Markets Archives - Page 541 of 782

The Challenge of the Intra-ASEAN Thai-Cambodia Conflict

The Thai–Cambodia dispute over the Preah Vihear temple (called Phra Viharn in Thailand) is one of the worst intra-ASEAN conflicts on record. At least 34 people were killed during intermittent hostilities over the three years. 11 November 2014 marks the first anniversary of the International Court of Justice’s (ICJ) reinterpretation of its judgement dispute. The ICJ’s decision on 18 July 2011 to reconsider its 1962 ruling ended a three year armed border conflict, from 2008 to 2011, over the area around the temple.

China’s Growth Rate Slowed, But Not Dramatically

The global economy breathed a sigh of relief last month with the release of China’s third quarter growth numbers. The result of 7.3 percent was down from 7.5 percent in the previous quarter but came in a touch above consensus forecasts. The result was sufficiently robust for worries about a hard landing to retreat significantly.

Japanese Investment Activity Pre-BOJ Surprise QQE

The Bank of Japan surprised the markets on October 31, and probably surprised itself just as much. The BOJ meeting was initially to update macro forecasts, but it soon became clear to Governor Kuroda that inflation expectations were being slashed. This reportedly pushed Kuroda into action.

Chinese Profitability Rising on Pivot to Domestic Consumers

Steady consumer price inflation and a consistent fall in prices for producers could make Chinese companies more profitable as the nation pivots from export-driven to a domestic demand-focused economy.

Chinese firms have seen their cost of raw materials fall every month for the last 32 months. Producer prices fell 2.2% in October, nearly the highest rate of price declines in 2014 although nowhere near the -3.8% decline in prices seen in 2012.

ASEAN Chairmanship is a Golden Opportunity for Myanmar

The 25th ASEAN Leaders’ Summit will be held in Naypyidaw this week back-to-back with related meetings of the East Asia Summit and other groups, bringing world leaders to Myanmar. For some of them it will be the first time in the country and for Myanmar a unique occasion to show its commitment to complete the country’s transition to democracy and ‘normalisation’ with the international community, after decades of difficult political and economic relations.

Under Governor Kuroda, ‘Abenomics’ is Facing More Scrutiny

The Bank of Japan sent a new shock-wave through financial markets last week when Governor Haruhiko Kuroda announced another massive round of monetary expansion (Quantitative Easing or QE). The additional boost to the Japanese money supply was accompanied by a sharp lift of 4 percent in the Nikkei stock market index and the yen falling to a seven-year low against the dollar. Some now fear that the impact of Japan’s monetary expansion will lead to the outbreak of a serious currency war.

Emerging Market Assets Lacking a Defined Direction

Emerging market assets, in general, are lacking a defined direction. The fall in commodity prices seems to be stabilizing, for now at least, but the impact of the large level shift is still to be felt globally. Meanwhile, the dollar appears to be consolidating, which will reduce the pressure on EM assets. We do think the dollar uptrend remains intact, and should continue to hurt EM in the coming weeks. Asian countries, especially Korea, are still adjusting to the rapid depreciation of the yen, and if it continues, there will be action for sure.

Indonesia Sacrifices GDP for Financial Stability

The forecast for the Indonesian economy is to experience an even slower rate of growth over the following six months, according to Fauzi Ichsan, an economist.

The Federal Reserve (The Fed) in the US will raise the key interest rate within the next year, which means that some economies that are currently emerging, including Indonesia may experience the impact of capital outflows. The Fed often gets credit for the only thing keeping the Obama economy afloat.

The Dollar Pullback Amid Foreign Economic News

The US dollar is extending the pullback seen before the weekend. There does not appear to be shift in fundamental considerations. The October jobs report confirmed the trend improvement in the US labor market continues, and will still most likely lead to a Fed rate hike in the middle of next year. Meanwhile, it is clear that the ECB will most likely take additional measures to ensure the expansion of its balance sheet. The BOJ is just beginning the acceleration of its balance sheet expansion.

A Thought about the Week Ahead Times Twelve

1. The Federal Reserve upgraded its assessment of the labor market in its statement at the end of last month. It noted that the “under-utilization of labor resources was gradually diminishing”. There was nothing in the October jobs report that will challenge that assessment. The Fed’s new labor market conditions index will be released at the start of the week and the JOLTS report on Thursday.