Euro down against dollar

SINGAPORE - The euro fell against the dollar in Asia Thursday as euphoria over the US fiscal cliff deal gave way to concerns about future budgetary rows in Washington.

The single currency bought $1.3137 in afternoon Asian trade from $1.3184 in New York late Wednesday, while it was also at 114.62 yen from 115.13 yen.

The greenback traded at 87.25 yen from 87.32 yen.

The dollar lifted against the European unit as doubts emerged over the 11th-hour deal reached Wednesday to prevent the huge tax hikes and spending cuts kicking in that would have likely sent the economy into recession. "Currency traders may be positioning themselves for the troubles that lie ahead for the US economy as Congress confronts spending cuts in two months' time," IG Markets said in a report.

"Investors realised that the fiscal problem is far from over as the debate on raising the debt ceiling looms... we expect an uglier showdown than the tax issue," Phillip Futures stated in their own report.

Stock markets worldwide rallied after US lawmakers cobbled together a last-gasp deal to avert the fiscal cliff on New Year's Day.

However, while the plan saw tax rises for only the rich, lawmakers only delayed the imposition of spending cuts for two months, meaning another debilitating stand-off is almost certain at the end of February.

Other feuds yet to be addressed include lifting the US debt ceiling and funding government operations.

The International Monetary Fund also said Wednesday that US actions to avoid the fiscal cliff did not go far enough to address the country's long-term fiscal deficit and debt problems.

The dollar was mixed against Asia-Pacific currencies. It rose to 1,064.37 South Korean won from 1,064.24 won on Wednesday, to Sg$1.2221 from Sg$1.2207 and to 9,645 Indonesian rupiah from 9,630 rupiah.

However, it fell to 30.37 Thai baht from 30.55 baht and to 40.82 Philippine pesos from 40.90 pesos. The greenback was unchanged at 54.49 Indian rupees and Tw$29.01.

The Australian dollar bought $1.0491 from $1.0464 while China's yuan was at 13.99 yen from 13.98 yen.

Japan's Nikkei hits 22-month high

Japan's Nikkei share average climbed to a 22-month high on its first trading day of 2013, as a deal in Washington to avert the "fiscal cliff" buoyed investor risk appetite and the weaker yen lifted exporters such as Toyota.

The Nikkei ended up 2.8 per cent at 10,688.11, its highest close since March 4th, 2011. It was also the Nikkei's biggest daily percentage gain since March 22nd, 2011. Volume was high, with 3.41 billion shares changing hands on the board, compared with 2.85 billion shares traded in the final business week of 2012.

Exporters were in demand, with Toyota adding 6.4 per cent, Honda advancing 4 per cent and Canon gaining 2.4 per cent. "It's a relief that the US fiscal cliff was averted," said Hiroichi Nishi, general manager at SMBC Nikko Securities, noting that the market was cheering positive developments that happened while Japanese markets were closed for the New Year holidays this week.

"Exporters should benefit from a weaker yen on expectations that they will have strong forecasts for the next fiscal year."

On Wednesday, US president Barack Obama signed "fiscal cliff" legislation that raises tax rates for top earners and extends tax cuts for the middle class. The yen traded at 87.83 yen to the dollar this morning, its weakest since July 2010. A weaker yen inflates exporters' overseas earnings when repatriated.

Yasuo Sakuma, chief executive of Bayview Asset Management, said carmakers and consumer electronics such as Nikon and Canon would attract strong buying on the back of the weaker yen. "Among exporters, consumer products may outperform compared with, say, machinery makers," Mr Sakuma said.

"Investors prefer them to manufacturers like semiconductor manufacturing equipment, whose customers are companies that are still saving on capital spending."

European stock index futures pointed to a slightly lower open today as concerns that the US Federal Reserve may end its asset-buying programme
ahead of time curbed appetite for shares in the run up to key US jobs data.

Reuters 

GIC’s Lim Chow Kiat to Succeed Ng Kok Song as CIO Next Month

Government of Singapore Investment Corp., manager of more than $100 billion of the city’s reserves, named Lim Chow Kiat group chief investment officer as Ng Kok Song, who served the fund since 1986, retires.

Lim, currently Ng’s deputy, will assume his new role as of February, GIC said in a statement on its website. Ng will advise GIC as head of global investments and as a member of the fund’s international advisory board, according to the statement.

Lim, 42, joined GIC in 1993 and became head of the fixed income, currency and commodities department as well as deputy president of GIC Asset Management in 2008. From 2009 until 2011 he oversaw GIC’s investments and relationships in Europe, Africa and the Middle East. In April last year he became deputy group chief investment officer.

“Ng Kok Song has been a great influence in developing the professional investment capability of GIC,” Lim said in the statement. “My focus will be to build on that capability and ensure that the GIC investment process remains robust.”

Ng, 64, started as an investment analyst in Singapore’s ministry of finance in 1970. He joined GIC in 1986, five years after the fund’s inception, and headed the equities and bond department, according to the statement. When he assumed the newly created role of group chief investment officer in 2007, Ng was in charge of integrating GIC’s investment strategies in the public and private markets.

Higher Cash

GIC said in July its cash allocation almost quadrupled to 11 percent of its portfolio in the year ended March from 3 percent a year earlier. Stock holdings fell to 45 percent from 49 percent as it pared equities in developed markets, while bond investments dropped to 17 percent from 22 percent, it said in its annual report.

The so-called 20-year annualized real return was 3.9 percent as of March 2012, unchanged from the previous year, it said. The annualized nominal rate of return in U.S. dollar terms was 3.4 percent over five years, 7.6 percent over 10 years and 6.8 percent over 20 years, it said. The fund, which doesn’t report an annual return or disclose the actual size of its portfolio, will release its next performance figures in July.

GIC is ranked the eighth-largest government investment fund globally by the Sovereign Wealth Fund Institute, which estimates it manages $247.5 billion.

To contact the reporter on this story: Klaus Wille in Singapore at kwille@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net