Dec. 27 (Bloomberg) -- The following are the day's top business stories:
1. Japan November Consumer Prices Fall for 21st Month as Deflation Persists 2. Dollar Falls Versus Euro on Concern Data to Show U.S. Housing Remains Weak 3. Bond Upgrades Top Downgrades at S&P as Cash Hoards Swell: Credit Markets 4. Japan's Stocks Fluctuate; Traders Decline on China Concern, Banks Advance 5. Dai-Ichi Life to Buy Remaining Stake in Tower Australia for $1.2 Billion 6. HSBC's Hong Kong Chief Says More Property Curbs Would Hurt `Real Buyers' 7. Commodities Beat Financial Assets Making Silver, Zinc Top Picks for 2011 8. Mundell Sees 2% U.S. Growth at Most in 2011 After Confidence `Devastated' 9. Mizuho's Tsukamoto Expects Higher-Than-Basel Capital Ratio, No Share Sales 10.Philippines May Hold Interest Rate as Growth Slows, Peso's Gain Moderates 11.Hedge Funds Bet Natural Gas Will Decline in Warm New Year: Energy Markets 12.Aberdeen Says Forget China Shares When Sizing Up Vodafone Cash Generation
1. Japan November Consumer Prices Fall for 21st Month as Deflation Persists
Japan´s consumer prices fell for a 21st month in November, a sign sustained deflation may prompt the central bank to revise its price projections. Consumer prices excluding fresh food declined 0.5 percent from a year earlier, the statistics bureau said today in Tokyo. That compared with a median 0.6 percent drop predicted by 28 economists surveyed by Bloomberg News. Entrenched deflation is weighing on an economy at risk of contracting this quarter as the effects of Prime Minister Naoto Kan´s stimulus spending fades. Miyako Suda, a Bank of Japan policy maker, said this month the persistent price falls will continue in the year starting April, an outlook that conflicts with the bank´s forecast of moderate inflation in the period. "The BOJ will probably be forced to reconsider its price projections," Mari Iwashita, chief market economist at Nikko Cordial Securities in Tokyo, said before the report. "It´s highly likely that the period of deflation end will be pushed back further."
2. Dollar Falls Versus Euro on Concern Data to Show U.S. Housing Remains Weak
The dollar declined to a one-week low against the euro on speculation a U.S. report today will show home prices fell, backing the case for the Federal Reserve to keep interest rates near zero. The greenback weakened versus 9 of its 16 major counterparts as the median forecast of a Bloomberg News survey of economists showed the S&P/Case-Shiller Index of property values dropped 0.2 percent in October from a year earlier, the first decline since January. The yen was near a two-week high against the Australian dollar after China raised interest rates for the second time in more than two months to contain inflation. "Cheap housing prices imply the Fed is still far from the exit," said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin-trading services. "It makes investors hesitate to buy the dollar, especially when the market thins at the end of the year." The dollar fell to $1.3190 per euro at 9:01 a.m. in Tokyo from $1.3165 yesterday in New York. It earlier slid to as low as $1.3191, the weakest since Dec. 21. The greenback was at 82.77 yen from 82.81 yen yesterday, when it touched 82.66, the lowest since Dec. 7. The yen was at 83.22 per Australian dollar from 83.20 yesterday, when it reached 82.73, the most since Dec. 13.
3. Bond Upgrades Top Downgrades at S&P as Cash Hoards Swell: Credit Markets
More U.S. companies had their credit ratings boosted by Standard & Poor´s this year than saw them cut for the first time since 1997 as borrowers increased profits and stockpiled cash. Ford Motor Co., the world´s most profitable automaker, and San Jose, California-based EBay Inc. were upgraded by S&P along with 756 others, compared with 722 downgrades, according to data compiled by Bloomberg. In 2009, S&P slashed corporate debt grades more than three times as often as it raised them, the data show. Companies held $1.17 trillion of cash, the most on record compared with the value of their assets, as the U.S. recovered from the worst recession in more than 70 years. Rising confidence in the ability of borrowers to meet debt payments led investors to push relative yields down to the lowest since 2007. "Corporate fundamentals are about as strong as we´ve ever seen them," said Edward Marrinan, a credit strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut. The creditworthiness of borrowers will continue to rise even as they are tempted to accelerate mergers and acquisitions and repurchase stock, according to Marrinan.
