Japan: pump price tops 160 yen for 1st time in nearly 5 years

The average retail price of regular gasoline in Japan as of Monday topped 160 yen per liter for the first time since October 2008, government data showed Wednesday.

The increase reflects continuing high prices of crude oil due to concerns about political uncertainty in Egypt as well as the weakening yen.

The average gasoline price climbed 1.3 yen from a week before to 160.1 yen per liter, the Agency for Natural Resources and Energy said.

Japanese companies increase summer bonuses

Average summer bonuses that major Japanese companies agreed to pay rose for the first time in two years in 2013, a private-sector survey showed Wednesday.

This year's summer bonuses totaled 809,502 yen per unionized worker, topping 800,000 yen for the first time since 2008, according to the survey by the Japan Business Federation.They represented an increase of 4.99 pct from a year earlier

China: CRC to increase railway investment

State-owned railway giant China Railway Corporation (CRC) has announced a plan to raise fixed-asset investment to 660 billion yuan (106.5 billion U.S. dollars) this year to boost railway development.

The amount, 10 billion yuan more than the investment target set earlier this year, has been interpreted as a signal that greater investments will be made in infrastructure to boost the economy, sources with the CRC said.

About 5,500 kilometers of railway lines will be put in operation, bringing the total length of railways in operation to 100,000 km by the end of 2013. Express rails are expected to exceed 10,000 kilometers.

In the first seven months of this year, the CRC has invested 261.7 billion yuan in railway fixed assets, up 16 percent year on year.

China's Huawei unveils Ascend P6 smartphone, the world's slimmest model

Huawei, a leading global information and communications technology (ICT) solutions provider, unveiled its two new products in the Philippines on Wednesday.

One was Ascend P6 smartphone, the world's slimmest model measuring only 6.18 mm and weighing just about 120 grams.

"It is a star among smartphones with its industry-leading design, high-quality camera and intuitive user interface," said Johnson Ma, country manager of Huawei Divice Philippines.

"The newly launched Ascend P6, Huawei's flagship phone, features a 1.5GHz quad-core processor, android 4.2.2 operating system, 200mAh battery, 4.7-inch in-cell LCD screen technology, and 'MagicTouch' for enhanced screen responsiveness even when wearing gloves," he added.

The other was Ascend Mate, a pocket cinema phablet that features an ultra huge 6.1-inch HD display, a super fast 1.5 GHz Hi-Silicon quad-core processor and a long lasting 4050 mAh battery.

Huawei, founded in China's Shenzhen city in 1987, is an entirely employee-owned private company and a leading global information and communications technology (ICT) solutions provider.

Source: Xinhua

IMF Report of Japan

The new government announced in December 2012 a new policy to end decades-long deflation and raise growth. The new policy framework—“three-arrows” of Abenomics comprising 
aggressive monetary easing, flexible fiscal policy, and structural reforms—provides a unique 
opportunity to end decades-long deflation and sluggish growth, and reverse the rise of public 
debt. 
 Japan's Q1 growth accelerated to 4.1%(seasonally adjusted annual rate) after two quarters of
stagnation. Exports rebounded because of a weaker yen,and the stock market rose sharply 
stimulating consumption. Inflation expectations have started to increase and actual inflation 
was recorded in June.
From September 2012 to mid-May 2013 the Nikkei stock index rose by about 80 percent, but temporarily dropped sharply by around 15 percent. As of end June, the yen has depreciated by about 20 percent in real effective terms since mid-2012. Ten-year bond yields have remained unchanged around 80-90 basis points since the beginning of the year, although they briefly declined to historic lows of about 45 basis points after the announcement of QQME.
  The Japanese economy is expected to grow by about 2% in 2013 as a result of monetary easing,and fiscal stimulus, increased consumption and investment.
  In 2014, growth is expected to moderate to 1.2 percent as a continued pick-up in private domestic demand is offset by fiscal withdrawal from the consumption tax increase from 5 to 8 percent and an unwinding of reconstruction spending.
  Over the medium term, growth is expected to converge to 1 percent as a recovery in investment is offset by a slowdown in labor supply due to population aging.

