Regions

[Muthukali]

Apple Profit Rises 94% on Growing Global IPhone Demand

Apple Inc. (AAPL) profit almost doubled last quarter, reflecting robust demand for the iPhone in China and purchases of a new version of the iPad, allaying the growth concerns that sliced shares 12 percent in two weeks.

Net income in the fiscal second quarter climbed 94 percent to $11.6 billion, or $12.30 a share, as sales rose 59 percent to $39.2 billion, Cupertino, California-based Apple said today in a statement. Analysts had predicted profit of $10.02 a share on revenue of $36.9 billion, data compiled by Bloomberg show.

Chief Executive Officer Tim Cook is relying more on regions outside the U.S. for sales growth. Apple sold 35.1 million iPhones in the period after releasing the latest model in China and 21 other countries in January. That helped make up for sales declines from the previous quarter at the top U.S. mobile-phone carriers, Verizon Wireless and AT&T Inc. It also quelled speculation that Apple’s growth pace may slacken.

“This report should erase any doubt in investors’ minds that this company can’t continue to deliver,” said Jack Ablin, chief investment officer of Harris Private Bank in Chicago, which oversees about $60 billion, including Apple shares. “It’s astounding.”

Apple rose as much as 7.8 percent to $604.22 in extended trading, after having dipped 2 percent to $560.28 at the close in New York.

iPad Sales
The company sold 11.8 million units of the iPad, which was updated last month to include a high-definition screen and faster processor. Apple has sold 67 million iPads since their debuted in 2010. It took the company 24 years to reach that milestone with the Mac computer, Cook told analysts.

Analysts surveyed by Bloomberg on average predicted Apple would sell 11.9 million iPads and 31.2 million iPhones.

The company’s shares had tumbled $75.95 since a record close of $636.23 on April 9 amid reports that indicated a possible shortage in key components for its mobile devices and showed a decline in iPhone sales at wireless carriers. Some traders also took cues from so-called technical indicators that use historical trends to predict stock movements.

The results released today add to evidence of a rebound in some pockets of the economy, lifting results for other technology bellwethers. Microsoft Corp., the top software maker, last week reported better-than-expected corporate purchases of computers, while Texas Instruments Inc., the biggest maker of analog chips, yesterday indicated robust demand for a range of electronics. International Business Machines Corp, the world’s biggest computer-services provider, also reported higher profit.

Rising China Incomes
For Apple, China has made up a growing slice of results since the introduction of the iPhone there in 2009. The most populous country accounted for $7.9 billion of revenue, 20 percent of the total, Cook said on the call with analysts. That’s three times the level for a year earlier, Cook said.

“China has been a very fast-growing region for them,” said Abhey Lamba, an analyst at Mizuho Securities USA Inc. in New York. “There’s more disposable income, strong demand for high-end products and their penetration has been very low in that market. They have been highlighting that region as one of their focus areas.”

Cook visited China last month, meeting with government officials and touring plants where the company’s products are built. The visit came just as a labor group said workers at those facilities, which are operated by Foxconn Technology Group, were violating local laws for excessive work hours. Cook has vowed to improve conditions at the facilities.

Growing Cash Pile
“There is tremendous opportunity for companies that understand China,” Cook said on the call. “We’re doing everything we can to understand it and serve the market as good as we can.”

The company is in talks to sell the iPhone through China Mobile Ltd., the country’s largest carrier. The opportunity to market the iPhone to China Mobile’s more than 600 million subscribers would give Apple added scope for growth in Asia.

Apple sold 4 million Mac computers and 7.7 million iPods, compared with 4.5 million Macs and 7 million iPods projected by analysts. Apple added to its cash hoard during the quarter. The company said it now has $110.2 billion in cash and investments on its balance sheet. Part of that sum will be returned to investors starting later this year, when Apple plans to start paying a dividend and buying back shares.

New IPhone?
Looking ahead to results for the current quarter, Apple forecast revenue of about $34 billion and profit of $8.68 a share. That compares with average analysts’ predictions for sales of $37.5 billion and profit of $9.96 a share.

The results will be lower because Apple doesn’t expect to sell as many iPhones in the quarter now under way, said Peter Oppenheimer, Apple’s chief financial officer. Customers often hold off on purchases of the iPhone in the months before Apple releases an upgrade. Analysts including Chris Whitmore of Deutsche Bank AG have predicted that Apple will introduce a new iteration of the handset later this year.

Cook, who took over for late co-founder Steve Jobs last year, hinted at new products that will be released.

“You’re going to see a lot more of the kind of innovation that only Apple can deliver,” Cook said in a statement.

Cook also discussed one product Apple won’t be making. He said Apple doesn’t intend to follow the lead of Microsoft, which is introducing a new operating system that will run on smartphones, tablets and personal computers. Cook said users prefer to have different experiences on mobile devices and PCs.

Toaster-Fridge Convergence
“You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user,” Cook said.

Apple benefited last quarter from lower operational costs, including lower component prices. Gross margin, the percentage of sales remaining after deducting costs of production, was 47.4 percent, compared with 41.4 percent a year earlier.

In China and elsewhere around the world, Apple is in the midst of a growing rivalry with Samsung Electronics Co. (005930), Asia’s largest consumer-electronics maker. While Samsung is a supplier of components for Apple devices, it also is among the biggest makers of products that run Google Inc.’s Android software. Earlier this month, Samsung reported profit rose to a quarterly record of 5.8 trillion won ($5.1 billion).

Samsung is one of several companies entangled in patent litigation with Apple in the U.S., Europe and Asia.

Cook said that while he’d prefer to settle the lawsuits than battle in court, he didn’t give any details on when such a deal may be reached.

“We need people to invent their own stuff,” Cook said.

Apple’s results contrast with those of Research In Motion Ltd. (RIMM) and Nokia Oyj, which have cut jobs and reorganized operations after falling behind in smartphone sales.

Apple’s growth also is bringing more government scrutiny. The U.S. Justice Department is suing Apple for allegedly colluding with book publishers to raise the price of e-books. Apple has denied wrongdoing.

 

[Muthukali]

US Airways Said to Approach AMR Bondholders on Merger

US Airways Group Inc. (LCC) is reaching out to AMR Corp. (AAMRQ)’s unsecured bondholders to widen support for a possible takeover bid for bankrupt American Airlines, two people familiar with the matter said.

While formal meetings haven’t been held, US Airways has begun talks with the bondholders to convince them that their financial recovery would be greater under a merged company than if AMR exits bankruptcy independently, said the people, who declined to be identified because details aren’t public.

US Airways won backing for a merger last week from American’s three major unions, which serve on AMR’s unsecured creditors committee. Support from two more members would give US Airways a majority of the nine-seat panel. US Airways hasn’t made a bid for AMR, which filed for bankruptcy on Nov. 29.

Conversations between US Airways and bondholders began as early as April 19, a day before the Tempe, Arizona-based airline announced accords with American’s unions, one of the people said. The bondholders are represented on the creditor group by Wilmington Trust, Manufacturers & Traders Trust Co. and Bank of New York Mellon Corp.

US Airways told the bondholders they would recoup more under its merger plan for Fort Worth, Texas-based AMR through cost savings and increased revenue, one of the people said. The investors’ holdings include corporate and municipal bonds, the person said.

American Name, Headquarters
A merger would blend American, the third-largest U.S. airline, with No. 5 US Airways. The combined carrier would retain the American name and the bigger airline’s headquarters, some unions told members last week, citing terms from US Airways given to labor groups at American.

US Airways rose 3.1 percent to $9.31 at the close in New York, pushing the gain for the year to 84 percent. That’s the most among 11 carriers in the Bloomberg U.S. Airlines Index.

