Investments In Equity Securities
The accounting for investments is dependant on the amount of control the buyer has on the business obtained. If the buyer does not have significant influence (i.e, has significantly less than 20% of the stock), investments are accounted for using cost with year-end adjustements to fair value. Dividends received are documented as dividend income. The equity method assumes that the investor can exercise significant impact over the business. This is normally presumed when the investor owns more than 20% of the stock. When the company reviews their income/loss, the investor reports their talk about of the income/reduction as an increase/lower in the investment account. When the ongoing company declares a dividend, the buyer reduces the quantity of their investment take into account the quantity of the dividend. No fair-value adjustment is made at year end under the equity method.
On the FX aspect, the USD-HKD 6M and 12M forwards have continued to be range-bound because the starting of 2010 after spiking higher at the end of December due to seasonal factors. In December 2009 printed 10 CPI inflation.5% y/y, lower than market expectations of 11 significantly.8% y/y, on lower oil and food prices.
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Headline CPI declined by 0.5% m/m as the federal government reduced prices of petroleum products consistent with international markets and prices of key food goods – including vegetables, rice, and chicken products – also declined. For December Follow poorer-than-expected US non-farm payrolls, the SGD rates markets started Monday with strong getting interest.
The IRS curve shifted reduced a parallel to somewhat steeper fashion, as the SGS curve steepened amid sellers at the long end; the last mentioned was a function of 15Y source at end-February probably. USD-SGD is trading with much tone good sharp downward move in USD-AXJ.
However, the Singapore buck (SGD) continues to underperform local currencies. Short-term technicals for USD-SGD are bearish, although stochastics have joined oversold place. The surge in Ghanaian connection produces throughout 2009 prevented the central loan company from issuing notes beyond 1Y, placing pressure on short-term produces and raising the risk of debts rollover.
Hence, we expect the new 3Y connection public sale to help convenience yields over the curve as the BoG reduces the amount available on shorter-term records. Last Friday’s T-bill auction was again well-received, with only GHS 156mn on offer; produces eased by another 64bps and 87bps, respectively, on the 91- and 182-day T-bills. In December GCC rates arrived of their slim trading range, with both the AED and SAR swap curves bearish steepening based on the US curve.
Late Friday, the federal government of Venezuela announced a devaluation of the currency, the Venezuelan bolivar (VEF), from the existing 2.15 per USD and the creation of a two-tier recognized exchange rate system. On Monday 11 January The brand new system had taken effect. One exchange rate of 4.30 VEF per USD will be in place for exports and import of most goods, including oil.
The alternate rate of 2.60 VEF per USD shall apply to concern imports such as food, medicine, and capital goods. In addition, the federal government announced that the central lender would transfer USD 7bn from the FX reserves to the off-budget FONDEN accounts. Markets assumed that this was a positive for debt-service payments, on Fri and on Mon morning hours which boosted the price tag on Venezuelan government bonds.
On the surface, the devaluation is an advantage for the fiscal accounts, as the general public sector is naturally long USD since Venezuela is an essential oil exporter. State oil company PDVSA will now receive twice the quantity of local currency per USD from oil exports. As PDVSA is a major source of government revenue, the public-sector balance sheet is much improved.