Global Property Markets II

With these criterion Canada’s market is especially vulnerable. A large bubble now looks set to burst. Home sales in March were 15% down on a year earlier. Buyers are in short supply. A recent poll showed that only 15% of Canadians are likely to buy a home in the next two years, down from 27% last year—the steepest decline in the 20-year history of the survey. After a big boom, the housing bust will be a wrenching affair.
By contrast, the recovery in the United States, where house prices are up by 9.3%, is based on solid foundations. Previous falls in prices have made homes cheap by historical standards. The recovery has been driven by investors rather than owner-occupiers, but interest on the part of homeowners is increasing. Housing starts are rising sharply.
In the crisis-stricken euro area the Spanish freefall will continue, judging by still- elevated valuations. Housing markets are depressed throughout southern Europe, notably in Italy. But the agony is no longer confined to the periphery of the euro zone. 
Home prices are falling fast in the Netherlands and they are also sagging in France. High valuations in both countries point to more misery ahead.
The big exception in the euro zone remains Germany, which avoided the great housing boom before the financial crisis. Property prices continue to rise but modestly.

Source: The Economist

China's "Taobao Villages" a transitional stage in agricultural and rural modernization.

Wantou, a village 350 km from Beijing, has become known as one of China's "Taobao Villages," home to over 500 online stores on Taobao, China's largest online shopping site under the e-commerce giant Alibaba.

With a stable but "boring" job in a nearby town, An in 2009 pioneered online sales of handwoven crafts in Wantou, where a tradition of wicker handicrafts has been handed down for at least 600 years.

An has since opened a physical store and a small factory with the cooperation of six neighboring family workshops in order to fill the orders flooding in from customers across the country.

"The online store has gained popularity and trust among netizens, who also bring business to my physical store," said An.

Chinese internet Alibaba defines a "Taobao Village" as a village in which over 10 percent of households run online stores and village e-commerce revenues exceed 10 million yuan per year.

By the end of 2012, more than 1.63 million Taobao stores were registered in rural areas. Total transactions from the 14 "Taobao villages" hit 5 billion yuan last year, according to a report released by Alireserach.

The growth of "Taobao Villages" has brought vitality to traditional agricultural areas of China, said Chen Liang, senior expert with Aliresearch.

Chen said that the villages are exploring a new path for China, with potential to realize sustainable economic growth and narrow the urban-rural income gap, much like the miracle created in Xiaogang Village over 30 years ago.

Earlier this month, the government of Shandong Province, a region known as China's farm produce powerhouse, put forward preferential policies for developing e-commerce, including helping graduates and migrant workers start online farm produce trade in remote areas.

China's Internet users reached 591 million in the first half of 2013, and e-commerce revenues hit 4.98 trillion yuan in the same period.

"We should pay closer attention to 'Taobao villages' in the long term. They are a transitional stage in agricultural and rural modernization," said Qiu Zeqi, director of the Center for Sociological Research and Development Studies of Peking University.

Source: Xinhua

U.S. With mortgage interest rising,the outlook becomes less certain

Record-low interest rates fueled a recovery in the housing market that spread to the broader economy. With mortgage interest rates rising in recent months, the outlook has become less certain.
The Fed signals that it may begin to  tap the asset purchases has led to an increase in the 30-year fixed-rate mortgage to more than 4 percent in recent weeks, having hovered in the 3 percent range for months.
At the National Association of Realtors, which releases the figures on sales of previously owned homes, spokesman Walter Molony says, "It looks like most of the growth in sales has already taken place this year. Higher mortgage interest rates are now causing home sales to level out."
Molony says the trade group expects sales to rise between 2 percent to 3 percent in 2014, with an increase in home prices of up to 6 percent. That's compared to what he characterizes as an 11 percent gain for this year.

Economist Robert Brusca notes that there's been a significant recovery from the depths of the housing market collapse. "Both new and existing home sales have been rising strongly in this recovery after a slow start," Brusca says. "Existing sales are up some 47 percent from their low point, while new home sales are up some 84 percent from their low. From those reference points, median existing home prices have risen 17 percent, with new home prices up 13 percent."

At the same time, he's sees some signs that are worrisome. "For low-priced houses ($100,000 and lower), existing home prices are still lower year-over-year by nearly double digits. New homebuilding is cherry-picking the hottest regions and is not representative of the (U.S.) housing market." Homebuilder stocks have recently been declining amid lower expectations.

As for helping to spread the wealth, so to speak, to the broader economy, Brusca says, "It is not surprising that sales of items that relate to homebuying -- like appliances, furniture and building materials -- are lagging."

