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Mexico Leading Index Rises For Second Month





The leading index for Mexico, which measures the future economic activity, increased for the second straight month in October, figures from the Conference Board showed Monday. The Conference Board leading economic index climbed 0.7 percent in October, following a revised 0.5 percent rise in the prior month. In August, the index had fallen 1.6 percent. Out of the six components, five contributed positively to the index in October. The coincident index that reflects the current economic activity rose 0.3 percent in October, the same rate of increase as in September. All three components gained during the month. Despite the small improvements in both the LEI and CEI, the persistent weaknesses among the leading indicators over the last six months continue to suggest that Mexico's rate of economic expansion is unlikely to pick up in coming months, the Conference Board said.


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Fitch: China, US Rates Pressures Build for Apac Banks in 2016





Banking sectors within the Asia-Pacific (APAC) region are likely to face a more challenging year ahead as financial systems adjust to slowing growth in China and the prospect of higher US interest rates, says Fitch Ratings in the agency's 2016 Outlook Report for the region. Earnings and capital buffers built up in recent years mean that most banking systems start from a position of strength going into this weaker economic backdrop. The exceptions are the large markets of China and India, and the frontier markets of Mongolia and Vietnam, although the outlook for banks in India and Vietnam is balanced by a more favourable economic environment. We have a higher proportion of banking systems on negative sector outlooks for 2016 than was the case in 2015. This is driven by the prospect of deteriorating asset quality, a more cautious risk appetite from most banks contributing to weaker credit growth, and margin pressures - all of which is likely to lead to slower profit growth. Fitch views lower credit growth as a positive development from the perspective of financial sector stability. With respect to the outlook on ratings, we have a stable outlook on the overwhelming majority except Mongolia and the Philippines (negative and positive, respectively). The predominantly stable outlook reflects two factors: first, that there is some tolerance in the ratings to slowing growth, given the buffers; and second, the rating outlooks reflect sovereign support in the cases where the Viability Ratings are lower than Issuer Default Ratings. Support from the authorities still matters in APAC. Key downside risks are Chinese growth and US interest rates, as rapid credit growth and the accumulation of high private-sector debt since 2008 has made some countries across the region sensitive to a major change in economic conditions. Fitch expects Chinese GDP growth to slow to 6.3% in 2016 and 6% in 2017, and for US interest rates to rise gradually in 2016. However, a more severe China slowdown and/or a sharper-than-expected increase in US rates could lead to greater economic headwinds, weaker APAC currencies, and possibly higher domestic interest rates - raising the cost of debt servicing. For the Chinese banks, this would compound asset-quality and earnings pressures which are already mounting. For the rest of APAC, the more open economies such as Japan, Singapore, Hong Kong, Korea and Taiwan would be affected, especially those financial systems with the largest direct exposure to China (Singapore, Hong Kong, and Taiwan), while further weakness in commodity prices would also be likely - exposing Indonesia, Malaysia and Australia. Unhedged lending in hard currency that has been built up in some markets may also be tested, which would in turn have a knock-on impact for sectors in the supply chain - affecting asset quality more broadly in the local domestic banking system. That said, currency risks appear to be less than for other emerging market regions. On a positive note, Fitch sees capital levels improving as global regulatory pressures begin to influence capital trends across the region, with the Australian banks continuing to lead the market. With the Total Loss Absorbing Capacity (TLAC) rules having been finalised, we could see this beginning to influence regulatory capital and TLAC-qualifying instruments issuance trends - as local regulators clarify their thinking in response to the measures announced by the Financial Stability Board in November 2015. The report "2016 Outlook: Asia-Pacific Banks" is available at www.fitchratings.com or by clicking on the links in this media release.


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EU officials agree on new digital privacy law





European Union officials sealed a deal on a pan-European digital privacy law, forming a new legal framework which will have ripple effects around the world on how firms can utilize people's personal details. EU officials said negotiators agreed on a final text of the union-wide bill following almost four years of haggling and lobbying, replacing a patchwork of 28 different sets of national privacy laws and bolstering their privacy penalties to perhaps billions of euros. Under the agreement, fines would be increased to a maximum of 4% of a company's overall global revenue. The new text needs to be approved by the European Parliament and EU governments before enacting it in two years' time.