Jack Butler, a lawyer for AMR’s creditors committee, said in U.S. Bankruptcy Court in Manhattan the group backs the company’s bid to cancel union contracts. He also said the panel supports AMR’s goal of crafting a stand-alone business plan, against which “strategic alternatives” can be be vetted.

A spokesman for US Airways, Todd Lehmacher, said the company had no comment about any contacts with bondholders.

Banks, AMR
Kent Wissinger, a Manufacturers & Traders Trust spokesman, said he couldn’t comment because of “the nature of our representation” as trustee. Spokesmen for Bank of New York Mellon and M&T Bank Corp. (MTB)’s Wilmington Trust didn’t immediately return calls seeking comment.

Andy Backover, an American spokesman, declined to comment beyond referring to yesterday’s remarks by Chief Executive Officer Tom Horton in a letter to employees in which he said the pursuit of any future combination would involve AMR’s board and executives in collaboration with the creditors committee.

AMR is asking U.S. Bankruptcy Judge Sean Lane this week for permission to void union contracts and impose new terms to cut labor costs by $1.25 billion a year. The company has said it needs the concessions as part of steps to pare $2 billion in annual spending and reorganize successfully.

 

[Muthukali]

Bernanke Says ‘Prepared to Do More’ as Policy Unchanged

Federal Reserve Chairman Ben S. Bernanke said the central bank stands ready to add to its stimulus if necessary even after leaving its policy unchanged today and upgrading its view of the economy for this year.

“We remain prepared to do more as needed to make sure that this recovery continues and that inflation stays close to target,” he said at a press conference today following a meeting of the Federal Open Market Committee in Washington. Additional bond-buying is still “very much on the table.”

Treasuries pared losses after Bernanke kept speculation alive that the Fed might embark on a third round of monetary easing after expanding its balance sheet to a record of almost $3 trillion. Central bankers today raised their forecasts for growth and the labor market this year while repeating that borrowing costs are likely to remain “exceptionally low” at least through late 2014.

The FOMC “expects economic growth to remain moderate over coming quarters and then to pick up gradually,” it said in a statement after a two-day meeting. The statement pointed to “some signs of improvement” in housing while saying the industry at the heart of the financial crisis “remains depressed.”

Policy makers are holding off on additional steps to boost the economy amid signs the more than two-year expansion is gaining strength. Still, the jobless rate isn’t declining fast enough to satisfy central bankers, who are also concerned about potential shocks from the European debt crisis.

Global Strains
“Strains in global financial markets continue to pose significant downside risks to the economic outlook,” according to today’s statement. The Fed has cited the risk in its previous five meetings. In March it said those strains had “eased.”

The yield on the benchmark 10-year note was little changed at 1.99 percent at 4:15 p.m. in New York, according to Bloomberg Bond Trader prices, after rising as high as 2.04 percent.

Stocks rose for a second day after Bernanke’s comments and as earnings beat estimates at companies from Apple Inc. to Boeing Co. The Standard & Poor’s 500 Index climbed 1.4 percent to 1,390.7.

Bernanke said that fiscal tightening may weigh on growth as lawmakers seek an agreement to narrow the budget deficit by year-end, before a deficit-reduction law requiring cutbacks takes effect.

‘Bar Is High’
“The bar is high, but it is still on the table given uncertainty with Europe and fiscal policy in the U.S.,” said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago, speaking about the prospects for new easing.

Policy makers today upgraded their forecasts for growth and unemployment this year. They now see the jobless rate at between 7.8 percent and 8 percent, compared with January estimates of 8.2 percent to 8.5 percent. The economy is forecast to expand at 2.4 percent to 2.9 percent, compared with 2.2 percent to 2.7 percent.

They also raised their projections for the inflation rate this year, as measured by the personal consumption expenditures index (SPX), to 1.9 percent to 2 percent, from 1.4 percent to 1.8 percent. The forecasts reflect the so-called central tendency, which excludes the three highest and three lowest projections of 17 policy makers.

Inflation “has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline,” the Fed said today. Gas prices will affect inflation “only temporarily,” it said.

Oil prices have declined since the Fed’s March meeting, and the national average cost of gasoline has fallen to $3.84 a gallon from a 2012 peak of $3.94 on April 4, according to the American Automobile Association.

Inflation Goal
Bernanke rejected suggestions that the Fed should allow inflation to rise above its 2 percent goal in order to stimulate growth, saying such a move would undercut the Fed’s credibility.

“To risk that asset for what I think would be quite tentative and perhaps doubtful gains on the real side would be unwise to do,” the Fed chairman said. It would be “very reckless” to “actively seek a higher inflation rate in order to achieve a slightly” faster reduction in unemployment.

The central bank said it would continue its swap of $400 billion of short-term debt with long-term debt to lengthen the average maturity of its holdings, a move dubbed Operation Twist. The Fed is scheduled to complete the program at the end of June. The Fed also didn’t alter its policy of reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities.

Echoes Yellen
Bernanke echoed Vice Chairman Janet Yellen’s April 11 remarks that the end of Operation Twist won’t amount to a tightening of policy. The benefits of the plan stem from the total amount of new purchases, rather than the “flow” of such buying, he said.

“If that theory is correct, then at such a time that our purchases come to an end, there should be relatively minimal effects on interest rates,” Bernanke said.

Richmond Fed President Jeffrey Lacker dissented for the third meeting in a row. Lacker has said he believes the first increase in interest rates will likely be necessary in 2013.

Fed policy makers met amid renewed concern over Europe’s fiscal crisis. The benchmark Stoxx Europe 600 Index of European countries hit a three-month low on April 23 and has since rallied as companies, including Electrolux AB (ELUXB), posted earnings that beat estimates.

In the U.S., consumer spending is starting to power growth as business investment cools. A report today showed orders for durable goods fell in March by the most in three years, indicating manufacturing will contribute less to growth this year.

Retail Sales
Retail sales rose more than forecast in March as Americans snapped up everything from cars and furniture to clothes and electronics. The 0.8 percent gain was almost three times as large as projected and followed a 1 percent advance in February, Commerce Department figures showed April 16.

An April 27 government report may show that gross domestic product rose at a 2.5 percent annual rate in the first quarter, according to the median forecast in a Bloomberg News survey of economists, driven by the biggest increase in household demand in a year.

While Fed officials raised their projections for growth in 2012, they lowered their estimates for next year and 2014. The economy will expand by 2.7 percent to 3.1 percent in 2013 and 3.1 percent to 3.6 percent in 2014, they projected. In January, they predicted growth of 2.8 percent to 3.2 percent next year and 3.3 percent to 4 percent in 2014.

Fiscal Impact
Bernanke said that the lower forecasts may reflect the impact from fiscal tightening, and that Congress needs to reach an agreement to address shortfalls. Bush-era tax cuts are set to expire at the end of the year.

“If no action were to be taken by the fiscal authorities, the size of the fiscal cliff is such that there’s no chance that the Federal Reserve could or would have any ability whatsoever to offset that effect on the economy,” Bernanke said.

Corporate earnings and an improving economic outlook are powering stock-market gains. The S&P 500 is up more than 10 percent this year.

“Despite its struggle with the sustained period of relative high unemployment, we’re pleased to see some early signs of a slowly improving macroeconomic environment” in the U.S., Muhtar Kent, president and chief executive of Coca-Cola Co. (KO), the world’s largest soft-drink maker, said in an April 17 earnings call.

More than 82 percent of companies in the S&P 500 that reported quarterly results since April 10 topped the average analyst earnings estimate, according to data compiled by Bloomberg as of yesterday. Companies from AT&T Inc. to 3M Co. beat analysts’ earnings projections. International Business Machines Corp. boosted a stock buyback by $7 billion and increased its dividend yesterday.

