MADRID | The Corner | Once again markets have embraced optimism about China, leaving fears of a hard landing and a credit crisis that dominated in 1Q behind. As Barclays analysts pointed out on Thursday, the onshore equity market has risen 6% in the past two weeks, with the low-valuation bank and property sectors advancing more than 10%.
MADRID | The Corner | In the next few days demand for Spanish bonds is expected to grow, since Spanish debt auctions will be held and European CPI data showing that prices remain very low will be released.
MADRID | The Corner | Reporting season in Europe is beginning. Over half the Stoxx600 companies that already showed results surpassed expectations. Profits grew for 70% of this businesses and the average rise was of 9%. European markets’ upward trend being less mature than American’s may point at a EuroStoxx higher appreciation potential. It gains importance as performance results keep looking up and prices context allows EZ companies to rise EBITDA margin from current 15.2% to prior years levels (above 16%).
By Peter Wong via Caixin | It is unlikely that the RMB or yuan, China’s “people’s currency,” will replace the dollar outright as the world’s only investment and reserve currency any time in the foreseeable future. But there is every indication that the dollar will have to make room for a second global reserve currency within the next 15 years. A revolution allowing investors to diversify risk – and creating a system with more choice and better ability to resist shocks – should be welcomed.
BERLIN | By Alberto Lozano | After Q1’s strong growth, numbers show that the German economy has slowed down during 2Q’s first two months, as Bundesbank reported this week. Both the industrial sector and the construction have fallen compared with the 1Q. However, it seems that Europe’s economic powerhouse will recover its strength in the coming months.
By Jean Pisani Ferry via Caixin | Investment in many advanced and emerging economies is down – except in China – but governments around the world can take steps to improve the situation.
MIAMI | By Pablo Pardo | The director of the IMF’s Department of Financial and Monetary Affairs, José Viñals, has declared himself “worried” about “the optimism of the financial markets.” Viñals made his remarks at the LSE Global Pensions Program, organized by the London School of Economics, Santander Asset Management and Novaster. To an audience of around one hundred pension fund managers and regulators, most of them from Latin America, the IMF official remarked that “everybody investing” in what he called “heterogeneous assets” has “made money” this year, in spite of the fact that the “economic news, ‘surprises’ have been relatively bad.”
SHANGHAI | Op-ed by Hong Hao at Caixin | Relaxing restrictions on property purchases, reintroducing discount mortgages or even further monetary easing are likely, given the importance of the property sector in the economy and its multiplier effects. No one is willing to be held responsible for an ugly crash in China. This is one certainty among the many uncertainties that the market is facing. But nor is anyone willing to inflate the property bubble further.
ATHENS | By Manos Giakoumis via MacroPolis | Having completed capital increases of 8.3 billion euros, which more than covered the capital needs identified by the Bank of Greece (BoG) under the baseline scenario, the single most important risk for Greek banks remains the non-performing loans (NPLs).
MADRID | By The Corner | Experts at JPMorgan are less worried about near-term disturbances and flows and more about the medium-term outlook for economic growth. Over the past three years, the world economy has grown only at a 2.5% pace, below potential and thus not able to make up for what we lost in the recession. Each year, they keep forecasting that growth will rise to a 3% handle, but have been steadily disappointed.