Emerging markets lead deposits, borrowing<\/p>\n
Agence France-Presse, Basel, Switzerland<\/p>\n
Emerging market countries, notably in Asia, are proving to be
\namong the most active international borrowers this year as well
\nas the leading depositors in overseas banks, the Bank for
\nInternational Settlements said on Monday in its quarterly report.<\/p>\n
The BIS, which acts as a central bank for national central
\nbanks, said the issuance of international debt securities
\nremained robust in the second quarter of 2004, bolstered by a
\nrecovering global economy and an easing in investor concern about
\nthe impact of higher interest rates.<\/p>\n
New debt issuances surpassed repayments in the April-June
\nperiod by US$348 billion, although that figure was overshadowed
\nby the $521 billion in net issuances in the first quarter.<\/p>\n
The report also predicted that \"corporate borrowing could pick
\nup in the near future\" in response to a slowdown in corporate
\nprofit growth.<\/p>\n
\"With profit growth now beginning to slow, corporations'
\nborrowing requirements are likely to increase if the rebound in
\ncapital investment, which began in mid-2003, persists.\"<\/p>\n
It noted that debt carried in commercial paper by non-
\nfinancial corporations in the United States and the eurozone had
\nrecovered in the first half of 2004 from its 2003 levels.<\/p>\n
Overall, however, new borrowing by companies in the United
\nStates, Europe and Japan was described as \"restrained\" in the
\nfirst half of 2004. U.S. corporate bond issuance was down 15
\npercent compared with the same period last year, while in the
\neurozone it was 40 percent weaker.<\/p>\n
That trend was offset by activity in emerging market
\ncountries, according to the report, where \"the pace of
\nborrowing ... in international bond and syndicated loan markets
\nshowed no sign of slowing, with $23 billion raised in July
\nalone\".<\/p>\n
The BIS said Asian borrowers were particularly evident,
\nnotably export-orientated firms in South Korea and Taiwan.<\/p>\n
Emerging market economies also posted a record expansion in
\ndeposits placed in BIS reporting banks during the first quarter
\nof the year.<\/p>\n
Banks primarily in the Asia-Pacific region, the Middle East
\nand Africa deposited a record $97 billion in BIS banks. The surge
\nin deposits eclipsed credit issued to all sectors in emerging
\nmarket countries, leaving a net outflow of funds of $34 billion,
\nthe largest since first quarter 2001.<\/p>\n
The largest placement of overseas deposits came from banks in
\nSouth Korea, India, China and to a lesser degree Malaysia,
\naccording to the report.<\/p>\n
The study also found that oil market participants considered
\nto be speculators had recently raised their profile. It cited
\ndata from the U.S. Commodity Futures Trading Commission showing
\nthat non-commercial traders -- such as investment banks and hedge
\nfunds -- had \"sharply increased their long positions in
\nexpectation of a rise in oil prices\".<\/p>\n
The commission defines commercial, non-speculative oil traders
\nas those who seek primarily to hedge production or consumption.<\/p>\n
\"It is possible that the larger presence of non-commercial
\ntraders in the oil market contributed to herd-like behavior,\" the
\nBIS study observed.<\/p>\n
\"Their presence, coupled with the upward trend in oil prices,
\nmight have made traders wary of positioning against further
\nincreases in oil prices, thereby effectively reinforcing the
\nupward trend.\"<\/p>\n
But the report said recent market fluctuations could also have
\nreflected concern over imbalances on supply and demand for oil.<\/p>",
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