  The Executive Board agrees that Japan's fiscal stimulus and aggressive monetary easing have 
improved in the short term growth prospects for the Japanese economy. Directors agreed, however, that the growth outlook is subject to significant risks, primarily stemming from incomplete domestic reforms and a weaker external environment, and that sustained implementation of the authorities’ reform program is the best way to minimize these risks.

   But because of the dismal fiscal situation,  Japan will have this year a gross debt of 246.9 % of 
GDP. Japan's Government should implement a credible fiscal plan in the medium term, to avoid politicaal uncertainties and avoid fiscal risks.
    Bringing down public debt as a share of GDP will require a significant adjustment over the next decade. In this regard, the IMF board supports Government plans to double the consumption tax rate by 2015, although a few Directors expressed concern over the possible adverse impact on growth. Directors also underscored that additional revenue and expenditure measures will be needed beyond 2015.

Source:   Executive Board of the International Monetary Fund (IMF)  Article IV consultation discussions with Japan

Global property investors are looking for buying real estate in Japan

Global property investors are turning their attention from Hong Kong - where the government has rolled out restrictive measures to curb investment demand - to offshore markets ranging from Japan to Vietnam.

While they remain positive about the long-term market outlook in China, including, Hong Kong, British property investment company Grosvenor and New York-based investment fund Angelo, Gordon & Co, say they are actively looking for buying opportunities in Japan.Investment fund Gaw Capital Partners singled out Vietnam as an option.
"At the moment, we think Tokyo presents the best market in terms of timing and opportunity in pricing," said Nicholas Loup, chief executive at Grosvenor Asia Pacific.

Source:  South China Morning Post

India and China compete for business in Africa

India and China scramble for business in Africa

With demand for resources to fuel both their growing economies rising, the contest between the two giants is playing out in different parts of the world.

The campus of Nairobi University is one such place.

In a corner here, workers from the China Wu Yi company are working to build a futuristic 21-storey tower, complete with lecture halls, for up to 3,000 students and a helipad.

"Once it is finished in two years, this building will be the tallest structure around," says Prof Sa Dequan, head of the university's Chinese language and cultural teaching centre.

China Wu Yi was helped by the Chinese government to gain access to Kenya, but now it is handling 18 projects here.

Not long ago, it completed a section of the eight-lane, 50km Thika Superhighway, described as Kenya's pride.

India's $65bn (£44bn) of trade with Africa is dwarfed by China's $200bn.

Chinese companies are active across the continent with big infrastructure projects, including ports, railways and sports stadiums.

By contrast, Indian initiatives are led by individual companies looking to expand in sectors such as telecoms, agriculture, the automotive industry and education.

Nairobi-based analyst Anil Bhandari says the African pie is too big for anyone to fret about.

"Most African countries are growing at 7% to 9%. Players like India, China, Brazil, European countries have a role to play."

Source:  BBC

China: Prices of coal down 10%

Prices of thermal coal in China, used to fire up power plants, have declined 10 percent so far this year amid an economic slowdown and gradual transition.

The latest benchmark Bohai-rim steam-coal price index showed that the average spot price at six major coal shipping ports in northern China in the week ending July 30 fell further to 570 yuan (93 U.S. dollars) per tonne, down 10 percent from the beginning of the year.

"Coal prices have fallen to five-year lows," Bu Changsen, chairman of Shandong Energy Group Co., Ltd., said. "The whole coal industry is experiencing the worst downturn in more than a decade and therefore most coal firms nationwide are mired in hard times."

Power consumption is a barometer of the state of the economy. Therefore slumps in thermal coal prices could mirror the downward pressure on the Chinese economy, economists said.

