Chinese, Azerbaijani presidents agree to boost ties

 Chinese President Xi Jinping held talks Tuesday with visiting Azerbaijani counterpart Aliyev, both agreed to enhance bilateral cooperation on various fronts.

Aliyev will attend the fourth summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) during his stay in Shanghai.

Hailing Azerbaijan's staunch support to China on issues concerning China's core interests, Xi also vowed support to Azerbaijan in its efforts to safeguard sovereignty, independence and to develop its economy.

Xi said, China is ready to boost exchanges between governments, legislatures, Parties of two countries in efforts to advance political trust, and is ready to promote people-to-people exchanges, as well as communications in international and regional affairs.

China will also encourage domestic enterprises to cooperate with the Azerbaijani side in infrastructure construction, transportation, communication, new energy, among other fields, Xi said.

Xi stressed, China holds a peaceful and friendly foreign policy towards members of the Commonwealth of Independent States (CIS), and a peaceful and stable Caucasian region is in the common interests of all nations in that region, adding that China opposes to any outside interference in the regional affairs.

Aliyev said, China has set a good example to the international community by respecting other countries' development paths, and China's own development has provided ample opportunities for Azerbaijan.

Aliyev expressed hope for political support, Party-to-Party and people-to-people exchanges, and for participating in China's development of the Silk Road Economic Belt.

Aliyev also pledged support for China's efforts in safeguarding its sovereignty and territorial integrity and in combating terrorism, adding that Azerbaijan is ready to cooperate with China in major international and regional issues.

He also welcomed China to participate in Azerbaijan's agricultural, manufacturing and oil and gas development

Source: Xinhua

Chinese president urges Asian unity

President Xi Jinping on Tuesday called on Asian countries to promote unity, cooperation and development of the continent.

Xi made the call during his speech at a banquet he and his wife Peng Liyuan gave to the guests attending the fourth summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA).

There are several major emerging economies in today's Asia, a continent with a variety of systems and cultures, Xi said, and the rise of Asia has become an important driving force for world economic development and progress of civilization.

He called on Asian countries to cherish the rare opportunities, jointly consolidate and safeguard the good momentum of Asian development, promote the unity, cooperation and development of whole Asia.

As a security forum which gathers the largest number of Asian countries, the CICA has a promising future in reaching Asian consensus, promoting dialogue among civilizations and strengthening mutual trust and interaction, said the president.

China's decision to take over the CICA rotating presidency is the country's practical action to safeguard peace, he said, vowing to host a successful summit so as to make contributions to a new Asia of peace, stability and cooperation.

Source: Xinhua

CICA Shanghai summit to promote preventive action: UN chief

The upcoming summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) will promote preventive action, UN Secretary-general Ban Ki-moon said Tuesday.

"There are historical legacies, territorial disputes, maritime issues in Asia, but nothing is impossible to overcome if we are sincerely engaged in dialogue," Ban said in an interview with Xinhua.

Ban, who is on a five-day official visit to China, will attend the CICA summit in Shanghai from Tuesday to Wednesday.

Ban has high regard for China's leaders, particularly President Xi Jinping, saying China, as chair of the CICA, will help build trust and confidence, leading strong and sustained engagement, dialogue and cooperation among members.

The CICA was established in 1992 as a forum for dialogue and consultation. It now has 24 member countries and 13 observers.

Calling Asia and the Pacific an area of "dynamism and great transformation," Ban said there are some conflicts, but there is great hope and prospects for prosperity.

As far as CICA is concerned, UN is an observer, Ban said, stressing the principles enshrined in the UN charter, such as peaceful resolution of crisis, promoting dialogue and trust, promoting development and upholding human rights, which are fully respected by CICA.

"I take climate change as the No.1 priority," Ban said. A big focus of his trip to China is the climate change summit scheduled for September in New York, and the role China can play in combating climate change and in climate adaptation. "I count on the Chinese leadership. China can be a world champion in leading this campaign."

Citing extreme weather patterns around the world, Ban said, "Nature is sending us a signal that our planet is sick."

Acknowledging there is a divide between the developed countries and developing countries in terms of climate change, Ban underscored the agreed principle of "common but differentiated responsibility."

"Advanced countries have responsibilities to provide financial and technological support to developing countries, so they can mitigate and adapt to this changing situation," Ban said. "We have only one planet. We don't have a plan B. Our focus must be united action."

BRAHIMI'S DEPARTURE NOT DEADLOCK

As Joint United Nations-Arab League envoy for Syria Lakhdar Brahimi announced that he will step down at the end of May, Ban said he had to accept Brahimi's resignation "with great reluctance."

"But that doesn't mean there is deadlock," Ban said, acknowledging little prospect for the resumption of the Geneva talks on settlement of the conflict in Syria.

Two rounds of talks this year saw both sides sticking to their positions and yielded only modest cooperation on the humanitarian issue of aid access to the city of Homs. A third round has been planned but not scheduled.

Ban urged those countries which have influence on the Syrian government and opposition forces to "exercise their influence, so they will come back to the dialogue table."

