Jobless claims fall, leading indicator slips

A surprise drop in the number of new claims filed for jobless aid pointed to a healthy U.S. labor market, but a forward-looking measure of the economy showed momentum has slowed, data released on Thursday showed.

Initial filings for state unemployment insurance aid fell for the third straight week and to the lowest in six weeks, dropping to 316,000 in the week ended March 17 from an upwardly revised 320,000 for the prior week, the Labor Department said.

Jobless claims are at a level economists see as consistent with steady employment growth.

"The data hints that March's payroll numbers will be stronger than a weather-depressed February," said David Sloan, an economist for 4CAST Ltd.

In February, the U.S. economy added 97,000 jobs, the smallest gain in two years, with weather taking its toll. Construction employment fell 62,000, probably prompted in part by cold and stormy weather in much of the country.

Thursday's data had no impact on the U.S. Treasury market as investors focused instead on taking profits following Wednesday's hefty rally after the
Federal Reserve in a statement on its policy meeting dropped an explicit reference to the possibility of future interest rate increases.

The Fed kept its benchmark federal funds rate unchanged at 5.25 percent at its meeting on Wednesday, as expected.

In a separate report, the private
Conference Board said its Composite Index of Leading Economic Indicators fell 0.5 percent in February following a 0.3 percent drop in January and 0.7 percent rise in December.

"Despite declines in both January and February, the cumulative change over the past six months remains positive," Ken Goldstein, labor economist at the Conference Board, said in a statement.

"The housing and manufacturing sectors are clearing going through a correction, but the consumer sector appears to be holding up. That mix should generate moderate but choppy growth ahead," Goldstein said.

In the weekly jobless report, there were no special factors behind the decline in new claims, which fell to their lowest level since the week ended February 3, a Labor Department analyst said.

"Claims will likely be volatile over the next few weeks as Easter approaches. The holiday falls eight days earlier this year than last, causing potentially significant problems for the seasonals," said Ian Shepherdson, chief U.S. economist for High Frequency Economics.

"Claims could easily drop sharply over the next couple of weeks before rebounding in early April," he said.

For a more conclusive picture of the job market, economists will have to wait until next month when the government releases its monthly payrolls report for March.

Analysts on Wall Street had expected claims, which provide a rough guide to the pace of layoffs, to rise to 324,000 from the 318,000 initially reported for the March 10 week.

A four-week moving average of claims, which smooths weekly volatility to provide a better sense of underlying job-market trends, also fell for the second straight week, dropping to 326,000 from 329,750 in the prior week.

The total number of unemployed still on the benefit rolls after drawing an initial week of aid fell 69,000 to 2.50 million in the week ended March 10, the latest period for which figures are available.

Investors beware as China charts consumer boom

China is on course to become the world's second-largest consumer market by 2015, but foreign firms looking to tap the retail boom must brace for a bumpy ride and possible price wars, Credit Suisse said on Friday.

Overseas firms now produce far more in China than they sell there, but that is likely to change as the economy comes to rely more on consumption than exports and investment to stoke its sizzling growth, the Zurich-based bank said in a new report.

Credit Suisse projects that the value of Chinese consumption will hit $8.8 trillion by 2020, fueled partly by a 5 percent yearly appreciation in the yuan between now and then.

That would take the Chinese currency to 3.9 to the dollar from 7.73 now.

By 2015, only the United States will be a bigger consumer market.

But devising winning strategies could prove tough amid shifting spending patterns, falling prices for some products and the fact that personal incomes are lagging economic growth.

"The potential of the market is huge," said Vincent Chan, the bank's head of China research. "However, the execution in the process could be tricky," Chen, who penned the report, told a news conference.

Foreign companies such as Coca-Cola Co. (NYSE:KO - news), Nestle (NESN.VX), Procter & Gamble (NYSE:PG - news) and, Swatch (UHR.VX) (UHRN.VX) appeared well-placed to ride the unfolding consumer boom, the report said.

