News and Research Update

November 21, 2009, 12:00 PM - Data Source: UBS Wealth Management Research

Research in focus:

UBS research focus: infrastructure investments – trends to build on

In the wake of the financial crisis, infrastructure spending worldwide is set to boom. In the new UBS research focus report, "Infrastructure: a strong foundation," Wealth Management Research (WMR) highlights the variety of attractive infrastructure-related investment opportunities that stand to benefit from this spending surge.

Daily Market News:

Economic News

Malaysia: Inflation slides 1.6% y/y in October (November 20, 2009, 3:50 PM)
Malaysia's consumer price index fell 1.6% y/y in October after a 2.0% decline in September. This is the fifth straight month of decline and slightly more than consensus expectation of -1.5%. Given the benign inflation outlook, we expect the BNM to remain on hold in its upcoming meeting on Tuesday.

Bank of Japan leaves policy unchanged (November 20, 2009, 9:02 AM)
The Bank of Japan (BoJ) left its rate target unchanged at 0.1% and announced no new measures, in line with our expectations. The BoJ is coming under increasing political pressure to take more aggressive action to fight off deflation, but in our view quantitative easing measures are still unlikely.

USA: Housing delinquency rates still rising (November 19, 2009, 9:00 PM)
The MBA delinquency rate for first-lien mortgages on 1-4 unit houses rose from 9.2% to 9.6% in 3Q09. The foreclosure rate rose from 4.3% to 4.5%. The deterioration shows that rising foreclosures will continue to be a problem in the housing market as the oversupply situation is not relieved.

USA: Philly Fed index rises in November (November 19, 2009, 8:59 PM)
The Philly Fed manufacturing climate index rose a bit more than expected from 11.5 to 16.7 in November. At that level it signals moderate growth in the manufacturing sector in the greater Philadelphia area. Key growth components such as new orders, shipments and employment rose.

USA: Initial jobless claims trending lower (November 19, 2009, 8:59 PM)
Initial jobless claims rose by 505k last week, matching the prior's week increase. The 4-week average continued to edge lower, to 514k, suggesting further gradual amelioration in labor market conditions. Further improvement will be necessary to signal positive payroll growth.

Top

Equity Markets EU

Daily European Equity Market Comment (November 20, 2009, 3:46 PM)
European markets declined on Friday, after ECB President said the bank will gradually withdraw the emergency cash it has pumped into the economy in order to ensure it does not fuel inflation. With this fall, the DJ STOXX 600 index has lost almost 3% this week and is witnessing the lowest trade volumes since July this year. Real Estate stocks were hit the most on concerns about the recovery in the UK property market.

Top

Equity Markets Asia

Daily Asia-Pacific Market Comment (November 20, 2009, 11:13 AM)
On Friday, Asian markets declined. Taiwan's Taiex index was the major loser led by technology stocks after results of companies like Dell and Sony disappointed investors. Taiwan is one of our least preferred markets in Asia ex-Japan. We believe the market has priced in rather optimistic scenario particularly in the technology sector. The quarterly results were strong, however we believe the third-quarter was a near-term peak for Taiwanese earnings growth, and expect two straight quarterly declines. Relative valuations have remained elevated and look unattractive to us. We view recent development in the cross-straits relations with China as the step in right direction. However, it should yield positive results only in the medium to long term.

Top

Forex Markets

EUR: Not supported by supportive comments (November 20, 2009, 4:39 PM)
ECB President Trichet's hawkish comments on Friday morning suggest that the path is being paved for early exit next year and that the December meeting will mention explicit exit policies. Even though this should strengthen the EUR, EURUSD weakened due to general risk aversion.

USDCNY: Downside to the forwards (November 20, 2009, 9:14 AM)
The Governor of People's Bank of China is reported saying that the expansionary monetary policy will be maintained. This has caused the market to scale back the appreciation expectation, shown in the rise in the Non-deliverable forwards (NDF). We recommend selling the forwards at the current levels.

JPY: No exit any time soon (November 20, 2009, 9:13 AM)
While upgrading the economic outlook, the Bank of Japan (BoJ) kept its ultra-low rates unchanged. The BoJ also assured the market that it wouldn't exit from its easy monetary policy any time soon. Although the economy is unlikely to return to recession, deflation will persist for years, BoJ noted.

Top