"I am afraid both sides seem to have the illusion that either side can beat the other side by military means. There is no military option. There is only one peaceful solution to political process," Ban said.

On the UN humanitarian mission in Syria, Ban said there are more than 3.5 million people who UN has never reached.

The UN is working hard to destroy Syria's chemical weapons, Ban said. "Ninety-three percent of chemical weapons in Syria have been destroyed. We will completely destroy them."

Ban urged the Syrian government and the opposition forces to reconcile themselves, stressing that the UN stands ready to resolve the crisis through mediation.

Source: Xinhua

BlackRock’s Fink Says Housing Structure More Unsound Now

"BlackRock Inc. (BLK)’s Chief Executive Officer Laurence D. Fink said the U.S. housing market is “structurally more unsound” today than before the financial crisis because it depends more on government-backed mortgage companies such as Fannie Mae and Freddie Mac.

“We’re more dependent on Fannie and Freddie than we were before the crisis,” Fink said today at a conference held by the Investment Company Institute in Washington, noting that he was one of the first Freddie Mac bond traders on Wall Street.

Fink co-founded BlackRock in 1988 after a career at First Boston Corp., now part of Credit Suisse AG, where he was known for his work slicing and pooling mortgages and selling them as bonds. Fink, who has built New York-based BlackRock into a $4.4 trillion money manager, said today that with strong underwriting standards, ownership of affordable homes can again become a foundation for American families.

The U.S. Senate Banking Committee is working to overhaul the housing-finance system, after casting a narrow vote this month to advance a bill that would wind down Fannie Mae (FNMA) and Freddie Mac. Current shareholders of Fannie Mae and Freddie Mac would be in line behind the U.S. for compensation from the wind-down.

Restructuring the mortgage market is the largest piece of unfinished U.S. business from the 2008 credit crisis, when regulators seized Fannie Mae and Freddie Mac as they neared insolvency. The companies, which buy mortgages and package them into securities, were bailed out with $187.5 billion from the Treasury and backed a growing share of mortgages as private capital dried up."

Source: Bloomberg
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IMF: Germany—2014 Article IV Consultation Preliminary Conclusions

1. The German recovery is expected to gain further momentum and keep outpacing that in the rest of the euro area. Germany remains an anchor of regional stability. Balance sheets are generally healthy, fiscal consolidation has been broadly achieved underpinning confidence, and financial conditions for enterprises are favorable. Private consumption should benefit from solid wage and employment growth, while business investment should continue to strengthen. However, while domestic demand is expected to contribute to growth more than in the past, the decline in the current account surplus is projected to be gradual. Risks to the outlook are broadly balanced. The main upside risk stems from the possibility of a long-awaited and stronger-than-expected rebound in private investment. Downside risks include faltering growth in the rest of the euro area, where domestic demand is constrained by the need to repair balance sheets both in the private and the public sectors, at a time when high unemployment and low and declining inflation are hampering the repair process. A sharp slowdown in emerging markets would negatively affect German exports, while an escalation in geopolitical tensions surrounding Ukraine would likely hit investment by increasing uncertainty and hurting market confidence.

2. Policies should focus on increasing growth in Germany while at the same time supporting the recovery in the euro area. Higher public and private investment and services sector reform in Germany would raise medium-term output, reduce the large and persistent current account surplus, and generate appreciable positive demand spillovers to the rest of the euro area, thus helping rebalancing within the monetary union. In a broader context, Fund staff have also called for more accommodative monetary conditions to support the regional recovery.

3. Stronger public investment, particularly in the transport infrastructure, is needed and feasible. The government’s decision to boost spending in this area is welcome, but the amount is small relative to estimated needs. Additional investment up to 0.5 percent of GDP per year over four years could be financed without violating fiscal rules and would have only a minor impact on the debt-to-GDP ratio given the growth offset. Such a program would yield a persistent increase in GDP by crowding in private investment and would also stimulate growth in the rest of the euro area. Measures to ensure that the financed projects have true economic value need to be put in place. It would also be important to explore the role that the private sector could play in these initiatives through public-private partnerships.

4. Unlike spending on investment, pension expenditures do not increase potential output, and have negligible outward spillover effects. Planned increases in benefits to certain categories of pensioners are particularly costly. Measures to facilitate early retirement for workers with long contribution periods will likely reduce older workers’ labor market participation and add to skills shortages in some sectors, while further increasing already high social security contributions down the road.

5. Greater clarity about the future energy sector regulatory framework would encourage private investment. While the goals of the Energiewende are clear, there are implementation challenges. Surveys indicate that uncertainty about energy policy has been discouraging investment by firms outside the energy sector. The announced reform of the renewable energy law has usefully clarified important elements of the strategy, including – for the short term – the contentious regime of exemptions for energy-intensive, internationally-active firms. However, the private sector still perceives the exemption regime in the medium-term as uncertain. At the same time, hostility by some affected parties continues to delay the needed grid extension. Estimates of investment needed to upgrade the energy infrastructure are about 1-1½ percent of GDP per year until 2020. Mobilizing this investment potential would help strengthen the outlook.