Luxury retailers like LVMH (LVMH.PA), whose handbags are coveted by a small but growing group of super-rich, should benefit given their relatively low advertising overheads.

But companies seeking inroads into the mass market needed to adapt their products to local tastes and be prepared to slash prices to cope with fierce competition, Chan said.

Outsiders would probably find it harder to break into the services sector, where Chinese companies have the upper hand because of their cultural know-how, he said.

Credit Suisse's third China Consumer Survey, based on a 2006 survey of 2,700 respondents in 8 cities, sheds light on spending and saving trends in the world's most populous nation.

As in previous years, the survey concludes that households generally save or invest a quarter of their total income and spend almost the same proportion on food.

Consumers between the ages of 20 and 29, who enjoy the most buoyant income growth, tend to splash out more on clothes and entertainment, making them the prime target group for China-bound retailers.

Some of the country's consumer dynamics are shifting, the report finds: the appetite for electronic goods such as digital cameras and mobile phones is waning, while confidence in the quality of local cosmetics is growing.

As many as 75 percent of those surveyed indicated a reluctance to pay more for foreign cosmetics, up from 62 percent in 2005 and 50 percent in 2004.

More Chinese are traveling, with 52 percent of respondents saying they took a flight in 2006 compared with 48 percent in 2005. The survey found that Southeast Asia is losing popularity to Europe and East Asia as a holiday destination.

IMF: Global economy on track for growth

The global economy is still on track for healthy growth despite the adverse impact on U.S. business prospects of a housing slump and skittishness about risky mortgages, the head of the
International Monetary Fund said Friday.

IMF chief Rodrigo de Rato said the international lending institution expects worldwide economic growth for all of this year to clock in at close to 5 percent.

"This would be the strongest five-year span for the global economy since the late 1960s," he said in prepared remarks to the University of Pennsylvania's Wharton School in Philadelphia.

Even though economic growth in the United States_ the world's largest economy_ is slowing, business growth in other parts of the world is moving ahead, he said.

"In the Euro area growth momentum looks solid," de Rato said. "Japan's economy seems to have regained its footing. China and India continue to be engines of growth."

The recent turbulence in financial markets in the United States and abroad reflected a "reappraisal of risk" as investors contemplated, among other things, the odds of an economic slowdown in the United States, problems in the U.S. mortgage market and the risks in currency trading, involving the Japanese yen, de Rato said.

Those were some of the factors behind the Feb. 27 swoon in stock markets around the world. The Dow Jones industrials that day alone suffered a gut-wrenching 416-point plunge.

De Rato said investor concern is not in itself a bad thing.

"The most dangerous time in financial markets is when no one believes that they can lose," he said. "Recent movements in markets, despite their costs, will at least help to reduce any such complacency."

Still, he said, troubles in the United States involving lenders who made mortgages to people with blemished credit histories bears close watching and could have implicatons for the global economy.

Delinquencies and foreclosures for such risky mortgages are spiking in the United States. That has battered lenders of these so-called subprime mortgages, rattled investors and ignited criticism of regulators from lawmakers on Capitol Hill.

Existing home sales rise unexpectedly in Feb

The pace of U.S. existing-home sales rose unexpectedly in February, but inventories of unsold homes also gained, according to a report on Friday that offered mixed news on the downtrodden housing sector.
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The National Association of Realtors said existing-home sales increased 3.9 percent to a 6.69 million-unit annual rate, the biggest gain since March 2004, as mild weather earlier in the winter spurred home buying.

Wall Street economists were expecting existing-home sales to slide to a 6.31 million-unit pace.

Wall Street economists were expecting existing-home sales to slide to a 6.31 million-unit pace.

In a sign that a wave of foreclosures in mortgages to borrowers with weak credit will impair the recovery of the housing market, the Realtors forecast sales declines of as much as 250,000 units annually among subprime borrowers over the next two years. This would be roughly 3 percent of overall home sales.

