Category:

Global stocks hit 2-1/2 month lows as EM selloff continues

Global equities hit 2-1/2 month lows on Thursday after the U.S. Federal Reserve pushed ahead with reducing stimulus, raising concern about more emerging markets weakness and pushing investors towards safe-haven bonds. The Fed trimmed its monthly bond-buying program by $10 billion and made no mention of the turbulence in emerging markets which some investors had thought might delay the widely-flagged policy move. The prospect of a steady withdrawal of stimulus coupled with improving economies in the developed world has attracted funds away from many emerging markets, particularly those with current account deficits or political troubles – or a combination of the two. "I think there is a lack of positive triggers right now, and there is a growing concern about what happens. It’s no 1998 … we have a very cautious stance on all emerging market equities and currencies at the moment," said Hans Peterson, global […]

Posted On : Published By : Tom Whipple
Category:

As China’s Economy Slows, the Pain Hits Home

Piles of unsold coal line rural roads in north-central China. Some iron ore mines near Beijing are operating at a fraction of capacity. Chinese farm products are even increasingly scorned by the Chinese consumer. While China remains nearly self-sufficient in all these categories, it is importing more from other emerging markets. Economists and investors around the world have been fretting in recent days about the effects on smaller emerging markets if China’s economic slowdown worsens. Those concerns have driven down share prices and currencies from Jakarta to Istanbul to Buenos Aires, although emerging markets staged a partial recovery on Wednesday. They helped to prod the central banks of Turkey and India to raise benchmark interest rates unexpectedly on Tuesday. Yet the most vulnerable producers these days may not […]

Posted On : Published By : Tom Whipple
Category:

‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil

The long-running boom in emerging markets came to be identified, if not propped up, by wide acceptance of the term BRICs, shorthand for the fast-growing countries Brazil, Russia, India and China. Recent turmoil in these and similar markets has produced a rival expression: the Fragile Five. The new name, as coined by a little-known research analyst at Morgan Stanley last summer, identifies Turkey, Brazil, India, South Africa and Indonesia as economies that have become too dependent on skittish foreign investment to finance their growth ambitions. The term has caught on in large degree because it highlights the strains that occur when countries place too much emphasis on stoking fast rates of economic growth. The new catchphrase also raises pressing questions about not just the BRICs but about emerging markets in general. The Morgan Stanley report came out in August, when there were reports […]

Posted On : Published By : Tom Whipple
Category:

Xinhua Insight: China dodges major shadow banking default

Chinese investors avoided a high-profile trust default on Monday, easing worries that the economy may be about to tip the first domino of shadow banking defaults. China Credit Trust reached a last-minute deal with investors to repay their investment in the three-billion-yuan (about 500 million U.S. dollars)product, deflating concerns that default would pound investor confidence in shadow banking and trigger credit crunches. "This offer comes as a compromise given rising concerns over a full default, but it is likely that investors have become more cautious on trust products in general," said Zhang Zhiwei, chief China economist at Nomura. The trust product, launched in February 2011, attracted some 700 private bank clients of the Industrial and Commercial Bank of China to invest in a private coal miner in north China’s Shanxi Province. Shanxi Zhengfu Energy Group went bankrupt […]

Posted On : Published By : Tom Whipple
Category:

Japan's fuel imports contribute to record trade deficit

TOKYO, Jan. 27 (UPI) — Soaring fuel imports in the aftermath of Japan’s 2011 Fukushima nuclear disaster, amid a weaker yen, have contributed to the country’s record annual trade deficit, a government official said. Japan Monday reported a trade deficit of $112.07 billion in 2013, up 65.3 percent from the previous year. “Energy imports have been rising significantly since the nuclear accident,” causing per capita costs of around $293 in Japan, Kyodo News quoted Yoshihide Suga, chief Cabinet secretary as telling reporters. “It is important for us to ease such a burden as much as possible.” All 50 of Japan’s working reactors currently remain offline, pending safety checks. Japan relies on imports for more than 90 percent of its energy needs. Imports of liquefied natural gas to Japan last year rose 17.5 percent and imports of crude oil rose 16.3 percent. With those import costs expected to grow, amid […]

Posted On : Published By : Tom Whipple
Category:

