For various reasons, well beyond the scope of this short note, China has amassed huge industrial capacity, well beyond its ability to absorb. In part, that is one of the challenges that the “One Belt One Road” addresses. Export the spare capacity by building infrastructure, networking east and central Asia (included parts of the former Soviet Union and the Middle East.
In the EM equity space, India (+5.3%), Taiwan (+4.1%), and Hong Kong (+3.6%) have outperformed this week, while Colombia (-1.5%), Qatar (-0.9%), and China (-0.5%) have underperformed. To put this in better context, MSCI EM rose 2.9% this week while MSCI DM rose 1.9%.
A number of economic studies show renewed strength in the American economy, helping the Federal Reserve boost its estimates for growth. The Atlanta Federal Reserve’s real-time GDP estimator, GDPNow, has raised its estimates for growth to 2.9%, an increase of 16% from the last estimate. That is the highest growth estimate in over a year.
The boost is being driven by renewed business investment in the United States, which rose from a negative reading to 0.4% thanks to a Census study of durable manufacturing goods.
The South Korean government will implement a new law known as the Improper Solicitation and Graft Act in September, which bans pricey gift exchanges during business transactions, according to Bloomberg.
Critics contend that the law will affect an economy already suffering from low consumption and lackluster GDP growth. Under the mandate, officials cannot receive meals over 30,000 won and gifts over 50,000 won, but journalists and teachers would be subject to the same rules.
American trade policy is failing to shrink the trade deficit with other countries as weak demand crimps services industries throughout the country. The trade balance between the United States and foreign countries rose 3.4% on a month-over-month basis in April, rising to $57.5 billion; however, that also represents the lowest trade deficit since February 2015.
It seems that not a day goes by without another Brexit economic forecast – whether it is one from the Treasury, the OECD or Economists for Brexit. Some say it will cost Britain to leave; others say it will be beneficial to the UK economy.
When the leaders of G7 countries descend on Japan later this week, Prime Minister Shinzo Abe has taken the opportunity to invite them to visit Ise Shrine as well. Although there were many reasons for the choice of Ise-Shima as location for the summit, it is impossible to ignore the underlying sentiments of religious nationalism.
Some countries have become wary of China’s aspiration to become a maritime power because the means pursued by the Xi Jinping government — as seen in the disputed South China Sea — appear to ignore the legitimate interests of its smaller neighbours, flout existing international norms and pose risks to regional peace and stability.
Investors dived into the stock market after American home sales crushed expectations with double-digit gains. New home sales in April soared to 16.6% more than sales in March and 23.8% from a year ago, according to a new report by the Census Bureau.
The World Bank and India signed a deal on Tuesday by which the nation will receive $100 million in loan funds to provide the citizens of Karnataka with a continuous supply of fresh, running water. The Karnataka Urban Water Supply Modernization Project will provide access to continuously piped water to the cities of Karnataka, a poor region of India.
