Give a more longer term perspective of Economic trends and the Macroeconomic and Monetary Interdependence of the Global Economy.
With the Background of this approach the blog will deal with the implications for Investment decisions.
The author believes that China and the Asia Pacific Region are and will be the powerhouse for the
global economic growth for years to come.
It will also cover IT because of its momentum driver for economic growth.
U.S. crude oil futures inched down on Monday following gains in the previous session, dragged lower by signs of increased supply from Libya and on easing tensions over Ukraine.
FUNDAMENTALS
* U.S. crude futures for September delivery <CLc1> had fallen 45 cents to $96.90 a barrel by 0007 GMT, after jumping $1.77 on Friday.
* Brent crude futures for October delivery <LCOc1> dropped 62 cents to $102.91 a barrel.
* Libya's oil production has risen to 535,000 barrels a day
(bpd) due to a higher output at the southwestern El Sharara, El Feel fields, a spokesman for National Oil Corp (NOC) said on Sunday.
* A delivery of crude oil from Iraqi Kurdistan has arrived at Croatia's Adriatic sea port of Omisalj, a Croatian government source said on Sunday, confirming a report by daily newspaper Jutarnji List late on Saturday.
* German Foreign Minister Frank-Walter Steinmeier said on Sunday after a meeting with his counterparts from Ukraine, Russia and France that they would report back to leaders in their capitals and possibly agree on Monday or Tuesday how to continue talks.
* U.N. nuclear agency chief Yukiya Amano said that he was very glad to hear a firm commitment from Iran to resolve outstanding issues through cooperation during a visit to Tehran on Sunday that he described as "useful".
MARKETS NEWS
* Sterling rose on Monday after the Bank of England indicated that UK interest rates may have to rise even before wage growth recovers, backtracking from earlier comments that prompted markets to push out the risk of a rate hike.
* U.S. equities ended mixed on Friday, paring an earlier selloff sparked by reports of Ukraine shelling a Russian armoured column
China's retail sales maintained steady growth in July, rising 12.2 percent year on year to 2.08 trillion yuan (338.2 billion U.S. dollars), according to data released by the National Bureau of Statistics (NBS) on Wednesday.
The rate was slightly down from the 12.4-percent rise in June, the data showed. In the first seven months, retail sales went up 12.1 percent to 14.5 trillion yuan.
Income from the catering sector increased 9.4 percent to 218.7 billion yuan in July, while sales of consumer goods amounted to 1.86 trillion yuan, up 12.6 percent year on year, the NBS said.
Retail sales growth in rural areas continued to outpace that in urban China. In July, sales in rural regions rose 13.2 percent from a year ago to 281.7 billion yuan, while that in urban areas climbed 12.1 percent.
New credit flowing into the Chinese economy dropped surprisingly in July, spooking economists and raising concerns that the world's second-largest economy may be stuck in a period of weak demand.
China's new yuan-denominated lending marked its slowest growth since November 2011 to reach 385.2 billion yuan (62.6 billion U.S. dollars) in July, down by 314.5 billion yuan from a year earlier, the People's Bank of China (PBOC, or the central bank) said Wednesday.
The decline in July's new lending was much lower compared with the 1.08 trillion yuan in new loans issued in June.
The total social financing aggregate, a broad measure of liquidity in the economy, fell to 273.1 billion yuan in July, which accounted for less than one-seventh of that in June and about one-third of the same period last year, according to the PBOC.
The social financing data also marked the lowest monthly reading since the depths of the global financial crisis in October 2008.
M2, a broad measure of money supply that covers cash in circulation and all deposits, increased 13.5 percent year on year to 119.42 trillion yuan at the end of July. The growth rate also slowed by 1.2 percentage points from June.
"The social financing figures in July were truly jaw-dropping," said Lu Zhengwei, chief economist of the Industrial Bank. "They were equal to just a tiny piece of normal months in the past."
After releasing the credit data, the PBOC shortly followed with a two-page statement trying to explain the sharp declines in a bid to soothe the market.