"Does that postpone the recovery in housing? Probably not. Does it slow the recovery in housing? Yes," NAR Chief Economist David Lereah told reporters. "Our numbers will not be as high as we thought they would be without the subprime mess."

Prices for U.S. government bonds slipped and the dollar rose on the better-than-expected sales performance, which was seen as diminishing the chances the
Federal Reserve would lower interest rates by mid-year.

February marked the third straight month existing homes sales had increased. It was the first time sales had risen three months in a row since the period ended in June 2004.

However, the February gain reflected a 14.2 percent rise in existing home sales in the Northeast, which Lereah said was likely the result of unseasonably warm temperatures in December and January. Existing home sales are recorded on closings of sales that typically lag the signing of a contract by four to six weeks.

Economists said a return to more seasonable weather would be needed before the underlying healthy of the slumping U.S. housing sector would become apparent.

"You will have to roll into March and April to get a good feel for the strength of the housing market," said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida.

Further clouding the picture, inventories of unsold homes on the market rose 5.9 percent to 3.748 million units. That represented a 6.7 months' supply at the current sales pace, up from 6.6 months' worth in January.

"We think the housing market will be a drag on the economy for most of this year," said Gary Thayer, chief economist, A.G. Edwards and Sons in St. Louis.

Falling prices have helped support sales. In February, the median existing home sales price was $212,800, up 0.9 percent from January but off 1.3 percent from a year ago. It was the seventh straight month in which prices were down on a year-over-year basis.

Existing home sales rise 3.9 percent

Sales of existing homes rose in February by the largest amount in nearly three years, but worsening troubles in subprime mortgages were viewed as a roadblock to a full-fledged rebound. The National Association of Realtors reported Friday that existing home sales climbed 3.9 percent last month, pushed up by a milder-than-normal winter that boosted sales in areas of the country such as the Northeast.

It was the biggest one-month gain since March 2004 and left sales at an annual rate of 6.69 million units, a pace that was still 3.6 percent below a year ago.

On Wall Street, the Dow Jones industrial average rose by 19.87 points to close at 12,481.01 as investors were encouraged by the better-than-expected showing on home sales.

Even with the improvement in sales, the median price of a home kept falling, dropping to $212,800 in February, down 1.3 percent from a year earlier. It marked a record seventh straight decline in prices compared with the same month a year earlier.

The price weakness was a far cry from the double-digit price increases recorded during housing's boom years.

After five years in which sales set new records, sales of existing homes dropped by 8.5 percent last year, the biggest annual decline in 17 years.

Many economists believe housing sales will fall again this year as the housing industry continues to work through an adjustment following a boom fueled by the lowest mortgage rates in four decades and speculative frenzy as investors rushed to cash in on soaring real estate prices.

Economists are now concerned that rising defaults in subprime mortgages, those offered to borrowers with weak credit, will trigger tighter lending standards that will make it harder for new buyers to qualify for loans. As borrowers default on their mortgages, more properties will be dumped onto an already glutted market.

"The subprime mortgage market has taken a beating because of an unexpected surge in defaults," said Patrick Newport, an economist at Global Insight. He predicted home prices will fall in 2007, which would be the first decline on an annual basis on record.

By region of the country, existing home sales were up 14.2 percent in the Northeast, a gain attributed in large part to warmer-than-normal weather.

Sales also were up in the Midwest, a gain of 3.9 percent, and 1.6 percent in the South. Sales were unchanged in the West, which analysts blamed in part on a reluctance by sellers there to cut prices to attract buyers.

KB Home, one of the nation's largest home builders, reported Thursday that its profits for the first quarter had plunged and it warned of continuing pressure on profits for the rest of the year because of such factors as near-record levels of unsold homes and lenders tightening standards.

