• Current Reports  

    Published on September 30th, 2014

    The public relations machine of Narendra Modi, a one-time pariah in respectable political circles, is currently in overdrive. India’s charismatic prime minister grabbed the plaudits for India’s low cost Mars orbiter pipping China to the Red Planet last week, and in recent days he’s been getting the full blown celebrity treatment during an official visit to the US, something which is rare for a foreign leader. In between these triumphs of marketing (NASA was responsible for a lot of behind-the-scenes work on the Mars program) he also had time to announce a new economic credo focused on making India a manufacturing nation...
    Published on September 30th, 2014

    It’s been a brutal year for commodities. Slower growth in China, and stalled economies in Europe and Japan, have eroded end-user demand even as the prospect of higher interest rates in the US has blunted investor appetite for zero-yield assets. At the same time the heavy investment of recent years is now bringing new sources of supply to market. In response, the S&P GSCI commodity index is down -7.2% over the year to date. Even copper, long regarded as a sure-fire play on China’s development, has not escaped the rout. Cash prices on the London Metal Exchange have fallen -8.0% this year to US$6,787.50 per metric ton (equivalent to US$3.08/lb). That’s down more than a third from the record high of US$10,180 achieved in February 2011 on the back of China’s investment boom, quantitative easing in the US, and limited supplies from the world’s mines...
    Published on September 30th, 2014

    It’s been a brutal year for commodities. Slower growth in China, and stalled economies in Europe and Japan, have eroded end-user demand even as the prospect of higher interest rates in the US has blunted investor appetite for zero-yield assets. At the same time the heavy investment of recent years is now bringing new sources of supply to market. In response, the S&P GSCI commodity index is down -7.2% over the year to date. Even copper, long regarded as a sure-fire play on China’s development, has not escaped the rout. Cash prices on the London Metal Exchange have fallen -8.0% this year to US$6,787.50 per metric ton (equivalent to US$3.08/lb). That’s down more than a third from the record high of US$10,180 achieved in February 2011 on the back of China’s investment boom, quantitative easing in the US, and limited supplies from the world’s mines...
    Published on September 29th, 2014

    China’s local governments held a party for the housing market, but no one came. Most major cities (with some exceptions including Beijing and Shanghai) have rolled back measures restricting housing purchases since June, but housing sales are still weak. Previously, we had argued that the combination of a pickup in credit growth and the relaxation of purchase restrictions would help the downturn in property sales find a bottom relatively soon (see Housing’s Quiet Period Is Over). Unfortunately, while local governments did relax their restrictive policies, credit growth did not accelerate, and in fact slowed notably in July and August. Property sales are tightly correlated with credit growth, and therefore also disappointed. With the central bank’s relatively hawkish views now seeming to get more traction in the national policy debate, it seems unlikely that...
    Published on September 29th, 2014

    The inhabitants of Hong Kong were treated over the weekend to the unusual spectacle of police battling political protesters in the city’s streets. Baton charges and volleys of tear gas might be common enough tactics in New York or London, but not in Asia’s leading international financial center. The rapid escalation of the protests over the weekend and the police’s strong-arm response shocked locals, and triggered a -2% fall in the city’s benchmark Hang Seng stock index on Monday morning as investors worried about the impact of continued unrest on Hong Kong’s markets, its economy and its future as Beijing’s laboratory of choice for China’s financial liberalization...
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