Subscribe free to our newsletters via your
. Energy News .

Fitch cuts ratings on Panasonic, Sony to junk
by Staff Writers
Tokyo (AFP) Nov 22, 2012

China manufacturing grows in November: HSBC
Beijing (AFP) Nov 22, 2012 - China's manufacturing activity grew in November for the first time in 13 months, HSBC said Thursday, in a further sign of strength in the world's second-largest economy after a marked slowdown.

The preliminary purchasing managers' index (PMI) released by the British banking giant hit 50.4 this month, up from a final 49.5 in October, after 12 consecutive months in negative territory.

A reading above 50 indicates growth in the key sector, while one below signals contraction.

The index, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of the economy.

November's figure was the first time since October 2011 that the indicator showed expansion and suggested a revving up in China's economy, where growth has slowed for seven straight quarters.

It comes after China's official purchasing managers' index rose, announced earlier this month, rose to 50.2 in October from 49.8 in September for the first expansion in three months.

"This confirms that the economic recovery continues to gain momentum towards the year end," Qu Hongbin, HSBC's chief economist for China, said in the bank's release announcing the figure.

"However, it is still the early stage of recovery and global economic growth remains fragile. This calls for a continuation of policy easing to strengthen the recovery."

China's economic growth hit a more than three-year low of 7.4 percent in the three months to September, but recent data has fuelled optimism that the worst is over.

Exports, industrial production, retail sales and fixed asset investment -- a key gauge of infrastructure spending -- have all shown improvement.

The rosier outlook comes as China concluded an overhaul of the Communist Party's top leadership last week.

Vice President Xi Jinping took the reigns of the party from President Hu Jintao, whom he is also scheduled to replace as state president in March.

Authorities have cut interest rates twice this year and have also reduced the amount of funds banks must keep in reserve three times since December to encourage lending.

J.P.Morgan economists Zhu Haibin and Grace Ng said that the result of the preliminary November PMI was due to positive effects from Beijing's efforts to prod growth.

They cautioned, however, that the external outlook is still a cause for concern.

"Global demand conditions going into early next year remain uncertain," they wrote in a research note.

The possibility of automatic spending cuts and tax increases in the United States -- the so-called fiscal cliff -- and the euro zone's ongoing debt problems "remain a key risk factor in China's road of economic recovery going into next year," they said.

HSBC said it would release its final November PMI data on December 3. China's official PMI for November comes out on December 1.

Japan's embattled electronics sector suffered another blow on Thursday as ratings agency Fitch downgraded industry titans Sony and Panasonic to junk status for the first time.

The agency slapped a speculative rating on each firm, pointing to their weak balance sheets and declining position in the global electronics sector as they come up against stiff competition from overseas.

In the wake of huge losses, Panasonic, Sony and rival Sharp have announced massive corporate overhauls that include selling off divisions and tens of thousands of job cuts as their shares plunged.

Japan's electronics sector has suffered from myriad problems including a high yen, slowing demand in key export markets, fierce overseas competition and strategic mistakes that left their finances in ruins.

Panasonic has warned it is on track for a $9.6 billion annual loss, while Sony expects to eke out a small profit, after four years in the red.

On Thursday, Fitch said it cut Panasonic by two notches to BB, while it slashed Sony's rating by three notches to BB-, with both firms given a negative outlook.

The downgrades mean their debt was no longer considered a safe investment.

Panasonic and Sony have suffered downgrades by other global ratings agencies, but Thursday was the first time either saw their credit rating slashed to speculative grade.

Earlier this month Fitch cut Sharp's rating to junk, which followed a similar decision by Standard & Poor's.

Fitch said Thursday its downgrade of Panasonic was due to its "weakened competitiveness in its core businesses, particularly in TVs and panels, as well as weak cash generation from operations".

"It also reflects the agency's view that the company's financial profile is not likely to show a material improvement in the short to medium term," it added in a statement.

Panasonic's huge restructuring "will help gradually improve operating margins", Fitch said, but warned over the pace of any recovery.