The Realtors' report said the inventory of unsold homes rose to 3.75 million units, up by 5.9 percent from the January level.

Senate Banking Committee members at a hearing on Thursday criticized the
Federal Reserve for not doing more to regulate risky lending practices during the housing boom. Roger Cole, the Fed's director of banking supervision, testified that "given what we know now, yes, we could have done more sooner."

The troubles with subprime lending companies helped to trigger a 416-point drop in the Dow Jones industrial average on Feb. 27 as financial markets worried that housing problems could become severe enough to push the country into a recession.

This week, the Federal Reserve triggered an upturn on Wall Street by signaling that it would consider cutting interest rates if necessary to rescue a faltering economy.

Newport said he believed housing would trim about 1.1 percentage points from overall economic growth this year, a slightly bigger impact than Global Insight had been forecasting a month ago.

David Lereah, the Realtors chief economist, said demand for homes could be cut by 150,000 to 200,000 annually over this year and 2008 because of the lending troubles.

"Our view is that the tightening in the subprime market will have a negative impact on home sales," Lereah said. "It probably won't postpone the recovery (in housing) but it will slow it."

Even with subprime market problems, Lereah said he believed the upturn in sales will be sustainable and the data will show that housing hit bottom in September last year and is now in a period of rebounding.

Path Solutions voted as the Best Islamic Finance Technology Provider

Path Solutions has beaten off stiff competition to scoop the award of the 2006 Best Islamic Banks Poll and the 2006 Deals of the Year as designated by readers of the industry’s leading Islamic capital markets focused publication Islamic Finance News (IFN).

Path Solutions and MRL Financial co-sponsored the inaugural annual awards ceremony and dinner organized by RedMoney, and held on the 12th March 2007 at the Shangri-La Hotel in Dubai.

“We’re thrilled that Path Solutions is making its mark at the top of this highly competitive segment”, said Naji Moukadam, President of Path Solutions.

The win comes after a great year for Path, which included the signing with more than 8 Islamic financial institutions and the launch of several new Sharia compliant products to its customers.

“2006 has been a fantastic year for Path Solutions and the award really is the icing on the cake”, added Mr. Moukadam. “The Best Islamic Banks Poll and the 2006 Deals of the Year prize is hugely pleasing because it was achieved through customers’ survey enjoying our services enough to cast their vote. I would like to thank everyone who voted, and our staff for giving our clients such award-winning technologies.”

Some two hundred guests attended the ceremony in Dubai, which will take place again in Malaysia later this month for partners from the Far East and South East Asia.

Standard Chartered wins four islamic banking awards at Islamic Finance News Awards 2007

Standard Chartered, a leading international bank in the UAE, received four distinguished awards for Islamic Banking excellence during an award ceremony held by Islamic Finance News at Shangri-La Hotel in Dubai Monday 12th March.

Standard Chartered’s strong expertise in structuring customised Islamic financial solutions catering to customer needs and complying with Shariah principles was recognised by the organisers and ensured Standard Chartered’s recognition at the awards ceremony.

Standard Chartered was presented with awards for:-

Musharakah Deal of the Year - Qatar Real Estate Investment Company Sukuk; Qatar Deal of the Year - Qatar Real Estate Investment Company Sukuk; Pakistan Deal of the Year - Sitara Chemicals Industry Ltd. Sukuk; and the Corporate Finance Deal of the Year - Kuwait Finance House Syndicated Facility.

“Standard Chartered has a reputation for innovation in Islamic Banking, and it’s our ambition to become known as the best Islamic International Bank in the world,” said Afaq Khan, CEO Islamic Banking Standard Chartered. “We currently lead the marketplace by being the first bank to devise product solutions that transcend industry segments as well as geographies, and that comply with Shariah principles.”

These principles were demonstrated in the Bank’s execution of numerous notable deals throughout the last 12 months, several of which were industry firsts. The Qatar Real Estate Investment Company (QREIC) Sukuk transaction, for example, is the longest tenor sukuk issue (ten years) to be issued in the international market and is the first corporate Sukuk to be issued out of the State of Qatar.