Japan’s fuel imports contribute to record trade deficit

TOKYO, Jan. 27 (UPI) — Soaring fuel imports in the aftermath of Japan’s 2011 Fukushima nuclear disaster, amid a weaker yen, have contributed to the country’s record annual trade deficit, a government official said. Japan Monday reported a trade deficit of $112.07 billion in 2013, up 65.3 percent from the previous year. “Energy imports have been rising significantly since the nuclear accident,” causing per capita costs of around $293 in Japan, Kyodo News quoted Yoshihide Suga, chief Cabinet secretary as telling reporters. “It is important for us to ease such a burden as much as possible.” All 50 of Japan’s working reactors currently remain offline, pending safety checks. Japan relies on imports for more than 90 percent of its energy needs. Imports of liquefied natural gas to Japan last year rose 17.5 percent and imports of crude oil rose 16.3 percent. With those import costs expected to grow, amid […]

Posted On : Published By : Tom Whipple
Category:

Emerging markets turmoil intensifies

The emerging markets sell-off intensified on Monday with stocks heading for their worst day in almost half a year even before Latin American bourses opened, and currencies weakened further, including the Turkish lira hitting a new low against the dollar. Investors have become concerned about the prospects of emerging markets as growth slows in China, the world’s second-largest economy and the US Federal Reserve scales back its quantitative easing. The Fed’s asset purchases were a key feature in the rise of emerging market asset prices over the past five years. The FTSE Emerging Markets index slumped 1.9 per cent in early trading – its biggest one-day drop since August 27. Hong Kong’s market fell 2.1 per cent, Taiwan’s tumbled 1.6 per cent, and Indonesia’s dropped 2.6 per cent. “At the moment you can’t stop the rot,” said Christian Lawrence, strategist at Rabobank. “The momentum is with the continued sell-off […]

Posted On : Published By : Tom Whipple
Category:

Davos delegates warned of imminent oil crisis

Some of the planet’s richest nations are to hear a warning that a global oil crisis could happen as early as next year. A British businessman will tell world leaders meeting in Switzerland today that it is dangerous to argue that fracking for shale oil and gas can help to avert a global energy crisis. Jeremy Leggett, a former Greenpeace staff member who founded a successful solar energy company, has been invited to the annual World Economic Forum meeting in Davos from 22 to 25 January. The theme of the meeting is The Reshaping of the World: Consequences for Society, Politics and Business. Leggett told the Climate News Network: “The WEF likes to deal in big ideas, and last year one of its ideas was to argue that the world can frack its way to prosperity. […]

Posted On : Published By : Tom Whipple
Category:

China stocks dip over poor factory activity prediction

Chinese shares dipped over HSBC flash PMI figures released on Thursday indicating sluggish manufacturing activity in January. ( The benchmark Shanghai Composite Index fell 0.47 percent, or 9.57 points, to finish at 2,042.18. The Shenzhen Component Index dropped 0.41 percent, or 31.98 points, to close at 7,788.47. Combined turnover on the two bourses fell to 212 billion yuan (34.7 billion U.S. dollars) from 216 billion yuan on the previous trading day. The flash reading for the China manufacturing Purchasing Managers’ Index (PMI) fell to 49.6 in January, hitting a 6-month low, said HSBC on Thursday. A PMI reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction. The financial sector led the losing trend, with China Pingan, an insurance giant, dropping 1.94 percent and China Merchants Bank falling 1.68 percent. The furniture and media sectors made significant gains. Guangdong Guangzhou […]

Posted On : Published By : Tom Whipple
Category:

China’s 2013 economic growth dodges 14-year low but further slowing seen

China’s economy narrowly missed expectations for growth to hit 14-year lows in 2013, though some economists say a cooldown will be inevitable this year as officials and investors hunker down for difficult reforms. The chance that the world’s second-largest economy may decelerate in coming months was underscored on Monday by data that showed growth in investment and factory output flagged in the final months of last year. Waning momentum capped China’s annual economic growth at a six-month low of 7.7 percent in the October-December quarter, a slowdown some analysts say may deepen this year as China endures the short-term pain of revamping its growth model for the long-term good. Full-year growth in 2013 was 7.7 percent, steady from 2012 and just slightly above market expectations for a 7.6 percent expansion, which would have been the slowest since 1999. "It’s like a Chinese medicine," said Lu Zhengwei, […]

Posted On : Published By : Tom Whipple