4. Japan's Stocks Fluctuate; Traders Decline on China Concern, Banks Advance
Japanese stocks fluctuated, with trading companies falling as China´s growth concern dragged down commodity prices and banks gaining after Japan´s industrial production increased. Mitsubishi Corp., Japan´s largest commodities trader, dropped 0.3 percent. Nitori Holdings Co., a furniture retailer, declined 1 percent after Daiwa Securities Group Inc. cut its rating on the company. Mitsubishi UFJ Financial Group Inc., Japan´s largest bank by market value, rose 0.7 percent after industrial production increased for the first time in six months in November. The Nikkei 225 Stock Average fell 0.3 percent to 10,323.74 as of 9:15 a.m. in Tokyo. The broader Topix index was little changed at 904.22. About the same number of stocks fell as rose. "China´s interest rate increase was mostly priced in yesterday in Japan, but if there are corrections in other markets, Japanese stocks will be influenced," said Fumiyuki Nakanishi a strategist at Tokyo-based SMBC Friend Securities Co. "Trading volume is getting thin, and moves in the stock market will be limited."
5. HSBC's Hong Kong Chief Says More Property Curbs Would Hurt `Real Buyers'
Any additional measures by Hong Kong´s government to cool house-price gains would run the risk of crimping demand among "real buyers" as well as speculators, a senior HSBC Holdings Plc executive said. Hong Kong´s government on Nov. 19 announced additional stamp duties on short-term property holdings and higher down- payments for some mortgages, stepping up measures to curb speculation after housing prices surged more than 50 percent since the start of 2009. "What we want to just be careful is that any further tightening would definitely be impacting the real buyer, the person who wants to live in that house," Mark McCombe, chief executive officer of HSBC´s Hong Kong unit, said in an interview. "It´s important that Hong Kong doesn´t lose sight of property ownership being an important driver" of the economy. Hong Kong Chief Executive Donald Tsang said when the latest measures were announced that the government was targeting "speculative activity" and the curbs "will not affect the users." On Nov. 26, Tsang said he´s prepared to take further action if needed to stem price gains.
6. Commodities Beat Financial Assets Making Silver, Zinc Top Picks for 2011
At a time when money managers´ concerns have swung between record government stimulus and the potential for a new recession, investors remain bullish on commodities that beat stocks and bonds for a second year. The benchmark Standard & Poor´s GSCI gauge advanced 20 percent, more than the 9.1 percent gain in the MSCI World Index of stocks and 5.3 percent return on a Bank of America Merrill Lynch index of Treasuries. Currency traders are betting on a stronger dollar, sending a contrarian signal because commodities moved in an opposite direction to the currency in 16 of the past 20 quarters, data compiled by Bloomberg show. Silver, an investment and an industrial material, will jump as much as 37 percent next year, leading gains in the 15 commodities covered in a Bloomberg survey of more than 100 analysts, traders and investors. Zinc, this year´s worst- performing metal, will appreciate 21 percent. Arabica coffee, which reached a 13-year high last week, will be the weakest performer, adding no more than about 7 percent. The strength in demand "has been a surprise considering that we´ve just come out of the worst recession since the 1930s and carnage in most asset classes," London-based Roxana Mohammadian-Molina, one of a team of 18 analysts at Barclays Capital who correctly called the bottom in oil and copper last year, said by phone Dec. 22. The bank says U.S. natural gas, will be the only one of the 25 commodity prices it follows that will average less next year.
7. Mundell Sees 2% U.S. Growth at Most in 2011 After Confidence `Devastated'
The U.S. economy will probably grow no more than 2 percent in 2011, less than what´s needed to lower unemployment, Nobel-prize winning economist Robert Mundell said. "I don´t see economic growth as being any better than 2 percent," the Columbia University economics professor said in an interview today on Bloomberg Television´s "Street Smarts" with Carol Massar. "You had this financial shock to the economy which devastated confidence, and there is nothing around the corner that looks like it´s going to be a strong push for the economy." The economy grew at an average 2.9 percent annual rate in the five quarters since the worst recession in seven decades ended in June 2009. That pace of recovery has lowered unemployment from a peak of 10.1 percent in October 2009 to 9.8 percent last month. Mundell, 78, said the Fed´s unconventional monetary policy actions, known as quantitative easing, had the undesired effect of strengthening the dollar.