 

[Muthukali]

SET rises 7.91 points - Thailand

The Stock Exchange of Thailand main index went up 7.91 points or 0.66% to close at 1,209.27 points at the end of trading session on Thursday afternoon. The trade value was 30.39 billion baht, with 3.70 billion shares traded.

The SET50 index ended at 848.32 points, up 5.99 points or 0.71%, with a total trade value of 19.47 billion baht.

The SET100 index rose 12.80 points or 0.70% to stand at 1,843.65 points, with a total turnover of 23.75 billion baht.

The SETHD index went up 6.78 points or 0.60% to stand at 1,131.85 points, with total trade value of 6.49 billion baht.

The MAI index gained 0.57 point or 0.19% to close at 304.45 points, with total transaction value of 1.17 billion baht.

Top five most active values were as follows;

IVL - stood at 34.75 baht, up 0.75 baht (2.21%)
CPF - stood at 40.50 baht, up 0.25 baht (0.62%)
KBANK - stood at 155.50 baht, up 1.00 baht (0.65%)
BBL - stood at 184.50 baht, up 0.50 baht (0.27%)
CPALL - stood at 72.75 baht, down 1.25 baht (1.69%)

 

[Muthukali]

More Americans Than Projected Filed Jobless Claims Last Week

More Americans than forecast filed applications for unemployment benefits last week, a sign that the labor market is taking time to improve.

Jobless claims fell by 1,000 to 388,000 in the week ended April 21 from a revised 389,000 the prior period that was the highest since early January, Labor Department figures showed today in Washington. The median forecast of 48 economists surveyed by Bloomberg News called for a drop to 375,000.

Fewer layoffs are needed to lay the groundwork for more hiring, which in turn should support consumer spending, the biggest part of the economy. Federal Reserve policy makers yesterday said that while labor-market conditions have improved, the unemployment rate “remains elevated,” helping explain why they stuck to a plan to hold borrowing costs close to zero through 2014.

“It’s just so hard for companies to be confident and start hiring,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, who correctly projected the level of jobless claims. “We believe that March is probably not the end of the modest readings on payrolls.”

Estimates in the Bloomberg survey ranged from 355,000 to 390,000. The Labor Department revised the previous week’s figure from 386,000. Claims in the week ended April 14 were the highest since Jan. 7.

Stock Futures
Stock-index futures extended losses after the figures. The contract on the Standard & Poor’s 500 Index expiring in June fell 0.3 percent to 1,383 at 8:42 a.m. in New York. The yield on the benchmark 10-year Treasury note dropped to 1.94 percent from 1.98 percent late yesterday.

The four-week moving average, a less-volatile measure than the weekly figures, climbed to 381,750 last week, the highest since Jan. 7, from 375,500.

The number of people continuing to receive jobless benefits rose to 3.32 million in the week ended April 14 from 3.31 million.

The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 60,000 to 3.14 million in the week ended April 7.

Claims by State
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.6 percent in the week ended April 14. Thirty-seven states and territories reported a decrease in claims, while 16 reported an increase. These data are reported with a one-week lag.

Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.

Employers added 120,000 jobs in March, half as many as in February and the fewest in five months, according to payrolls figures released on April 6. The jobless rate fell to 8.2 percent from 8.3 percent the prior month.

“Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated,” the Federal Open Market Committee said yesterday in a statement. “The committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Consequently, the committee anticipates that the unemployment rate will declined gradually toward levels that it judges to be consistent with its dual mandate.”

Replacing Workers
CSX Corp. (CSX), the biggest U.S. eastern railroad, is hiring mostly to keep headcount stable.

“Last year, you may recall we hired 4,000 people --roughly 3,000 was attrition, the other 1,000 was evenly split between train and engine crews to move the products” and others to install safety systems to comply with regulations, Michael Ward, chief executive officer at CSX, said in an April 18 interview. “So those people were hired. This year the 3,000 will be largely attrition.”

Companies like AMR Corp. (AAMRQ)’s American Airlines are still cutting workers. The airline said last week it will eliminate 1,200 airport agent, baggage and cargo jobs.

 

[Muthukali]

Coke’s Stock Split Recalls Buffett’s Pickpocket Warning

Coca-Cola Co. (KO) Chairman Muhtar Kent, who pushed for the beverage maker’s 11th stock split with an appeal for greater market liquidity, may be philosophically at odds with his biggest investor, Warren Buffett.

Buffett, who controls a Coca-Cola stake of almost $15 billion, has resisted splitting Class A shares of his Berkshire Hathaway Inc. (BRK/A), which closed yesterday at $119,700. Splits, he said in a 1984 letter, may encourage short-term investment strategies that enrich brokers at the expense of the business.

“I don’t know what he would say about this one,” said Howard Buffett, the investor’s son and a director at Atlanta- based Coca-Cola. Howard Buffett, who spoke today on the sidelines of the soft-drink maker’s annual meeting, said he voted for the 2-for-1 split and had not discussed the transaction with his father. “Every situation is different.”

The transaction will halve the price of Coca-Cola, which ended yesterday at $74.12, making it more affordable for retail investors, said Jack Russo, an analyst at Edward Jones & Co. It “reflects our desire to share value with an ever-growing number of people and organizations around the world,” Kent, also the chief executive officer, said today in a statement.

“It’s somewhat ironic that a stock that’s been part of the Buffett portfolio all these years is playing that stock- splitting game,” said David Rolfe, chief investment officer of Berkshire shareholder Wedgewood Partners Inc. “Be careful what you wish for. Is it more and better shareholders that are going to have a long term view? I doubt it.”

Coca-Cola rose 1.1 percent to $74.93 at 4 p.m. in New York. Berkshire, where Buffett is chairman and CEO, accumulated its stake in the world’s largest soft-drink maker from 1988 to 1994 at a cost of about $1.3 billion.

‘Pickpocket of Enterprise’
Coca-Cola split its stock in 2-for-1 transactions three times while Buffett, a Coca-Cola director from 1989 to 2006, was on the board. Howard Buffett, also a director at Berkshire, joined the Coca-Cola board in 2010.

“One of the ironies of the stock market is the emphasis on activity,” Warren Buffett said in the 1984 letter. “But investors should understand that what is good for the croupier is not good for the customer. A hyperactive stock market is the pickpocket of enterprise.”

Shareholders at today’s annual meeting stood and applauded when Kent told them of the newly proposed split. Warren Buffett didn’t mention the action in a video he taped to open the meeting.

‘Never Sold a Share’
“I’ve had a relationship with Coke for over 70 years,” Buffett, who drinks Cherry Coke, said in the video. “Today we own 200 million shares. We’ve never sold a share of Coca-Cola.”

Kent Landers, a spokesman for Coca-Cola, declined to comment about the statements in Buffett’s letter. Warren Buffett didn’t return a message seeking comment.

Buffett, who holds more than $40 billion in Berkshire stock, has said gains represent a barrier to entry for short- term investors and encourage shareholders to think like owners. Berkshire shares cost a minimum of $33,200 each 16 years ago. The cost of entry fell as Buffett added a second class of stock and, two years ago, split the B shares to facilitate the $26.5 billion cash-and-stock takeover of railroad Burlington Northern Santa Fe.

‘One Opinion’
Berkshire Class B shares rose 15 cents to $79.94. Buffett split the B shares 50 for 1 in 2010, and said it enabled Burlington Northern investors to convert more of their holdings into Berkshire shares, reducing cash proceeds and tax costs. Howard Buffett said his father has “one opinion about how Berkshire should handle a stock split and another about how Coke would handle it.” The stock split requires shareholder approval.