6. Further reforms in services sector regulation could boost competition and productivity. There is scope for deepening competition in several areas of the services sector. In professional services (accountants, architects, engineers, lawyers, tax consultants, etc…), greater flexibility could be introduced in the areas of exclusive rights, compulsory chamber membership, and regulation on prices and fees. While barriers to competition are generally low in network industries, in rail transportation and postal services we would welcome the reinforcement of the regulator’s powers to stop discrimination against the incumbent operators’ competitors.

Urban Transport: Volvo to test electric road that charges buses as they're in motion

Volvo has announced plans to study the potential for electric roads that charge buses as they're being driven. The study will be carried out in partnership with the Swedish Transport Administration to further develop sustainable transport. A stretch of electric road may be built in Gothenburg for testing.

Volvo has already been testing electric rails built into the road as a means of powering long-haul trucks. It also already produces environmentally-friendly electric buses that are used in Gothenburg.

Now, it will look at the feasibility of combining those two concepts. The idea would allow vehicles to be charged wirelessly while they are on the move, without their having to be stationary at a charging point. The vehicles would be charged via electromagnetic induction, in the same way that someelectric buses in Korea already are.

In order to carry out the study, Volvo will work with the Swedish Transport Administration to put together a proposal for building a section of road that is equipped with the charging technology. The section of road would be located on an existing bus route in Gothenburg, and the test data collected would be used to inform future discussion and decisions on the use of such technology.

"Vehicles capable of being charged directly from the road during operation could become the next pioneering step in the development towards reduced environmental impact," says Niklas Gustavsson, executive vice president for corporate sustainability and public affairs of the Volvo Group. "Close cooperation between society and industry is needed for such a development to be possible and we look forward to investigating the possibilities together with the City of Gothenburg."

Source: Volvo

Reborn Chesapeake starts to hit its stride

A reinvented Chesapeake Energy is starting to hit its stride. A year to the day after replacing profligate Chief Executive Aubrey McClendon, the U.S. oil and gas explorer secured a two-notch credit rating upgrade from Moody's. By slashing debt and simplifying Chesapeake, new boss Doug Lawler is winning over stock and bond investors alike.

McClendon left behind a company outspending cashflow from operations by about $12 billion. Labyrinthine off-balance sheet obligations also made the true scale of the company's debt burden hard to ascertain. Standard & Poor's downgraded Chesapeake's debt after it was discovered that McClendon had taken out personal loans from one of the company's business partners, the first in a series of corporate governance scandals that eventually led to his ouster.

That Chesapeake almost seems like a distant memory. For the first time in its history, according to Barclays, Chesapeake is just one notch away from a coveted investment grade rating from both top agencies. Since Lawler took over, the spread on its 2021 bonds over U.S. Treasuries has contracted by a third to about 2 percentage points. The shares, meanwhile, have surged 38 percent, outpacing those of Lawler's former employer, Anadarko Petroleum , and rival Devon Energy .

A certain amount of luck played its part. Since Lawler was picked, the price of natural gas, the mainstay of Chesapeake's output, has climbed 16 percent. That helps make its debt more sustainable.

Lawler nevertheless has pulled the right levers. He is on track to spend less than sixth of the $3.2 billion that McClendon splashed out in 2012 on land. By 2015, Chesapeake's cashflow should match its capital spending. Throw in asset sales of $4 billion this year and the company is on track to cut net debt to trailing EBITDA from around three times to below two times by 2016.

What's more, by selling off non-core businesses like oilfield services, Chesapeake is becoming easier for investors to understand. Simple solutions are often the best ones.
Source: Reuters

Facebook to expand video ads to seven countries outside U.S.

 Facebook Inc is expanding its new video advertising service, allowing marketers to show the television-like spots to users of the social network in Britain, Brazil and five other countries, the company told Reuters.

The move marks a significant ramping up of one of Facebook’s most closely watched new advertising products, which analysts believe could help the Internet company capture a bigger slice of lucrative brand advertising budgets.

The 15-second video ads appear in users’ newsfeeds and play automatically with the sound muted until they are clicked on. Facebook began selling the ads in the United States in March to a small group of marketers including insurance company Progressive Corp and television broadcaster NBC, a unit of Comcast Corp .

Facebook said the performance of the initial group of video ads in the United States has been strong, but declined to elaborate.

As it did in the United States, Facebook is moving cautiously to roll out the auto-play video ads in its overseas markets to avoid annoying users. The company will initially work with a limited group of advertisers in France, Germany, Brazil, Japan, Canada, Australia and Britain starting next month.

Each ad must pass a quality-control test that Facebook administers in conjunction with video analytics firm Ace Metrix.


Most of the commercials in international markets will not appear on Facebook’s website until September, as the Internet company spends several months working closely with marketers to ensure that the spots meet its quality standards, a Facebook spokesman told Reuters.

But he said that companies whose commercials are deemed acceptable could begin airing them on Facebook in June, in time for the World Cup international soccer tournament, a popular event for brand advertisers.