8. Mizuho's Tsukamoto Expects Higher-Than-Basel Capital Ratio, No Share Sales
Mizuho Financial Group Inc., Japan´s third-biggest bank by market value, expects to exceed international capital requirements without additional stock offerings, the lender´s chief executive officer said. "We won´t need a share sale as an emergency measure to boost our capital," CEO Takashi Tsukamoto said in an interview this month. The Tokyo-based bank plans to meet the capital rules by "steadily" building profit, managing risk assets and reducing costs to buffer the effects of possible economic slowdowns or increases in bad loans, he said. With a lower capital ratio than those of its two bigger local rivals, Mizuho plans to cut operating costs by 50 billion yen ($600 million) in three years. Slowing loan demand at home is prompting Japan´s largest banks to seek growth in Asia led by China and India, where infrastructure projects need financing. Mizuho "has a lot of things to do internally such as a reduction of personnel expenses," said Yoshinobu Yamada, an analyst at Deutsche Bank AG in Tokyo. "They should then go ahead with their growth plans by boosting businesses in Tokyo and Asia."
9. Philippines May Hold Interest Rate as Growth Slows, Peso's Gain Moderates
The Philippine central bank will probably leave borrowing costs unchanged tomorrow after economic growth slowed and gains in the peso moderated inflation. Bangko Sentral ng Pilipinas will keep the benchmark interest rate at 4 percent for the 13th straight meeting, according to all 12 economists surveyed by Bloomberg News. That´s the lowest level since central bank data started in 1990. Governor Amando Tetangco is seeking to support the economy after third-quarter expansion cooled and consumer price growth remained within target last month. The central bank has sought to protect exporters by joining counterparts from South Korea to Thailand in countering capital inflows stoking currency gains. "The central bank has a lot of elbow room to keep rates steady," said Ricky Cebrero, treasurer at Philippine National Bank in Manila. "Inflation is benign and increasing policy rates at this time will only attract more flows into the country."
10.Hedge Funds Bet Natural Gas Will Decline in Warm New Year: Energy Markets
Hedge funds raised bearish natural gas bets by the most since October on forecasts that higher- than-normal temperatures in the first weeks of the New Year will reduce demand for the heating fuel. The funds and other large speculators cut net-long positions, or wagers on rising prices, by 35 percent in the seven days ended Dec. 21, according to the Commodity Futures Trading Commission´s weekly Commitments of Traders report. It was the largest drop since Oct. 12. Natural gas has declined 26 percent this year as stockpiles reached record levels for the second straight November. Warmer- than-normal weather forecast for early next month may reduce the demand needed to erode surplus inventories. "The first two weeks of January, you´re going to see the market turn around from December cold," said Dave Melita, president and chief meteorologist of Melita Weather Associates in Durango, Colorado. "The snow cover will be melting fast. It will be 20 degrees above average on some days."
11.Aberdeen Says Forget China Shares When Sizing Up Vodafone Cash Generation
Anne Richards, who helps oversee more than $280 billion of assets worldwide as chief investment officer of Aberdeen Asset Management Plc, says focusing only on the big trends such as the rise of China can mean missing out on opportunities in developed markets such as the U.S. and U.K., Bloomberg Markets reports in its February 2011 issue. "We don´t try and buy into big macroeconomic themes," she says. Instead, Richards, 46, says Aberdeen takes a more ground- level approach, centered on the basic company research of its worldwide staff -- especially in global equities, its largest holding at more than $113 billion as of Sept. 30. "We base the vast amount of our decision making on what we hear from companies from the bottom up," she says. The message that many larger companies are sending now -- regardless of geography -- is that business is improving a bit faster than expected, Richards says. That´s reflected in earnings that are beating estimates in many cases.
For the complete stories summarized here, and for more of the day's top news, see TOP <Go>.