Meanwhile, the weak coal market comes as the country is striving to cut some high polluting and energy guzzling capacity to transform the economy into a more sustainable one, said Li Tiegang, deputy president of the school of economics with Shandong University.

Official data also showed that compared with heavy industries, the new and high-tech sectors have better growth momentum and offer hope for the Chinese economy.

China's Central Bank injected liquidity into the banking system on Tuesday

China's central bank continued to inject liquidity into the banking system on Tuesday, with 12 billion yuan (1.96 billion U.S. dollars) of 7-day reverse repurchase agreement (repo) operations.

The yield of the reverse repo, a process of central bank purchasing securities from commercial banks with an agreement to resell them at a future date, stood at 4.0 percent, according to a People's Bank of China statement.

"The reverse repo rate fell 40 basis points from last week's offering," said Jiang Chao, an analyst with Haitong Securities."It indicated that the central bank aims to guide the market borrowing costs to a lower level," 

But experts said the central bank's move does not mean a change in the prudent monetary policy.

Source: Xinhua

China's top economic planner said most Regions can meet target growth

 China's top economic planner said on Tuesday that most regions can achieve their growth target this year if macro-policies remain basically stable, in the latest words of reassurance about the slowdown of the world's second-largest economy.

The commission called for deeper reforms and further opening-up in the more affluent eastern regions, including accelerating construction of new experimental zones and pilot reforms in major areas to offer experience to the broader economy.

It also pledged more support to the central, western and northeastern regions.

Central government investment will lean toward major infrastructure and social projects in central and west China to make sure they are not affected by the slowing economy, the NDRC said, adding it is also mulling a policy document to revitalize old industrial bases in the northeast.

Source: Xinhua

Hollande reste optimiste sur la croissance française

François Hollande s'est de nouveau montré optimiste mardi 6 août sur une reprise de la croissance lors d'un déplacement en Vendée sur le thème de l'emploi, jugeant que "c'est fragile, mais il y a quelque chose qui se passe".

"Nous devons tout faire pour accompagner ce mouvement", a déclaré le chef de l'Etat lors d'une visite d'un Pôle emploi à La Roche-sur-Yon. "Je suis confiant sur l'inversion de la courbe du chômage. Nous allons y arriver", a-t-il répété.

 Un optimisme affiché alors que dans son rapport annuel sur l'economie francaise , publié lundi, le FMI estimait que Paris avait déjà accompli "aux deux tiers les efforts entrepris en 2011 pour stabiliser les déficits", et pouvait dorénavant lever un peu le pied sur la rigueur.

"Il ne faudrait pas l'interpréter comme un relâchement de ce que nous avons àfaire sur le plan des économies, mais plutôt comme un encouragement", a-t-on commenté dans l'entourage du président de la République.

"L'échec étant patent, tout va être dans la communication et la méthode Coué, a déclaré M. Roger Karoutchi, sénateur des Hauts-de-Seine et vice-président de l'UMP. Le président en déplacement tous les jours clame dans les médias : 'Emploi, emploi, emploi !' Bon, à défaut de créer un emploi, cela peut faire croire que l'on s'en occupe."

Le porte-parole du PCF, M. Olivier Dartignolles, a lui dénoncé "l'optimisme présidentiel" qui "ne remplacera pas l'urgence d'en finir avec l'austérité, avec une politique gouvernementale qui tourne dramatiquement le dos à l'espoir d'un changement, à une amélioration concrète des conditions de vie".

Source: Le Monde

Japan unveils new big warship

Japan's biggest warship was unveiled on Tuesday, raising grave concerns about the country's military buildup as observers said the vessel is actually an aircraft carrier, banned by Japan's pacifist constitution.

Tokyo's move coincided with Manila's latest efforts to upgrade its military, as the Philippine navy received a second former US coast guard ship. Manila received the first ship in 2011.

Analysts see the upgraded warships in Japan and the Philippines as efforts to gain an upper hand in maritime disputes with China, as well as a catalyst igniting an arms race that would escalate regional tensions.