Another landmark deal for Standard Chartered was the Sitara Chemicals Industries Limited (SCIL) Sukuk in Pakistan, which saw the Bank appointed as the Lead Manager and Sole Bookrunner for the first local currency sukuk to be issued by a local corporate in the country. This was also Standard Chartered’s first sukuk issue in this market.

“A diminishing Musharaka structure was used as the basic structure for this transaction,” explains Ahsan Ali, Head of Islamic Origination. “The success of this transaction has significantly raised Standard Chartered’s profile as a provider of innovative Islamic capital markets solutions, exemplified by other corporates in Pakistan now using this as a model for similar sukuk issuances.”

Other notable deals in the Islamic banking field from Standard Chartered include the first Islamic profit swap deal in South East Asia with Bank Muamalat; the first commodity Murabaha facility in Singapore with BAITAK Asia Real Estate Fund and the first syndication facility for Kuwait Finance House, the world’s second largest Islamic bank.

“The Islamic banking industry is going from strength-to-strength,” added Afaq Khan. “We have identified this industry as a key emerging market. Robust Islamic products have exactly the same risk and reward dynamics that are required by Standard Chartered, global banking and international regulatory standards. Standard Chartered Islamic Banking has significantly grown in the last 12 months and we’re on track to continue to grow the business, it’s our aim to assist our customers to tap into this potential.”

With over 150 years of international experience in the banking and financial sector, Standard Chartered has developed a comprehensive portfolio of Islamic products including basic transactional banking, FX and ALM, sukuks, syndications, structured finance, structured trade finance as well as Islamic TrAin and Derivatives (profit rate swap, cross currency swap, forward rate agreement).

The Bank’s strong network across the Middle East, Asia and Africa uniquely place it to arrange seamless global transactions for customers.

Notes and contacts

About Standard Chartered - leading the way in Asia, Africa and the Middle East

Standard Chartered PLC is listed on both the London Stock Exchange and the Hong Kong Stock Exchange and is consistently ranked in the top 25 among FTSE-100 companies by market capitalisation.

Standard Chartered has a history of over 150 years in banking and operates in many of the world’s fastest-growing markets with an extensive global network of over 1,400 branches (including subsidiaries, associates and joint ventures) in over 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the Americas.

As one of the world’s most international banks, Standard Chartered employs almost 60,000 people, representing over 100 nationalities, worldwide. This diversity lies at the heart of the Bank’s values and supports the Bank’s growth as the world increasingly becomes one market.

With strong organic growth supported by strategic alliances and acquisitions and driven by its strengths in the balance and diversity of its business, products, geography and people, Standard Chartered is well positioned in the emerging trade corridors of Asia, Africa and the Middle East.

Standard Chartered derives over 90 per cent of profits from Asia, Africa and the Middle East. Serving both Consumer and Wholesale Banking customers worldwide, the Bank combines deep local knowledge with global capability to offer a wide range of innovative products and services as well as award-winning solutions.

Trusted across its network for its standard of governance and corporate responsibility, Standard Chartered takes a long term view of the consequences of its actions to ensure that the Bank builds a sustainable business through social inclusion, environmental protection and good governance.

Standard Chartered is also committed to all its stakeholders by living its values in its approach towards managing its people, exceeding expectations of its customers, making a difference in communities and working with regulators.
Contact Details

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Kelly Smith

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Actionprgroup

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Banks get religion to lure Muslims

Banks used to offer free coffee mugs to attract customers. In the Middle East, Malaysia and Europe, a new crop of Islamic banks is luring customers by offering “divine rewards” that include trips to the Muslim holy city of Mecca.

“Reward points, bonus points or mileage points simply don’t compare with the divine rewards that come with the Al Islami credit cards,” Dubai Islamic Bank said in recent newspaper advertisements.