The central bank attributed the plunge in July new credit to multiple factors, including the unexpectedly strong financing data in June, flagging demand for loans amid downward pressures on economic growth, drops in deposits, and risk control by banks in the face of rising bad loans.
Non-performing loans have now risen for 11 straight quarters, according to the PBOC statement.
"A further analysis showed the growth of new credit and social financing still remains in the reasonable range," the PBOC noted in the statement, saying the central bank's monetary policy to "keep total volume stable and optimize the structure" remains unchanged.
"We should not cling to just short-term fluctuation in a single month," the PBOC said, forecasting that credit will keep growing steadily in the future as banks have made loans of between 30 billion and 50 billion yuan each day since the beginning of August.
Lu said that as the government increased investment to stabilize the economy, banks were restrained by the tight capital adequacy ratio regulation, rather than by demand.
He urged regulators to speed up the approval of banks' issuance of preference stocks to replenish their capital.
In the statement, the PBOC vowed to create a "stable monetary environment" for economic restructuring and upgrading and to appropriately fine-tune its monetary policy in a timely way.
Source: Xinhua
Japan's GDP contracted at a 6.8% annualized rate in Q2,the higher sales taxe hit consumers who've seen litlle growth in incomes and rising consumer prices which rose 3.6% in June year/year.
Tencent Holdings Ltd. (700) faces the prospect of losing its position as Asia’s most-valuable Internet company this year after Alibaba Group Holding Ltd. (BABA) goes public. The Shenzhen-based company isn’t going to concede quietly.
Tencent
is taking on Alibaba in almost every business related to the Web, from
games to security to search. In the latest escalation of the battle,
Tencent is expanding in messaging services and using the technology to
drive customers to its e-commerce partners -- in a direct challenge to
its rival.
The fight exposes a rare vulnerability for Alibaba,
which is planning an initial public offering that may be the largest in
U.S. history. Tencent has an enormous lead in messaging, with about a
billion users for its QQ and WeChat products, compared with Alibaba’s
last target of 100 million for its offerings. Tencent is projected to
report a 52 percent surge in profit when it announces second-quarter
results today, bolstered by messaging.
“Tencent is using Mobile
QQ and WeChat to take traffic away from Alibaba and direct people to
e-commerce platforms backed by itself,” said Bill Fan, a Hong Kong-based
analyst at China
Securities Co. “Instant messaging hasn’t been Alibaba’s strong point,
but it sees the viral effect that Tencent’s app is having so it’s trying
to develop similar services.”
Tencent’s two technologies let people trade messages over mobile phones and tablets, akin to the WhatsApp service that Facebook Inc. (FB)
agreed to acquire this year for $19 billion. QQ, which began as an
instant-messaging service on desktop computers and was repurposed for
use on mobile devices, has about 848 million monthly active users.
WeChat, known as Weixin in China, has 396 million.
The success of the messaging services has helped boost Tencent’s market value to about $161 billion,
making it the most valuable Internet company in Asia. Alibaba will
compete for that title after it goes public. The latest estimate is that
after the IPO the company could be valued at $187 billion, according to
a survey of 11 analysts by Bloomberg. Tencent shares declined 0.2
percent as of 9:52 a.m. in Hong Kong trading, while the benchmark Hang Seng Index was unchanged.
Alibaba
is trying to close the gap in messaging. In September, it started
offering a service called Laiwang. Still, Tencent has continued to
expand the features available through its apps to maintain its lead. “In the latest version of QQ, we have upgraded it to a
platform for food, drinking and entertainment, and the number of cities
we cover is also expanding,” said Dowson Tong, president of the
company’s social network group that oversees QQ, in a recent interview. Tencent has integrated games more tightly into its messaging services
to capitalize on the China online gaming market, which IResearch projects will expand to 225 billion yuan
by 2017. QQ and WeChat helped triple Tencent’s mobile-game revenue to
1.8 billion yuan in the first quarter from the previous three months. That
trend likely continued in the second quarter. Tencent’s profit rose to
5.59 billion yuan in the three months ended June, according to the
average of 11 analysts’ estimates compiled by Bloomberg. That would make the second successive quarter with profit growth of more than 50 percent. Earnings climbed 61 percent in the three months ended March 2011.