China's Ministry of National Defense expressed concern on Tuesday about Japan's "continuous military buildup" and urged it to adhere to peaceful self-defense.

"Japan should reflect on its history, adhere to self-defense and the promise of following the path of peaceful development," the ministry's bureau for media affairs told China Daily. The ministry also called for Japan's neighbors and the international community to be "highly alert".

The Japanese-built carrier has a displacement of around 20,000 tons. It can accommodate 14 helicopters and will play a major role in disaster and rescue missions, as well as defend sea passages and Japanese territory, according to Japan's defense ministry.

But it is much larger than many countries' aircraft carriers in terms of displacement and deck length, and it can be easily and swiftly refitted to support F35-B fighters, which have strong combat capabilities, said Zhang Junshe, a senior researcher at the People's Liberation Army Naval Military Studies Research Institute.

"It is an aircraft carrier, and Japan just called it ‘a helicopter destroyer' to downplay its aggressive nature," Zhang said. Japan, defeated in World War II, is creating regional tensions by breaking the postwar order, he added.

Source: ChinaDaily

China to relax family planning policy

The National Health and Family Planning Commission moved on Tuesday to allay concerns in media reports last week that China will relax its family planning policy by 2015 to allow more couples to have two children.

The commission said no timetable has yet been determined and instead said the new plan will be carried out "at the proper time".

The commission, however, did confirm media reports that an update is on its way. In the new plan, couples will be allowed to have a second child if at least one parent has no siblings.

There are several exceptions to the one child rule,the current policy permits couples to have two children if both parents are the only children in their families.

In most rural areas, for example, families can apply to have a second child if their first-born is a daughter.

An update to the policy makes economic sense, because allowing more couples to have a second child could stem potential labor shortages in the future.

Lu Jiehua, a professor of social demographics at Peking University who has done research for the commission, said that the "proper time" is probably coming this year.

"Regions with a relatively higher proportion of (families with only one child) and a higher urbanization level are most likely to introduce the relaxation first," he said.

Government Bonds Quotes

Government Bonds

                                                                                          Price         Yield
                                                                                        Change           %

U.S. 5 Year			-0/32	1.393
U.S. 10 Year			-1/32	2.647
U.S. 30 Year			-1/32	3.729
Germany 2 Year			0/32	0.178
Germany 10 Year			-5/32	1.708
Italy 2 Year			2/32	1.911
Italy 10 Year			6/32	4.263
Japan 2 Year			0/32	0.117
Japan 10 Year			-3/32	0.788
Spain 2 Year			3/32	1.827
Spain 10 Year			7/32	4.564
U.K. 2 Year			0/32	0.370
U.K. 10 Year			-1/32	2.481

  Source:  WSJ

Fed Officials talking about tapering bond buying soon

Dallas Fed  President Richard Fischer, talked yesterday about starting to cut central bank bond buying as early as September.
Chicago Fed President Charles Evans said today that the central bank could start tapering its $85 billion-a-month bond-buying program at its September policy meeting, 
Mr. Lockhart told Market News International the Fed could start cutting back its bond-buying program at any of three remaining Federal Open Market Committee meetings this year.
The Chicago Fed's Mr. Evans' view that the Fed could decide to begin reducing its bond-buying program in September is significant because he is part of the activist wing of the Fed that has supported unconventional policies like bond buying, which aim to drive down borrowing costs in the hopes of spurring investment, spending and hiring.
Mr. Fisher and Mr. Lockhart aren't voting members of the Fed's decision-making committee, while Chicago's Mr. Evans is.