Video ads, along with ads on the Facebook-owned Instagram photo-sharing app, are among the new businesses that analysts believe could turn into important money-makers for Facebook, though the company has said it does not expect video ads to contribute meaningfully to its business this year.

Facebook’s ad revenue grew 82 percent year-on-year to $2.27 billion in the first quarter.

The price that marketers pay to run a video ad on Facebook is determined by the size of the audience as measured by measurement firm Nielsen. Marketers can choose specific times of day for their spots and can target ads according to age and gender.

Online video ads, which typically carry much higher rates than other forms of online ads, could help Facebook bolster its ad revenue in international markets where the company’s average revenue per user is lower than in the United States and Canada.

Roughly 84 percent of Facebook’s 1.28 billion monthly users are outside of the United States and Canada, with 87 million monthly users in Brazil and 34 million monthly users in the UK at the end of the first quarter, according to the company. Daily mobile users in Brazil increased 75 percent to 35 million in the nine-month period ending in the first quarter, Facebook said.

Source: Thomson-Reuters

India: -Modi mania and activism show growth premium: James Saft

May 20 (Reuters) - Investor enthusiasm for new Indian Prime Minister-to-be Narendra Modi and for activist investment may spring from a common underlying cause: the reality of lower, less explosive growth.

India handed Modi and his Bharatiya Janata Party (BJP) a thumping victory in elections last week, setting off an equally explosive rally in shares, which jumped as much as 6 percent on the day the votes were counted and the results announced.

On the surface India’s rally, essentially a bet that Modi’s pro-business and development policies will succeed, seems very different from the joy with which investors have taken to greeting news that an activist investor has taken a stake in a company and is banging the table for change.

Underneath both can be seen as a reaction to more difficult times, conditions in which growth is at a premium.

Just as investors push for yield when interest rates decline, taking on more risk in search of a little extra return, so do they put a premium on potential cash flows as growth declines. That can be via genuine organic growth, as Modi hopes to create with infrastructure investment, or it can be the result of financial engineering, as with the share buybacks and dividends so often demanded by activists.

In both cases we get what may be an outsized reaction to changes in policy simply because more difficult conditions make small, incremental increases in outcome that much more valuable.

While the hope within an Indian context is for faster growth, the reality in the rest of the world is less upbeat. Not only did both the euro zone and U.S. economies barely make headway in the first quarter, but Chinese growth, long to be relied upon, has sputtered. Citigroup’s Economic Surprise Index, which measures economic data relative to expectations, is in negative territory for the U.S. and Japan, is negative and falling in Europe and has more or less fallen off a cliff in China.

That weakness in China, which is growing but far less rapidly than we are used to, is ironically making the hope of future growth in India that much more attractive. Indeed foreigners front-running a Modi victory committed upwards of $16 billion into Indian shares in the past six months, taking their holdings to more than a fifth of all Mumbai-listed issues.

None of this is to say these are the correct strategies, but they certainly become more attractive to investors when the low-hanging fruit elsewhere has been plucked.


RARITY PREMIUM

But India, history shows, is a difficult place in which to effect 'business-friendly' reform, and though Modi and the BJP have the best mandate in decades successes will carry political costs which may make them self-limiting. Growth too, as ever with structural change, will only come at a considerable delay to when the reforms are begun, much less when elections are held. It seems likely, then, that the market is crediting Modi and the BJP party with perhaps a bit more ability to get things done immediately than they will display.

Are Indian shares worth 8 percent more than a month ago? Impossible to say, but very likely that they have enjoyed a tail wind because of the lack of positive stories elsewhere. After all, there aren’t that many societies these days with more than a billion people and better growth prospects than a year ago. That lack increases India’s value, regardless of its degree of success in enacting reforms.

The lack of great growth stories is also very likely part of the reason for the growing popularity of activist investing, which at its best is really no more than shareholders playing their proper role as owners. More than $3.5 billion net cash flowed into activist hedge funds in the first quarter alone, according to Hedge Fund Research, well over double the pace in 2013.

Though activists haven’t got anything like a monopoly on knowledge of how to extract value from a company, it is very likely that they get a better hearing, both from corporate boards and from other investors, during times in which organic growth is more difficult to come by.

Take Apple for example, which came under pressure from activists Carl Icahn and David Einhorn over the past year, positions taken after the company amassed a huge cash pile and seemed less sure-footed in expanding its product lines.

Though Icahn eventually dropped a proposal seeking $50 billion of additional share buybacks, Apple did come through with much of what they’d been asked for. The company’s earnings in April featured $30 billion in new buybacks, a 7 for 1 stock split and a big hike in its dividend.

If the current period of slower growth proves protracted, we can expect many more such stories, both corporate and national, and an increasing willingness by investors to pay a premium for hoped-for improvements.

Putin yet to seal gas deal on China visit, wins support on Ukraine

China and Russia failed to sign a $400 billion gas supply agreement on Tuesday, despite growing urgency for the Kremlin to seal a deal as it faces economic and political isolation in the West over the crisis in Ukraine.

