Iran deal offers the world a ray of hope

November 25, 2013

Turning the accord to curb nuclear activities into a lasting solution won’t be easy, but diplomatic goodwill makes it harder to go backwards. Reintegrating Iran into the global economy would have profound consequences. For now, the agreement reduces geopolitical risk.

Global deflation – not quite Marx’s prophecy

November 22, 2013

Profit shares in the economy are too high, wage shares too low. That’s a recipe for creeping, Japan-style deflation. Karl Marx had warned that capitalism would turn on itself with rates of profit collapsing. The irony is that ennui is setting in even with high returns on capital.

Asia’s fear of Fed is now infecting more economies

November 21, 2013

The fragilities revealed by last summer’s market wobble are spreading beyond India and Indonesia. Growth has stalled in Thailand. Malaysian public finances look shaky. Debt is piling up everywhere. Asian assets will feel a jolt as the Fed starts to turn off the tap of dollars.

Chinese “fixers” speak to Wall Street weakness

November 20, 2013

Foreign banks’ practice of hiring well-connected consultants to help them get on big deals is under the spotlight. The nebulous nature of the product makes it hard to tell when a line has been crossed. The real mystery, though, is why some banks still need so much help.

The ‘Abe put’ will keep Japanese equities buoyed

November 18, 2013

Foreign investors have shown most early enthusiasm for the prime minister’s economic programme. But pension reforms and tax breaks for individuals promise more cash inflows. If momentum stalls, the central bank could step in. It all points to a continued boost for Japanese stocks.

Nirvana eludes Japan after one year of Abenomics

November 14, 2013

GDP growth halved in the third quarter. But investors are worried about something else. One year after Shinzo Abe chalked out a path to revival, Japan is still awaiting the structural reforms he promised. Without them, the effect of monetary and fiscal stimulus could soon wane.

Four ways to tell China is serious about markets

November 13, 2013

The ruling party says market forces are to take a “decisive” role in the economy. Will it happen? A domestic bond default, shrinking currency reserves, the foreign takeover of a failing state-owned company and more volatile commodity prices would all be promising signs.

Japan index: Risks to GDP growth recede

November 13, 2013

Breakingviews’ Abenomics Index rose the most in six months in September. The gain would have been higher but for Japan’s unusual current account deficit. Higher revised values for July and August suggest the risk of a significant slowdown in third-quarter GDP growth has ebbed.

China plenum is far cry from what might have been

November 12, 2013

The meeting gave the new leadership an opportunity for big gestures, along the lines of Deng Xiaoping’s 1992 southern tour. Instead, they went for a modest “big reveal”, with good polices wrapped in bland talk. Politics remains a matter firmly for the Party, not for outsiders.

Asian tsunami offers lessons for Philippine repair

November 12, 2013

Like typhoon Haiyan, the 2004 tidal wave caused death and devastation. In countries like Sri Lanka, subsequent rebuilding efforts sucked labour into construction, undermining export industries. The Philippines’ rapidly-expanding economy is at risk from similar distortions.