Personal finances, Investing & Markets - Your money

Money market unimpressed by draghis pledges of strong action

Euro zone money markets shrugged off the excitement created by ECB President Mario Draghi's comments that he will do whatever it takes to save the euro in a sign that investors believe the ECB does not have much more ammunition left. Spanish and Italian government bonds rallied, while the euro currency and stock markets across the globe gained on Draghi's pledge on Thursday. Even though the comments came just one week before the ECB's next policy meeting, money markets did not move to price any move on the rates or the liquidity front."What does it take to preserve the currency union? If we look at the core of the problem it is not so much related to the level of interest rates in money markets which are extremely low," Rabobank's senior market economist Elwin de Groot said."The main (problem) remains the bond market and the trust that money market participants have in the currency union. I think he (Draghi) was just referring to the Security Markets Programme (bond-buying)."

The European Central Bank's bond-buying programme has had only a short-term effect in the past and failed to protect the access to capital markets of countries such as Greece, Ireland or Portugal. As long as investors continue to fret about the possibility that Spain may have to seek a bailout that would dry up the euro zone's aid resources and leave Italy unprotected against an escalation of the crisis, the interbank market will remain dormant, analysts said. With no access to markets for themselves, banks would be reluctant to lend to businesses in the real economy, which makes any conventional ECB measure on monetary policy less effective.

Euribor futures were 1 basis point higher on the 2012 strip on Friday, having changed little in the past week, meaning the market's view on where three-month Euribor interbank rates will settle later this year was virtually the same. Forward euro overnight Eonia rates, which are sensitive to market expectations on the ECB's deposit facility rate, which it cut to zero at this month's meeting, were also stable.

At 0.04-0.05 basis points, Eonia rates dated for the last quarter of 2012 are still discounting a tiny possibility of a cut in the deposit facility to minus 25 basis points - which would effectively penalize banks for keeping their money with the ECB and not lending. Eonia rates have settled at an average of 8 basis points over the deposit facility in recent months."They are still pricing in a small possibility of a move on rates, but those discussions have been going on for some time. The data over the past weeks justify a cut in rates," Commerzbank rate strategist Benjamin Schroeder said.

Morocco to decide on debt issue in junejuly fin min

DUBAI, April 2 Morocco's government expects to decide in June or July whether to issue a conventional bond or a sukuk (Islamic bond) in the international market to help finance its budget deficit this year, the finance minister said on Tuesday."We will have an idea in June or July, something like that. We are working on it now," Nizar Baraka told reporters at a meeting of Arab finance ministers and central bankers in Dubai. Baraka predicted the budget deficit would be between 5 and 5.5 percent of gross domestic product this year, down from 7 percent in 2012.

The budget assumes economic growth of 4.5 percent this year but the outlook will become clearer at the end of April when the state of agricultural production is known, he said.

"I think it will be closer to 5 percent than 4 percent," compared to an estimated 2.4 percent last year, he said.

The government plans to hold a major discussion on tax policy at the end of this month, examining how to make taxation more equitable while covering the informal sector of the economy, Baraka added without giving details.

Pakistan to raise 495 bln rupees via 1st sukuk in 15 months

Pakistan's central bank will sell 49.5 billion rupees ($503.8 million) of Islamic bonds, the country's first such issuance in 15 months, with pricing to be set on Wednesday. The sukuk will inject a much-needed liquidity management tool for the domestic Islamic banking industry. The appetite for local currency sukuk has grown with Islamic banks posting double-digit asset growth, but the government has been unable to match demand, constraining the sector's financing and investment capability.

Since 2008, the central bank has sold 15 local currency sukuk, with the last one being in March 2013, raising 43 billion rupees. The busiest year was 2012, when there were four sukuk raising a combined 163.5 billion rupees.

Such instruments are highly sought by the country's five full-fledged Islamic banks and 15 others offering Islamic finance services. The sukuk help them manage short-term liquidity needs and support their financing activity. At the auctions for the government's last four sukuk, applications were received for more than double the amount of bonds being sold.

Net investments by Pakistan's Islamic banking industry declined by 17.7 percent or 76 billion rupees in the 12-month period ending in March. This was mainly due to a lack of new government issuance of sukuk, the central bank said in its latest Islamic banking bulletin. The government has not indicated whether it would issue more local currency sukuk this year, although the finance ministry has said it was considering issuing dollar-denominated sukuk. ($1 = 98.2600 Pakistani rupees)

