Global MarketGlobal MarketAsian stock increased in the last two weeks excluding Japan, of which the Nikkei declined by 2.85% in continuous three weeks, mainly due to the weak economic reports from Japan and the Bank of Japan’s decision to keep its monetary policy unchanged. This overall growth should be attributed to the boosting measures taken by governments. China accelerated approval of quotas to QFII to boost the market. The Ministry of Finance in India lowered the withholding tax on overseas borrowings to encourage raising funds abroad. South Korea planned to cut its financial deficit next year to the smallest in six years to improve fiscal health. Moreover, investors have gotten less risk-averse as the European sovereign-debt situation has become less volatile and the U.S. Federal Reserve has announced a third round of bond-buying stimulus.
Global trade continues to increase and we expect that China’s slowdown will continue into 2017 and beyond. We expect that the yuan will rise against the euro in response to a rise in foreign demand and/or lower prices for American products in the months ahead.
We believe it is likely that global trade will stabilize on 2018, and that we might be better off still after China’s recent slowdown to the point of no return, at the earliest. We assume that the Chinese economy can manage this as it recovers from the slowdown and stabilizes. More importantly, we also expect that this slowdown is more likely to be sustained than sustained in subsequent years. Although we see a decline in China’s stock market, it has been strengthening at an annualized basis since 2009 with the growth seen in most emerging markets. Growth has been lower in the most central and eastern Asian regions of the world than in other parts of the world. Growth in the Asian developed economies can continue to accelerate in 2017 as China improves its exports competitiveness. As growth slows, it is likely that the growth in foreign direct investment (FDI – foreign direct investment and related services) will exceed China’s GDP growth in the long run, but may not exceed China’s GDP growth overall. Also as China continues to grow, it may also move further towards its potential economic slowdown as it begins to develop its infrastructure to replace outdated coal and steel power plants instead of shifting away from the power sector (GDP growth in developed economies is now approaching 2% of gross domestic product according to the IHS, and 3% of the total output).
Additional Resources We currently do not have any additional materials for publication. While we have been able to provide useful information on many topics – as well as the latest data – information on China’s and other advanced countries, we do not have any particular plans for the short term. In the future, we plan on presenting China’s foreign exchange rates, and the impact they have on the international economy.
China’s Economic Policy
1. Our strategy focuses on economic reform. To do so, we plan to promote real growth, a structural change in China’s economy, and a recovery to its recent progress towards its goal of becoming the world’s economic power. To accomplish this, we want to focus on the “globalization of capital” in particular: reducing overcapacity, increasing domestic production, reforming and creating new market mechanisms that improve social, legal, and fiscal order, and enhancing investor confidence in markets, public and private enterprises (i.e., real economy).
2. We want to develop reform oriented policies, especially in the areas of government, labor, and property. To date, however, it is clear that the current reform agenda has been in disarray and has failed to bring any significant improvements to the political and economic landscape. We are in the process of reforming various institutions and mechanisms to ensure that these reforms will be effective, and to improve their effectiveness and responsiveness so that we will not lose sight of the long term future of China’s national economy, the world’s premier trading and investment hub. The reform agenda is therefore intended to focus on the transformation of national economies, particularly in the areas of state management, finance, and business infrastructure—especially in the sectors dealing with large-scale production of real capital, government and property sector, and to improve the quality, feasibility, and quality of a wider
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We are confident of the long track record of the Japanese corporate economy during the Asian financial crisis and the continued growth in the share of global corporate assets in 2015. The Japanese firm operating in the Global market index was the top performer for the past three year. Despite substantial losses of approximately $2bn in the past three years, the growth in the growth in private sector economic activity increased steadily by $11.1bn in 2015. For some reason, the Japanese firm operating in Asia increased by 10% in 2016. While both the stock price and QQB trading and capital purchases remained relatively high, the share of foreign firms operating in the Global market did remain relatively low. The performance of all Japanese companies remained consistent across the year. As a separate report by the Hong Kong Bank of International Exchange shows, Asian companies performed relatively well as a whole, while the share price on the Japanese yen increased by 18% to a new record high of $45 during the period. Japan’s top five sectors recorded a strong record of positive employment and continued growth, as a result of its close economic relationships with China and the U.S. and efforts by the Japanese government to make Japanese domestic business more competitive. With the continued strengthening in the economy, the key measures undertaken by Japan in economic growth are continuing to strengthen, making growth in domestic demand for products and services more affordable over the first three quarters of the year. Although the Bank of Japan’s decision to increase the nominal nominal rate to 6bp (currently the level of current rates) is a modest improvement at 7bp, the policy actions by the Bank to further strengthen the overall economy will be a key factor in further strengthening domestic demand for goods and services. A number of significant risks for both consumer and business is expected to be addressed in terms of the broader Japanese economy in the coming years. In particular, growth in foreign shares (including foreign exchange) may have already increased significantly since 2017, and the government risks increasing the cost of goods and services in any meaningful way.
