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Jul 23, 2013

Lira steady, forint falls after diverging rate moves

LONDON, July 23 (Reuters) – The lira steadied below
one-month highs on Tuesday after a relatively modest interest
rate hike by Turkey’s central bank, while the Hungarian forint
hit four-week lows after a rate cut and the promise of more to
come.

Turkey’s central bank has been acting in recent weeks to
shore up the currency, whch has fallen on global fears about the
withdrawal of U.S. stimulus and by domestic political tensions.

Jul 23, 2013
via Global Investing

Russia’s starting blocs – the EEU

The course is more than 20 million square kilometers, and covers 15 percent of the world’s land surface. It’s not a new event in next month’s IAAF World Championships in Moscow but a long-term project to better integrate emerging Eurasian economies.

The eventual aim of a new economic union for post-Soviet states, known as the Eurasian Economic Union (EEU), is to “substitute previously existing ones,” according to Tatiana Valovaya, Russia’s minister in charge of development of integration and macroeconomics, at a media briefing in London last week.

Jul 9, 2013
via Global Investing

Chinese inflation – unreported retail

China’s inflation print for June at 2.7 percent, a four-month high, was higher than forecast, but part of the picture could be obfuscated by a lack of accounting for the ever-growing online retail sector.

Gross domestic product figures have been consistently revised down this year from 8 percent to around 7.4 percent by July, with significant doubt over the reliability of official data. Some analysts forecast the more likely GDP print is around 5 percent, given the lack of punishment for falsifying local data and incentives for better growth figures for regional prints.

Jul 5, 2013
via Global Investing

Route 312 – China’s Route 66

The world’s largest car market, China, with a population of 1.3 billion people and an emerging middle class, holds great potential for investors and consumers alike with annual growth rates in the auto sector expected to hold at around 23 percent to 2017, according to Alliance Bernstein Asset Managers.

Joint ventures (JV), the most popular structure for foreign firms investing in the automobile sector in the world’s largest car market, are set to capitalise on a growing consumer base in a country with 3.3 million kilometres of asphalt. Traversing the so-called ‘mother’ road 312 (China’s route 66) is becoming more of an attainable dream for the Chinese consumer.

Jun 12, 2013

Stocks edge off 9-mth lows, Turkey makes gains

LONDON, June 12 (Reuters) – Emerging equities hit 9-month
lows for a second day on Wednesday on a continuing flight from
high-yield assets before recouping some losses, bolstered by a
slight recovery in Turkey and Russia.

Emerging market assets have been hard-hit by expectations
the U.S. Federal Reserve will scale back quantitative easing,
encouraging money to return home to the United States, and by
lower growth in key commodity export market China.

Jun 11, 2013
via Global Investing

Russians and the city: consumer led growth

Speculation is growing that new central bank governor Elvira Nabiullina will cut rates to help stimulate faltering growth soon after takes up her job later this month, but the resilience of the Russian consumer may be another important factor in giving the economy a lift.

Retail sales figures have been lower than expected for the first quarter of 2013, leading economists to revise downwards their prediction for this driver of growth, though performance in the construction and cement sectors is improving, according to Morgan Stanley research:

Jun 4, 2013

Brazil may have to live with weaker currency -cbank director

LONDON, June 4 (Reuters) – Brazil will have to live with a
weaker local currency if its depreciation against the U.S.
dollar is in line with the movement of other currencies, the
Brazilian central bank’s director for monetary policy said on
Tuesday.

In comments that drove down its exchange rate, the official,
Aldo Mendes, said that “there is nothing we can do” if the
depreciation of the Brazilian currency, the real, is in
synch with a global currency trend.

Jun 3, 2013
via Global Investing

The Sub-Saharan frontier: future generations

As growth in Sub-Saharan Africa is set to post a steady 5-6 percent per annum to 2017 according to IMF estimates,  investors will be taking notes on the region’s growth story not least with the financial sector.

Growth projections have rebounded from forecasts of around a 3 percent rise in 2009 after falling commodity prices have hit one of the region’s main revenue sources. Yet, according to the World Bank’s recent Global Development Finance report, stronger commodities will firm growth prospects in the coming years. In recent weeks, commodities have dipped, dampening the outlook for some resource-rich countries, but as 76 percent of the region’s population do not have access to a bank account, lenders are set to grow their presence in the region.

May 31, 2013

Shares suffer largest monthly loss in a year

LONDON, May 31 (Reuters) – Emerging shares fell almost 1
percent on Friday and were heading for their largest monthly
loss in a year while most currencies posted fresh losses as
investors fretted over a slowdown in emerging giants India and
China.

Fear of a broad emerging markets slowdown was reinforced by
Indian data showing the weakest growth in a decade, while
Chinese data due at the weekend is also expected to stay soft.

May 20, 2013
via Global Investing

China data: Lessons from Yongzheng

 Is China’s data reliable? With official figures showing the Chinese economy grew by 7.7 percent in the first quarter of 2013, a so-called slowdown or ‘soft patch’ in the Chinese economy has concerned some marketeers. Whether gross-domestic-product calculations involve macro data or micro data, the overall picture is not so clear, though some say a focus on regional numbers, cement, oil and gas usage would help complement official statistics. Kang Qu, assistant vice president of research at the Bank of China, said at a panel discussion earlier this week organised by the centre for the study of financial innovation, and supported by NowCasting, on calculating official Chinese data there is not so much government focus as in other countries on business confidence indicators but more on GDP prints, which are still under some doubt:
This is a reference when the People’s Bank of China makes big decisions.
Difficulty in collating accurate data is perhaps not so surprising, given the rapid urbanisation of the world’s second largest economy. Off-beat labour statistics (employing dissimilar methodology to the ILO) are partly skewed due to a large number of temporary registrants that slip the official statistics net. The solution? Jinny Lin at Standard Chartered, who thinks China’s real GDP level is more likely around 5.5 percent, suggested this could be taken from the history books. Emperor Yongzheng, China’s ruler in the late Qing dynasty, set up an independent body to look at data at the local level, and successfully stemmed tax evasion.

If local data is reliable enough, we should use local data.

Source: Flikr creative commons

Problems are found at a local level too, however. While the current system sets local government officials’ bonuses for better GDP growth, there is no penalty for supplying incorrect data, neither are local government officials assessed on the jobs they create but via a points system. Instead local governments have ‘soft’ and ‘hard’ targets to attain, according to the panellists, some of which include environmental targets.