State Bank of India
Thursday, October 02, 2008
The Reserve Bank of India (RBI), concerned over the crisis in overseas markets, has asked commercial banks to provide data on their exposure to "troubled financial entities", two newspapers said on Thursday.
The RBI has asked banks to furnish details of their exposure to Wachovia Corporation, Fortis, American International Group Inc, Washington Mutual and Lehman Brothers Holdings Inc, the newspapers said.
"We have sent letters to the chief executive officers of all banks seeking information on their exposure to the troubled financial entities," a senior Reserve Bank of India official said, according to one daily.
It said the RBI was also planning a special audit of ICICI Bank, the country's largest private sector bank, to assess whether it has any exposure to these entities and the possible impact on its profit and loss account.
On Tuesday, the RBI joined ICICI Bank to reassure investors and customers about the financial health of India's second biggest lender, saying ICICI was well capitalised and has enough cash to meet depositor demand.
Separately, another daily reported that some large foreign institutional investors (FIIs) told the Securities and Exchange Board of India (SEBI), the country's stock market regulator, that they have not been aggressively short-selling ICICI's stock.
At a meeting convened by SEBI Chairman C B Bhave, quite a few of the FIIs said they had been buying ICICI's stock, it quoted a person familiar with the development as saying.
ICICI Bank's shares ended up 3.1 per cent at 551.45 rupees on Wednesday after hitting its lowest in more than two years on Tuesday. The markets are shut on Thursday for a local holiday.
With the Senate passing the USD 700-billion bailout package, American market regulator Securities and Exchange Commission has extended the ban on short selling to allow time for the rescue Bill to be enacted into a legislation.
The current ban would expire on the third business day after enactment of the legislation. However, the order would expire in no case later than October 17, SEC said in a statement on Wednesday.
In September, the American regulator had taken a temporary emergency action to prohibit short-selling in financial companies to protect the integrity and quality of the securities market as well as strengthen investor confidence.
"We have carefully re-evaluated the current state of the markets and we remain concerned about the potential of sudden and excessive fluctuations of securities prices generally and disruption in the functioning of the securities markets that could threaten fair and orderly markets," SEC said in the latest statement.
This order would be extended beyond its currently scheduled expiration, to allow time for completion of work on the anticipated passage of legislation, it added.
Short-selling means borrowing a security from a broker and selling it with the understanding it must be bought back and returned to the broker. Investors use this to make profit from falling price of the stock.
Last month, in a move to strengthen investor confidence, the market regulators in the UK and the US had halted short-selling in 799 financial stocks with effect from September 19.
Crude supplies register buildup for the first time in six weeks
Crude oil prices fell by almost $2 on Wednesday, 01 October, 2008 after energy department reported buildup in crude supplies for the first time in six weeks. Prices also softened on overall global energy demand concerns.
Crude-oil futures for light sweet crude for November delivery closed at $98.89/barrel (lower by $1.78 or 1.8%) on the New York Mercantile Exchange. Prices fell to a low of $95.95 during intra day trading. Prices reached a high of $147 on 11 July but have dropped 34% since then.
The EIA wing of the Energy Department reported today, Wednesday, 01 October, 2008 that at US, crude supplies rose for the first time in six weeks, by 4.3 million barrels for the week ended 26 September. They stood at 294.5 million barrels. Crude supplies had fallen a total of 15.7 million barrels in the prior five weeks. Refinery activity climbed as the Gulf of Mexico continued to recover from Hurricanes Gustav and Ike. Refinery utilization was at 72.3% compared with 66.7% of capacity a week earlier.
EIA also reported that motor gasoline supplies also climbed - for the first time in ten weeks, up 900,000 barrels in the latest week to stand at 179.6 million barrels. But after dropping 38.4 million barrels in nine weeks, supplies of the fuel were 9.7% below the year ago level. Distillate inventories, which include heating oil, fell for a fifth week in a row, down 2.3 million to 123.1 million. They're 8.1% below the year-ago level and in five weeks, have tallied a decline of 9.7 million barrels.
The report also showed that demand for petroleum products over the last four weeks has averaged 19 million barrels per day, down 7.1% from the same time a year ago. Of that, motor gasoline demand has averaged almost 8.9 million barrels per day, down 4.5% from the same time a year ago.
For the third quarter of the year that ended yesterday, crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%. For the year, prices are still up by 3.4%.
Investors are concerned that a prolonged credit crisis would further undermine an already waning demand for energy as global growth slows down.
Against this background, November reformulated gasoline fell 9.8 cents to close at $2.36 a gallon, and November heating oil shed 4.8 cents to end at $2.8469 a gallon.
Nikkei Touch 3 Year Low While Sydney Came Back In Red
The stock markets across the Asian region closed mixed after the U.S. Senate approved a revised bailout package to rescue the U.S. financial system. However, concerns about a global slowdown persisted after the Institute for Supply Management said Wednesday that activity in the U.S. manufacturing sector contracted at a much faster pace than expected in September, with the index of activity in the sector falling to its lowest level in almost seven years. Additionally, major automakers around the world reported sluggish U.S. sales in September.