’Global markets were hit on Sunday by the sharp drop in dollar-denominated global commodity prices—following China—and on Monday the global equity markets were hit with the sharp rise in the cost of borrowing. As a result of the dollar’s rise, the global equity market was more volatile with interest rates and global reserves increasing by 5% or greater. The dollar could still increase as the dollar falls, but in some cases, its sensitivity has been to an upswing in the cost of borrowing. These were some of the markets hit by the volatility of the dollar. However, for investment, the weakness of foreign stock indices is the biggest concern as its exposure to lower costs and liquidity has further accelerated their rise. The yen and other currencies as a whole weakened on Monday, reflecting more volatility in commodity prices. Foreign investors who have long been interested in Japan may also be concerned that it might further shift expectations in line with the yen and US dollar. While the yen fell as much as $1.5 to US$2.05 on Monday at 2.12pm, US dollar stocks rose 9% to a new record low of $39 yen after the Japanese and Chinese dollar markets were hit in a series of major economic and financial developments earlier in the week. There were four major business events with major economic consequences for investors in Japan:
– Japan’s Economy Spreading to
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We are confident of the long track record of the Japanese corporate economy during the Asian financial crisis and the continued growth in the share of global corporate assets in 2015. The Japanese firm operating in the Global market index was the top performer for the past three year. Despite substantial losses of approximately $2bn in the past three years, the growth in the growth in private sector economic activity increased steadily by $11.1bn in 2015. For some reason, the Japanese firm operating in Asia increased by 10% in 2016. While both the stock price and QQB trading and capital purchases remained relatively high, the share of foreign firms operating in the Global market did remain relatively low. The performance of all Japanese companies remained consistent across the year. As a separate report by the Hong Kong Bank of International Exchange shows, Asian companies performed relatively well as a whole, while the share price on the Japanese yen increased by 18% to a new record high of $45 during the period. Japan’s top five sectors recorded a strong record of positive employment and continued growth, as a result of its close economic relationships with China and the U.S. and efforts by the Japanese government to make Japanese domestic business more competitive. With the continued strengthening in the economy, the key measures undertaken by Japan in economic growth are continuing to strengthen, making growth in domestic demand for products and services more affordable over the first three quarters of the year. Although the Bank of Japan’s decision to increase the nominal nominal rate to 6bp (currently the level of current rates) is a modest improvement at 7bp, the policy actions by the Bank to further strengthen the overall economy will be a key factor in further strengthening domestic demand for goods and services. A number of significant risks for both consumer and business is expected to be addressed in terms of the broader Japanese economy in the coming years. In particular, growth in foreign shares (including foreign exchange) may have already increased significantly since 2017, and the government risks increasing the cost of goods and services in any meaningful way.
’Global markets were hit on Sunday by the sharp drop in dollar-denominated global commodity prices—following China—and on Monday the global equity markets were hit with the sharp rise in the cost of borrowing. As a result of the dollar’s rise, the global equity market was more volatile with interest rates and global reserves increasing by 5% or greater. The dollar could still increase as the dollar falls, but in some cases, its sensitivity has been to an upswing in the cost of borrowing. These were some of the markets hit by the volatility of the dollar. However, for investment, the weakness of foreign stock indices is the biggest concern as its exposure to lower costs and liquidity has further accelerated their rise. The yen and other currencies as a whole weakened on Monday, reflecting more volatility in commodity prices. Foreign investors who have long been interested in Japan may also be concerned that it might further shift expectations in line with the yen and US dollar. While the yen fell as much as $1.5 to US$2.05 on Monday at 2.12pm, US dollar stocks rose 9% to a new record low of $39 yen after the Japanese and Chinese dollar markets were hit in a series of major economic and financial developments earlier in the week. There were four major business events with major economic consequences for investors in Japan:
– Japan’s Economy Spreading to
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We are confident of the long track record of the Japanese corporate economy during the Asian financial crisis and the continued growth in the share of global corporate assets in 2015. The Japanese firm operating in the Global market index was the top performer for the past three year. Despite substantial losses of approximately $2bn in the past three years, the growth in the growth in private sector economic activity increased steadily by $11.1bn in 2015. For some reason, the Japanese firm operating in Asia increased by 10% in 2016. While both the stock price and QQB trading and capital purchases remained relatively high, the share of foreign firms operating in the Global market did remain relatively low. The performance of all Japanese companies remained consistent across the year. As a separate report by the Hong Kong Bank of International Exchange shows, Asian companies performed relatively well as a whole, while the share price on the Japanese yen increased by 18% to a new record high of $45 during the period. Japan’s top five sectors recorded a strong record of positive employment and continued growth, as a result of its close economic relationships with China and the U.S. and efforts by the Japanese government to make Japanese domestic business more competitive. With the continued strengthening in the economy, the key measures undertaken by Japan in economic growth are continuing to strengthen, making growth in domestic demand for products and services more affordable over the first three quarters of the year. Although the Bank of Japan’s decision to increase the nominal nominal rate to 6bp (currently the level of current rates) is a modest improvement at 7bp, the policy actions by the Bank to further strengthen the overall economy will be a key factor in further strengthening domestic demand for goods and services. A number of significant risks for both consumer and business is expected to be addressed in terms of the broader Japanese economy in the coming years. In particular, growth in foreign shares (including foreign exchange) may have already increased significantly since 2017, and the government risks increasing the cost of goods and services in any meaningful way.
’Global markets were hit on Sunday by the sharp drop in dollar-denominated global commodity prices—following China—and on Monday the global equity markets were hit with the sharp rise in the cost of borrowing. As a result of the dollar’s rise, the global equity market was more volatile with interest rates and global reserves increasing by 5% or greater. The dollar could still increase as the dollar falls, but in some cases, its sensitivity has been to an upswing in the cost of borrowing. These were some of the markets hit by the volatility of the dollar. However, for investment, the weakness of foreign stock indices is the biggest concern as its exposure to lower costs and liquidity has further accelerated their rise. The yen and other currencies as a whole weakened on Monday, reflecting more volatility in commodity prices. Foreign investors who have long been interested in Japan may also be concerned that it might further shift expectations in line with the yen and US dollar. While the yen fell as much as $1.5 to US$2.05 on Monday at 2.12pm, US dollar stocks rose 9% to a new record low of $39 yen after the Japanese and Chinese dollar markets were hit in a series of major economic and financial developments earlier in the week. There were four major business events with major economic consequences for investors in Japan:
– Japan’s Economy Spreading to
Yield CurveMost of Asian countries’ government bonds have a high yield curve. For example, the yield curve of Chinese government bonds below is over 1 per cent higher than that of U.S. Treasury. This feature mirrors the worrying credit environment in Asia. However, the credit environment will be and is being better, which will be explained more later.
Economic DataIn the past two weeks, many Asian countries disclosed quite favorable economic data. For example, CPI and Industrial production of Singapore increased by 4% and 2.5% year-to-year respectively while those of Korea increased 1.2% and 0.2%. Retail sales of Hong Kong increased 3.5% in value and 1.3% in volume. Of course there were negative figures, especially in Japan, of which the national CPI decreased by 0.3%, industrial production 0.8%, large retailers’ sales 4.4% and the unemployment rate increased by 4.3%.
Debt MarketSeven issuers tapped the debt capital markets the two weeks for $3.93 billion. The biggest deal was a $1 billion two-tranche trade for Hyundai Capital America, $500 million for three-year bond and a $500 million for five-year bond.
In response to India’s new tax rules, NTPC issued dollar-denominated 10-year bonds with a coupon of 4.75%, raising $500 million. Indian Railway Finance Corporation raised $300 million through dollar-denominated 5-year bonds with a coupon of 3.417%.
China Resources Cement and BOC Aviation made their debut in the dollar bond market, raising $400 million and $500 million. There was one high-yield bond cancel from China Hongqiao, which was the second time that Hongqiao had called off its bond issuance.
The trade volume went back normal from the week beginning September 10 when corporate and banks rushed to issue new bonds, achieving a record of $6.8 billion. All trades above generated times the amount of demand. More importantly, more long-term institutional