QQ was the first iconic product billionaire Ma Huateng created at Tencent in 1999, two years after AOL Inc. (AOL)’s
messaging service took off. As more Chinese accessed the Internet,
instant messaging became the most popular online app. Ma restructured
QQ’s divisions in 2012 to take it mobile and the effort paid off.
Last
year, 83 percent of China’s Internet users subscribed to Mobile QQ and
80 percent to WeChat, compared with Laiwang’s 23 percent, according to a survey among almost 4,000 people by Shanghai-based IResearch in June.
Tencent is now leveraging its vast user base to go after a bigger share of the China e-commerce market, which IResearch estimates will more than double from last year to 21.6 trillion yuan ($3.5 trillion) in 2017.
The
company in March took a 15 percent stake in JD.com Inc., a direct
competitor to Alibaba, and folded its own e-commerce assets into the
venture. This year, Tencent has also agreed to buy 19.9 percent of
Craigslist-like 58.com Inc. and take a 20 percent stake in Dianping.com,
a website similar to Yelp Inc. that users review restaurants in China.
Tencent has been working closely with JD.com and Dianping, directing
traffic from Mobile QQ and WeChat to the websites, said Tong.
Those
steps are beginning to yield results. A new single-click link to JD.com
from Weixin produced an eightfold increase in daily transaction volumes
compared with an earlier access that took two clicks, JD.com said in
June. This month a similar integration with JD.com was provided to users
of Mobile QQ.
Still, Tencent and its partners are far behind in
e-commerce. Alibaba, which operates platforms including Taobao
Marketplace and Tmall.com that connect retail brands with consumers,
accounted for 76.4 percent of total mobile retail transactions in China,
according to its IPO filing to the U.S. Securities and Exchange Commission.
The
fact that Tencent wrapped its e-commerce assets into JD.com shows it
wants to limit its investment in the segment, said Yao Yue, a
Shenzhen-based analyst with Morningstar Inc.
“Even if Tencent’s
instant messaging apps can direct a lot of traffic to JD.com, at the end
of the day it still depends on who has the better shopping service, and
Alibaba’s Taobao is dominant,” said Yao.
Alibaba hasn’t been
able to achieve the same success in mobile messaging so far. The company
in 2004 started Aliwangwang, a PC-based instant messenger for buyers
and sellers, that is now used for negotiating prices, customer services
and delivery notifications on its Taobao marketplace. It also has a
mobile version called Wangxin.
Laiwang
was started by Alibaba to broaden its reach, after billionaire founder
Jack Ma alluded to Tencent being ahead in the messaging race at a Credit
Suisse conference in March 2013.
“We also invested heavily, but
we are not that lucky and not creative, so creative like Tencent, which
has WeChat, such a powerful thing,” Ma said at the conference.
Ma
has vigorously tried to promote Laiwang and said the company wouldn’t
pay bonuses to staff who didn’t get 100 clients for the app before Nov.
30 last year, according to a post on the company’s microblog.
In
an attempt to generate revenue from Laiwang, Alibaba said in January it
would offer games on the app. A month later Alibaba’s Ma said the
company’s achievement on mobile applications wasn’t satisfactory.
Alibaba spokeswoman Florence Shih declined to comment on the company’s mobile strategies, citing pre-IPO restrictions.
The WSJ reports,"tensions eased slightly in Iraq on Tuesday as local factions called for calm and many welcomed the nomination of a new prime minister—including the country's most powerful Shiite militia—offering early signs of a potentially peaceful way forward in forming a new government.