Source:  WSJ

FMI Executive Board of U.S. Economy Part II

The executive board welcomed the improvements in the U.S. economy,which bodes well for
a gradual acceleration of growth. While the balance of risks tilt the outlook to the downside.
They concurred  "that the fiscal deficit reduction in 2013 is excessively rapid, and that the automatic spending cuts  not only reduce growth in the short term but could also lower medium-term potential growth. They stressed the importance of adopting a comprehensive and back-loaded medium-term plan entailing lower growth in entitlement spending and higher revenues".
 A slower plan of U.S. deficit reduction in the short run,would help global growth,place the fiscal
situation on a sustainable path,and would help to reduce global imbalances . They also expressed concern over the possible political gridlock for the next fiscal budget, and expected improvement.

They agreed that "accommodative monetary policy continues to provide essential support to the recovery, but cautioned that its financial stability implications should be carefully assessed. They considered that a long period of exceptionally low interest rates could potentially entail unintended consequences for domestic financial stability and has complicated the macro-policy environment in some emerging markets. In this context, macro-prudential oversight and supervision of the financial system remain essential".

There are significant challenges involved in reducing easy money policy. Including market overreactions in interest rates and currencies.
"They stressed that effective communication on the exit strategy and a careful calibration of its timing will be critical for reducing these risks".

"Directors welcomed the recent improvements in the housing and labor markets. They agreed that the rebound of the housing market has benefited from monetary policy actions and government-backed programs that facilitated refinancing and modification of loans under stress. They saw room for policies that continue to support the housing market while gradually reducing the dominant role of the government-sponsored enterprises".

"Emerging vulnerabilities and risks from persistently low rates in the financial sector need to be carefully monitored. Directors welcomed the strengthening of the regulatory architecture relative to the pre-crisis period, including through the adoption of Basel III capital rules. They emphasized that completing the implementation of the financial reform agenda remains essential to increase the resilience of the U.S. financial system".

Source:IMF Executive Board Concludes 2013, Article IV Consultation
                 with the United States

Positive Economic Indicators in the EU Zone

Germany said industrial orders at its factories surged by a surprisingly strong 3.8 percent in June, their largest monthly rise since October as contracts for big-ticket items jumped and euro zone demand rebounded.Manufacturing, which makes up around one fifth of Europe's biggest economy, struggled earlier this year but Tuesday's data, combined with a survey last week showing the sector expanded at its fastest rate in 1-1/2 years in July, offers some hope that it is regaining traction.

Britain's manufacturers reported their biggest annual rise in overall industrial production for over two years, adding to growth already seen in service sector activity, the housing market and in retail sales.The data showed a 1.1% month-on-month increase in industrial output,beating predictions of 0.6%

Italy's economy shrank by less than expected in the second quarter, adding to recent signs its slowdown is bottoming out.Gross domestic product marked its eighth straight quarter of contraction, dropping 0.2 percent on the quarter and 2.0 percent an annual basis, national statistics bureau ISTAT said on Tuesday.The quarterly slump was the smallest since early in a recession that began in the middle of 2011, and half as large as the 0.4 percent drop forecast by analysts in a Reuters survey.

That continued a run of encouraging data, and some analysts are predicting a return to very modest growth in the fourth or possibly the third quarter, tracking a gradual upturn forecast for other parts of the euro zone.

