The meeting, initiated by French President Nicholas Sarkozy, focused on balancing global economic trade crisis by reducing the world’s reliance on the Greenback and increasing the yuan’s weight in the international monetary system to limit the risk of another financial crisis.
However, China must first uphold flexible exchange rate systems and free capital flows before its currency can join the IMF’s basket, conditions it has yet to meet, US Treasury Secretary Timothy Geithner said. His comments came after the HSBC China Manufacturing Purchasing Managers’ Index (PMI) registered muted progress in Chinese production output for the month of March. The index rose a mere 0.1 points to 51.8 after eight months of continued growth, revealing a weaker rise in new businesses on supply shortages and inflation, HSBC said.
Nevertheless, the Bank of China Hong Kong has cut its annual interest rates for yuan deposits in Hong Kong to 0.629% from 0.865% following a record 10% rise in bank deposits to RMB407.7 billion ($78.6 billion) in February, the Hong Kong Monetary Authority said. The rise reflects higher demand for the yuan and expectations that the currency will appreciate. The yuan has indeed gained 4.2% over the past year to hit 6.5456 per US dollar in Shanghai on April 1, its highest level in 17 years, but still low enough for US lawmakers to argue that the currency gives the world’s biggest exporter an unfair advantage in global trade.
Meanwhile, the local bourse remained subdued ahead of the US non-farm and unemployment report, the crisis in the Middle-east and North African region and ongoing concerns about Japan’s radiation woes. The IMF has since downgraded Japan’s 2011 growth forecast to 1.4% from 1.6% previously as the country prepares to seal four of its nuclear plant reactors at Fukushima damaged during the March 11 earthquake and tsunami, at a cost of more than 1 trillion yen ($15 billion) to the Tokyo Electric Power Company, according to analysts’ estimates. The Japanese government now plans to take control of TEPCO by injecting public funds into it.
Against this backdrop of global uncertainty, local brokerage UOB KayHian recommends that investors seek refuge in high-yielding, ex-dividend status stocks even as the market continues to stay choppy. After falling 3.5% to 2,935.78 on March 18 after the earthquake, the benchmark Straits Times Index is now up 6.3%, closing April 1 at 3,120.47. “Despite the volatile market, some companies are going ex-dividend in the coming months with significant ordinary and special dividend pay-outs yielding up to 10%,” UOB says in a note to investors.
Based on a list of stocks going ex-dividend in April prepared by UOB on March 31, telecommunications solutions provider Nera Telecom will pay out a dividend of 4 cents a share on April 26, representing the highest yield on the list at 9.76%. Nera Tel trades at 41 cents and has a market cap of $145 million. Meanwhile, electronics company Elec & Eltek -- which trades at US$3.39 each with a market cap of US$626 million ($790 million) -- will pay a dividend of US 25 cents per share on April 4, representing a yield of 7.37%.
Other companies that will trade ex-dividend this month include printed circuit board manufacturer CEI Contract Manufacturing at a yield of 6.93% on April 19, mechanical engineer Mun Siong at 5% on April 27, technology equipment supplier Frencken Group at 4.8% on April 29 as well as M1 at a yield of 4.63% on April 11. Other larger blue-chip companies due to pay dividends include rig builders Sembcorp Marine and Keppel Corporation as well as Sembcorp Industries, Keppel Land, ST Engineering and ComfortDelgro Corp at yields of between 1.77% and 5.35%.
Weekend Comment April 1: High-yield stocks for troubled times
Friday, 01 April 2011
Friday, 01 April 2011
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