Breakingviews

China “hard landing” talk abates, but not for long

By John Foley

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

China’s hard landing is the catastrophe that wasn’t. A return to expansion in the closely watched official survey of purchasing managers released on Nov. 1 leaves the Chinese economy on track for GDP growth of around 7.5 percent for 2012. The Breakingviews Tea Leaf Index, which combines a more eclectic group of indicators, also showed that conditions are improving. But talk of a punishing downturn will recur, because China’s economy remains unbalanced.

 Breakingviews China Tea Leaf Index

The big threat to China’s growth remains real estate, which contributes roughly 15 percent of GDP, and in reality much more, through its effects on consumer goods sales, wages and confidence.

Europe, China holding back Asian export recovery

By Wayne Arnold

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

Asia’s export engine could remain stuck in neutral as long as Europe and China are slowing. An uptick in September exports has buoyed hopes for a U.S.-led rebound in regional trade. But in the past decade, Asian economies have shifted focus to Europe and responded to China’s rise by supplying the manufacturing juggernaut. A U.S. upturn alone won’t be enough.

Storm dents Wall Street but spares U.S. election

Richard Beales, Rob Cox, Agnes T. Crane, Martin Hutchinson and Daniel Indiviglio contributed to this view.
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

America’s “Frankenstorm” lived up to the hype. A record storm surge on Monday evening left train and car tunnels flooded, much of Lower Manhattan dark, and bank headquarters like those of Goldman Sachs running on backup power. The overall economic damage could run as high as $20 billion, according to risk modeler Eqecat, and that was before Hurricane Sandy completed her destruction. Luckily for American voters, the weather arrived a full week before the Nov. 6 elections.

Three reasons China’s banks deserve their derating

By John Foley

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

China’s banks enjoy valuations most Western rivals would kill for. But compared with the earnings they are throwing off, their share prices look miserly. The country’s seven biggest banks trade at an average of 1.2 times their most recently reported book value, according to Reuters Eikon, despite aggregate returns on equity above 20 percent. Five years ago, lesser returns allowed them to command multiples above 4.5 times book. Though the derating is harsh, it’s justified.

Frankenstorm is salient risk management reminder

By Rob Cox

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

The Frankenstorm battering the east coast of the United States provides a salient lesson in the virtues of risk management. When it comes to natural disasters, there’s no such thing as too much preparation. The same is true in business, particularly banking: calamities often strike without warning – and there’s no such thing as too much capital.

Hong Kong’s anti-foreigner property tax may spread

By Peter Thal Larsen

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

Hong Kong’s new anti-foreigner property tax may catch on elsewhere. Battling the effects of cheap money and capital flight, the territory’s authorities have slapped a 15 percent stamp duty on buyers without a permanent residents’ card. Though the move will have unintended side effects, its political logic could prove appealing in other urban hotspots.

Review: A practical guide to writing in Chinese

By Katrina Hamlin

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

Mo Yan may have won the Nobel, but in China celebrity blogger Han Han rules online. More than half a billion readers have visited his irreverent blog. He’s also a hit on Sina Weibo, China’s answer to Twitter, where his first post attracted 750,000 followers.

China insider exposé is explosive and predictable

By John Foley

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

Fix one problem, and along comes another. On the day China expelled disgraced politician Bo Xilai from its parliament, a New York Times investigation alleged that Premier Wen Jiabao’s family controls financial assets worth $2.7 billion. The suggestion is explosive, particularly of a leader who has spoken out about inequality. But it is also mundane, and won’t much change the calculus for investors in the People’s Republic.

To fix U.S. finances requires compromiser-in-chief

By Rob Cox and Daniel Indiviglio
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Who is best suited to be the next compromiser-in-chief? That may be the most important question American voters will have to answer when they head to the polls to elect a new president on Nov. 6. A sweeping, bipartisan agreement to reform the tax code, cut spending and ensure the safety of entitlement programs is an essential precondition for stabilizing the country’s finances and getting the economy back on track.

Mixed messages for Chinese IPO hopefuls

By Wei Gu

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

Chinese IPO hopefuls are getting mixed messages. Foshun Pharmaceutical, whose name means “revival” in Chinese, has raised $500 million in the first Hong Kong offering for three months. At the same time, however, a real estate trust backed by Li Ka-Shing has cancelled its Singapore listing. Despite a market recovery, the summer lull isn’t over yet.