Negotiators from both countries have been unable to bridge differences on price, a spokesman for Russian President Vladimir Putin said in Shanghai, meaning that the contract was not signed on Tuesday as many in the industry had predicted.

But there is still a chance that the two sides could agree before Putin leaves China on Wednesday, or, more likely, in time for an economic forum in the Russian city of St. Petersburg later this week.

Despite disappointment so far over an energy deal seen as vital to both countries' long-term economic interests, Putin did receive a rare nod of support from Chinese President Xi Jinping over the Ukraine crisis.

In a statement issued after the two leaders met, Russia and China called for the de-escalation of tensions in Ukraine and for "peaceful, political ways to resolve existing problems." The countries also referred to the crisis as "domestic".

Across much of the rest of the world, Putin stands accused of fomenting pro-Russian sentiment in neighbouring Ukraine, which has already lost the peninsula of Crimea after it was annexed by Moscow.

In more recent conciliatory steps, Putin ordered Russian forces massed on the Ukraine border to return to bases and welcomed what the Kremlin called initial contacts between the Ukraine government and those calling for more power for largely Russian-speaking regions in the east.

China's Xi has underscored the importance of ties with Russia, and Moscow was the first capital he visited after assuming the presidency last year. Xi also attended the Winter Olympics in Sochi at Putin's invitation.

While observing a joint naval exercise conducted outside of Shanghai, Xi and Putin said the two neighbours would cooperate to maintain stability in the region.

But, while the two see eye-to-eye on many diplomatic issues including the conflict in Syria, and generally vote as one on the United Nations Security Council, China has been less willing to support Russia openly on Ukraine.


CHINA "HAS UPPER HAND"

Expectations had run high that Putin's China visit would provide the setting for both parties to ink a contract under which state-owned Gazprom would supply China National Petroleum Corp (CNPC)[CNPET.UL] with 38 billion cubic meters

(bcm) of natural gas a year for 30 years.

China's gas consumption is forecast to more than double between 2014 and 2020, while Beijing's move to curb coal use led to a severe gas supply shortage last winter.

The failure to reach a deal so far, despite talk of a narrowing price gap, suggests China is driving a hard bargain.

"Despite all the talk out of Russia, despite their desperation, China has the upper hand," said Gordon Kwan, regional head of oil and gas research at Nomura Research.

"China wants to really squeeze the price lower. China has other options such as the gas project in Sichuan and North American liquefied natural gas. I think it will be a mistake by Russia if they couldn't agree on a deal just because of the price."

Gazprom's shares were down 2.3 percent at 1105 GMT on Tuesday, underperforming a flat Moscow stock market
But Russia said there was still a chance a deal could be reached in China.

"The visit is not over yet. Talks will continue ... substantial progress is reached but there is still work to do on price," Putin's spokesman, Dmitry Peskov, told reporters. "Talks are going on today, it can happen absolutely any moment."

Analysts said other issues, such as details over pipeline construction, upstream equity participation for Chinese firms and pre-payment, may have also contributed to the delay.

Chinese state media on Monday quoted Putin as saying that preparations for a gas deal had entered "the final phase", while

Gazprom said at the weekend that it was "only one digit" away from a deal.

It was not clear exactly what the "digit" referred to.

Gazprom's average 2013 gas sale price to Europe was $10.60 per million British thermal units (mmBtu) - the pricing standard used in global gas trade. That works out at $380 per 1,000 cubic metres according to the pricing convention used in Russia.

Industry sources have said Gazprom was hoping for $10-$11 per mmBtu from China. China is understood to pay $9 per mmBtu to Turkmenistan, the former Soviet state in Central Asia that beat Gazprom to the Chinese market.

Sources close to Gazprom and in the gas industry said the company wanted China to pay $25 billion up front to secure future gas supplies, which should start in 2018.

China has so far not been willing to commit, concerned that other suppliers would seek similar deals.

Russia and China said in the joint statement that they would strengthen cooperation in energy and infrastructure in Russia, and would also step up financial cooperation and look to increase trade in the rouble and the yuan currencies.

Source: Reuters

Euro shares, peripheral bonds feel election pressure

 European shares and peripheral bonds buckled for a second day running on Tuesday, as political angst outset optimism over fresh support from the ECB.

The premiums demanded by investors to hold Spanish, Italian and Portuguese bonds rather than German Bunds rose to two-month highs amid growing nervousness about this week's European Union elections. [GVD/EUR]

Coupled with recent disappointing growth data, the worry is that strong showings by Eurosceptic parties from Greece to France could derail domestic reforms.

Shares across the region <.FTEU3> faltered after a broadly solid start. The main bourses in London <.FTSE>, Frankfurt <.GDAXI> and Paris <.FCHI> dropped 0.5, 0.3 and 0.5 percent respectively. U.S. stock futures pointed to a lower start for Wall Street.

The upcoming elections will be the first time since the euro zone debt crisis began that the European electorate will get a chance to voice its opinion, said Kerryy Craig, a global markets strategist at J.P. Morgan Asset Management.

