China's Inflation Rises 4.9%

http://online.wsj.com/article/SB10001424052748703703804576145010662663794.html?mod=WSJASIA_hpp_LEFTTopWhatNews

By BOB DAVIS And AARON BACK

BEIJING—China's consumer prices rose 4.9% in January from a year earlier, prompting worries that the world's second-largest economy is falling behind in the fight against inflation, as are other countries in Asia.
While the increase in the consumer price index, which was faster than December's 4.6%, doesn't sound especially high by U.S. standards—let alone the sky-high levels of Latin America in the 1980s—Chinese leaders are extraordinarily sensitive to inflation, which has long been associated with political unrest. The headline numbers also underplay the impact on many ordinary Chinese. The foods component, for instance, jumped 10.3%, and has averaged more than 10% for the past four months. Hundreds of millions of Chinese still live at or just above poverty levels, and so are especially sensitive to food increases.

The numbers also don't capture adequately the rise in assets, such as housing prices. Lu Feng, director of Peking University's Macroeconomic Research Center, said that China's extraordinary gains in manufacturing productivity hold down the cost of manufactured goods, which is reflected in the consumer price index.
Inflation is caused by too much money in the system chasing too few goods, he said, and that "excessive money largely goes to asset markets, so it boosts asset prices and can even result in asset bubbles," including possible bubbles in such items as housing, antiques and ancient paintings.
China's National Bureau of Statistics reworked the way it calculates the CPI, in part by decreasing slightly the weighting of food and increasing the weighting of housing items. The National Bureau of Statistics said that using the old measure the inflation rate in January would have been slightly lower. But a Wall Street Journal calculation using an estimate of the old weighting shows it may have produced an inflation reading of 5.1%—higher than the government reported.
China has raised interest rates three times since October, most recently last week, but benchmark lending rates, at around 6%, are still barely above the rate of inflation.
Earlier this month, Chinese Premier Chinese Premier Wen Jiabao tried to reassure the public that the government would tame inflation by attacking China's rising food costs.
"We are confident that we have the ability to promote the stable development of agricultural products, to ensure the effective supply of agricultural products, especially grain, and to maintain the overall basic stability of goods prices," he told China's State Council, the government's highest administrative body, in remarks reported on television.
Most major economies would boost interest rates to fight inflation, but China tends to keep rates low and depend instead on industrial policy measures, including, in this case, incentives to boost farm production. It's unclear whether such measures can work rapidly enough to tamp down inflationary pressure.
Rising inflation has become a problem across fast-growing Asia, which has seen a huge increase in investment from overseas and which relied on big stimulus measures to fight the effects of the global financial crisis between 2008 and 2010.
Anoop Singh, the International Monetary Fund's Asia chief, said there are signs inflation is becoming a structural issue, reflecting underlying demand, not just a temporary rise in food or commodity prices. He urged Asian nations to boost the value of their exchange rates, which would reduce the value of imports, as a way to fight price increases.
China is wary, though, of letting its currency appreciate more rapidly because it fears that would harm its thriving export industry. The value of the yuan has risen just 3.5% since June 2010 when China said it would let the currency float somewhat. Finance ministers and central bankers of the Group-of-20 nations meeting in Paris on Friday and Saturday are bound to press China on its currency policy.
In China, food prices typically rise prior to the Lunar New Year holiday, which ended on Feb. 8, but January's price increase was intensified by adverse weather, including drought conditions. Non-food price rises also accelerated to 2.6% from 2.1% last year, indicating that inflation pressures are spreading through the economy. All the Chinese price statistics are calculated compared to year-ago levels.
Drought conditions are adding to rising food costs. The U.N. Food and Agriculture Organization issued a warning recently that at least five of China's major wheat growing provinces, which account for two-thirds of China's wheat production, are facing a severe drought.
In another sign of burgeoning economic activity, China's imports rose 51% in January, nearly twice as fast as it did a month earlier. Exports also rose sharply, by 38%. That narrowed China's trade surplus to $6.45 billion in January, down from $13.1 billion in December, according to customs data.
Economists cautioned that China's trade figures are typically very volatile at the start of the year, due to distortions caused by the variable timing of the Lunar New Year holiday, which this year fell in the first week of February.
—Tom Orlik contributed to this article. Write to Bob Davis at bob.davis@wsj.com and Aaron Back at aaron.back@dowjones.com