U.S. stocks closed yesterday’s volatile session modestly lower after seeing considerable weakness early in the day. The Dow closed down 0.2% at 10,831, the S&P 500 dropped 0.5% to 1,161, and the Nasdaq shed 1.1% to 2,069.
Oil prices eased US$0.29 to trade at US$98.24 a barrel by 3:08 a.m. ET. The contract for November delivery finished Wednesday's U.S. session at US$98.53 a barrel, down US$2.11 on higher U.S. inventory data. November crude-oil futures rose as much as $1.53 to $97 a barrel in electronic trading, after falling $1.78 to $98.89 a barrel Wednesday on the New York Mercantile Exchange.
In the currency market, the U.S. dollar eased to the upper 105-yen levels in late Tokyo deals, down from the lower 106-yen range seen in early trade and late Wednesday.
The Australian dollar closed at a 14-month low. The Aussie finished the session at US$0.7867-0.7871, down almost one U.S. cent from Wednesday's close of US$0.7962-66, marking the first session finish below US$0.79 in two weeks.
The New Zealand dollar gave away some of its gains after the U.S. Senate passed the revised U.S. bank bailout package. The kiwi finished the local session at US$0.6725, down from US$0.6746 in early trade, but was up from US$0.6703 late Wednesday.
The South Korean won tumbled to a 65-month low against the U.S. dollar. The won finished the local session at 1,223.5 a dollar, down 36.5 won from Wednesday's close of 1,187.0 a dollar, as offshore investors and importers bought the dollar.
The Japanese stock market closed sharply lower after it rebounded yesterday, ending a four-day losing streak. The market started off higher, but turned lower soon after the U.S. Senate approved a revised rescue package for the beleaguered U.S. banks.
The benchmark Nikkei 225 Average ended the day 1.9% lower at 11,154.76, its lowest finish in more than three years, while the broader Topix index lost 2.2% to 1,076.97. Both benchmarks had advanced earlier in the day.
On the economic front, the monetary base in Japan climbed 0.9% on year in September to 88.37 trillion yen, the Bank of Japan said Thursday. That followed a 0.2% annual decline in August and a 0.7% fall in July. On a seasonally adjusted basis, the monetary base soared 15.8% on year in September, standing at 89.398 trillion yen. That followed a 5.7% annual increase in August.
Meanwhile, the Ministry of Finance said that Japanese investors purchased a net 114.8 billion yen in foreign stocks for the week ended 26 September 2008. They also bought a net 361.0 billion yen in foreign bonds and notes during the same period. Meanwhile, foreign investors sold a net 236.8 billion yen in Japanese stocks, and they also unloaded a net 1.1 trillion yen in Japanese bonds and notes.
In Hong Kong, the Hang Seng Index finished 1.1% higher at 18,211.11, after sliding as low as 17,631.70 earlier in the day. The Hang Seng China Enterprises Index ended up 2.9% at 9,331.05.
The Australian stock market finished volatile trading session lower after it ended a four-day losing streak on Wednesday. The market started off firm, but turned lower after the U.S. Senate passed a revised rescue plan.
The benchmark S&P/ASX 200 index closed down 33.5 points or 0.7% at 4,761.1 after surging 4.22% on Wednesday. The broader All Ordinaries index lost 40.4 points or 0.8% to finish at 4,774.1.
On the economic front, Australia's trade surplus was A$1.36 billion in September, far above the consensus forecast that called for a surplus of A$200 million. It also represented the largest surplus since June 1997. Exports rose 6% to A$24.61 billion, while imports declined 2% to A$23.25 billion.
The New Zealand stock market closed higher, extending gains for the second consecutive trading session. The market started off higher, despite a weak lead form Wall Street, and finished the session in positive territory though most of the regional markets turned weak following news that the U.S. Senate has voted in favor of a bailout plan. The benchmark NZX 50 index closed up 44.68 points or 1.38% at 3,232.64 and the broader NZX All Capital index advanced 45.75 points or 1.40% to finish at 3,260.62.
On the economic front, New Zealand's commodity export price index fell by the most in 21 years in September, led by dairy, aluminium and beef, ANZ National Bank said in a report. The index dropped 4.9% from August when it fell 3.3%. Prices declined 1.9% from a year earlier.
The South Korean stocks closed lower for the fifth straight trading session on Thursday, as growing concerns over the global economy offset the positive outcome of a vote Wednesday in the U.S. Senate on the revised U.S. financial sector bailout bill. The benchmark Korea Composite Stock Price Index or KOSPI fell 20.02 points or 1.39% to finish at 1,419.65.
Stock markets on mainland China are closed this week for National Day holidays, while Indian markets were also closed on the account of National holiday.
Elsewhere, Taiwan's Taiex gave up 1.1% to 5,703.72 while Singapore's Straits Times Index also wavered between gains and losses, and was recently up 0.2% at 2,363.60.
In other regional market, European shares climbed after the U.S. Senate approved a revised $700 billion rescue plan for the financial sector and UBS said that it would report a quarterly profit, as investors wait for a decision on interest rates from the European Central Bank.
In the opening trade, the U.K. FTSE 100 index rose 0.9% to 5,005.91, the French CAC-40 index advanced 1.1% to 4,100.63 and the German DAX 30 index traded up 0.9% at 5,856.43.