Posts Tagged: china

 

France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.

The decision by the three European governments comes after Britain announced last week that it would join the $50bn Asian Infrastructure Investment Bank, a potential rival to the Washington-based World Bank.

Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of the new bank, has also said that it will now rethink that position.

The European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside and pushed for higher lending standards. >> Read More

 

Here we go: data just out from China show the country’s economy slowed in the first two months of the year across several closely-watched measures.

China has just released a trio of data readings covering January and February, the first two months of the year being coupled together to avoid Chinese New Year distortions obscuring how the economy is really performing. And the numbers aren’t great:

  • Retail sales rose 10.7 per cent year-on-year, versus expectations of an 11.6 per cent rise, according to the National Bureau of Statistics.
  • Industrial output rose 6.8 per cent year-on-year, versus expectations of a 7.7 per cent rise. It had risen a cumulative 8.3 per cent in December.
  • Urban fixed asset investment rose 13.9 per cent year-on-year, versus expectations of a 15 per cent rise.

Last week Chinese policymakers officially downgraded China’s growth target to “around 7 per cent”, from 7.5 per cent. GDP in the world’s second largest economy decelerated to 7.4 per cent last year — its lowest level since 1990.

World equity index hovers near record

26 February 2015 - 5:46 am
 

US and European stocks took a breather after their recent strong run but a gauge of global equity prices hovered near its highest ever level, as bulls focused on the prospect of continued policy accommodation from central banks.

Signs of a pick-up in China’s manufacturing sector supported the broadly optimistic mood in the markets.

The FTSE All-World equity index was up 0.2 per cent at 285.82 in late New York trade, surpassing its record closing high of 285.76, reached in July last year. The index earlier matched its all-time intraday peak of 286.09.

The S&P 500 slipped 0.1 per cent from Tuesday’s record close, although it did touch a fresh intraday high of 2,119.59. Across the Atlantic, the FTSE Eurofirst 300 edged back 0.1 per cent from a seven-year peak.

The broadly positive tone came as market participants continued to dissect comments from Janet Yellen, chairwoman of the Federal Reserve, on the outlook for US interest rates.

Her testimony to the Senate banking committee on Tuesday — repeated to a House of Representatives’ committee on Wednesday — suggested the US central bank was in no hurry to begin raising borrowing costs. >> Read More

 

Russia is set to ratify an agreement on the creation of a bank for the BRICS bloc of large emerging economies this month or in March, the country’s finance minister said.

The establishment of the development bank, aimed at providing funds for infrastructure projects, has been slow in coming with prolonged disagreement over funding and management of the institution.

Finance Minister Anton Siluanov said Russia was running ahead of the other BRICS nations.

“We are ahead of everyone. Our ratification is possible for the end of February or at the latest March,” Siluanov told reporters on the sidelines of a meeting of G20 finance chiefs on Tuesday. >> Read More

 

Casino revenues in Macau declined for an eighth consecutive month in January. Gaming revenues last month fell 17.4 per cent from a year ago to 23.748bn patacas ($3.48bn), according to the Gaming Inspection and Coordination Bureau.

The 17.4 per cent decline is, however, an improvement from December, when the year-to-year decline was 30.4 per cent. Gross revenue in December was 23.285bn patacas.

In 2014, full-year revenue in Macau – the gambling haven and former Portuguese colony near Hong Kong – declined for the first time since records began in 2002, amid a corruption crackdown engineered by Chinese president Xi Jinping.

Shares in the six big casino operators lost an average 39.6 per cent of their value last year – the first decline since 2008 – according to an index compiled by Bloomberg. So far this year shares are down another 4.3 per cent.

 

India has the potential to overtake China in terms of growth rate in the coming years, provided it implements reforms in a big way, noted economist Nourel Roubini said today.

The improvement in India’s growth rate has so far mostly been because of ‘luck’ even as the country is more safe from global shocks, he added.

Reiterating his earlier prediction that the Indian tortoise will take over Chinese hare, Roubini, however, said India will have to wait longer to match it in terms of overall size of GDP.

“I do believe (in that prediction) because China is slowing down and next year it may be below 6 per cent, from about 7 per cent now.

“At the same time I don’t see a reason why India cannot grow faster. They can go to 7 per cent soon and even more than that. In the next decade there is no reason why India should not grow at a rate more than China. >> Read More

 

China – HSBC/Markit Flash reading for manufacturing PMI for January:

  • expected is 49.5
  • prior was 49.6
 

Peeved over International Monetary Fund (IMF)’s forecast that India’s growth rate would surpass that of China by 2016, a state-run daily here today said having overshadowed by the Communist giant for long, India is seeking evidence to show that “it is not inferior to China”.

“It’s different in India. Long overshadowed by China, it is keen to become the best in some aspects. It is in dire need of evidence to show that it is not inferior to China,” state- run Global Times said in its editorial, a day after IMF forecast that Chinese economy would continue to slowdown even next year and would fall behind India’s growth rate.

Besides posting its lowest growth of 7.4 per cent last year in two decades, during which China became the world’s second largest economy, it also missed the official target of 7.5 per cent for the first time in recent years, fuelling concerns about a prolonged slowdown. >> Read More

 

Albert Edwards admits that his “über bear” reputation is well deserved, at least with respect to equities, an asset class he has dismissed for the last 10 years. His bearishness has not abated, and for the coming year, he fears that “deflation will overwhelm the west.”

Markets, he said, will riot.

Edwards is the chief global strategist for Société Générale and he spoke at that firm’s annual global strategy conference in London on January 13. Andrew Lathrope, the firm’s head of global quantitative strategy, and Dr. Marc Faber, the publisher of the Gloom Boom & Doom Report, also spoke.

Global markets face three risks, according to Edwards: bearishness in the U.S. government bond market, a flawed confidence that the U.S. is in a self-sustaining recovery and undue faith in the relationship between quantitative easing (QE) and the equity markets.

Deflation is the main threat, though, according to Edwards. “This is the year the markets really panic about deflation. You haven’t had that panic yet.” >> Read More

China and Japan Treasury Holdings

20 January 2015 - 22:30 pm
 
This Great Graphic, created on Bloomberg, shows Japan (white line) and China (yellow line) holdings of US Treasuries in November 2014 based on the latest TIC data. 
Japan’s holdings rose to a record $1.24 trillion in November.  This is a $56 bln increase from November 2013.   
On the other hand, China reduced its Treasury holdings for the third consecutive month in November to $1.25 trillion.  From November 2013, China’s Treasury holdings have fallen by $66 bln.  An important caveat is that the TIC data often initially attributes buying to the financial center of the transaction and later revise to what it believes is the beneficial owner. 
That said, Japan’s holdings of US Treasury’s may exceed China’s in 2015 for the first time since 2008.  In addition, although some will see China’s decline in Treasury holdings as some kind of negative sign for the US, it is considerably more complicated than that.  Treasury accumulation by China (and other central banks) is not desired by the US Treasury.  Central bank accumulation of Treasuries is often a accomplished to resist adjustment of currency valuation.   It is not clear how far the US Treasury will push this line, but there US officials are unlikely to be disturbed by the decline in China’s Treasury holdings.    
The decline in China’s Treasury holdings have been gradual and minor.  China’s holdings peaked in November 2013 just shy of $1.317 trillion.  The decline could be mostly passive as issues mature.  Given the low rates available at the short-end of the curve, China also appears to have done what many private investors have done, namely shift toward longer duration.  China’s reduced holdings in the August-November 2014 period have not prevented a continued decline in US bond and note yields.   

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Technically Yours,
Team ASR,
Baroda, India.