"The polls are suggesting that 25 to 30 percent of seats could go to the Eurosceptic parties ... that shows that a lot of people aren't really happy with the way things are going," he said. But that "may actually force the more centre right and centre left parties to work more closely and not have the feared big impact on the policy direction at the European level."

The euro was back under $1.37, after two weeks of hints the ECB will loosen policy, which have undermined bets the single currency would top $1.40.

A trio of ECB policymakers - Finland's Erkki Liikanen, Austria's Ewald Nowotny and Spain's Luis Linde - are all due to speak later. Analysts will be hoping for further clues on the decisions likely to be made at its meeting at the start of June.

"Largely baked into the (market) prices are a refi rate cut and a negative deposit rate and perhaps something additional like a targeted LTRO," said J.P. Morgan AM's Craig. "But the chance of anything firm in terms of asset purchases is low and markets had maybe been pricing a little bit of that in."

Source: Reuters

China excludes Windows 8 from government computers

BEIJING, May 20 (Xinhua) -- China has announced that it will forbid the use of the Windows 8 operating system in new government computers, a move to ensure computer security after the shutdown of Windows XP.

All desktops, laptops and tablet PCs to be purchased by state organs must be installed with operating systems other than Windows 8, according to an online statement by the Central Government Procurement Center.

The measure only targets computers used by government offices, while the personal computer market is expected to stay unaffected.

China, Russia pledge stronger cooperation in trade, energy. Joint Statement.

SHANGHAI - China and Russia on Tuesday vowed to beef up cooperation in a wide range of fields, including finance, trade, energy andtransportation infrastructure.

The pledge came in a joint statement during a visit by Russian President Vladimir Putin. Putin is in China for the 4th summit of theConference on Interaction and Confidence Building Measures in Asia in Shanghai and a state visit at the invitation of President Xi Jinping.Xi held talks with Putin in Shanghai on Tuesday.

According to the joint statement, the two countries will expand local currency settlement for bilateral trade, cross-border investment andfinancing and will strengthen exchanges for the formulation of macro-economic policies.

The two pledged to increase bilateral trade to 100 billion US dollars by 2015 and 200 billion US dollars by 2020 from nearly 90 billion USdollars last year.

The two will work to ensure balanced trade, optimize trade structure and expand mutual investment in fields like transportation infrastructure,mining development, and housing projects in Russia, said the statement.

The two sides vowed to deepen cooperation in the petroleum industry, kick-start Russia's supply of natural gas to China as soon aspossible and jointly develop coal mines in Russia. The two also will consider jointly building power plants in Russia to increase power supplyto China.

The two countries will strengthen cooperation in major projects in the peaceful use of nuclear energy, civil aviation, research on basicaerospace technologies, satellite navigation and manned space flight, said the statement.

The two will speed up the construction of cross-border transportation infrastructure, including bridges on cross-border rivers, and Russia willfacilitate China's goods shipment using its railway networks, ports and through the Northern Sea route, said the statement.

The countries also pledged constructive cooperation in the use and protection of water resources in cross-border rivers as well as in theestablishment of cross-border nature reserves to protect biodiversity.

Source: ChinaDailyUSA

Interview with Putin: Russia-China ties at highest level in history

Question: What are your expectations concerning the upcoming visit to China? What results do you expect from the Summit of the Conference on Interaction and Confidence Building Measures in Asia in Shanghai?

Vladimir Putin: I am looking forward to a new meeting with President of China Xi Jinping, with whom I have good working and personal relations. We will discuss how previous agreements are being implemented and outline new objectives for the future. I am sure that the upcoming talks will give a powerful impetus to further strengthening of bilateral cooperation in all areas and deeper coordination in the international arena. The summit’s results and future plans will be reflected in the Joint Statement by the Heads of State and a strong package of documents expected to be signed during the visit.

Russia and China have actively advocated establishing a new security and sustainable development architecture in the Asia-Pacific. The forthcoming Summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) serves to contribute to addressing this task.

At the upcoming summit, the Secretariats of CICA and SCO are expected to sign a Memorandum of Understanding. That would serve as another step towards shaping a framework of partnerships between this region’s organizations and forums.

Russia places China as foreign trade partners

Q: Cooperation between China and Russia has been steadily increasing, but 

uncertainties in global economy persist. The emerging markets are faced with new challenges and slowdown of economic growth. How can our two countries help each other to counter these challenges? How can we ensure steady increase of mutual trade and reciprocal investments?

Vladimir Putin: Today, Russia firmly places China at the top of its foreign trade partners. In 2013, the volume of bilateral trade was close to $90 billion, which is far from being the limit. We will try to increase trade turnover to $100 billion by 2015 and up to $200 billion by 2020.

The arrangements on export of Russian natural gas to China have been nearly finalised. Their implementation will help Russia to diversify pipeline routes for natural gas supply, and our Chinese partners to alleviate the concerns related to energy deficit and environmental security through the use of "clean" fuel. We implement a list of joint projects in 40 priority areas with total investments of about $20 billion.