Coca-Cola’s quarterly dividend has advanced more than 10- fold since Berkshire began buying shares, and Buffett said in 2011 that he expected the payouts to double in the next 10 years. Berkshire’s share of the quarterly payout rose to $102 million this year.

“Time is the friend of the wonderful business,” Buffett said of Coca-Cola in his letter to shareholders last year.

 

[Muthukali]

Amazon First-Quarter Revenue Tops Estimates on Kindle Sales

Amazon.com Inc. (AMZN), the world’s largest Internet retailer, beat analysts’ first-quarter revenue and earnings estimates, led by demand for Kindle devices and e- commerce services for outside vendors.

The shares surged 15 percent after the report. Net income was $130 million, or 28 cents a share, compared with $201 million, or 44 cents, a year earlier, the company said today in a statement. Sales rose 34 percent to $13.2 billion. Analysts on average estimated earnings of 7 cents on sales of $12.9 billion, according to data compiled by Bloomberg.

Chief Executive Officer Jeff Bezos is looking to add customers by pouring money into new versions of the Kindle and warehouses that are equipped to send out products faster. In the quarter when it was introduced last November, the Kindle Fire tablet rocketed to No. 2 in the market behind Apple Inc.’s iPad, according to IDC, and it remains the best-selling item on Amazon’s website, the company said today.

“It was above expectations, both top and bottom line,” Kerry Rice, a San Francisco-based analyst at Needham & Co., said in an interview.

Income from operations was $192 million in the first quarter, Seattle-based Amazon said. Analysts on average had projected $99.4 million in operating profit. Third-party unit sales represented 39 percent of the total and grew 60 percent from a year earlier, Amazon said.

Shares Soar
The company’s shares soared as high as $225.80 following the report. They had climbed less than 1 percent to $195.99 at the close in New York, and have gained 13 percent so far this year.

Amazon trades at about 141 times trailing 12-month earnings, compared with an average of about 53 for similar companies, data compiled by Bloomberg show.

This is the first quarter in three that Amazon reported higher revenue than analysts were predicting, data compiled by Bloomberg shows.

“First solid top and bottom line beat in quite a while, when some investors were expecting a miss on one or both,” said Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco, who has an “outperform” rating on the company’s shares. “If Amazon can ultimately drive higher margins this year on continued strong revenue growth, then we could see further upside in shares.”

Amazon’s operating margin, a measure of profitability, was 1.46 percent in the first quarter, according to data compiled by Bloomberg. Margin for all of 2011 was 1.79 percent, the lowest for any year since 2001.

Second Quarter
Second-quarter operating income will range from a loss of $260 million to a gain of $40 million, the company said. Analysts in a Bloomberg survey were projecting operating income of $184 million. Sales in the current period will be $11.9 billion to $13.3 billion, Amazon said, compared with an estimate of $12.8 billion.

Bezos spent about $4.6 billion on Amazon’s warehouses last year, part of a series of investments that sent operating expenses up 44 percent in 2011 and sliced margins by 2.3 percentage points. The company will build 13 more distribution centers in 2012, Chief Financial Officer Thomas Szkutak said on a conference call today.

To bolster profitability, the company has been adding more third-party sellers, which generate higher margins, to its website. Amazon collects a commission, usually about 10 percent, on any item sold by an outside vendor. All of that money goes to the bottom line. Amazon also collects fees if the partner elects to fulfill through its chain of warehouses, according to Mercent Corp., a consulting firm that helps retailers improve online sales.

Video Offerings
Amazon is focusing on building out the video offerings available on its website and the Kindle Fire, Szkutak said. Amazon announced the availability of the Amazon Instant Video app for Sony Corp.’s PlayStation 3 earlier this year, the first video-game console that offers the software.

Sales of digital media increased 19 percent to $4.7 billion, Amazon said.

“Underlying user growth trends remain strong,” Douglas Anmuth, an analyst at JPMorgan Chase & Co. (JPM) in New York, wrote in a research note this week. “We project margin to improve in the back half of the year.”

 

[Muthukali]

BoT unlikely to lift rate

The Bank of Thailand is expected to leave its benchmark interest rate unchanged at 3% when its Monetary Policy Committee meets next Wednesday, according to Kasikorn Research Center (K-Research).

K-Research said on Friday that the one-day repurchase rate would likely remain at 3% to ensure economic stability in light of risk factors, particularly the fragile global economy and the rising cost of living and production costs.

The Kasikornbank affiliate said that inflation risk would be higher in the second half of this year and would be a challenge for the central bank.

Inflation in March reached 3.45% year-on-year, a relatively high figure that economists said reflected continuing heavy spending in the aftermath of the floods late last year.

Core inflation, which excludes volatile fresh food and energy prices, was 2.8% in March. The MPC conducts monetary policy and sets interest rates in line with a goal to keep core inflatuon within a range of 0.5% and 3.0%.

The Finance Ministry's Fiscal Policy Office (FPO) has projected that gross domestic product growth for the first quarter of 2012 would be above 2% from the same periood last year.

The National Economic and Social Development Board will release the official first-quarter growth figures on May 21.

There is a strong possibility that the Thai economy for the full year would grow by more than 5.5%, spurred by the recovery in domestic consumption and private sector investment, the FPO said.

The Pheu Thai-led government has taken several steps to spur domestic consumption, most notably the increase in the minimum wage to 300 baht a day and minimum salaries for bacvhelor's degree holders to 15,000 baht a month.

The minimum wage increase, 40% over prevailing rates, is currently in effect in seven high-income provinces including Bangkok. It is expected to apply nationwide later this year.

Pheu Thai strategists say that putting more money into people's pockets isone of the best ways to stimulate the economy.

A Bangkok Poll survey released this week said more than 60% of workers polled believed the 300-baht minimum wage would make their livese better.

The survey was conducted from April 23-26, seeking opinions from 1,180 workers in Bangkok and nearby provinces.

Bangkok Poll reported that 60.7% of the respondents aid their living standards had improved, 36.5% believed there was no impovement and 2.8% said it was worsening.

A total of 79.1% said they had received the new wage rate, but 20.9% have not got it because their employers have not yet approved the rate.

Asked whether their working life changed or would change after the higher wage took effect, 82.4% said no change, 15.4% said they had to work harder and 1.3% said they worked less than before.

Half of the respondents did not believe the wage increase would cause problems for manufacturers or force them to close; 26.9% believed employers’ profits would drop; 23.0% said businesses would gain more profits; 1.4% said their employers could face losses; and 0.8% said their factory could close down.

Asked whether the wage rise would help ease the problem of social inequality, 54.9% of the labourers said yes but 45.1% disagreed. A total of 93.2% of the respondents backed the 300-baht wage and 6.8% were opposed.

The workers wanted the government to oversee and improve the welfare of labouers, ensure that the employers would abide by the law and improve their quality of life.

 

[Muthukali]

SET up, more to come

The Stock Exchange of Thailand index rose 2.51 points or 0.2% to close at 1,211.78 points on Friday afternoon. Trading turnover was modest at 24.69 billion baht, with foreign investors net buyers of 924 million baht in shares.

The SET could rise by another 12% this year as the rebound in consumption and investment in the wake of the worst floods in almost 70 years lifts corporate earnings, according to Kasikorn Securities Co.

The SET Index could climb as high as 1,350 points -- its highest since April 1996 -- in the third quarter, said Kavee Chukitkasem, an investment strategist at the brokerage.

Investors should buy banks and energy shares, which may lead gains in the index as loan growth accelerates and fuel prices climb, he said.

"Thai equities still have more room to gain with a fast rebound in consumer and business spending following the floods," said Mr Kavee. "Earnings of banks and oil companies will sustain solid growth after their spectacular performance in the first quarter."

