There appears to be growing euphoria that it is India’s ‘manifest destiny’ to overtake China and become the fastest growing major economy and a major world power. But unless India successfully introduces productivity reforms and opens its markets, this ‘destiny’ will remain a pipe dream.
There are two broad courses for the capital markets in the week ahead. The first is a continuation of what we have experienced for the past two weeks. Greece’s financial and political crisis, and the dramatic drop in Chinese shares, and the extensive policy response dominate the market’s focus. Alternatively, the pressures emanating from these two forces could subside.
1. The BRICS central banks sign an accord on $100 bln foreign currency pool. 2. South African union AMCU declared a dispute with gold producers over wages. 3. China’s recent actions to stabilize equity markets became increasingly desperate. 4. Argentina local elections gave the opposition a solid victory. 5. Brazil’s central bank pared the amount of FX swaps rollover late last week. 6. The approval of Chile’s President Michelle Bachelet’s continues to fall.
President Joko Widodo believes his country is transitioning from an economy based on commodities to one centered on production and investment. The president’s address comes on the heels of slow growth for the Southeast Asian country, which saw 4.7-percent expansion in the first quarter of 2015, the slowest growth rate since 2009.
There is a growing sense of optimism that Greece and its creditors will strike a deal. There is also a sense that although nearly half of China’s stocks are still frozen, that the dramatic sell-off is over.
Good times for Australia kept rolling whilst prices and demand for our resources were high. However, boom-time is on the wane, manufacturing is squeezed, and it is time for a serious where-to-from-here conversation about the nation’s economy.
The Chinese stock markets have experienced significant turmoil in recent weeks, with the Shanghai Composite Index – the country’s major reference – falling by 32% since June 12. However, this fall was preceded by an equally sharp rise of 150% over the previous nine months. In the 20 years since I have been working in finance, I have never seen anything like this. So what is going on with the Chinese stock market?
Indian Prime Minister Narendra Modi is in trouble. He and the Bharatiya Janata Party (BJP) romped to power in 2014 on an anti-graft and pro-governance platform. Today, thanks to what is being popularly dubbed as ‘Lalitgate’, both Modi and his party are seen as condoning nepotism.
Russia kicked off three days of high-level summitry on July 8, hosting leaders of several Asian and developing countries that it hopes will form the foundation of a new, non-Western world order.
Around the world, Japanese Prime Minister Shinzo Abe is perhaps most famous for his ‘Abenomics’ program to revive Japan’s economy. So far, it has not worked — mainly because it has not really been tried. Only the first of the famous ‘three arrows’ — monetary stimulus — has been fired. The indispensable third arrow, structural reform, remains lots of nice-sounding targets but little strategy to achieve them.
