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World economy 27th August 2014

China’s antitrust investigation threatening 25% of car industry’s global benefits

MADRID | The Corner | China’s antitrust investigation on over 1,000 manufacturers and foreign suppliers in China (market of € 450,000 million in revenues) threatens 25% of the sector’s global benefits. In particular, German manufacturers are the most exposed (BMW, Daimler, Audi and Porsche generate 50.000 million euros and account for over 80% of demand for luxury goods). According to Morgan Stanley figures, 80% of the market has been influenced by foreign companies. In the short term Morgan Stanley analysts believe the focus of the problem will centre on imports but generalized cuts in luxury markets are also expected.

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World economy 24th August 2014

China as Responsible Stakeholder or Just ‘Guest’?

Via Caixin | By Miriam L. Campanella | Media outlets have published news that based on a World Bank report China’s economy will be the world’s largest in terms of purchasing parity power (PPP) by the end of 2014. Yet, China itself did not welcome the news. The World Bank included a note in its report that the country’s National Bureau of Statistics contested the methodology and rebuffed the report. The Financial Times even reported how China tried to convince World Bank analysts not to use the data. “China wanted to throw this out,” one source said.

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World economy 19th August 2014

Further policy easing to support China’s property downturn

MADRID | The Corner | The biggest uncertainty for China’s economy now and in 2015 is the nature and duration of the ongoing property downturn. Following a sharp drop in the beginning of 2014, Chinese property construction has shown signs of improvement in recent months as policies have been increasingly relaxed. Both have provided support for the economy and property related stocks, with the latter rallying by 17% from trough levels. However, UBS analysts expect that the property downturn will weigh more heavily on growth in Q4 and 2015.

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World economy 14th August 2014

Stock markets go up despite poor global macroeconomic data

MADRID | By J. J. Fdez-Figares (LINK) | European and American stock markets closed yesterday up in a session of low activity and  volatility. The good performance of Western stock markets ​​occurred despite the set of macroeconomic figures published during the day in China, Europe and the USA, which pointed again to a global slowdown in economic growth. The only explanation we can find to the good performance of stock markets yesterday is precisely that investors have interpreted that as long as the growth of these economies remain weak, the central banks will be forced to maintain its current policy of monetary expansion, which provide liquidity to the system, something that equity markets consider positive.

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World economy 7th August 2014

Top One Percent Has One Third of China’s Wealth, Research Shows

BEIJING | By Zhou Dongxu (Caixin) | China’s income inequality is relatively high, and its wealth inequality, as measured by the Gini index, is greater than its income inequality. The U.S.’ income inequality index is lower than China’s, but its wealth inequality is higher – Its Gini coefficient for household wealth was 0.8, compared with China’s 0.73. This is because the United States has a relatively mature market economy, where wealth has been accumulated slowly through income and investment. Many in China, however, own homes allocated to them by the government. As those homes’ value increased, so did their wealth.

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World economy 3rd August 2014

Can China keep running?

MADRID | The Corner | A bull market. But how sustainable? Asia ex Japan has just breached its 2011 high. Key to this is China. Over the last month MSCI China is up 7% on strong volume. It is now up 5% for the year. Easier monetary conditions, better growth data and improved earnings, meeting low valuations and poor sentiment, have driven the China rally and recent outperformance.

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World economy 31st July 2014

China: optimism on the rise again

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%. 

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World economy 30th July 2014

China optimism lifts Asia equities

LONDON | By EM Asia Rates Strategy analyst Rohit Arora | Asian equities continued to march higher, with stocks in Korea and Japan outperforming on the day. The Nikkei’s outperformance, despite weaker-than-expected readings on retail sales and jobless data, was counterintuitive and likely reflects increasing market expectations of BoJ easing. In FX, the NZD was a notable underperformer after Fonterra lowered its 2014-15 milk price forecast to NZD6/kg from NZD7/kg.

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World economy 25th July 2014

How the hammer falls as China nails corruption

BEIJING |By Gao Yu and Wang Heyan via Caixin | Curiosity is one reason the website of the Central Discipline Inspection Commission (CDIC) attracts up to 2 million page views every day. Another reason is fear. Some website visitors, for example, want to know whether they or anyone they know has been targeted by a government campaign to root out corruption led by the CDIC Inspection Team.