The SET Index has risen 18% this year, the third-best performer in Southeast Asia, as overseas investors bought a net US$2.7 billion worth of Thai shares on optimism the government’s increased spending on post-flood reconstruction will bolster investment and consumption.

Prime Minister Yingluck Shinawatra has pledged to spend 350 billion baht on infrastructure.

Asian stock markets generally rose on Friday, tracking US stocks which jumped overnight on strong housing data and earnings, but concerns over the health of European banks weighed on investor risk appetite after Standard & Poor's downgraded Spain's rating.

In Bangkok, the SET50 index ended at 850.11 points, up 0.21%, and the SET100 rose 0.19% to 1,847.16 points. The Market for Alternative Investment (MAI) gained 2.09 points or 0.69% to close at 306.54 points.

The five most active stocks by value were Jasmine International (JAS), unchanged at 3.10 baht; PTT closing at 344.00 baht, down 3 baht; DTAC at 81.25 baht, up 2 baht; SCC at 346.00 baht, up 4 baht, abd CPF closing at 40.25 baht, down 0.25 baht (0.62%).

 

[Muthukali]

Stocks Advance as Earnings Overshadow GDP; Euro Climbs

U.S. stocks rose for a fourth straight day as improving consumer confidence and earnings overshadowed lower-than-forecast economic growth and a downgrade of Spain’s credit rating. The dollar weakened versus 14 of 16 major peers while Treasuries were little changed.

The Standard & Poor’s 500 Index added 0.2 percent to 1,403.36 at 4 p.m. in New York and the Stoxx Europe 600 Index (SXXP) closed up 0.8 percent. Ten-year Treasury yields were little changed at 1.93 percent after earlier dipping to a 12-week low. The euro strengthened 0.2 percent to $1.3242 as it gained for a fourth day. Spain’s bonds fell as the nation lost its A rating at S&P, while Italian bonds erased earlier losses.

Amazon.com Inc. posted earnings-per-share that quadrupled the average analyst estimate, joining about three quarters of S&P 500 companies to exceed forecasts so far in the reporting season and leading a gauge of retailers in the index to a record. The Commerce Department said the U.S. economy grew at a 2.2 percent annual rate, below the 3 percent pace at the end of last year and the 2.5 percent median forecast of economists. The report showed a smaller contribution from inventories overshadowed higher consumer spending.

“The economy is not gangbusters, but the chance of a recession is dimming,” Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston, said in a telephone interview. “We’re encouraged by the earnings surprises. We’re not happy with today’s GDP data, but it shows domestic spending being on track.”

The Thomson Reuters/University of Michigan’s final index of sentiment increased to 76.4 from 76.2 last month. The gauge was projected to hold at the 75.7 level initially reported earlier this month, according to the median forecast of economists.

Earnings Season
Amazon.com (AMZN) surged 16 percent, the most since 2009. Expedia Inc. surged 24 percent for the best gain in the S&P 500 after the online travel agency reported adjusted earnings-per-share that almost doubled the average analyst estimate. Starbucks Corp. (SBUX) fell 5.3 percent as the biggest coffee-shop chain reported same-store sales that trailed projections. Procter & Gamble Co. slid 3.6 percent as the largest consumer-products company cut its profit estimate.

The S&P 500 rallied almost 1.8 percent this week after Apple Inc. (AAPL) posted earnings that almost doubled, sending the index to its biggest gain of the week on April 25. The index is down about 0.4 percent in April, threatening to snap a four- month streak of gains, its longest since 2009.

Investors are “getting spooked by uncertainty” surrounding the U.S. budget deficit and reemergence of Europe’s debt crisis, mirroring concerns at this time of year in 2011 and 2010, according to Thomas Lee, chief U.S. equity strategist at JPMorgan Chase & Co. in New York. The S&P 500 tumbled 19 percent from its 2011 high in April to its low in October. In 2010, it slid 16 percent from an April peak to its July low. This year, it has slipped about 1 percent from an almost four-year high on April 2.

‘Different Amplitude’
While the parallels of 2012 to 2011 “are striking, the downside risks, in our view, are lower,” Lee wrote in a note to clients, saying that the U.S. budget standoff and Japan’s tsunami and nuclear disaster aggravated concerns last year. “In a nutshell, same frequency, different amplitude,” he wrote.

The Stoxx 600 erased an earlier decline of as much as 0.9 percent as construction, financial-services and bank shares led gains. Sales at Vinci SA, Europe’s largest builder, topped analyst estimates, while Sandvik AB, the world’s biggest maker of metal-cutting tools, reported first-quarter profit that beat projections. Earnings have slipped 1.7 percent on average for the 128 companies in the Stoxx 600 that released results since April 10, while still beating analyst estimates by 6.9 percent.

‘Element of Support’
“For the past few days, the market has been focusing on earnings and this is an element of support,” said Guillaume Duchesne, an equity strategist at BGL BNP Paribas SA in Luxembourg. “The debut of earnings season has been impressive. There are signs of hope in the U.S. economy.”

Italy sold 4.92 billion euros ($6.5 billion) of 2017 and 2022 bonds, close to the maximum target, even as its borrowing costs rose.

European Yields
The two-year Italian note yield erased earlier gains to trade little changed at 3.25 percent as the government also sold debt maturing in 2016 and 2019. The Spanish 10-year yield climbed five basis points to 5.88 percent and was above 6 percent earlier, as S&P cut the nation’s sovereign rating two steps yesterday, to BBB+ from A, on concern the country will have to provide further fiscal support to the banking sector. A report today showed unemployment surged to 24.4 percent, the highest in 18 years.

Oil rose 0.3 percent to $104.88 a barrel in New York, reversing losses in the last hour of floor trading. Gold futures advanced 0.3 percent to $1,664.80 an ounce on the Comex in New York. Copper rallied 1.5 percent to $3.8295 a pound for a fourth straight advance.

Emerging-market stocks rose, erasing an earlier decline. The MSCI Emerging Markets Index (MXEF) advanced 0.4 percent. The gauge is still poised for a sixth weekly retreat, the longest losing streak since October 2008. Russia’s Micex Index gained 1.6 percent, and Poland’s WIG20 Index climbed 1.2 percent.

 

[Muthukali]

U.S. Consumer Spending Probably Rose on Income Gains

Consumer spending in the U.S. probably climbed in March as incomes grew, indicating the biggest part of the economy is helping to sustain the expansion, economists said before a report today.

Household purchases, which account for about 70 percent of the economy, rose 0.4 percent after a 0.8 percent gain that was the most in seven months, according to the median estimate of 62 economists surveyed by Bloomberg News. An index (S15RETL) of business activity cooled this month, separate figures may show.

A job market that’s on the mend and warmer weather underpinned household purchases, which grew in the first quarter by the most in more than a year as sales climbed at car dealerships and retailers like Target Corp. (TGT) The pace of demand may be difficult to maintain this quarter without a pickup in hiring and wages.

“Consumers certainly helped to support first-quarter growth and will continue to play their part,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The risk is, they may not be able to shoulder the expansion as much going forward. We need to see bigger gains in employment.”

The Commerce Department’s spending report is due at 8:30 a.m. in Washington. Economists’ forecasts for consumption ranged from gains of 0.2 percent to 0.8 percent.

At 9:45 a.m., a report from the Institute for Supply Management-Chicago Inc. may show its business barometer fell to 60.5 in April, from 62.2 the prior month, according to the Bloomberg survey median.

Income Gains
The Commerce Department data may also show incomes grew 0.3 percent, following a 0.2 percent gain, according to the survey median.

