Markets Archives - Page 516 of 782

China’s Banking Industry and Associated Risks

Banking activity is growing rapidly in China’s $30tn banking system and even though the country faces a sluggish economy, its banking system consists of some of the largest banks of the world. The combined value of Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China is now at par with the four big US banks (JPMorgan Chase, Bank of America, Citigroup and Wells Fargo). With a considerable influence of the Chinese government in the banking network, the sector continues to develop commercially and globally.

Is this a U.S. Economic ‘Deflategate’?

US prices are falling. The 0.7% decline in US consumer prices was the largest monthly drop since December 2008. Consumer prices in January fell 0.1% from a year ago. The last time the year-over-year CPI was negative was when the US economy was just beginning to recover from deep contraction associated with the end of the credit cycle and the financial crisis.

Does this mean that US is experiencing deflation? If so why is the Fed preparing the market for an eventual rate hike?

The Pilot Free Trade Zone Should Assist China’s Transition to Slower Growth

Since September 2013, China has been operating a new form of free trade zone (FTZ) based in a small area of Shanghai, called the China (Shanghai) Pilot Free Trade Zone (SPFTZ). Only 28 square kilometres in area, the SPFTZ is a concrete first step to China’s new development model, the so-called ‘new normal’. The SPFTZ’s substantial steps towards financial liberalisation will assist China’s adjustment to growth at a relatively lower but still increasing rate.

The BJP’s Declining Political Fortune

The tale of the recent February Delhi assembly elections shows how quickly political fortunes can decline. Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) recorded a landslide victory at the 2014 national elections and won a majority of seats in three subsequent state elections. But his party suffered a crushing defeat in Delhi, winning just three of the 70 seats. The unexpected defeat dents the image of electoral invincibility of both the BJP and Modi.

Can Modi’s Plan for India Survive Past the Post-Election Honeymoon Period?

When India opted for constitutional democracy in 1947, few gave it much of a chance. India’s diversity was overwhelming and it was home to some of the world’s poorest. But India’s democracy has succeeded beyond the expectations of even the most optimistic and faired far better than that of similarly placed countries.

The 16th general election held in 2014 once again demonstrated the faith of most Indian citizens in democracy.

Japan’s Inward FDI is Extremely Low Among Developed Nations

Japan’s inward foreign direct investment (FDI) is extremely low in comparison with that of other developed countries and even its Asian neighbours.

Does Australia Have to Choose Between China and the U.S.?

Will it be China or the US? One is Australia’s largest trading partner, the other its traditional security ally. But what happens if Australia is forced to choose between them — will economics or history win out?

Malcolm Fraser, the former Australian prime minister (1975–83), wants Australia to end its security dependency on the United States and resume its sovereign ability to decide into what wars it will follow the US.

Indonesia’s Poverty Reduction Strides During Decentralization were Offset by Rising Inequality

How effective was Indonesia in addressing poverty and inequality in the decentralisation period?

In the first decade of the decentralisation period, from 2001–10, Indonesia’s GDP grew at an average annual rate of only 5.4 percent. This was significantly slower than during 1990–96, prior to the Asian financial crisis, when Indonesia’s GDP grew at an average rate of more than 7 percent per year.

A Heavy Economic Data Week in the Emerging Markets

With some of the big near-term uncertainties gradually being cleared up (Greece and Ukraine), we think EM assets could get some traction this week. That said, EM FX will remain vulnerable and liable to selloffs should the dollar bullish-trend resume in earnest. The outlook for the FED will be the focal point now, and Yellen’s testimony this week could be decisive. We think the needle will move back towards a June hike. This may be a negative development for EM given that some investors are pricing in a later hike.

Jokowi’s High Risk, High Reward Strategy for Indonesia

No more ‘business-as-usual’ is the Jokowi government’s message in the 2015 budget. Cut fuel subsidies, ramped up infrastructure spending, and rising revenues. These three steps deliver a 1.9 percent fiscal deficit, down from 2.2 percent in 2014. This leaves space for a fiscal response in case the global economy turns less friendly. The success of this bold strategy depends on whether the dash for immediate results risks delaying or possibly even sacrificing medium-term gains.