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Argentina to ease currency control





Argentina announced it would alleviate its foreign exchange control, with President Mauricio Macri hoping the move will bolster exports and fuel economic growth. Farmers in the country have been waiting for the Argentinian peso to decline before selling stockpiles of soybeans. The official exchange rate of 10 pesos per US dollar is not matched by a firmer black market rate. Analysts noted the official rate to decline between 13.5 and 15.00 to the dollar. Also, Finance Minister Alfonso Prat-Gay expected the rate to weaken near 14.2 per greenback.


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Japan Nov Trade Deficit Narrows More Than Forecast





Japan's merchandise trade deficit narrowed more-than-expected in November from a year ago, as imports fell faster than exports, the Ministry of Finance said on Thursday. The trade deficit decreased notably to JPY 379.7 billion in November from JPY 898.8 billion in the corresponding month last year. Economists had expected the deficit to narrow to JPY 449.7 billion. Exports dropped 3.3 percent year-over-year in November, exceeding economists' expectations for a 1.6 percent decline. Similarly, imports plunged 10.2 percent in November from a year ago. The expected rate of fall was 7.3 percent.


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Canadian Dollar Falls Against Majors





Japan's merchandise trade deficit narrowed more-than-expected in November from a year ago, as imports fell faster than exports, the Ministry of Finance said on Thursday. The trade deficit decreased notably to JPY 379.7 billion in November from JPY 898.8 billion in the corresponding month last year. Economists had expected the deficit to narrow to JPY 449.7 billion. Exports dropped 3.3 percent year-over-year in November, exceeding economists' expectations for a 1.6 percent decline. Similarly, imports plunged 10.2 percent in November from a year ago. The expected rate of fall was 7.3 percent.


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Carney open to serve 8-year term as BOE Governor





Mark Carney has hinted at serving a full eight-year term as Bank of England Governor, three years longer than he initially pledged, saying he needs to do more at the central bank. He refused to rule out staying longer than the five years he committed himself to when he was appointed in 2012, following George Osborne wooed the previous Bank of Canada Governor for nearly a year. Carney was formally appointed for eight years, but the Treasury previously said he had indicated he wanted to serve for only five years. To extend his term, Carney needs to express his intention to continue.


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Japan All Industry Activity Rises More Than Expected October





Japan's all industry activity increased at a faster-than-expected pace in October, after falling in the previous month, figures from the Ministry of Economy, Trade and Industry showed Monday. The all industry activity index rose 1.0 percent month-over-month in October, reversing a 0.2 percent drop in September. Economists had expected a 0.9 percent climb for the month. In August, the measure showed no variations. The index measuring industrial production gained 1.4 percent monthly in October. Similarly, the index measuring both construction and tertiary activity index grew by 0.9 percent during the month. On a yearly basis, the all industry activity index climbed 0.9 percent in October, faster than the 0.6 percent spike in the preceding month. It was the fifth consecutive monthly rise.


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NZ Dollar Rises Against Majors





The New Zealand dollar strengthened against the other major currencies in the Asian session on Tuesday. The NZ dollar rose to a 5-day high of 0.6787 against the U.S. dollar and a 4-day high of 82.26 against the yen, from yesterday's closing quotes of 0.6759 and 81.88, respectively. Against the euro and the Australian dollar, the kiwi edged up to 1.6075 and 1.0607 from yesterday's closing quotes of 1.6127 and 1.0625, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 0.68 against the greenback, 83.50 against the yen, 1.57 against the euro and 1.04 against the aussie.


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Fitch: India, Se Asia Airlines to See improved Earnings Outlook





The earnings outlook for Indian and south-east Asian airline sectors should improve in 2016, driven by higher demand, lower fuel costs and ongoing industry restructuring, Fitch Ratings says. But the operating environment will be challenging due to strong competition and capacity expansion. Macroeconomic growth should help bolster demand and top-line growth for the region's airlines, and data so far in 2015 is already showing strong demand growth. Passenger load factors (PLF) in India and south-east Asia have risen steadily, with the average PLF across seven major airlines based in the region hitting multi-year highs above 80% in 3Q15. The continued decline in global oil prices will also provide a much-needed boost to airline earnings, with Brent crude falling further so far in 4Q15. Industry consolidation and restructuring should also result in improved profitability. Nonetheless, aggressive competition and capacity expansion remain key risks for the sector over the longer term. Capacity growth in south-east Asia and India has slowed in 2015 as airlines focused on profitability, but a huge order book for new aircraft remains, which could make it difficult to improve profitability for the sector. The full report 'Improved Earnings Outlook Likely for Indian and South-East Asian Airlines' is available to subscribers at www.fitchratings.com or by clicking on the link in this media release.


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