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from Breakingviews:

China stock market opening is opposite of Big Bang

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s approach to opening up its stock market is the opposite of a Big Bang. Investors are once again getting excited about the prospect of mainland shareholders being allowed to buy Hong Kong stocks. But such hopes have proved premature before. As with any loosening of China’s capital controls, progress is bound to be gradual.

The latest rush of excitement stems from reports that Hong Kong and Shanghai are about to allow investors in each market to buy shares in the other. Hong Kong Exchanges & Clearing - which operates the stock market in the former British Colony - says no deal has been agreed. Nevertheless, its shares continued to rise on April 3 after a 5 percent jump the previous day.

The mooted move - known as “mutual market access” - could punch a big hole in capital controls designed to keep Chinese money on the mainland, and keep foreign investors out. That’s the reason it is unlikely to happen in one go. Though China’s regulators have promised to make the yuan fully convertible, any meaningful liberalisation remains several years away at best. Moreover, the authorities seem particularly keen to ensure that flows out of China are matched by capital flowing in from abroad.

from Breakingviews:

Alibaba shopping spree needs better explanation

By Robyn Mak

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Alibaba’s shopping spree needs better explanation. The Chinese e-commerce giant has spent $3.8 billion on acquisitions and investments since 2013. The land grab may excite prospective investors ahead of its long-awaited initial public offering (IPO). But Alibaba will eventually have to justify its purchases.

from Breakingviews:

Noble China joint venture still faces market test

By Una Galani

The author is a Breakingviews columnist. The opinions expressed are her own.

Noble Group’s joint venture with China still faces a test from market forces. The Singapore trader is selling 51 percent of its agricultural business to a consortium led by state-backed COFCO for around $1.5 billion. China’s desire to control its food supply should guarantee volumes for the joint venture. But it’s less clear that will translate into healthy margins.

The precise size of the COFCO’s investment depends on how the unit, which processes everything from grains to coffee, performs over the next nine months. The final price will be equivalent of 1.15 times its book value in 2014. The headline price implies a valuation of $2.94 billion for the business, which accounted for 16 percent of Noble’s revenue last year.

from Breakingviews:

OCBC’s Chinese ambition comes with hefty price tag

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Oversea-Chinese Banking Corp is paying a hefty price to expand in the People’s Republic. The Singaporean group is realising a long-held ambition by splashing out almost $5 billion for Hong Kong’s Wing Hang bank. But the deal looks expensive at a time when growth on the mainland is slowing and the U.S. Federal Reserve’s tapering is threatening to push up deposit costs.

from MacroScope:

Erdogan unfettered

Investors have spent months looking askance at Turkey’s corruption scandal and Prime Minister Tayyip Erdogan’s response to it – purging the police and judiciary of people he believes are acolytes of his enemy, U.S.-based cleric Fethullah Gulen. But it appears to have made little difference to his electorate.

Erdogan declared victory after Sunday’s local elections and told his enemies they would now pay the price. His AK Party was well ahead overall but the opposition Republican People's Party (CHP) appeared close to seizing the capital Ankara. 

from MacroScope:

ECB uncertainty

For European markets, Germany’s March inflation figure is likely to dominate today. It is forecast to hold at just 1.0 percent. The European Central Bank insists there is no threat of deflation in the currency area although the euro zone number has been in its “danger zone” below 1 percent for five months now.

Having appeared to set a rather high bar to policy action at its last meeting, this week the tone changed. Most notable was Bundesbank chief Jens Weidmann, normally a hardliner, who said printing money was not out of the question although he would prefer negative deposit rates as the means to tackle an overly strong euro.

from Breakingviews:

China index: growth cannot cloud judgment on smog

By Katrina Hamlin

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.

Smog in China is losing its silver lining. Bad emissions were once associated with economic growth, since they meant power plants and factories were active. Citizens broadly accepted the trade-off. But the relationship may be changing. Breakingviews’ latest Tea Leaf Index reading shows growth prospects are the worst since July 2009 – even though the sub-index for pollution is at its second highest average level monthly in six years.

from Breakingviews:

CITIC’s $41 bln mega-merger needs fancy footwork

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

CITIC’s $41 billion mega-merger will need some fancy footwork. The Chinese state-owned conglomerate wants to reverse most of its assets, which include stakes in banks, brokerages and resources, into Hong-Kong listed subsidiary CITIC Pacific. There’s something in it for both sides, but the deal will require creativity to ensure it looks good financially for both the Chinese state, and CITIC Pacific’s minority shareholders.

from The Great Debate:

Putin’s new ‘values pact’

Now that Russia President Vladimir Putin has swallowed Crimea, the question becomes: What if the peninsula doesn’t satisfy his appetite for new Russian territory? What if the only thing that will satiate his hunger for power is the goulash known as eastern Ukraine? Or does he then move on to Moldova, and then on and on?

Indeed, while the world watched the protests in Kiev and the Sochi Olympics last month, the Moldovan territory of Gagauzia quietly held a referendum about whether or not to join Russia if the rest of the country opts for stronger ties to the European Union. Its citizens, just like those in Crimea, have argued that they would be economically better off on Putin’s planet, rather than as meager satellites in the Western solar system.

from MacroScope:

IMF verdict on Ukraine due

G7 leaders didn’t move the dial far last night, telling Russia it faced more damaging sanctions if it took any further action to destabilize Ukraine.
They will also shun Russia’s G8 summit in June and meet ”à sept” in Brussels, marking the first time since Moscow joined the group in 1998 that it will have been shut out of the annual summit.

There were some other interesting pointers. For one, the G7 agreed their energy ministers would work together to reduce dependence on Russian oil and gas. Could this lead to the United States exporting shale gas to Europe? A committee of U.S. lawmakers will hear testimony on Tuesday from those who favour loosening restrictions on gas exports.

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