Sanctions on Russia will cost less than inaction

April 17, 2014

European leaders blame Russia for the takeover of Ukrainian cities by armed separatists. Yet they’re refraining from further sanctions because it’s not a full-blown invasion. The wavering and waiting will only increase the final price to be paid for Vladimir Putin’s actions.

Asian bond sizzle is a bet on deflationary fizzle

April 11, 2014

Investors have lapped up $50 billion in Asian debt so far this year, roughly the same as in 2013. They’re not ignoring Fed tapering, political tension and the emerging market slowdown. Rather, they are locking mediocre yields and hoping global deflation will prove them right.

Time to bust China’s “omniscient regulator” myth

April 10, 2014

The country’s dueling financial watchdogs are undeniably smart. But as shadow banking runs amok, they have limited tools to fight problems they didn’t create. Some reforms are beyond their power, others are tied up in red tape. It undermines the theory that China is crisis-proof.

Japan index: Economy is ready to take on tax hike

April 10, 2014

The Breakingviews Abenomics Index climbed to a six-year high in February, suggesting the economy has enough strength to withstand this month’s sales tax increase. Wages and inflation expectations firmed up, while hopes of further monetary easing pushed bond yields lower.

Russia would pay steep price for Ukraine invasion

April 8, 2014

The pro-Russian agitation in eastern Ukraine has rekindled fears of an intervention from Moscow. But even if Vladimir Putin is tempted, the economic implications will hopefully bring second thoughts. Any Russian invasion would spur costly sanctions and massive capital flight.

Modi win is blow for Tesco, good for investors

April 8, 2014

The Indian opposition leader’s party has vowed to ban foreign retailers. With that exception, its manifesto strikes the right notes on the economy. If Narendra Modi does become prime minister, shareholders will expect a major improvement in the country’s investment climate.

Noble China joint venture still faces market test

April 2, 2014

The Singapore trader is selling 51 pct of its agri business to a group led by state-backed COFCO. Noble gets $1.5 bln in cash and shrugs off some debt. China’s desire to control food supply should secure volumes. What’s less clear is whether that translates into healthy margins.

Triple defence will shield Japan from tax burden

March 31, 2014

The bump in the country’s sales tax on April 1 is threatening growth. But fiscal policy that pumps extra revenue back into the economy and a revival in investor optimism over deregulation can prevent a deflationary funk. If those tactics fail, there is always the Bank of Japan.

Ukraine bailout can work if politics are fixed

March 27, 2014

The IMF has announced a $14-$18 bln aid package for Ukraine conditioned on medium-term reforms. Kiev will get emergency relief while pain is delayed. But the Fund’s third attempt to help will only work if Ukraine gets a stable and decent government after the May election.

Rich world exports its way to trouble

March 25, 2014

OECD countries are free-riding on world demand. Net exports by these 34 economies have been unusually high for two years. The strategy is both selfish and self-defeating. It has created an illusion of growth in rich nations, which an emerging market slump could now destroy.