Source: Bankrate

Research & Development in the Euro Zone

One of the five headline targets of Europe 2020 Strategy is to
achieve an R&D intensity (R&D expenditure as a percentage of
GDP) of 3% in the EU. In 2011, R&D intensity in the EU-27 stood
at 2.03%. Despite an increase on the 2010 figure (2.01%), it was
below the figures recorded in Japan (2009: 3.36%), South Korea
(2010: 4%) and the United States (2009: 2.87%), but higher than
in China (2009: 1.7%).
Among the EU Member States, only Finland (3.78%), Sweden
(3.37%) and Denmark (3.09%) exceeded the EU goal of devoting
3% of GDP to R&D, also outperforming the United States.
Another seven Member States, namely Germany (2.84%), Austria
(2.75%), Slovenia (2.47%), Estonia (2.38%), France (2.25%), the
Netherlands and Belgium (both 2.04%) were above the EU-27
average although below the target figure of 3%.
Between 2005 and 2011, R&D expenditure in the EU-27 increased
by an average of 3% per year, reaching EUR 257 billion in 2011.
Germany, France and the United Kingdom together accounted
for more than half of all R&D expenditure in the EU-27.
The business enterprise sector (BES) was the largest of the
four main institutional sectors of R&D performance in 2011,
accounting for 62.3% of EU-27 R&D expenditure. The higher
education sector (HES) and government sector (GOV) followed
with shares of 24.0% and 12.7% respectively.
In many of the countries under review, the ‘manufacturing’
sector accounted for the greatest share of business enterprise
R&D expenditure. This was notably the case in Germany,
Slovenia, Finland and Sweden, where 75% or more of R&D
expenditure by the BES was devoted to manufacturing. However,
eight other Member States (Bulgaria, Estonia, Ireland, Cyprus,
Latvia, Lithuania, Portugal and the United Kingdom) saw more
than half of their expenditure go on the services of the business
economy.

Source:  Eurostat

Enhance competitiveness of Chinese Agriculture

In recent years, investment in excess of three billion yuan has been devoted to furthering agricultural industrialization, an important part of the national program for enhancing the international competitiveness of Chinese agriculture. In 2004 alone the government set up 35 agricultural programs, supported by 30 million yuan from the Central Government, over 50 million yuan from local governments, some 100 million yuan of bank loans and more than 600 million yuan raised by enterprises and farmer.
Now a pattern has been formed, with 582 key national enterprises and over 2,000 key provincial enterprises as spearhead, and agencies of various forms connecting farmers with the production base. Leading enterprises in certain sectors, e.g., corn processing, dairy industry and chicken production, have taken major market share and play an increasingly important role in the development and pricing of their respective industries.

Since 2003, the state has set up six types of demonstration projects for the industrialization of modern agro-technology, so as to promote the use of advanced technology for agricultural production, and enhance foreign earnings from exports of farm products.

These projects include industrialization of breeding and cultivation of excellent new varieties and fine strains; high-efficiency, eco-friendly planting and aquatic breeding technology; water-saving and precision technologies; downstream processing of agricultural and ancillary products; pollution-free inputs (e.g., fertilizer and fodder) and the establishment of an agricultural information platform. The "downstream processing of main agricultural products project" was listed as an important sci-tech project during the 2000-2005 Five-Year Plan period. It aims at developing key technologies and equipment for downstream processing of staple agricultural products, research into integrated quality control systems and the quick testing of agro-product technology and equipment. Once completed, some of China's technological aspects will meet the advanced international standard. Meanwhile, the "dairy industry development" and "water-saving agriculture" projects have been listed among important sci-tech application programs initiated by the Ministry of Science and Technology.

Source: Xinhua

China: Innovation in railway funding and speed up railway construction

The central government on Monday published detailed plans to innovate railway funding and speed up railway construction as the new leadership is devoted to deepening reforms.

The State Council said in a statement that railway investment this year is likely to exceed the planned amount. Also, for this year and the following two years, the central government will provide transitional subsidies for China Railway Corp, established in March after a separation of the now-defunct ministry of railways' government and enterprise functions.

These measures are expected to strengthen growth in the world's second-largest economy, which slowed to 7.5 percent in the second quarter of this year.

Railway construction should be accelerated in an attempt to exceed the 2013 investment plan, while the building of railways and related infrastructure should be prioritized in the western and less-developed areas, the statement said.

The reform will see railway fundraising methods diversified and encourage private investment in railway construction as the ownership and management rights of intercity, suburban and branch railways, as well as railways for resource development, will be open to local government and social capital.

In addition, a railway development fund to support national railway projects will be set up with founding capital from the central financial fund coupled with social investment. Private investors will gain reasonable rewards, although they will not directly participate in the construction and management, according to the statement.

"Before the railway freight price determined by the market and the accounting system for nonprofit transportation is established, central finance will support the CRC with transitional subsidies this year and the following two years in view of the latter's insufficient capital, heavy interest rate and the nonprofit function of railway transportation," the statement said.

Source  China Daily

Sixteen Asian and Oceanian countries Monday agreed to adopt common tariff rates

Sixteen Asian and Oceanian countries Monday agreed to adopt common tariff rates in principle under a proposed regional free trade pact.

The countries agreed to work out a broad plan for tariff reductions and elimination under the Regional Comprehensive Economic Partnership pact before a ministerial meeting is held in Myanmar in summer 2014, said sources with access to the conference.In addition, the nations confirmed that they will speed up discussions so that they can end the RCEP talks by the end of 2015.

China's central bank governor Zhou Xiaochuan ready to liberaze deposit interest rates

China's central bank governor Zhou Xiaochuan said Monday the economy will not post persistent slowdowns, indicating the bank is ready to free the long-awaited deposit interest rates to fully liberalize the financial market.

During an interview, Zhou told reporters that the People's Bank of China (PBOC) will continue to implement the prudent monetary policy and conduct some structural finetunings if needed.

The current growth rate is at normal level. China still has powerful endogenic potential of growth and will not slow further, he said.

In response to when the central bank will liberalize the deposit interest rates, Zhou said PBOC is ready and the reform is underway as planned. He is personally optimistic.

Precious Metals Prices 7.10 Eastern Time

Gold Price Futures          3 months      US$   1,366.02

Silver Price Futures        3 months      US$       22.96