Cooperation on international and regional affairs

Q: In 2015, our countries will celebrate the 70th anniversary of Victory over fascism. What is the impact of joint Russian-Chinese efforts to oppose the attempts aimed at challenging the results of World War II?

Vladimir Putin: We share an idea that it is unacceptable to revise the results of the war, as the consequences will be extremely grave.

It is clearly evident from the tragic events currently unfolding in Ukraine, where violent neo-Nazis are waging a real campaign of terror against civilians.

Source: ChinaDailyUSA

China slams indictments over cyber snooping

China reacted strongly on Monday to US announcement of indicting five Chinese military officers for alleged cyber theft.

Foreign Ministry spokesman Qin Gang described the US move as "based on fabricated facts" and "grossly violates the basic norms governing international relations and jeopardizes China-US cooperation and mutual trust".

Qin said China has lodged its protest with the US right after the announcement and has urged the US side to immediately correct its mistake and withdraw the "indictment".

On Monday, the US Justice Department charged five members of the Chinese People's Liberation Army of conducting economic cyber-espionage against US companies. It was the first time that the US has filed such a charge against another nation.

"The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response," Attorney General Eric Holder told a news conference.

Westinghouse Electric, Alcoa, Allegheny Technologies Inc, United States Steel, the United Steel Workers Union and Solar World are some of the targets of the alleged Chinese hacking.

But the US side did not say whether the alleged Chinese hacking is also for military and national security reasons, a pretext the US has been using all the time to defend its widespread cyber espionage against other nations, as revealed by former National Security Agency contractor Edward Snowden.

Snowden revelation showed that NSA has engaged in widespread hacking activities against not only Chinese government and military entities, but also Chinese companies and universities.

The actual picture of NSA hacking activities is believed to be much larger since only 1 percent of the 58,000 files received by The Guardian from Snowden have been made public, according to the newspaper editor Alan Rusbridger.

In Beijing, spokesman Qin said China has decided to suspend activities of the China-US Cyber Working Group given the lack of sincerity on the part of the US to solve issues related to cyber security through dialogue and cooperation.

The working group was set up last year by the two governments to deal with bilateral cyber security concerns.

"China will react further to the US 'indictment' as the situation evolves," he said, without saying whether China will retaliate by indicting US officials responsible for the rampant NSA hackings against China.

Qin said China is steadfast in upholding cyber security.

"The Chinese government, the Chinese military and their relevant personnel have never engaged or participated in cyber theft of trade secrets. The US accusations against Chinese personnel are purely ungrounded and absurd," he said.

Qin said China is a victim of severe US cyber theft, wiretapping and surveillance activities.

"Large amounts of publicly disclosed information show that relevant US institutions have been conducting cyber intrusion, wiretapping and surveillance activities against Chinese government departments, institutions, companies, universities and individuals," he said.

"China has, on many occasions, made serious representations with the US side. We once again strongly urge the US side to make a clear explanation of what it has done and immediately stop such kind of activities," Qin said.

The latest data from the National Computer Network Emergency Response Technical Team Coordination Center of China showed that from March 19 to May 18, a total of 2,077 Trojan horse networks or botnet servers in the US directly controlled 1.18 million host computers in China, according to a Xinhua News Agency report on Monday.

The center found 135 host computers in the US carrying 563 phishing pages targeting Chinese websites that led to 14,000 phishing operations. In the same period, the center found 2,016 IP addresses in the US had implanted backdoors in 1,754 Chinese websites, involving 57,000 backdoor attacks.

The US attacks, infiltrates and taps Chinese networks belonging to governments, institutions, enterprises, universities and major communication backbone networks, Xinhua quoted a spokesperson from China's State Internet Information Office as saying.

Douglas Paal, vice-president for studies at the Carnegie Endowment for International Peace, said the US decision has the look meant largely for a domestic audience to show that the administration is not as feckless as it looks.

"But actually prosecuting anyone in China is likely to prove feckless as well," he said.

"This leads me to conclude that it is the equivalent of denying visas to Russians close to Putin, which makes it a form of sanction on China for its commercial espionage."

Paal believes the US frustration with China's recent behavior over disputed islands may also lie behind the decision to press charges.

"The administration's effort to address this legitimate issue is hopelessly compromised by the Snowden revelations and I would think it would learn when to cut its losses," he said.

"Giving China an excuse to end the bilateral cyber dialogue is also counterproductive."

Zhu Zhiqun, professor of political science and international relations at Bucknell University, said the latest development exposes one of the biggest problems in the bilateral relationship: deep-rooted suspicion and lack of mutual trust.

"What the US and China can and should do now is to stop finger-pointing and to sit down and map out some mutually-agreed rules or protocol to regulate cyber security," Zhu said.

"Consultation and cooperation will be more helpful and effective than accusation and confrontation."

Source: ChinadailyUSA

China's real estate market: collapse or managed slowdown?

In the middle of the previous decade, when large numbers of newly built properties remained vacant as housing prices tripled, predictions that the market was on the verge of collapse abounded. The bubble did not burst, however, as government policies aimed at stopping overseas speculators and limiting purchases of second homes seemed to control the threat.