China can still grow at high rates. Justin Yifu Lin

"After three decades of 9.8% average annual GDP growth, China’s economic expansion has been slowing for 13 consecutive quarters – the first such extended period of deceleration since the economic policy reform, was launched in 1979. Real GDP grew at an annual rate of only 7.5%  of this year".
There is a growing bearishness among investors and anxiety over the future rate growth of its economy.Many
expecting an unavoidable hard landing.
Mr Justin Yifu Lin a former chief economist and senior vice president  of the World Bank says: "China’s economic slowdown since the first quarter of 2010 has apparently been caused mainly by external and cyclical factors. Facing an external shock, the Chinese government should and can maintain a 7.5% growth rate by taking counter-cyclical and proactive fiscal-policy measures, while maintaining a prudent monetary policy. After all, China has high private and public savings, foreign reserves exceeding $3.3 trillion, and great potential for industrial upgrading and infrastructure improvement".
Indeed, China can maintain an 8% annual GDP growth rate for many years to come, because modern economic growth is a process of continuous technological innovation and industrial upgrading. One can argue that this is the same for developed economies,but there is a fundamental difference, the latter have always been on the frontier of R&D which is costly and risky.
 By contrast developing countries benefit from the “latecomer’s advantage”: technological innovation and industrial upgrading can be achieved by imitation, import, and/or integration of existing technologies and industries, all of which implies much lower R&D costs".
According to the Growth Commission led by Nobel laureate Michael Spence, "13 economies took full advantage of their latecomer status after World War II and achieved annual GDP growth rates of 7% or higher – at least twice as high as developed countries’ growth rates – for 25 years or longer.
China became one of the 13 economies after 1979. Because the country’s latecomer status explains its 33 years of rapid economic growth", the key to understanding its potential for further rapid growth in the future lies in estimating how large those advantages still are.
"Per capita GDP, which reflects a country’s average labor productivity and its overall technological and industrial achievement, is a useful proxy to estimate latecomer’s advantage. That is, the per capita GDP gap between China and developed countries essentially reflects the gap between them in terms of overall technological and industrial achievement.
According to the most up-to-date estimate by the late economic historian Angus Maddisson, China's per capita GDP in 2008 was US$ 6725, which was 21% of per capita GDP in the United States. That is roughly the same gap that existed between the US and Japan in 1951, Singapore in 1967, Taiwan in 1975, and South Korea in 1977 – four economies that are also among the 13 successful economies studied by the Growth Commission. Harnessing their latecomer’s advantage, Japan’s average annual growth rate soared to 9.2% over the subsequent 20 years, compared to 8.6% in Singapore, 8.3% in Taiwan, and 7.6% in South Korea.
China’s annual growth potential should be a similar 8% for the 2008-2028 period. To realize its potential growth as a latecomer, China needs, above all, to deepen its market-oriented reforms, address various structural problems, and develop its economy according to its comparative advantages".

China's Outbounds Investments

In 2010 KPMG published a study of China's outbounds investments, the report found that although
chinese companies had made progress towards their goal to become Global players,they still needed
more to fullfill world class aspirations.
"Since the turn of this century, China’s rapid economic growth and a deepening reform and opening-up program have propelled a large number of stronger Chinese companies to pursue a “going out” strategy to expand into new markets, secure resources, and enhance their core competitiveness".

In 2012 KPMG made a second survey and interviews, and has issued a new report .
China’s outbound investment has gone through three stages:
• Stage I: Initial stage from the late 1970s to the mid-late 1980s
• Stage II:Transition period from 1991 to 2003, marked by the establishment of
offshore procurement and sales channels
• Stage III: Rapid development from 2004 to present, China’s outbound
investment has developed quickly, stimulated by a series of positive factors,
including the fundamental business need for Chinese companies to expand
overseas, favorable policies and regulations, massive foreign exchange
reserves, and the appreciation of the renminbi against international currencies.
In 2012, the total value of outbound investments made by China’s non-financial
enterprises reached USD 77.2 billion, representing a remarkable 44.3%
compound annual growth over the period since 2003. China’s outward direct
investment has already reached the same level as the average outward direct
investment of six of the G7 countries (i.e. Great Britain, France, Germany, Japan,
Italy and Canada).
  There is a tendency to invest in projects at the lower scale of the value chain.

Recently, outbound investment in
manufacturing has experienced an increase but resource acquisitions remain the
dominant sector. Average deal size has come down as a result of an increasing
number of Small and Medium Enterprises (“SMEs”) and Privately Owned
Enterprises (“POEs”) beginning to participate in outbound investments, as well
as a growing number of transactions outside of the natural resources sector
where the deal sizes are typically large.

Source: KPMG

.

Assessing FDI relationships between China, Japan and the U.S.