The March results will signal whether the consumer was gathering strength or losing it as the quarter drew to a close. Household spending rose 2.9 percent from January through March, Commerce Department data showed on April 27. Gross domestic product climbed at a 2.2 percent annual rate, less than projected and following a 3 percent pace the prior quarter.

The report was a reminder of the concerns of Federal Reserve officials, who last week said growth will be “moderate” as unemployment remains “elevated.”

The central bank “expects economic growth to remain moderate over coming quarters and then to pick up gradually,” policy makers said in an April 25 statement. They repeated a plan to hold borrowing costs low through 2014 to spur growth.

Employers increased payrolls by 635,000 from January through March, the biggest quarterly gain since the first three months of 2006.

April Employment
Later this week, the Labor Department may report payrolls advanced in April by 165,000 after a 120,000 gain the prior month, according to the Bloomberg survey median. Unemployment probably held at 8.2 percent. The rate has been above 8 percent since early 2009.

Unseasonably mild temperatures may have also spurred Americans to dine out and go shopping. The January-to-March period was the warmest first quarter in records going back to 1895, according to the National Oceanic and Atmospheric Administration.

Retailers posted gains in March as stores offered discounts and shoppers stocked up early on spring gear. March same-store sales at Target, the second-largest U.S. discount chain, and Gap Inc. (GPS), the biggest U.S. apparel chain, beat the average estimate of analysts. Cars sold last quarter at the fastest pace in four years, according to industry data.

Gasoline Prices
Employment and income gains may have given Americans some relief from higher fuel prices. The cost of a gallon of gasoline at the pump jumped 65 cents from the beginning of the year to $3.93 on March 31, which was the highest level in 10 months, according to AAA, the largest U.S. auto group. Fuel costs have eased since, to $3.83 on April 27.

Investors are optimistic about consumer spending. The Standard & Poor’s Supercomposite Retailing Index has increased almost 24 percent since the start of this year compared with a 12 percent advance in the broader S&P 500. (SPX)

Consumers also are spending on leisure. Starwood Hotels & Resorts Worldwide Inc. (HOT), owner of the luxury St. Regis and W brands, said first-quarter earnings rose more than fourfold, driven by sales of vacation units at the company’s new resort in south Florida.

“Our corporate clients and our leisure guests tell us that their appetite for travel is quite robust,” Frits van Paasschen, president and chief executive officer, said in an earnings conference call with analysts on April 26. “I still have yet to hear from a customer that plans to travel less in 2012 than in 2011.”

 

[Muthukali]

Spain falls back into recession

Spain has back tipped into recession, an official estimate confirmed Monday, even as the government pressed ahead with unpopular spending cuts to rein in burgeoning debt.

pain's economy shrank by 0.3 percent for the second straight quarter in the the first three months of 2012, according to preliminary data by the National Statistics Institute.

The return to recession, blamed on weak domestic demand only partially compensated by exports, comes barely two years after Spain emerged from the last downturn at the start of 2010.

It was no surprise coming days after an even more pessimistic diagnosis by the Bank of Spain, which predicted the economy would shrink by 0.4 percent in the first quarter.

But it was the first official estimate to confirm a recession -- two quarters of shrinking economic output.

Despite the recession and a towering unemployment rate, which hit 24.4 percent in the first quarter, the government has vowed to meet its ambitious deficit-cutting targets so as to regain market confidence.

Tens of thousands of people took the streets on Sunday to protest against the conservative Popular Party's spending cuts, however, especially in health care and education.

Across the eurozone, meanwhile, the emphasis on austerity remedies during a recession is increasingly come under question.

Investors' doubts about Spain's ability to meet its deficit goals are amplified by the plight of Spain's banks, many bogged down in bad loans extended during the property boom.

Markets fear the state may have to step in to help some banks' fragile balance sheets, placing its own deficit under further stress.

Standard & Poor's on Monday downgraded the ratings of the top Spanish banks, including Santander and BBVA, after slashing the country's credit standing because of the deficit and the recession.

The banks affected include Santander and its subsidiary Banesto, BBVA, Banco Sabadell, Ibercaja, Kutxabank, Banca Civica, Bankinter and the local unit of Barclays.

S&P on Friday slashed Spain's sovereign rating by two notches to 'BBB+' and said Monday the same considerations "could have potentially negative implications for our view of the economic risk and industry risk affecting the Spanish banking industry."

 

[Muthukali]

'Unusual moves' in SET

Shares of the following companies had unusual moves in Thailand trading on Monday. Stock symbols are in parentheses and prices are as of the 4.30pm close in Bangkok.

The Stock Exchange of Thailand (SET) Index rose 1.4 per cent to 1,228.49, the highest close since July 1996. The gauge has risen 2.7 per cent this month, poised for its seventh monthly gain.

Glow Energy Pcl (GLOW) , a Thai power producer, added 7.2 per cent to a record 67.25 baht. The company expects profit to climb to a record in 2012 on new plants, the Thai-language Krungthep Turakij newspaper reported, citing Chief Financial Officer Suthiwong Kongsiri. The company's total capacity will increase by 770 megawatts to 3,500 megawatts after starting two power plants, the report said. Mr Suthiwong wasn’t available for comment when a call was made to his office today.

PTT Pcl (PTT), Thailand’s largest company by market value, rose two per cent to 351 baht, the steepest advance since April 19. The company plans to sell 15 billion baht of seven-year bonds in May, it said in an emailed statement.

Thai Vegetable Oil Pcl (TVO TB), the nation’s largest soybean supplier, climbed 2.6 per cent to 23.30 baht, the highest close since Sept 19. Soybean futures for July delivery rose 0.9 per cent on April 27 to US$14.935 a bushel on the Chicago Board of Trade, after touching $15.0675, the highest level since July 18, 2008.

Thoresen Thai Agencies Pcl (TTA) advanced 0.5 per cent to 19.20 baht. The Baltic Dry Index, a measure of shipping costs for dry-bulk commodities, climbed 0.7 per cent on April 27, its 13th straight day of gains, according to the Baltic Exchange in London.

 

[Muthukali]

Australia slashes interest rates to 3.75%

SYDNEY - Australia slashed interest rates by a shock 50 basis points Tuesday to 3.75 per cent due to weaker economic conditions and lower inflation, causing a drop in the Aussie dollar but a sharemarket boost.

It was the largest cut since the Reserve Bank of Australia reduced rates by 100 basis points in February 2009 in the wake of the global financial crisis, and came as a surprise to analysts who tipped a 25 basis point fall.

Bank chairman Glenn Stevens said the decision was "based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated".

In particular, data showed underlying inflation had declined again, and was a little over 2.0 per cent over the latest four quarters, and would likely be lower than earlier forecast over the next few years.

"A reduction of 50 basis points in the cash rate was, in this instance, therefore judged to be necessary in order to deliver the appropriate level of borrowing rates," Stevens said.

The local currency, which has been at historic highs for the past 18 months, slumped from 104.10 US cents to 103.22 US cents after the announcement. Sydney stocks were up around 0.8 per cent.

Treasurer Wayne Swan welcomed the news, describing it as a move small businesses and householders had been "hanging out for", and urged the big commercial banks to pass the full cut onto their borrowers.

The RBA last slashed its rate in December, and Stevens said the board "judged it desirable that financial conditions now be easier than those which had prevailed" then.

He repeated his view that while growth in the global economy had slowed in late 2011, a deep downturn was not occurring.

"Market sentiment remains skittish, however, and the tasks of putting European banks and sovereigns onto a sound footing for the longer term, and of improving Europe's growth prospects, remain large," he said.

"Europe will remain a potential source of adverse shocks for some time yet." Australia was dubbed the "Wonder from Down Under" after its mining-fuelled economy dodged recession during the global financial crisis.

