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from Breakingviews:

Global poverty needs a post-industrial definition

By Andy Mukherjee

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

Global poverty needs a new, post-industrial definition.

The $1-a-day threshold, the most-often cited marker of penury, is an anachronistic legacy from the time when being able to fill a human stomach could be reasonably equated with putting raw manpower to productive use in farms, factories and on construction sites.

India's threshold for deprivation, the first attempt by any poor country to define poverty in the post-colonial era, came into being in the 1970s by assuming a subsistence requirement of 2,250 calories a day. The price of those calories turned out to be $1, which went on to become the worldwide norm. After tweaks and updates, the global poverty line now stands at the purchasing power-adjusted equivalent of $1.25.

London School of Economics anthropologist Jason Hickel has argued that the United Nations should raise the bar to a more honest $2.5 when it adopts sustainable development goals next year.

from Breakingviews:

Diagnosis of economic malaise lacks credible cure

By Peter Thal Larsen

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

Central bankers know what’s wrong with the world economy, but are struggling to come up with a cure. That, at least, is the message from the latest annual report from the Bank for International Settlements. It worries that global growth is feeble and financial markets are piling up risks. Yet its proposed remedies of tighter monetary policy and structural reform are far from convincing.

from Breakingviews:

Russia harms the BRICs and adds to global risks

By Ian Campbell

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

BRICs? Perhaps it should be shortened to BICs. Russia’s intervention in Ukraine is a big blow to the Russian economy and also to other embattled emerging economies. It’s not good for the global picture either, as the redirection of funds makes developed markets more bubbly and vulnerable.

from MacroScope:

Not again, please! Brazil and India more vulnerable now to another crisis

After bad economic news from Germany, China and the United States over the past few weeks, here are two more. Brazil and India, two of the world's largest emerging economies, are increasingly vulnerable to another crisis or to the eventual end of the ultra-loose monetary policies in developed economies after five years of a severe global slowdown.

Weak demand for Brazil's exports and the voracious appetite of local consumers for imported goods widened the country's current account deficit to 2.93 percent of GDP in the 12 months through March, the widest gap in nearly eleven years. In dollar terms, that amounts to $67 billion.

from Deepti Govind:

Not again, please! Brazil and India more vulnerable now to another crisis

After bad economic news from Germany, China and the United States over the past few weeks, here are two more. Brazil and India, two of the world's largest emerging economies, are increasingly vulnerable to another crisis or to the eventual end of the ultra-loose monetary policies in developed economies after five years of a severe global slowdown.

Weak demand for Brazil's exports and the voracious appetite of local consumers for imported goods widened the country's current account deficit to 2.93 percent of GDP in the 12 months through March, the widest gap in nearly eleven years. In dollar terms, that amounts to $67 billion.

from Global Investing:

Rich investors betting on emerging equities

By Philip Baillie

Emerging equities may have significantly underperformed their richer peers so far this year (they are about 4 percent in the red compared with gains of more than 6 percent for their MSCI's index of developed stocks) , but almost a third of high net-worth individuals are betting on a rebound in coming months.

A survey of more than 1,000 high net-worth investors by J.P. Morgan Private Bank reveals that 28 percent of respondents expect emerging market equities to perform best in the next 12 months, outstripping the 24 per cent that bet their money on U.S. stocks.

from Global Investing:

A yen for emerging markets

Global Investing has written several times about Japanese mom-and-pop investors'  adventures in emerging markets. Most recently, we discussed how the new government's plan to prod the Bank of Japan into unlimited monetary easing could turn more Japanese into intrepid yield hunters.  Here's an update.

JP Morgan analysts calculate that EM-dedicated Japanese investment trusts, known as toshin, have seen inflows of $7 billion ever since the U.S. Fed announced its plan to embark on open-ended $40-billion-a-month money printing.  That's taken their assets under management to $67 billion. And in the week ended Jan 2, Japanese flows to emerging markets amounted to $234 million, they reckon. This should pick up once the yen debasement really gets going -- many are expecting a 100 yen per dollar exchange rate by end-2013  (it's currently at 88).

from Global Investing:

Risks loom for South Africa’s bond rally

Investors are wondering how much longer the rally in South Africa's local bond markets will last.

The market has received inflows of over $7.5 billion year-to-date, having benefited hugely from Citi's April announcement that it would include South Africa in its elite World Government Bond Index (WGBI).  But like many other emerging markets, South Africa has also gained from international investors' hunger for higher-yielding bonds. And the central bank's surprise rate cut last week was the icing on the cake, sending 5-year yields plunging another 30 basis points.

from Breakingviews:

Investment banks’ Asian love affair cools rapidly

By Wei Gu and Rob Cox

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

After the financial crisis, the investment banking mantra became “Shanghai, Mumbai, Dubai or goodbye.” While the rest of the world was falling apart, the countries stretching from Saudi Arabia to India, Southeast Asia and China were growing, and could pick up some slack. Or so the thinking went. But the swingeing decline in the Asian equities business – the most expensive pillar of Wall Street’s expansion – suggests this was a fallacy. A retreat now looks inevitable.

from Global Investing:

In defence of co-investing with the state

It's hard to avoid state-run companies if you are investing in emerging markets -- after all they make up a third of the main EM equity index, run by MSCI. But should one be avoiding shares in these firms?

Absolutely yes, says John-Paul Smith at Deutsche Bank. Smith sees state influence as the biggest factor dragging down emerging equity performance in the longer term. They will underperform, he says, not just because governments run companies such as Gazprom or the State Bank of India in their own interests (rather than to benefit shareholders)  but also because of their habit of interfering in the broader economy.  Shares in state-owned companies performed well during the crisis, Smith acknowledges, but attributes emerging markets' underperformance since mid-2010 to fears over the state's increasing influence in developing economies. (t

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