International
Markets: AIB launches €500m farm fund; Samsung reports second year-on-year profit decline
By Finfacts Team
Apr 8, 2014 - 2:32 PM

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Liu Yiqian, a Chinese billionaire, paid a record-breaking $36m for a rare Ming-era wine cup that’s 500 years old, at Sotheby's auction in Hong Kong today. He told The Wall Street Journal: “Why do you all care so much about the price? I bought it only because I like it.” He added that he thought the price was reasonable.

AIB today announced a €500m fund to support the growth and development of Ireland’s agri sector at farm level. The fund is designed to support the ongoing development of the farming sector by providing finance for capital expenditure, working capital and asset finance. The fund is also available to support farmers who wish to refinance debt from banks that are exiting the Irish market. The fund is supported by discounted EIB funding for eligible projects.

AIB also announced that it has doubled its agri advisor team to twelve, supporting customers on the ground.

Samsung Electronics today posted estimated first quarter operating profits of 8.4tn won ($7.96bn).

This was the second year-on-year fall in a row as growth in global smartphone sales slows. Profits are up 1.08% on the previous quarter, but were 4.3% lower than a year earlier.

The market leader in smartphones has seen growth in smartphone sales slows, with mature markets like North America and Europe near saturation.

UK Deloitte CFO survey suggests that companies are ready to expand capital expenditure rapidly: Conall Mac Coille, chief economist at Davy, comments - - "Stock indices fell on Monday: the Euro Stoxx 50 closed down 1.4% and the S&P500 1.1%. Biotech and internet stocks continued to lead indices down. The euro pared back some of its losses from last week, rising to $1.374 yesterday, after the ECB president intimated that the bank may engage in quantitative easing. German industrial production data released yesterday saw strong growth of 4.8% on the year. In Spain, industrial output was up 3.1% in the year to February, another solid sign that the Spanish economy is exiting recession. Overall, the consensus forecast for euro area industrial production to grow by just 2.1% in 2014 and 2.6% in 2015 looks far too pessimistic. We expect euro area GDP growth will also beat the consensus forecast for just a 1.1% expansion in 2014 and a 1.4% rise in 2015.

In the UK, the Recruitment & Employment Confederation (REC) survey released this morning indicates that pay growth for full-time employees is now at a seven-year high. This is an encouraging sign. UK consumer spending in 2013 was primarily driven by a small fall in the savings ratio and with jobs growth compensating for average earnings expanding by just 1%, well below the rate of CPI inflation. Today’s REC survey complements the signal from wage settlements data that pay growth started to pick up at the turn of the year.

Another puzzle in the UK economy has been the weakness of investment spending, which contracted by 0.5% in 2013. However, yesterday’s Deloitte CFO survey for Q1 2014 suggests that companies are now ready to start expanding their capital expenditure. On balance, +80% of surveyed CFOs expected to increase capital expenditure over the next 12 months, and a +87% balance expected revenues to rise. Furthermore, the survey indicates that, on balance, +48% of CFOs expected to issue bonds or seek bank loans to finance new investment, with a +43% balance indicating that now is a good time to take on additional balance sheet risk.

Indeed, a key factor underpinning our forecast for UK GDP to grow by 3.3% in 2013, above the current consensus at 2.7%, is that we expect investment spending to expand at a rapid 8.3% pace this year. The latest Deloitte Survey for Q1 2014 is the latest in a series of positive surveys of companies’ investment intentions, suggesting that companies’ capital expenditure will expand rapidly in 2014."

Economic View: ECB’s concerns about promissory note deal may see bond sales accelerated; Juliet Tennent of Goodbody comments - - "The annual report of the ECB, published yesterday, expressed 'serious concerns' about the restructuring of the promissory note deal in February 2013. That deal saw the Promissory Note replaced by Irish government bonds totalling €25bn with maturities of between 25 year and 40 years which are held by the Irish Central Bank. At the time the ECB said that it would review the deal in relation to a possible conflict with the ECB prohibition on monetary financing (Article 123) and the Irish media reported last week that the Bank’s annual report would highlight some concerns with the arrangement. However, in the annual report the ECB also stated that the concerns “could be somewhat mitigated by the disposal strategy of the Central Bank of Ireland”. On the current timeline, it is expected that the bonds will be sold at a pace of €500m per annum, but it is now likely that the Central Bank will accelerate this to appease the ECB. This will mean that the interest bill associated with this debt will rise faster, as the ECB funding rate is replaced by a higher market funding rate at a faster pace.

However, the current benign interest rate environment also provides an opportunity for securing low rates.

The agreed disposal timetable for the bonds is the “minimum” that is required under the promissory note transaction. Given the favourable market conditions, we do not expect much of an impact on prices and yields due to a slight acceleration in the sales process."

US Markets

In New York Monday, the Dow fell 167 points or 1.02% to 16,246.

Both the S&P 500 slid 1.08% and the Nasdaq slipped by 1.16%

US benchmark updates

Asia Markets

The MSCI Asia Pacific Index fell 0.1% Tuesday.

Japan's Nikkei 225 fell 1.36%; China's Shanghai Composite rose 1.92%; South Korea's KOSPI climbed 0.17% and Australia's S&P/ASX 200 dipped 0.06%; and in Mumbai, the Bombay Stock Exchange the S&P BSE India Sensex Index slid 0.07%.

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600  is down 0.64% in mid afternoon trading Tuesday.

In Dublin, the ISEQ  is off 1.89%.

CRH is down 2.26%.

European Benchmarks

Irish Share Prices

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies

The euro is trading at $1.3788 and at £0.8243.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time high of 11,771 on May 21, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 3.11%, to 1,619 points, Bloomberg report.

On Monday in London the BDI closed down 19 points or 1.58% to 1,186. The index is down 47.91% year to date and up 38.23% in 12 month period.

The index rose by 220% in 2013 to 2,237.

Global rebalancing — the tanker scrapyard index?

Crude oil for May 2014 delivery is trading on the Chicago York Mercantile Exchange (CME/Nymex) at $101.29 up 85 cents from Monday's close. In London, Brent for May 2014 delivery is trading on the International Commodities Exchange at $106.39. The North Sea benchmark accounts for two-thirds of the global market.

Finfacts, July, 15, 2013: US West Texas Intermediate oil benchmark jumps in July - - margin between WTI and Brent falls.

Gold spot price

The spot price of an oz of gold is trading on the CME in Chicago at $1,311.90 up $13.90 from Monday's closing - - the gold price fell 28% in 2013, the biggest annual plunge since 1981.

Gold had hit a record high of $1,921.15 a troy ounce on Sept 06, 2011.

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