The reprieve comes a day after a high-stakes political confrontation that raised the prospect of violence as Nouri al-Maliki, who sought a third term as prime minister, aggressively rejected the nomination of Haider al-Abadi and vowed to dispute it in the courts. Deployment of security forces in Baghdad also raised concerns that Mr. Maliki might resort to the use of force.
But on Tuesday, a spectrum of voices came out in support of the president's decision and his nominee, Mr. Abadi, and Mr. Maliki himself urged security forces not to take sides in the political confrontation. Mr. Maliki stays on in his position as caretaker prime minister until Mr. Abadi, a member of Mr. Maliki's own Dawa party, tries to form a government within a 30-day time frame outlined in the constitution.
In a statement, Mr. Maliki's office said he met with security chiefs and urged them "to distance from the political crisis." A picture showed him sitting at the head of a long table with some 30 uniformed police and army personnel, whom the statement said he instructed "not to interfere, and to leave this matter to the people, the politicians and the law."
But in the same statement, Mr. Maliki continued to defend the constitution as the only way to preserve Iraq, a reference to his own bid to serve a third four-year term as prime minister, which he views as a constitutional right. He warned otherwise of a "setback" that would be "no less dangerous than that of Mosul," the northern city seized by Islamic militants on June 10—the event that sent Iraq into its worst political and military crisis in years and began to polarize national opinion on Mr. Maliki.
The caretaker prime minister, who alienated the Sunni political community and alarmed Shiites with an increasingly personal bid for power, showed no sign on Monday of backing down, using two television appearances to slam the president's decision and vow to push through his constitutional right.
In a sign of the broad rejection of—and warning against—his defiance, support poured in from international governments in the hours that followed for Mr. Abadi as he begins the difficult process of forming a cabinet. U.S. President Barack Obama interrupted a vacation to make a brief announcement to praise what he said was a positive step toward a more inclusive government in Iraq.
In the semiautonomous Kurdish region of Iraq, where a push by the group calling itself the Islamic State toward the regional capital Erbil drew in U.S. airstrikes, officials also said they supported Mr. Abadi. In part, some officials said, that was just because it meant getting closer to seeing the end of Mr. Maliki's tenure".
The WSJ reports,"the euro slid and German shares deepened
their recent slump Tuesday as fears intensified that a downturn in
Germany's economy could threaten the euro zone's economic recovery.
The
moves came after an unexpected slump in German economic sentiment
became the latest sign that the economic standoff with Russia over the
conflict in Ukraine is hurting Europe's largest economy.
Germany's
ZEW index of economic expectations, a survey of analysts and investors,
fell to 8.6 in August from 27.1 in July, its lowest level since
December 2012. And there may be more bad news this week as data on
Thursday are expected to show a contraction in Europe's largest economy.
Germany's DAX stock index closed 1.2% lower, compared with a fall of just 0.2% in the pan-European Stoxx Europe 600 index.
The euro fell 0.3% against the dollar to $1.3336, close to the nine-month low it touched last week.
Germany's main stock index has fallen out of favor during the Ukraine crisis, as investors worry about the country's close trade links with Russia.
In
bond markets, yields on safe-harbor German 10-year debt edged lower to
1.06%, not far above the all-time low of 1.02% also hit last week. Lower
yields mean higher prices.
"The
question to what extent the European economy will be affected by these
tensions has increasingly become an issue amongst investors," said
Lutz Karpowitz,
a currency strategist at Commerzbank.
Growth
data for the euro zone are due on Thursday. Economists expect Germany
to lag behind the paltry 0.1% quarter-on-quarter expansion they predict
for the currency bloc as a whole, with a 0.1% loss of output.
"The ZEW index is good at predicting turning points of the economic
trajectory and the uninterrupted decline since the end of last year has
well flagged the loss of momentum of the economy in the second quarter,"
said
Christian Schulz,
senior economist at Berenberg".
Gold prices rose on Tuesday as signs emerged that the stand-off between Russia and Ukraine was hurting confidence in the euro zone economy, and as U.S. bond yields held near their lowest in 14 months.