But many observers now see new danger signs in the real-estate sector, making the possibility of a crash seem more certain to them.

"We are convinced that the property sector has passed a turning point and that there is a rising risk of a sharp correction," Nomura Securities analysts Zhang Zhiwei wrote investors this month. Behind the comment were Chinese government statistics showing that the amount of unsold commercial and residential property in the country hit an all-time record in March. China's national growth rate is now seen as possibly dropping below the 6 percent mark in 2014 amid a glut of housing supply and tight project-development funds.

Driving Nomura's prediction were negative first-quarter property investment figures in four of China's 26 provinces, including two - Heilongjiang and Jilin - where the investment dropped by more than one quarter in the period. When the property industry turns downward in China, national growth suffers because of the industry's major influence on economic performance.

Other analysts dismiss the idea of a short-term popping of China's property bubble and see a gradual deflating of the bubble.

One of them is Barclays PLC's Barclay Capital, who predicts that will occur in the next 18 months as government monetary policies and developers manage their activities more carefully.

"We believe the government will likely tolerate some further correction, although not too steep, and also allow local governments more discretion to use 'differentiated housing policies' that fit local situations," Barclays China economist Chang Jian said.

UBS AG said China's leaders will try to slow the downturn through policy moves. "The government still has the means and willingness to mitigate a property downturn, including by increasing infrastructure investment and relaxing property policies," UBS economist Wang Tao said.

"As such, our base case forecast is for the property downturn to remain manageable," Wang said.

Sophii Weng, an economist with Standard Chartered Bank in New York, told China Daily the bank expects China's government to step in to blunt the impact of a housing-market slowdown as property investment growth declines through this year.

"Given the importance of the property sector to China's economy, we think the government will introduce more loosening measures to mitigate the impact of a housing-market slowdown," Weng said in an interview.

Moves by China's central bank, the People's Bank of China, requesting that banks speed up mortgage lending, set mortgage rates at reasonable levels, and do more to meet first-home buyers' mortgage requirements "signal that the central government would like to stabilize the housing market", the economist said.

National growth is "clearly decelerating - and without more aggressive short-term stimulus measures, we think it is set to slow further," Weng said. To meet or come close to Chinese Premier Li Keqiang's 2014 goal of 7.5 percent GDP growth, Beijing will need to gradually loosen policy in the second and third quarters, Weng said.

"We expect this loosening to take the form of increased investment" as well as export-tax rebates, reserve requirement ratio cuts in the second and third quarters and a basically flat Chinese yuan against the US dollar.

Such moves would help "stabilize growth and confidence", the economist said.

Observers like Ma Guangyuan, a member of the 12th Beijing Municipal Committee of the Chinese People's Political Consultative Conference and director of the Private Economy Research Center under Renmin University of China, find it hard not to conclude that the decade-long Chinese real estate boom may be over.

Ma wrote in China Daily that the average price of newly built homes in China's 70 major cities rose 8.7 percent year-on-year in February, slightly lower than the 9 percent growth in January, according to data from the National Bureau of Statistics.

The number of cities that saw prices rise fell to 57 in February from 62 in January while prices rose just 0.7 percent on average in the latest month, compared with a modest 1.2 percent rise a month earlier, Ma pointed out. Moreover, in Beijing, Shanghai, Guangzhou and Shenzhen - major cities that saw huge increases just a year ago - the price increase fell below 20 percent, the research center director noted.

"Along with the slowing price increases is the drastic drop in home sales. In Beijing, only 2,221 new homes were sold in February, a record low since 2007," Ma wrote. "The February volume for sales of secondhand houses was 5,441, decreasing by 38 percent from January and 46.3 percent from a year earlier, a new low in 24 months."

Source: ChinaDailyUSA

Deutsche Bank Analyst sees value in few internet stocks

WSJ: Lloyds Bank tightens lending criteria on U.K. Mortgages. Mounting fears of property bubble.

Fitch Ratings to host panel Discussion in Emerging markets Energy

WSJ: Gas Deal Between Russia and China is of great Symbolic Value

WSJ: Putin offered to scrap some taxes on gas destined to China, in order to close gas supply deal.

Source: The Wall Street Journal

Russian, Chinese Leaders Silent on Gas Deal in Shanghai

The presidents of China and Russia failed to sign a $400 billion gas supply deal at a meeting today in Shanghai.

Talks will continue as the two countries seek a compromise, Alexey Miller, chief executive officer of Russian gas-exporter OAO Gazprom, said in a statement after Vladimir Putin and his Chinese counterpart Xi Jinping signed bilateral agreements that didn’t include the gas deal.

Russian officials said before the meeting that the two sides were very close to deal, more than 10 years after talks started. The stumbling block has been price, though with Putin facing trade and financial sanctions from the U.S. and European Union after he annexed Crimea, a deal was seen as probable.

The two countries are working out pricing, and an agreement could be reached at any time, Dmitry Peskov, Putin’s spokesman, said after today’s meeting.

Source:Bloomberg