China: cash squeeze is “critical”
Squeeeeeeze
It’s deliberate. To all intents and purposes, the Chinese authorities on Wednesday confirmed that the cash crunch squeezing the country’s banks is no market aberration but the result of considered central bank action.
By consistently withholding funding from banks, the People’s Bank of China has for the past two weeks been driving up short-term interest rates and putting pressure on overextended lenders. And there is no sign of it relenting. Continue reading »
Wanda does the deal
Dalian Wanda Group, China’s largest premier commercial property and entertainment conglomerate, confirmed on Wednesday that it’s going ahead with a widely-signalled £320m deal to buy control of Sunseeker International, the British luxury yacht maker, and a £700m luxury hotel development in central London.
The £1bn combined investment highlights the ambitious Chinese developer’s commitment to international expansion and its faith in the British economy – or at least in two sub-sectors of great interest to wealthy Asians. Continue reading »
China: house prices jump, complicating life for Beijing…and for forecasters
Here’s an awkward reminder that despite the clear slowdown in the Chinese economy, the property market remains bloated.
China’s house prices rose in May at their fastest rate since January 2011, with average new home prices in 70 big cities up 6 per cent year-on-year, compared to 4.9 per cent in April, according to a Reuters index based on data released by the National Bureau of Statistics.
Tuesday’s numbers only make it harder for the new administration of president Xi Jinping to even consider boosting economic growth. Continue reading »
Fidelity China: exit Bolton, slowly
There is a neat coincidence about Anthony Bolton announcing his planned retirement from its Fidelity’s China Special Situations investment trust – and putting out the news in the middle of the current emerging market turmoil.
But that’s probably all it is – a coincidence. Bolton won’t actually be going until April 1 next year which suggests that, far from being a rushed response to recent events, Monday’s move has been in the works for a while. Continue reading »
JP Morgan: EM companies face long profits squeeze
With emerging markets stable on Monday, if still very nervous, there’s a moment to stand back and count the cost of the turmoil.
India is clearly paying a price, with the central bank on Monday holding interest rates at a time when it would have preferred a cut to boost weak economic growth, were it not for the rupee’s plunge.
Elsewhere, as JPMorgan says in a report, EM governments are mostly in good shape to withstand tighter financial conditions. But that doesn’t mean nothing’s changed in the EM outlook – EM companies are under pressure. Continue reading »
CEE floods: economic impact ‘limited’
Central Europe’s recent floods looked dreadful on television. And they will have scarred the memories of the people who were hit the hardest. But the economic effects will be limited thanks to the solid defences put in place since the last flood a decade ago.
So says Erste Bank, which argues that while the floods were similar in scale to those of 2002, the costs for Austria, the Czech Republic, Slovakia and Hungary, will be a small fraction of 2002′s €6bn. Continue reading »
Deutsche: markets rough, economies mostly stable
Don’t panic, says Deutsche Bank, about the emerging markets sell-off. Once the dust has settled, investors will see that most emerging markets are in better shape for a post-QE world than most developed markets because debt levels are lower.
But, as Deutsche admits, it could be a while before the dust settles. And even after it settles, EMs with big external deficits (eg Turkey) or with big recent credit growth (south east Asia) may be under pressure. Continue reading »
EM equities under fire
After bonds and currencies, equities are now in the firing line in the 2013 emerging markets duck shoot.
Driven down by a sell-off in Asia, the MSCI emerging markets index plunged 1.5 per cent on Thursday, falling to its lowest level for nearly a year as investors fled for the safety of the Japanese yen.
The biggest plunges hit markets which have recently been riding high – notably the Philippines (down 6.75 per cent) – as the hot money rushed out even faster than it went in. Continue reading »
EM sell-off may have further to run
It’s often wishful thinking, but there comes a point in a mass sell-off when investors decide enough is enough. And so it was on Wednesday, with a near-1 per cent bounce in the Indian rupee against the US dollar, after weeks in which it had been in the forefront of a global plunge in emerging markets. Continue reading »
S Korea: men in make-up
Learning about make-up
Pub quiz question: which country leads the world in male skincare? Answer: South Korea.
At $565m South Korea was last year the world’s largest market for men’s skin creams and lotions, according to a Euromonitor report. China will take first place this year, but, for the foreseeable future, South Korean guys will still stay far ahead of the rest of the world in terms of per capita expenditure.
This may seem strange in a country where men pride themselves on their hard-working culture. But male cosmetics don’t have the ‘soft’ connotations they do in the west. They’re part of mainstream male life. Continue reading »
Turkey: despite political crisis, US car hire group pulls into the market
Is today (Tuesday) the right day to announce a new investment in Turkey, when police and protestors are battling for control of Taksim Square?
The world’s largest car hire company thinks so. Enterprise Rent-A-Car, the US group that operates the Enterprise, National Car Rental and Alamo brands, has done a deal with Yes Oto Kiralama, a subsidiary of Gurbaşlar Automotive Group, to move into Turkey. Continue reading »
Russia: Ignatyev holds the line on rates, for the last time
Russian central bank governor Sergey Ignatyev on Monday completed his last rate-setting meeting with his hawkish reputation intact.
In line with expectations, the bank left key policy rates on hold, though it eased medium-term borrowing costs in a move which was seen a a signal of a coming relaxation in monetary policy. Continue reading »
Turkey: Erdogan attacks put investors on the defensive
By a curious coincidence, the Istanbul Stock Exchange’s Monday opening was delayed by an hour just as investors were steeling themselves for another torrid day.
Just as conspiracy theorists were wondering whether it might be the first attack in the assault on “speculators” promised by premier Recep Tayyip Erdogan, officials announced it was all due to “a technical problem” with index calculation.
However, any relief was short-lived. The BIST 100 opened 2.4 per cent down and still trading 1.8 per cent lower an hour later. Meanwhile the lira fell more than 1 per cent against the dollar. Continue reading »
China data: little fire in the numbers before Dragon Boat Races
Economists are busy downgrading GDP growth forecasts for China following the latest round of data pointing to a bigger-than-expected slowdown.
With exports up just 1 per cent in May, inflation falling to 2.1 per cent, and new bank loans rising more slowly than had been predicted, there’s a sense in the market that Beijing may struggle to reach its 2013 GDP growth target of 7.5 per cent. Fortunately, officials don’t seem to be too worried for the moment. And there’s three days holiday of Dragon Boat Race holidays this week to keep the citizens happy. Continue reading »
China property buyers head for London
Where are Chinese buyers of foreign property putting their money? London, that’s where.
Chinese real estate investment in Europe this year has already hit €2.2bn versus €2bn for the whole of last year, with London the prime target, according to a LaSalle Investment Management/ Real Capital Analytics report. In fact, London accounts for 80 per cent of all Chinese property investment in Europe over the past five years. Another reason why prices aren’t falling. Continue reading »
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