Even for those hardened to advertisers’ gimmicks, the link between God and credit cards would be enough to raise the eyebrow of any potential bank customer. But on closer investigation “divine rewards” turns out to be a misnomer for the bank’s loyalty program: You get a partial refund on the card’s fees — if you pay the bills on time.

Islamic banking was once viewed as a phenomenon of a few conservative Arab countries, but now the practice is bursting out of its traditional market and luring customers by offering the mundane banking products with a Muslim twist.

Abu Dhabi’s First Gulf Bank has upped the ante with its “Makkah” credit card. Named after Mecca, the holiest city in Islam, big spenders will eventually earn enough reward points to earn a flight to the Saudi Arabian city. Unfortunately, it can’t be used for the Hajj, the period of the year when millions of Muslims cram into the holy city to complete the journey they must do at least once in their lives.

The chief difference between Islamic and traditional banking is that Islamic banks work to avoid the Muslim ban on charging or paying interest, usually by substituting a fee. Islamic versions of credit cards, personal finance, savings and checking accounts, mortgages and bonds are now available which comply with Islamic law, or Sharia.

“It’s very important for me to open an account in this bank because they don’t take interest. As a Muslim, it’s the most important thing,” said Atta Hassan el-Atta, a Dubai-based customer of Dubai Islamic Bank.

Another goal at the top of the Islamic bankers’ agenda is ethical investment. Banks want to ensure their money won’t be funding activities that don’t sit well with Islamic theology, such as businesses involved with alcohol, gambling, pork, weapons or usury.

An International Monetary Fund study found the number of purely Islamic institutions has soared from 75 in 1975 to over 300 in 2005, and that figure doesn’t even include the wealth of western financial companies that are now dealing in Islamic products.

There’s even Islamic insurance. The principles are different, based on a system of mutual assistance the customer joins a collective pool of funds can be used by those who need it.

Islamic scholars feel that conventional insurance schemes involve an element of uncertainty, which is like gambling. Conventional insurance companies also like to put their money in interest gathering investments, which means it’s out of bounds for a strict Muslim.

Globally the Islamic insurance market is estimated to be worth $2 billion, but premiums are expected to reach nearly four times that figure by 2015, according to Zawya.com, a Middle East business information site.

Islamic banking is most dominant in the seven countries of the Arabian Peninsula, led by Saudi Arabia. More than 30 percent of Saudi bank assets are classified as Shariah compliant and the figures for other Gulf states range from 10 to 20 percent according to British-based Islamic Banking and Finance magazine.

Saudi’s Al Rajhi Bank is currently the world’s largest, followed by Kuwait Finance House. Dubai Islamic Bank is No. 3, according to Zawya’s rankings.

The Dubai International Financial Center, a bank enclave governed by western-style financial laws, predicts Islamic banking will quickly carve out a huge share of the global market. The Dubai center estimates that as much as 50 percent or more of the savings of the world’s 1.2 billion Muslims could be held as religiously compliant products within the next decade.

Traditional banks are also getting in on the Islamic banking trend. American and European banks are offering Islamic products to hang onto their clients and capture a share of the booming market.

Lloyds TSB kicked off its Islamic banking services two years ago in five branches in Britain. Now, those services are available in 1,900 branches, said bank spokesman Emile abu-Shakra.

Even Wall Street stalwarts like Morgan Stanley are jumping in, developing sophisticated Islamic instruments that involve securitization, or borrowing against a company’s future revenue. This normally involves interest bearing investments. That’s quite a step forward considering they were recently struggling to come up with financial products as simple as savings accounts.

Dow Jones has compiled 60 indexes that track sharia-compliant investments.

“As more Western institutions get involved in Islamic finance, it’s going to raise the profile, to the point of a parallel system,” said Rushdi Siddiqui, New York-based global director of the Dow Jones Islamic Market Index.