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Finance ministers and central bankers from the Group of 20 leading developed and emerging economies, meeting in Mexico, Feb 25/26 2012.
Finance ministers and central bankers
from the Group of 20 meeting in Mexico City at the
weekend signalled an agreement to expand the Eurozone's rescue fund via the IMF,
but only if Europe strengthens its firewall first.
European leaders on Thursday and Friday this week
plan to discuss combining the temporary European Financial Stability Facility
(EFSF) bailout fund with a permanent facility, the European Stability Mechanism
(ESM), which will be launched this summer, to create a combined €750bn fund that
could backstop struggling economies such as Italy and Spain. However, Germany
has hinted it wishes to delay a decision. Today the Bundestag will vote on the
second Greek bailout that was agreed by finance ministers last week.
The expansion of the rescue fund "will provide
an essential input in our ongoing consideration to mobilize resources" to
the International Monetary Fund, the G-20 officials said in
a joint statement Sunday.
Kingspan, the building materials
reported pre-tax profits of €77.76m for the year to the end of December 2011
and the company said the growth in demand for greater energy efficiency will
drive continued global growth in its insulation solutions.
The company reported that revenues grew by 30% to
€1.55bn, including results from acquisitions. Kingspan recommend a final
dividend per share of 6.5 cent. The total dividend for 2011 was up 10% to 11
cent, the company said.
Goodbody's Robert Eason commented:"Kingspan has reported EBIT of €91m for the 12 months to end Dec-11 (+35%
yoy), which is ahead of our forecasts of €83m and beat management guidance given
in November of €82-85m. Adjusted EPS (based on diluted no. of shares) was also
9% ahead of our estimates at 39.2c. At a divisional level, better than expected
performances from Insulated Panels (helped by a stronger top-line),
Environmental & Renewables (reflects one-off contract win in France with good
margins) and Access Floors (continues to surprise on the upside, despite
declining sales) more than offset a weaker than forecast outturn for Insulation
While management notes the uncertain economic backdrop and that in recent months
markets have weakened in the Benelux and Ireland, it has seen improving trends
in the key markets of the UK and US. Furthermore, given the “recent level of
bidding activity and our pipeline”, management expects to deliver growth in the
first half, albeit at a slower pace.
Taking into account the weather impact in Q4, we see circa 3% upside to FY12
forecasts. Overall, this is a comforting set of results and a reassuring
outlook, which highlight why we believe Kingspan should be a core holding for
HSBC, the global bank, today reported a profit of $21.9bn for 2011, a rise of 15% on 2010
and the biggest profit for 2011 announced by a Western bank so far. However, the
profit includes a $3.9bn gain on the value of the bank’s own debt. Excluding
that, pre-tax profit fell by $1.2bn to $17.7bn as a strong performance in
emerging markets was offset by a sharp rise in costs.
Economic View: ECB LTRO II the highlight
of the week; Dermot O'Leary, chief economist at
Goodbody comments -- "Following the resounding
success of the first auction in December, the second Long-Term Repo Operation
(LTRO) from the ECB will take place this Wednesday. There is a relatively wide
range of estimates in the market, with consensus settling on European banks
taking up €470bn in the operation, close to the €489bn in liquidity provided in
The success of the first LTRO can be measured by the fact that the euro-zone
avoided a significant credit crunch as banks were allowed roll over maturing
bonds and also provided a boost to sovereign debt markets. Sovereigns are also
likely to benefit from the second auction. However, the real goal of the second
auction this week will be whether the money will find its way into the real
economy in the form of increased credit supply. Such a preference was expressed
by ECB President Draghi in comments in Mexico yesterday. It remains to be seen
whether this will occur, but the actions of the ECB since December have played a
significant role in calming markets and thus reducing the odds on a sharp
downturn in the euro-zone economy in 2012, with a mild recession now likely.
The ECB’s actions have also been beneficial to Ireland and the Irish banking
system. Rate cuts have been directly passed on to the majority of borrowers
(those on tracker mortgages), while a more stable funding situation (for the
next three years in any case) should mean that the recent stability in deposit
trends should continue."
Treaty ratification crucial for return
to bond markets, but fiscal compact sorely lacking IMF proposals on risk
sharing: Conall Mac Coille, chief economist at Davy
comments -- "Ireland has little choice but to
adopt new treaty, which will enshrine two fiscal rules in Irish law
The Irish government intends to ratify the new
European fiscal compact treaty by end-March.
The key innovation in the new treaty is a
commitment to enshrine two fiscal rules in Irish law: Ireland's structural
budget deficit must adhere to a limit of 0.5% of nominal GDP, and debt must be
reduced to 60% of GDP.
Ireland has little choice but to adopt the
treaty given that ratification is a pre-condition for securing future ESM
Structural budget deficit target of 0.5% is a
The structural deficit is an abstract economic
concept that cannot be observed with certainty.
For example, the IMF estimates that Ireland
ran a structural budget deficit of 5.4% of GDP in 2006, whereas the EU
Commission estimates that Ireland ran a surplus of 2.2% the same year.
Markets are unlikely to derive confidence in
fiscal policy from budgetary targets they cannot observe.
Treaty does not go far enough; IMF proposals
that could have preserved Ireland's creditworthiness are not included
The fiscal compact would have had no bearing
on the collapse in Ireland's public finances had it been adopted at the
inception of the euro. Ireland adhered to the Stability and Growth Pact rules
prior to the collapse of the construction sector.
However, the IMF has proposed mutual insurance
mechanisms for the euro area that could have preserved Ireland's
Ireland should actively advocate the IMF's
recommendations, not least because they highlight that the sovereign has borne
too high a cost in recapitalising banks and deserves additional support from
ECB Succeeds in Reducing Liquidity Risks: Erik Fishwick, Head of Economic Research, CLSA tells Russell Jones, Global Head of Fixed Income Strategy at Westpac Institutional Bank that he believes the ECB has succeeded in restoring health to a dysfunctional money market and expects the LTRO to reduce liquidity risk for European sovereigns:
The MSCI Asia
Pacific Index slid 0.9% Monday.
Nikkei 225 fell 0.14%; China’s Shanghai Composite Index added 0.30%. South
Korea's Kospi index dipped 1.42%. Australia's S&P/ASX 200 declined 0.92% and the
Bombay Stock Exchange Sensex 30 index in Mumbai dropped 1.81%.
The skyscrapers and
immaculate beaches of Singapore's seaport look out on one of the world’s largest
parking lots: mile after mile of empty cargo ships, as far as the eye can see.
Similar fleets bob at anchor,
with empty cargo holds, off the coasts of southeast Malaysia and Hong Kong. And
dozens of newly built ships float empty near the giant shipyards of South Korea
and China, their owners from all over the world reluctant to accept delivery
during one of the worst markets ever for the global shipping industry.
As recently as six weeks ago
large freighters that can carry bulk commodities like iron ore or grain were
fetching charter rates of $15,000 a day. Now, brokers and owners say, the going
rate is $6,000 a day. If any customers can even be found.
between the US benchmark WTI (West Texas Intermediate) used on the New York
Mercantile Exchange and Brent is over $15 - - The Globe and Mail says that for
the past 10 months, Canadian producers - - whose prices are tied to WTI - - have
been taking steep discounts for their oil compared with international crude
prices that are benchmarked against North Sea Brent, which can be shipped more
readily. In the past, WTI tended to trade at a small premium to Brent, because
it is easier to refine.
hit a peak of $28.08 (US) on Oct. 14, but has fallen dramatically since then.
After plans for more pipeline capacity at Cushing, Oklahoma, the differential