Intermoney | A slightly higher opening (Eurostoxx futures +0.3%) after yesterday’s 2% falls in the main American and European indices, with the Ibex registering a better relative performance, buoyed by the tourism and defensive sectors. This environment of greater risk aversion and fears about economic growth also translated into additional moderation of IRRs. In the case of Europe, this was also supported by the statements from Villeroy, the governor of…
Morgan Stanley | With growth already at pre-Covid levels, China has announced its priorities: a gradual exit from stimulus, internalisation of the yuan and reduction of carbon emissions. These are some of our predictions: Foreign Exchange reserves of $3,190 bn (vs $ 3,178 bn in November 2020; Headline inflation from -0.5% to 0% and a credit growth down 0.1% to 13.6%. Furthermore, we estimate that the deficit will fall to 12% of GDP, after reaching a record high of 15.4% in 2020. But still above 9.9% in 2019.
Jinyue Dong / Betty Huang (BBVA Research) | A batch of economic activity indicators announced yesterday by the National Bureau of Statistics pointed to a continuing growth momentum in August. Industrial production, fixed-asset investment and retail sales all showed remarkable improvement from their previous month’s readings and beat the market consensus.
Fidelity | Our analysts report that activity in Asia’s extensive network of factories, ports and logistics centres is accelerating as the Chinese economy leaves the blockade behind. Dockside cranes are once again squeaking in some of Asia’s largest ports as production at Chinese factories progressively speeds up, after several weeks of coronavirus-related disruptions.
I. de la Torre and L. Torralba (Arcano Partners) | The economist Dornbusch says that “crises take long to arrive than you can possibly imagine, but when they do come, they happen faster than you can possibly imagine”. The events that have affected the emerging countries this summer have proven Dornbusch was right.
Andrew Sheng via Caixin | There are two main lessons that we can draw from the 2007 to 2009 global financial crisis: the failure of mainstream economics to predict and solve the crisis, and its inability to explain the rise of the Chinese economy
Christine Lagarde’s two-day-visit to China concluded on Monday without any specific agreements on how Beijing will fend off financial risk. But Premier Li Keqiang insisted that they will use all the tools available. Trillions of renminbi of debt have built up in the Chinese economy as a result of decades of stimulus and easy credit.
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.
Marco Bellochio was probably unaware of how close China could become when he directed his famous movie portraying a rotten Western society besieged by Mao’s revolutionary thrust. History eventually proved that the Little Red Book had less enduring success than the Holy Bible…
By Wang Lan via Caixin | The rules for China’s government provide space for the state-owned economy and public ownership, but this still allows for limiting the role of SOEs.