Press digest australian business news jan 9

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy. THE AUSTRALIAN FINANCIAL REVIEW (this site)Recruitment firm Heidrick & Struggles has been appointed by Hong Kong power company CLP Group to compile a board of directors for local energy retailer TRUenergy. The move comes ahead of CLP Group's A$4 billion float of TRUenergy later this year, which is set to be Australia's largest since rail freight company QR National's A$6.2 billion listing in 2010. Page 14.-- Peter Farrell, founder and chairman of sleep disorder product manufacturer ResMed , has announced that he will recuse himself when the board votes on the company's next chief executive from a shortlist that includes Mr Farrell's son Michael. "As far as governance goes we are cleaner than a whistle  having founded the company 22 years ago, the last thing I want to do is throw it under the bus by making the wrong call," Mr Farrell, who has been acting chief executive since the departure of Kieran Gallahue a year ago, said. Page 14.-- Peter Birtles, chief executive of Super Retail Group , the owner of the Ray's Outdoors, Supercheap Auto and Rebel Sport franchises, yesterday said the company had "solid trading in line with expectations" over the holiday period as consumers continued to buy leisure-focused goods that were low-cost. Mr Birtles also commented on the malaise affecting other local retailers, saying "some retail businesses have pulled the discount lever too quickly and have now conditioned their customers to being accustomed to those discounts". Page 14.-- Minmetals Resources' A$1.2 billion takeover bid for locally-listed copper producer Anvil Mining will expire this Wednesday, with the Chinese miner yet to secure any acceptances despite securing lock-up agreements with commodities trader Trafigura Beheer, the largest shareholder in Anvil. An undertaking by Minmetals to proceed with the deal only if Gecamines, a mining company owned by the Democratic Republic of Congo, signs off on the conditional takeover has discouraged other shareholders from approving the bid, observers say. Page 15.-- THE AUSTRALIAN (this site)The Australian Competition and Consumer Commission (ACCC) has been criticised by Chris Schacht, a former minister of small business in the Keating government, and Nationals senator Ron Boswell for spending more than A$16 million in legal fees to unsuccessfully block grocery wholesaler Metcash's takeover of the Franklins supermarket chain. In an opinion piece published today, Mr Boswell said the regulator had "delayed a pro-competitive deal by 18 months" and the takeover would allow the company to compete with its larger rivals. Page 27.--

The Australian Crime Commission will be able to share data with industry, under new laws set to come into force this year, in a bid to combat corruption. The Crimes Legislation Amendment (Powers and Offences) Bill 2011 gives the commission the power to inform accountants, lawyers and financial institutions that they could be employing rogue employees or conducting business with criminals. Page 27.-- The United Kingdom has chosen to adopt financial reforms introduced in Australia, with British Prime Minister David Cameron proposing the introduction of a shareholder vote on executive remuneration. The move is unlikely to affect companies that are listed in both Britain and Australia, such as global miner BHP Billiton , as local companies already adhere to the Gillard government's "two-strikes" rule. Page 27.-- Qantas Airways has begun a push into Australia's growing resources sector, with its recently acquired Network Aviation and regional QantasLink divisions set to add 14 planes to their fleet over the next year in order. The move is a bid by the airline to tap into firms that use fly-in, fly-out workers. Narendra Kumar from QantasLink yesterday predicted the aviation resources market to grow by up to 70 percent in the next few years. Page 27.--

THE SYDNEY MORNING HERALD (this site)The Australian Greens are set to use their influence in the Senate to force the multibillion-dollar Future Fund to divest its holdings in companies that produce nuclear weapons and tobacco. "It would be very easy to divest ourselves of those shares without any impact on the bottom line, and I think it would be the socially responsible thing for the Government to do," Greens senator Richard Di Natale said. Page B17.-- Australia's tourism bodies have been targeting the Chinese and Taiwanese markets in a bid to revive flagging tourist numbers, with Asian pop singer Show Luo last year hired by Tourism Australia to produce 10 advertisements promoting north Queensland. According to the Australian Bureau of Statistics, 5.9 million tourists visited Australia in the last financial year, with one in four visitors coming from South-East Asia or China. Page B17.-- Analysts are predicting that investors will adopt a cautious attitude when the market opens today, with news of Spain's 23 percent unemployment, a rise in Italian bond rates and more negative economic data from Europe likely to limit any gains. The March ASX 200 index contract also gained 12 points to close at 4092 points, indicating that any rises at the beginning of today's trade is likely to be minimal. Page B18.--

Observers have warned that Australia's major lenders are likely to intensify the debate on interest rates this year. Westpac Banking Corporation chief executive Gail Kelly last month warned that "high funding costs [for banks] are a reality  We are very mindful of the impacts of interest-rate decisions on customers but these must be balanced with what is economically responsible". Critics, however, argue that the banks are attempting to safeguard their profits by waiting to fully pass on last month's cut in the official cash rate. Page B19.-- THE AGE (this site)A new book published just before Christmas has shown that the local wool industry was more influential to Australia's economy than the mining sector until the late 1980s. Written by Australian Broadcasting Corporation reporter Timothy Lee, Wanganella and the Merino Aristocrats details the impact of the wool sector in Australia's history, going back into the 19th century. "The sheer magnitude of what the Australian Peppin merino did has not been told," Mr Lee said. Page B13.-- Holiday timeshare operators have warned in a submission to an upper house inquiry that reforms to the financial advice industry pose an "immediate and devastating" threat to their sector. Timeshare operators are obligated to hold a financial services licence, with their products regulated as managed investment schemes. "The way the legislation is worded, it doesn't matter if it's commissions or bonuses  they are basically banned  for our sector it will be very detrimental," Wyndham Vacation Resorts chief executive Barry Robinson said. Page B14.-- The chairman of Tourism Australia, Geoff Dixon, has described China as having the same importance to Australian tourism as the country does to the local mining sector. "China and Asia are coming to Australia's rescue when it comes to tourism," Mr Dixon said. Figures from the Federal Government's Tourism Research Australia show that Chinese tourists contributed A$3.1 billion to the sector in 2010, despite more tourists arriving from New Zealand and the United States. Page B14.-- A spokeswoman for the Australian Federal Police yesterday warned that cyber attacks on businesses were becoming more commonplace, in the aftermath of a denial-of-service attack on the online broking websites of lenders St George and Australia and New Zealand Banking Group. "Online attacks are becoming more common as organised criminal gangs and motivated individuals understand the technology of the internet and take advantage of the anonymity that comes with it," the spokeswoman said. Page B16.--