But despite its booming resources sector, other parts of the economy are struggling against higher labour and energy costs and the stronger Australian dollar.

Families are saving rather than spending, with retail in a slump and housing construction weak.

Chief economist at the Commonwealth Bank Michael Blythe said the rate cut could lift consumer confidence.

"I think it has provided a circuit breaker for the negative feedback loop of consumer confidence that has been coming through," he said.

Shane Oliver, chief economist at AMP Capital Investors, said the decision revealed "the RBA got it wrong, now it's trying to get it right".

"At last the RBA has moved to get back on track and reverse the de-facto monetary tightening we have seen so far this year thanks to higher bank lending rates, and address the fact that the non-mining economy in Australia is really struggling," he said.

Australia still has higher rates compared to other nations.

The US Federal Reserve is expected to keep rates near zero until late 2014, while Bank of England policymakers last month voted to keep them at a record low 0.50 per cent, where they have stood since March 2009.

With the European economy tipping towards recession, the European Central Bank's policy-setting governing council voted last month to leave its benchmark interest rate unchanged at the historic low of 1.0 per cent.

 

[Muthukali]

Foreign trading of Thai bonds rises

Foreign investors have raised their activity in the Thai market, with first-quarter average daily trading for bonds with durations of one year or more up 48% from the year before.

Average daily trading by foreign investors was 3.4 billion baht in the first quarter, compared with 2.3 billion the same preiod last year.

Bandid Nijathaworn, the chairman of Thai Bond Market Association (TBMA), said foreign investors were also active in short-term bonds. Daily trade by foreign investors in the first quarter for all maturities was 10 billion baht, up 29% from the same period last year.

"During the first quarter, foreigners were reported to have a total net buy of 298.5 billion baht. Of this, net buying in bonds with durations of over one year was 49.5 billion baht," Dr Bandid said.

Total net holdings by foreign investors was 549.736 billion baht at the end of March, up 30% from the end of 2011.

Foreign investors currently hold 7% of the total debt oustanding in the market, up from 6% at the end of last year. Around 61% of total foreign net holdings was in government bonds, with the remaining 39% invested in short-term Bank of Thailand debt.

Dr Bandid, a former deputy central bank governor, said while trends pointed to rising interest rates, the speed and extent remains unclear.

"[Interest rate hikes] depends on the central bank's policy and whether they are more concerned about inflation or economic growth," he said.

In terms of corporate debentures, new issuance totalled 144.7 billion baht in the first quarter, up three-fold from the same period last year. Commercial banks accounted for 53% of the new debt issued, primarily fund-raising to cover maturing bills of exchange.

The TBMA projects corporate issuance in the second quarter at 120 to 140 billion baht, with total issuance for the year of 350 to 400 billion baht.

Dr Bandid said investors in the secondary market will likely limit their portfolio durations amid interest rate risk.

Daily turnover is expected to rise from the first quarter due to higher supply from government issuance and growing demand from investors, particularly overseas investors.

 

[Muthukali]

BoT keeps policy rate unchanged

The meeting of the Bank of Thailand's monetary policy committee on Wednesday decides to keep the repurchase rate unchanged at 3.00 per cent, in line with the market's expectation.

The panel will also review its previous gross domestic growth projection for 2012 following the better and faster than expected economic recovery in the first quarter of the year.

Reports said the central bank's committee will also monitor the economy and stands ready to revise the key policy rate as necessary to suit the situation.

Meanwhile, the Central Wage Committee voted by a majority not to postpone the planned increase in the daily minimum wage to 300 baht per day in the 70 remaining provinces, set for Jan 1 next year, as proposed by the employers' representatives.

The daily minimum wage has already been increased to 300 baht in seven provinces - Bangkok, Pathum Thani, Nonthaburi, Samut Sakhon, Samut Prakan, Nakhon Pathom and Phuket - since April 1.

The government plans to increase the minimum wage in the other 70 provinces to 300 baht per day from the New Year.

Permanent labour secrtary Somkiat Chayasriwong, the chairman of the Central Wage Committee, said the representatives of the employers today proposed that the wage increase in the remaining 70 provinces be postponed to 2015.

The committee agreed by majority not to change the plan, reasoning that the postponement would confuse business operators and the employers' representatives did not provide clear enough information on how businesses would be affected.

However, Mr Somkiat said, he had instructed labour offices throughout the country to survey the cost of living over the next three months and report to the committee, which would subsequently reconsider whether or not to delay the minimum wage increase.

He said that if the survey showed that the increase would seriously affect the cost of living and the overall economic condition the Central Wage Committee might have to review its decision.

Mr Somkiat said information provided by representatives from the Commerce Ministry showed the prices of vegetables and meat in March-April had not gone up unusually, compared to the same period last year.

The government's three-year debt suspension scheme for farmers and low-income earners was launched on Wednesday, with the registration period for people seeking assistance set to end on Aug 20.

Prime Minister Yingluck Shinawatra presided over the opening ceremony of the debt suspension scheme on at the Santi Maitri Building, Government House.

"This cooperation between the state sector and financial institutions will ease the burden of low-income earners and their spending will then be in line with their income," Ms Yingluck said. "People will then have savings to improve their living conditions and the overall economy will be improved."

She advised people to keep track of their household accounts so they can control unnecessary expenditure. His Majesty the King's sufficiency economy could help raise people's quality of life, she said.

"It's not a debt relief scheme, but it will give debtors more time to repay, or to expand their businesses," Ms Yingluck said.

The debt moratorium scheme, with an estimated budget of 459 billion baht, is accessible by 3.8 million borrowers from four state banks -- the Government Savings Bank, the Bank for Agriculture and Agricultural Cooperatives, the Small and Medium Enterprise Development Bank of Thailand and the Islamic Bank of Thailand.

Those eligible for the moratorium must have an outstanding loan debt of no more than 500,000 baht.

This government expects its populist policy to drive the country's economic growth for 2012 up by 0.4 to 0.7 per cent, or about 44 billion to 77 billion baht a year.

 

[Muthukali]

SET rises 0.97 point

The Stock Exchange of Thailand main index went up 0.97 point or 0.08% to close at 1,240.03 points at the end of trading session on Thursday afternoon. The trade value was 38.11 billion baht, with 5.05 billion shares traded.

The SET50 index ended at 872.75 points, up 0.81 point or 0.09%, with a total trade value of 26.87 billion baht.

The SET100 index rose 1.61 points or 0.09% to stand at 1,894.57 points, with a total turnover of 32.11 billion baht.

The SETHD index went down 3.91 points or 0.34% to stand at 1,160.32 points, with total trade value of 6.69 billion baht.

The MAI index fell 0.43 point or 0.14% to close at 307.80 points, with total transaction value of 1.50 billion baht.

Top five most active values were as follows;

CPALL (XD) - stood at 39.25 baht, down 37.25 baht (48.69%)
PTTGC - stood at 72.50 baht, up 1.50 baht (2.11%)
IVL - stood at 36250 baht, up 0.50 baht (1.40%)
JAS - stood at 3.38 baht, up 0.14 baht (4.32%)
CPF - stood at 41.00 baht, down 0.50 baht (1.20%)

 

[Muthukali]

ECB Leaves Interest Rates Unchanged

FRANKFURT—The European Central Bank left its key interest rates unchanged at its monthly meeting Thursday.

The decision means the ECB's main interest rate, the rate it charges for its regular refinancing operations, remains at a record low of 1%, where it has stood since December.

The decision was in line with expectations—all 47 banks and think tanks polled by Dow Jones Newswires ahead of the announcement expected rates to remain unchanged at the May meeting.

