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World economy 10th January 2016

Alarm Bells Sound Over Wealth Management Products

Caixin | As we start 2016 hoping for a better economic outlook, regulators must address certain financial problems, particularly risks associated with wealth management products that led to many defaults last year. China weathered several major financial storms over the past decade because of a towering pile of savings that provide banks with ample liquidity to prop up the market during times of trouble. But now depositors are using their money to snap up financial products offered by trust companies promising high returns.

china drags

World economy 8th January 2016

China Drags The Markets Down

Hopes for a soft landing in the Chinese economy are fading away. Focus sharpens on renminbi as it dips to increasingly low levels, challenging Central Bank’s massive interventions. China still commands sweeping foreign reserves but, over the latest months, they have shrunk by nearly one trillion dollars. Markets fear they could meltdown forcing a massive depreciation.

bonds issuance

World economy 8th January 2016

Global Rates Strategy 2016

UBS | In the euro Area €865bn of gross issuance is expected in 2016, €24bn less than 2015. We forecast the majority of countries to see a fall in issuance vs 2015. Issuance net of redemptions and coupons in 2016 is anticipated to be around +€56bn, slightly less than 2015. Net supply is non – supportive for bonds in 1Q16.

angola

World economy 7th January 2016

The Bottom Billion And The Voice Of A Nobel Prize

“The need to impose good governance comes to the forefront among providers of development aid. But no one knows well how to get it.” The quote from Collier’s book only has as its objective to remind us that humanity continues without overcoming the “trap” of underdevelopment,  and therefore without resolving the problem of poverty in the world.

 

 

APAC

World economy 7th January 2016

Asia: The Pivotal Questions For 2016

UBS | Current year in Asia we expect c.8% return (in U$) driven primarily by earnings, from a 6% growth in revenues and a modest expansion of margins. We think multiples will be unchanged as a re-rating is unlikely given ongoing ‘Debtopia’ headwinds, and historically low valuations make further de-rating also less likely

printing

World economy 6th January 2016

Larry Summers Says Print More Money, Globally

Benjamin Cole via Historinhas | Probably, He Is Right. Among serious economists, the words “print more money” are not used, and of course the thought is sacrilege for many. Evidently, some prefer a decade or so of 20+% unemployment (see Spain, Greece), or the perennial loss of about 10% of GDP (the United States) to the idea of printing more money.

interest rates

World economy 6th January 2016

Interest Rates Dropped 450 bp To Record Lows Over The Last 30 Years

Interest rates have dropped 450 bp to record lows over the last 30 years. And they are at this level because the desire to invest and take a risk is lower than ever. It’s the weak demand from investment funds, not the central bank’s supply, which is the reason for the almost flat interest rate curve.

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World economy 4th January 2016

EM Outlook 2016: Battle hardened or battle weary?

UBS | 2015 was likely to mark the fifth year of EM underperformance. The last time EM underperformed for as extended a spell as this was 1997-2001. And what a time to buy that was! Could 2016 provide a similar inflexion point? We would bet against it.

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World economy 4th January 2016

Banking regulation, a never-ending story

The implentation of Basel III is taking its time. The adjustment periods are very long and drawn-out; the refinement of the concept of capital will not be completed until 2022. We have also seen that the implementation of the TLAC requirements, ratified at November’s G20 meeting, will not happen quickly. Until these adjustments are completed, the banks and the markets will still feel there is no break from regulation.