Spot gold was up 0.3 percent at $1,314.80 an ounce at 1351 GMT, while U.S. gold futures for December delivery were up $6.00 an ounce at $1,316.50.
Anxieties over the Ukraine crisis and how this might impact future business hit economic sentiment in Germany, the ZEW think-tank said on Tuesday as it reported a fall in investor morale to its lowest level since December 2012. [
That helped push the euro lower, while boosting German Bund futures. While jitters over Ukraine have fuelled some buying of gold as a safe store of value, the resulting strength in the dollar has kept it within a narrow range, analysts said.
"While gold may rise and fall with the ebb and flow of geopolitical news, we're still stuck in this range between $1,280 and $1,340, as we have been for the last month and a half," Mitsubishi analyst Jonathan Butler said.
"Unless we see another major change, I don't think the current news is going to lead us to break out of that range," he said. "We'll be watching geopolitical situation carefully."
Russia said a convoy of 280 trucks had left for Ukraine on Tuesday carrying humanitarian aid, amid Western warnings against using help as a pretext for an invasion.
Elsewhere, Iraq's new prime minister-designate won swift endorsements from uneasy mutual allies the United States and Iran as he called on political leaders to end crippling feuds that have let jihadists seize a third of the country. Source: Reuters
- Brent crude oil fell below $104 a barrel on Tuesday, its lowest level in nine months as steady supplies dispelled concerns over potential disruptions in producers such as Iraq and Libya.
The International Energy Agency (IEA) said that while the situation in several producer countries was "more at risk than ever", supplies were ample and the Atlantic Basin was even reported to be facing a glut.
OPEC output hit a five-month high of 30.44 million barrels per day (bpd) in July with a rise of 300,000 bpd led by Saudi Arabia and Libya, the IEA said.
"In terms of the physical side of things, particularly for Brent, there are pretty high inventories at the Atlantic Basin at the moment and that's holding back gains," said Ankit Pahuja, a commodity strategist at investment bank ANZ.
September Brent crude was down 94 cents at $103.74 per barrel by 1349 GMT after touching $103.35, its lowest level since November 2013. The contract closed on Monday at $104.68, off 34 cents.
U.S. crude was trading down 79 cents to $97.29 a barrel.
Brent is down about 10 percent from a June peak of $115 per barrel despite concerns over supply disruptions.
Production in Iraqi Kurdistan remains largely unaffected and July exports from the south of Iraq held at near record levels of around 2.5 million bpd.
In Libya, despite clashes between armed factions in Tripoli and Benghazi, output remains around 450,000 bpd, a National Oil Company spokesman said on Monday.
The IEA said Libya's output rose by 190,000 bpd in July to 430,000 bpd.
Sanctions placed on Russia by the United States and European Union over the crisis in Ukraine have also failed to impact oil markets for now.
"Short‐term supply disruptions do not seem on the cards, while on the other hand the sanctions (which are not limited to the oil sector) are expected to trim Russian demand," the IEA said.
A Russian convoy carrying food, water and other aid set off for eastern Ukraine on Tuesday, but Kiev said it would not allow the vehicles to enter the country.
Oil markets awaited weekly U.S. oil stocks data, due to be published later on Tuesday and on Wednesday.
U.S. commercial crude oil stocks were forecast to have fallen 2.2 million barrels in the week to Aug. 8, a preliminary Reuters survey of six analysts showed on Monday.
- Brent crude oil slipped below $105 a barrel on Monday as U.S. intervention in Iraq eased concerns over the risk of disruption to supply from OPEC's second-largest producer.
Oil jumped sharply at the end of last week as Islamic State fighters made rapid gains in parts of northern Iraq and came within striking distance of more of the country's oilfields.
But U.S. air strikes on the Sunni insurgency calmed market worries over the risk to oil production, helping pull prices lower again.
Oil exports from southern Iraq are near record levels and the Kurdistan Regional Government's (KRG) oil pipeline via Turkey is operating normally and pumping 120,000 barrels per day
(bpd) of crude oil.