Attention now shifts to ECB President Mario Draghi's 12:30 p.m. GMT news conference in Barcelona, Spain. Market observers will be listening for clues on whether the central bank will take weak forward-looking indicators as an incentive to consider further monetary easing measures over the coming months.

The ECB was praised for issuing two rounds o three-year loans to euro-zone commercial banks late last year and early this year, pumping over €1 trillion ($1.316 trillion) into the banking system. The extra funds and the accompanying confidence boost in the markets helped push governments' borrowing costs down as banks used the new money to buy up euro-zone government bonds.

The three-year loan also encouraged banks to ease tightening of credit standards in the first quarter of the year, the ECB's bank lending survey showed last week.

Despite the positive effects from the three-year loan, or LTRO, it is very unlikely the ECB will announce a new one in the near future. At the recent spring meetings of the International Monetary Fund, the ECB "sent signals in discussions that they are not currently considering another long-term refinancing operation," an official with knowledge of the matter said.

The ECB fears that continuing to provide cheap money through long-term maturity loans will only encourage banks to become "addicted" to central bank funds. It would also delay the reforms that both banks and governments need to make to their balance sheets.

The ECB's resistance comes against the backdrop of increasingly negative economic data from the 17-country euro zone. On Wednesday, data showed the euro-zone's manufacturing sector contracted at its sharpest pace in nearly three years, while unemployment rose to match a record high in March. The data suggest the euro-zone economy could continue to shrink even into the second quarter of 2012.

The weak economic outlook will increase calls for the central bank to pump more money into the euro-zone economy. Price developments in the currency zone might also dissuade the central bank from taking bold measures for now. Consumer price inflation remains above the central bank's benchmark of just below 2%. The European Commission's statistics authority Eurostat said Monday that consumer prices were up 2.6% in April, after March's 2.7%.

 

[Muthukali]

U.K. Economy Losing Momentum

LONDON—The U.K.'s dominant services sector grew at the slowest rate in five months in April, a survey showed Thursday, reflecting other data published this week that suggest the economy continued to lose momentum at the start of the second quarter.

The purchasing managers index for services missed analysts' estimates, sliding to 53.3 in April, the lowest level since November last year, the survey from data provider Markit and the Chartered Institute of Purchasing and Supply showed.

The figure compares to a March reading of 55.3. A reading above 50.0 indicates the sector is expansion, while below that level points to contraction.

The services sector is the powerhouse of the U.K. economy, making up 76% of the country's gross domestic product. But last week official figures showed the sector's performance in the first quarter was disappointing, eking out growth of just 0.1%. Overall, the U.K. economy shrank 0.2% in the first three months of the year, sending the country back into technical recession.

Thursday's survey follows PMI surveys for the manufacturing and construction sector, published earlier this week, which also showed the pace of activity slowed in April.

Chris Williamson, chief economist at Markit, said the composite PMI—which is a weighted average of the services, manufacturing and construction surveys—fell to 53.2 in April from 55.2 in March.

"The three U.K. PMI business surveys collectively signalled an easing in the pace of expansion in April, with the rate of growth dropping to the weakest since November," Mr. Williamson said.

The PMIs come ahead of next week's policy meeting at the Bank of England, where rate-setters will decide whether or not to expand the central bank's £325 billion ($527 billion) bond-buying stimulus program.

Investors' expectations of further stimulus have been tempered in recent weeks by central bank officials' warnings on inflation and their assertion that the economy is probably in better shape than the official data suggest.

Vicky Redwood, chief U.K. economist at Capital Economics, said the fall in the April PMIs will make the MPC's decision trickier.

"We still think that the recent stickiness of inflation will prompt the MPC to pause its QE program," she said. "But if the recent weaker tone of the activity data continue, as we expect, more asset purchases are likely later in the year."

Despite the downturn in April's PMIs, the surveys have signalled a stronger economic performance so far this year than official data. The PMI surveys suggest the economy grew by as much as 0.5% in the first quarter, while April's readings are consistent with growth of 0.2% to 0.3%.

Bank of England governor Mervyn King Thursday said that despite the gloomy official data there are grounds for optimism.

"It's a patchy picture, but there are indeed signs of a recovery coming," Mr. King said in an interview on BBC radio, citing improving employment data and the more upbeat PMI surveys. "I think a reasonable view would be that we would start to see a steady, slow recovery coming during the course of the year."

The Confederation of British Industry Thursday downwardly revised its forecast for economic growth in 2012 to 0.6% from the 0.9% it had predicted in February.

The business group said the economic recovery would continue to be bumpy, saying the weaker than expected state of the economy would mean Chancellor of the Exchequer George Osborne would struggle to meet his deficit reduction targets over the next two years.

There was further disappointing economic data Thursday from the Nationwide Building Society NANW.LN +2.05% house price index, which showed prices fell again in April and are expected to be flat to a little lower over the next 12 months.

The index showed house prices fell 0.2% on average in April from March and 0.9% on the year.

 

[Muthukali]

Asian Stocks Drop 2nd Day on U.S. Data, Commodity Prices

Asian stocks fell for a second day, with a regional benchmark index paring its weekly advance, as U.S. service industries expanded less than forecast and falling commodity prices weakened the earnings outlook for exporters and raw-material producers.

Samsung Electronics Co. (005930), the world’s No. 1 mobile-phone maker by sales, fell 1.9 percent in Seoul. BHP Billiton Ltd., the world’s biggest mining company, lost 1 percent in Sydney. Gloucester Coal Ltd. sank 2 percent on speculation the price of fuel used in power stations may not recover from an 18-month low. Ascendas Real Estate Investment Trust slid 4.3 percent in Singapore after the industrial landlord raised S$298.5 million ($240 million) by selling shares at a discount.

“The U.S. data was quite disappointing and it seems like it’s now catching up with the rest of the world,” said Stan Shamu, a market strategist at IG Markets in Melbourne, a provider of trading services in stocks, bonds and commodities. “Commodities prices have weakened, so the likes of BHP will be negatively affected.”

The MSCI Asia Pacific Excluding Japan Index dropped 0.4 percent to 440.68 as of 9:17 a.m. in Hong Kong, with about three shares sliding for every two that rose. The regional gauge is heading for its first weekly advance in five weeks following moves to stimulate economic growth in Australia and amid signs manufacturing output in U.S. and China is improving.

Australia’s S&P/ASX 200 Index (AS51) decreased 0.5 percent, while South Korea’s Kospi Index dropped 0.6 percent. Singapore’s Straits Times Index lost 0.3 percent. Japanese markets are closed today for a holiday.
U.S. Economy

Futures on the Standard & Poor’s 500 Index were little changed today. The gauge declined 0.8 percent in New York yesterday as U.S. service industries grew at a slower pace than projected in April.

Exporters declined as the services industry data, combined with a report that showed consumer confidence among Americans fell to a two-month low last week, added to signs the recovery of the world’s largest economy may be faltering.

The reports overshadowed data showing jobless claims fell to 365,000 in the week ended April 28, a one-month low. A Labor Department report today may say the U.S. added 160,000 jobs in April, compared with a gain of 120,000 the previous month, according to a Bloomberg survey of economists.

Raw-material producers posted the biggest decline among the 10 industry groups in the MSCI Asia Pacific Excluding Japan Index. (MXAPJ) The London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 0.9 percent yesterday. The Thomson Reuters/Jefferies CRB Index of raw materials also retreated 0.9 percent. Oil traded near a two-week low.

The MSCI Asia Pacific Excluding Japan Index rose 12.6 percent this year through yesterday, compared with a 10.7 percent gain by the S&P 500 and a 5.3 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.7 times estimated earnings on average, compared with a multiple of 13.2 for the S&P 500 and 10.8 times for the Stoxx 600.