Theresa M. Greaney a*,and Yao Li  b
a
Department of Economics, University of Hawaii
b
School of Management and Economics, University of Electronic Science and Technology of
China

"We find evidence that Japanese affiliates in China are more concentrated in manufacturing industries and are more export-oriented than their American counterparts, but the
latter difference is shrinking over time.
The traditional Heckscher-Ohlin (H-O) theorem of trade helps in explaining China’s trade pattern.
 With the largest population in the world and relatively low
wages, China has comparative and even absolute advantage in manufacturing labor-intensive
products relative to most of its trading partners. As China has increasingly integrated into the
world economy over the past three decades, it has evolved into a major exporter in most
categories of labor-intensive manufacturers, as predicted by the H-O theorem.
This framework indicates that an increase in a country’s inward FDI flows will dampen
 its trade growth.
More recent theories that incorporate multinational enterprise production into models of
international trade develop two different hypotheses to explain the relationship between FDI and
trade flows. In vertical integration models such as Helpman (1984), the primary incentive for
FDI is to seek lower production costs in the host country and then to export goods produced or
processed by the firm’s foreign affiliates. This type of FDI inflow will increase a host country’s
trade, primarily through increased exports.2
 On the other hand, a host country’s trade is predicted to decrease in horizontal integration models (such as Horstmann and Markusen), 1992 where FDI inflows substitute for imports.
 In this case, firms move the production of their
exportable products to the host country to economize on firm-level economies of scale, avoid
trade barriers and reduce transportation costs.
Gu, Awokuse, and Yuan (2008) and Xing (2007) examine the recent relationship
between trade and FDI for China. Gu et al. use disaggregated manufacturing sector data for
1995–2005 to conclude that China’s FDI inflows have statistically significant and positive effects
on China’s total exports, but these effects differ across industries.
With trade data from 1980 to With trade data from 1980 to
2004, Xing (2007) investigates to what extent FDI promoted intra-industry trade between China
and its major trading partners, Japan, and the US. The analysis indicates that Japanese direct
investment in China performed a significant role in enhancing intra-industry trade between
Japan and China. However, there is no such evidence found for the US direct investment in
China
With trade data from 1980 to
2004, Xing (2007) investigates to what extent FDI promoted intra-industry trade between China
and its major trading partners, Japan, and the US. The analysis indicates that Japanese direct
investment in China performed a significant role in enhancing intra-industry trade between
Japan and China. However, there is no such evidence found for the US direct investment in
tra-industry trade between China
and its major trading partners, Japan, and the US. The analysis indicates that Japanese direct
investment in China performed a significant role in enhancing intra-industry trade between
Japan and China. However, there is no such evidence found for the US direct investment in
China''.

Precious Metals

Gold Prices Futures            3 months        US$  1,300.89

Silver Prices Futures           3 months       US$       19.68

U.S. Service sector growth accelerated in July

U.S. Non-Manufacturing Index 56, expected 53.

EU Indicators

                                                 
                                              Expected                       Real

Italy Markit Services               46.5                             48.7

Germany Markit                      52.5                             51.30
Markit Services

EUR Markit Services              49.6                              49.80

EUR PMI Composite              50.4                              50.5

GBP Markit Services              57.2                              60.2
PMI

EUR Sentix Investor               -10                                -4.9
Confidence

EUR Retail Sales                    -1.2                               -0.9

Precious Metals Prices

Gold Price Futures          3 months       US$  1,317.25

Silver Prices Futures       3 months       US$      19.97

Sony officials will reject proposal to spin off its entertainment arm

In May, the US asset management company Third Point proposed that Sony should spin off its entertainment arm and sell 15 to 20 percent of its shares on a US stock market. The US hedge fund is a major Sony shareholder.

Third Point thinks the money could be better spent rebuilding the company's electronics division.

Sony officials say they will reject the proposal at a board meeting as early as next week. They believe the entertainment arm can contribute to the company's future growth if it's run in combination with its electronics business that includes TV and video games.

Source: NewsonJapan