Asia Mixed Before China CPI By SHRI NAVARATNAM

SINGAPORE -- Most Asian share markets were mixed Tuesday after Wall Street's uninspiring lead, with many investors cautious ahead of key inflation data from China.
Japan's Nikkei Stock Average was flat, Australia's S&P/ASX 200 was off 0.1% at 4931.5, South Korea's Kospi Composite was off 0.1% at 2006.49 and New Zealand's NZX-50 was up 0.1%.
Dow Jones Industrial Average futures were down 10 points in screen trade.
Markets remained focused on China's January inflation data due later in the day amid speculation the outcome would be milder-than-expected. The median forecast in a Dow Jones Newswires survey of 12 economists was for January's consumer price index to have risen by 5.4% on-year, up from December's 4.6% rise and November's 5.1% increase.
Investors will be keen to gauge the impact of recent tightening measures on consumer prices and whether Beijing will have to continue with more aggressive steps to fend of inflation pressures.
In Tokyo, the market was taking a breather after Monday's solid gains.
"Shares are becoming top-heavy as investors become cautious about the speed of gains in Japanese shares," said Kenichi Hirano, an operating officer at Tachibana Securities.
He expects the outcome of the China data to influence trade later in the session.
Twenty-one of the 33 Topix subindexes were down. Some exporters, which posted strong gains the previous session, were lower.
Olympus fell 2.7%, Canon was off 0.9% and Toyota Motor gave up 0.1%.
GS Yuasa advanced 4.6% after the battery maker on Monday raised its full-year earnings outlook, thanks to robust domestic demand for replacement batteries due to the summer heat wave and the winter season.
Investors are also awaiting the outcome of the Bank of Japan's policy meeting later in the day. The BOJ is widely expected to maintain its overnight call loan rate in the current 0.0%-0.1% range, but analysts say the bank may raise its assessment of the economy for the first time in nine months amid increasing signs of recovery in key economic sectors.
The Sydney market was a tad lower as trade was buffeted by earnings reports, while investors were also cautious ahead of China's inflation data.
"I would saw we are just pausing here before we continue on our way to 5100," said Bell Potter Senior Client Adviser Stuart Smith. "I don't see any real impediment to our market going higher."
Westpac Bank rose 0.2% despite first half cash earnings dropping 3.0% on year as the bank managed to maintain fairly strong margins, lowered bad debt and keep costs lower. Westpac's peers were down, with ANZ Bank off 0.8% and National Australia Bank 0.2% lower.
Leighton Holdings rose 2.4% after UBS upgraded the stock to Buy.
In the materials space, BHP Billiton was flat and Rio Tinto was off 0.5%.
Logistics company Brambles fell 0.8% after its first half profit missed analysts' expectations.
The Seoul market was sluggish as investors kept to the sidelines ahead of the China data. Foreign selling also cut into early demand, traders said.
"There's a tug-of-war going on between foreign outflows and domestic capital inflows," said Daewoo Securities analyst Kim Hak-kyun. "The market may sway back and forth around 2000 for a week or two."
Shinhan Financial was off 0.8%, while Posco fell 1.2%.
The technology sector was mixed, with Hynix Semiconductor down 0.2% and LG Display off 1.3%. Samsung Electronics tacked on 0.4% amid hopes the firm may be able to add to its share of the global mobile phone market.
Shares in New Zealand were subdued as investors focused on the earnings seasons, with several key results due over the next two weeks.
Fletcher Building, which has been struggling amid a weak domestic housing sector, was up 0.1%, and Sky City rose 0.6%. Both companies will report their first half results on Wednesday.
In foreign exchange markets, the euro held steady after it slipped to a three-week low of $1.3428 against the U.S. dollar on Monday, weighed by worries about the region's sovereign debt and banking problems.
Euro-zone leaders failed Monday to agree on any specifics about the size or scope of Europe's bailout fund for debt-stressed states, while Portugal said its economy contracted in the fourth quarter, raising fears the crisis-stricken country could slip back into recession. "Euro zone concerns continue to hang over the euro making a sustained rally in the currency difficult to attain," Credit Agricole said in a note to clients.
The single currency was fetching $1.3498 against the greenback, from $1.3488 late in New York on Monday, and 112.42 against the yen, up from 112.39 yen. The dollar was at 83.27 yen, compared with 83.34 yen.
The Australian dollar was steady at $1.0035 against the greenback, after dovish minutes of the Reserve Bank of Australia's February policy meeting, which were broadly in line with Governor Glenn Steven's testimony on Friday.
Lead March Japanese government bond futures were off 0.01 at 138.87 points as investors awaited the Bank of Japan rate-setting outcome and Governor Masaaki Shirakawa's press briefing. The 10-year cash bond yield was at 1.3%.
Spot gold was at $1,363.20 per troy ounce, up $1.20 from its New York close Monday. March Nymex crude oil futures were up four cents at $84.85 per barrel on Globex.
Write to Shri Navaratnam at shri.navaratnam@dowjones.com

外資持續撤離新興市場　資金大舉回流美股

鉅亨網新聞中心　(來源：中廣新聞網)　2011-02-15 12:14:32

最近新興市場股市跌得鼻青臉腫，外資資金大舉獲利了結，回流到成熟市場。根據最新的統計資料，上週歐、美、日三大成熟市場以及美債，全都出現大幅的資金流入。其中，美股基金的資金動向最受矚目，已經是連續第六週的資金淨流入，今年以來回流的資金超過252億美元。（張佳琪報導）
中國大陸去年十月以來已經三度升息，反應出新興市場國家的通膨壓力持續升高。在此同時，美國公佈的經濟數據持續好轉，許多企業財報出現令市場驚艷的好成績，於是乎，國際資金開始從新興市場獲利了結，回流到美國股市。也因此，最近市場上愈來愈多機構法人對美股今年的表現抱持樂觀期待。

根據統計，上週國際資金持續流向成熟市場，歐、美、日三大成熟市場都出現資金淨流入，美股基金上週淨流入25.48億美元、歐股基金淨流入19.93億美元、日本基金淨流入6.7億美元。美債上週也湧入大筆資金，出現37.38億美元淨流入。
統計顯示，美股基金已經是連續第六週的資金淨流入，今年以來回流美股的資金已高達252.85億美元；歐股以及日本基金今年以來累計也有34億美元、24.26億美元的淨流入。
摩根富林明投信指出，通膨所帶來的壓力，加速國際撤離新興市場，二月份來全球新興市場大失血，淨流出的資金有56億美元，成熟市場一下子鹹魚大翻身，今年以來MSCI成熟市場指數已上漲4.86%，美股更站上32個月高點。