Iraqi Kurdistan said on Friday its oil output remained unaffected.
Brent was down 12 cents at $104.90 a barrel by 1255 GMT. The contract jumped more than $1 to hit a weekly high of $106.85 on Friday before settling 42 cents lower.
U.S. crude was up 7 cents to $97.72 a barrel.
"The oil market is not as worried now about what is happening in Iraq," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
"The market has become more complacent about supply again. But complacency is dangerous. Given the geopolitical tensions, a spike in oil prices cannot and should not be ruled out."
Oil markets are well supplied in most parts of the world, and North Sea crude oil for immediate delivery is trading at a discount of $1 to $2 below the Brent futures front month.
Simon Wardell, analyst at Global Insight, said the market's focus was on how fast-moving events in Iraq might unfold.
"There's talk of changes in Baghdad. The oil market is sort of waiting to see what happens," Wardell said.
Prompt Brent prices are unlikely to move higher unless there's a significant disruption in supply, analysts argue, although prices have risen in the future months on concerns about future output growth.
"Oil markets are now well supplied, but forward futures prices suggest the low prices won’t last," Fritsch said.
Ample OPEC production has also weighed on oil prices. OPEC said its members increased output in July despite violence in Iraq and Libya while trimming its 2014 demand growth forecast. Source: Reuters
Copper prices rose slightly on Monday as tensions eased between Russia and Ukraine and on optimism about the outlook for China's economy and metals demand, though expectations of rising copper supplies put a brake on gains.
Three-month copper on the London Metal Exchange
(LME) traded at $7,005 in official rings, up 0.2 percent. It ended the previous week lower for the second week in a row, down 1.1 percent.
Russia's defence ministry said on Friday it had finished military exercises in southern Russia, which the United States had criticized as a provocative step in the Ukraine crisis.
European shares bounced back from a sharp two-week slide, in a move that helped support risk appetite. [.EU]
"There are indications of some easing in geopolitical tension over the weekend, and that is helping the equity markets. Base metals are benefiting from that," said Nic Brown, head of commodity research at Natixis.
Investors were monitoring the situation in the Middle East, with a focus on turmoil in Iraq and on talks in Cairo between Israel and the Palestinians on ending the month-old Gaza conflict.
Robust Chinese export numbers on Friday pointed towards healthy metals use. But solid trade data has yet to be seen globally, with particular questions over the impact of Russian sanctions on the European economy and demand for metals.
This week, industrial production data from China and the United States should paint a clearer picture about the health of the global economy.
"The data from China has been improving for a while now, and the gradual loosening of monetary conditions has been supportive to growth," Brown said.
Investors are concerned, however, that prices for the metal used in power and construction are likely to come under pressure in the second half due to rising supply.
The copper market is expected to be in a 226,000 tonne surplus by the end of 2014, a Reuters poll in July showed, with the surplus seen rising to 285,000 tonnes in 2015
Reflecting a drop in enthusiasm for copper holdings, hedge funds and money managers cut their bullish bets in copper markets in the week to Aug. 5, the Commodity Futures Trading Commission said on Friday.
In other metals, aluminium traded at $2,033 a tonne, up 0.4 percent. The discount to three-month prices narrowed to $4.25 per tonne on Friday, its biggest discount since December 2012, reflecting tightening supplies.
Zinc , untraded in official rings, was bid at $2,311 a tonne, up 0.7 percent, rose 0.9 percent, rebounding after hitting its lowest in more than three weeks in the previous session. Prices have been weighed down by rising inventories, with LME stocks increasing by more than 5 percent this month.
Lead traded at $2,255 a tonne, up 0.7 percent and nickel traded flat at $18,560 a tonne. Tin , untraded in official rings, was bid at $22,350, down 0.1 percent.
In industry news, Michael Farmer, among the world's most famous metals traders, said he had no intention of abandoning the market that earned him his fortune after he was named baron of the British House of Lords. Source: Reuters