It cast doubt on Sony's prospects, saying a "meaningful recovery will be slow, given the company's loss of technology leadership in key products, high competition, weak economic conditions in developed markets and the strong yen".

The downgrades were released after markets closed with Tokyo's benchmark Nikkei 225 index surging to its highest close in over six months Thursday on the back of a weaker yen.

"The (rating) action might impact the affected companies themselves, but I expect the overall market will not be brought down by that," said Kenji Shiotani, strategist at Daiwa Securities.

On Thursday, a senior executive at Sharp said a planned deal for Taiwan's Hon Hai Precision to buy about 10 percent of the Japanese firm was on hold amid Sharp's volatile share swings, as the firms haggle over a new purchase price.

The stock "needs to stabilise" before a deal can be clinched, the executive told reporters in Tokyo on condition of anonymity.

The agreement was announced before Sharp shares plunged earlier this year and trading has been volatile ever since, throwing a wrench into plans for the more than $800 million capital injection by Hon Hai, which makes Apple gadgets in China.

Japan's electronics giants have seen big losses in their television businesses owing to falling prices as they try to compete with lower-cost South Korean and Taiwanese rivals.

The high yen -- which hit record levels around 75 against the dollar last year and remains historically strong -- makes Japanese firms' products less competitive overseas. High labour costs at home have made it tough for the nation's electronics companies to compete globally.

They were also hit badly by a consumer boycott in China over a territorial row with Beijing, and a slump in manufacturing caused by last year's earthquake-tsunami as well as floods in Thailand where a number of factories are based.

Sony closed 1.83 percent higher at 834 yen in Tokyo trade on Thursday, tracking the market's rally, while Panasonic ended 0.74 percent higher at 407 yen.

In June, Sony shares tumbled below 1,000 yen for the first time since 1980 and the era of the Walkman.


Related Links
Global Trade News

Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks DiggDigg RedditReddit GoogleGoogle

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

Hundreds protest against Myanmar copper mine
Yangon (AFP) Nov 20, 2012
Hundreds of Myanmar villagers, students and monks have joined protests at a Chinese co-owned copper mine which they allege has forced people off their land and polluted the area, activists said Tuesday. In a protest unthinkable just last year when junta rule was replaced by a quasi-civilian government, locals at Monywa in the northern district of Sagaing set up camps near the mine. It is ... read more

Official "Green Tuesday" Launch November 27, 2012

Poland to invest 24 billion euros in energy by 2020

Analyzing the cost of federal and other renewable energy subsidies in Texas

High Risk Investing - The New Trend in Energy

Turks hike energy stake in Iraqi Kurdistan

New energy technologies promise brighter future

Oil prices ease amid Gaza truce, China data

Boston said riddled with natural gas leaks

Areva commits to Scotland turbine plant

AREVA deploys its industrial plan to produce a 100 percent French wind power technology

Gannets could be affected by offshore energy developments

Scotland approves 85MW Highlands wind farm

Continuation of Arenales solar power plant project secured

New American Chemical Society video series shines a light on transparent solar cells

Silicon Energy Announces Next Gen Solar Photovoltaics

Trina Solar offers certified Building Integrated PV solutions for residential and commercial roofs

Swiss nuclear reactor shuts down due to defect

Nano insights could lead to improved nuclear reactors

Coalition Reaffirm Commitments To Advance SMR Technology

Swiss nuclear reactor back up after closure over defect

Mixing processes could increase the impact of biofuel spills on aquatic environments

White rot fungus boosts ethanol production from corn stalks, cobs and leaves

14,000 Jobs Possible from Military Biofuels Initiative

Airbus, EADS and ENN make a push for new generation aviation fuels

Mr Xi in Space

China plans manned space launch in 2013: state media

China to launch manned spacecraft

Tiangong 1 Parked And Waiting As Shenzhou 10 Mission Prep Continues

CU-NOAA study shows summer climate change, mostly warming

Doubts as greenhouse gas leader hosts climate meet

Targets for limiting global warming further out of reach: UN

Climate change may increase Europe's north-south divide: EU

The content herein, unless otherwise known to be public domain, are Copyright 1995-2014 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement