• Current Reports  

    Published on July 30th, 2014

    “I know of no instances in world practice and previous experience in which sanctions have achieved their aim and proved effective,” declared Sergei Ivanov in 2006. At the time Ivanov—then Russia’s defense minister—was criticizing US sanctions on Iran. Today he is even better placed to observe the effectiveness or otherwise of economic sanctions. As Vladimir Putin’s chief of staff, Ivanov was among the Russian president’s intimates targeted by the sanctions Washington imposed in March following Putin’s annexation of the Crimea. Ivanov is unlikely to have changed his tune, however, even after the European Union yesterday agreed a new batch of sanctions targeting Russia’s banks, oil industry and defense sector...
    Published on July 30th, 2014

    The big game hunter has now bagged his finest trophy. On Tuesday, the Communist Party officially announced a corruption investigation into Zhou Yongkang, a former member of the ruling Poliburo Standing Committee. Over recent months investigators have already detained many of Zhou’s relatives and associates. But no official of Zhou’s rank has been formally disciplined for corruption in the reform era, and it has been uncertain when or if he would be publicly charged. The confirmation that Zhou himself will be tried and punished is therefore certainly the symbolic climax of Xi Jinping’s anti-corruption campaign—but it will not mark the end of that campaign or the tensions it has brought...
    Published on July 29th, 2014

    In the first article in this series, I argued that what is happening with the global economic cycle strongly influences investors beliefs’ about structural phenomena such as productivity, demographics, capital allocation and debt dynamics (see The Case For A Structural Bull Market). And while it will take many years to settle all the debates between bulls and bears about productivity or debt sustainability or zero interest rates, the cyclical outlook is now fairly clear, at least for US economic growth. Despite the first quarter’s astonishingly weak gross domestic product figures, the US economy now seems to have reached ‘escape velocity’. From this point it can continue expanding and creating jobs even in the face of exogenous shocks such as cold winter weather, geopolitical turmoil and the chaotic introduction of Obamacare. The situations in Europe and Japan are much less rosy, and the risk of an accident in China cannot quite be dismissed. But, above all, it is the sustainability of the US economic recovery that has been governing market performance around the world, as this piece will explain...
    Published on July 29th, 2014

    China’s equity markets are finally beginning to play catch-up. Over the first half of 2014, the Shanghai composite index and Hong Kong’s ‘H-share’ China enterprises index were the worst performing markets in the region, both recording losses while the rest of emerging Asia enjoyed a great run. Lately, however, both the Shanghai market and H-shares have showed signs of renewed vigor. Over the last five trading days both have risen by around 5% to set new year-to-date highs...
    Published on July 28th, 2014

    In the next few days Indonesia’s Constitutional Court will rule on a challenge mounted against Joko Widodo’s victory in this month’s presidential election. All the indications are that the court will dismiss the complaint filed on Friday by defeated candidate Prabowo Subianto, who alleges massive electoral fraud. Yet if the court does throw out Prabowo’s challenge for lack of evidence as expected, Joko’s difficulties will not be over. In all likelihood, they will only just be starting...
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