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Putin wants to chummy up with China
<p>With its economy a mess, and its relations with its Western neighbors in tatters, Russia is in dire need of new friends. So, its leader - Vladimir Putin - is looking east to China.</p> <p>According to Reuters, Putin was at the Eastern Economic Forum in Vladivostok  earlier this week trying the woo Asian investors in a bid to drum up cash for Russia's neglected Far East region. </p> <p>“The possibilities in region,” Putin told Asian investors, “are enormous”. The Russian leader was touting the region - packed with natural resources, forestry and fish stocks - to delegates from Japan, South Korea, and, most importantly, China. </p> <p>Its Putin’s hope that Russia’s Asian friends will help turn his country’s Far East - which takes of a third of its landmass - into a "profitable business center". </p> <p>China is already throwing quite a bit of love Russia's way. Data from Rhodium, a China-focused research group, shows that China's direct investment into Russia totaled about $8.4 billion in 2014, up 10% from 2013. That’s almost half of the $18 billion China invested in the whole of Europe for the same period. </p> <p>With its economy buffeted by cheap oil and western sanctions, resulting from its conflict in Ukraine, Russia really needs its Asian allies. But then again, anyone with even with a passing interest in the global economic affairs will know that China is having a few money problems of its own right now.</p> <p>Photo: Donkey Hotey via Flickr</p>
NexAsia Week Ahead: Chinese inflation, exports, and forex reserves figures coming up
<p>(Note: all times HKT)<br /> Good morning everyone. China and the Federal Reserve will continue to dominate the headlines this week as the former reports is forex reserves and export data while the latter gears up to decide whether it should lift rates or not. There are other heavies on this week’s docket though, such as the Bank of Canada’s and the Reserve Bank of New Zealand’s interest rate decision, the Bank of England’s PMC minutes, Japan’s GDP growth, and Jean-Claude Juncker’s upcoming State of the Union address.</p> <p>Here’s what else you should look out for:</p> <p>Monday:</p> <p>6:00 am – China August foreign exchange reserves</p> <p>1:00 pm – Japan July preliminary coincident index – Forecast: 112.17 from 112.3</p> <p>1:00 pm – Japan July preliminary leading economic index – Forecast: 106.3 from 106.5</p> <p>2:00pm – Germany July YoY industrial production – Forecast: 1.84% from 0.6%</p> <p>Tuesday:</p> <p>7:50 am – Japan Q2 QoQ final GDP growth rate – Forecast: -0.4% from 1%</p> <p>7:50 am – Japan Q2 annualized final GDP growth rate – Forecast: -1.6% from 3.9%</p> <p>9:30 am – Australia August NAB business confidence – Forecast: 3.75 from 4</p> <p>10:00 am – China August balance of trade – Forecast: $40 billion from $43 billion</p> <p>10:00 am – China August YoY exports</p> <p>10:00 am – China August YoY imports</p> <p>2:00 pm – Germany July balance of trade – Forecast: € 21.8 billion from €24 billion</p> <p>5:00 pm – EU Q2 estimated YoY GDP growth rate – Forecast: 1.2% from 1%</p> <p>Wednesday:</p> <p>8:30 am – Australia September Westpac consumer confidence index – Forecast: 98.58 from 99.5</p> <p>1:00 pm – Japan August consumer confidence – Forecast: 40.22 from 40.33</p> <p>4:30 pm – U.K. July balance of trade – Forecast: unchanged at £ -1.6 billion</p> <p>4:30 pm – U.K. July YoY manufacturing production – Forecast: 0.4% from 0.5%</p> <p>4:30 pm – U.K. July YoY industrial production – Forecast: 1.31% from 1.5%</p> <p>8:15 pm – Canada August housing starts – Forecast: 195,100 from 193,000</p> <p>8:30 pm – Bank of Canada interest rate decision – Forecast: unchanged at 0.5%</p> <p>Thursday:</p> <p>5:00 am – Reserve Bank of New Zealand interest rate decision – Forecast: unchanged at 3%</p> <p>9:30 am – Australia August unemployment change – Forecast: 9,500 from 38,500</p> <p>9:30 am – China August YoY inflation rate – Forecast: 1.7% from 1.6%</p> <p>9:30 am – China August YoY PPI – Forecast: -5.5% from -5.4%</p> <p>7:00 pm – Bank of England interest rate decision – Forecast: unchanged at 0.5%</p> <p>7:00 pm – Bank of England MPC meeting minutes</p> <p>7:00 pm – Bank of England quantitative easing – Forecast: unchanged at £375 billion</p> <p>10:00 pm – Singapore Parliamentary elections</p> <p>Friday: </p> <p>2:00 pm – Germany August YoY inflation rate – Forecast: unchanged at 0.2%</p> <p>8:30 pm – U.S. August MoM core PPI</p> <p>8:30 pm – U.S. August MoM PPI – Forecast: 0.1% from 0.2%</p> <p>10:00 pm – U.S. September preliminary Michigan consumer sentiment – Forecast: 91.5 from 91.9<br /> Photo: nuomi @1280x1024.net</p>
Barron's Weekend Roundup: Making sense of the market correction
<p>The bull market isn't over yet. The August 24 stock market correction may have shaken some, but U.S. shares will still see gains for 2015, Barron's writes in this week's cover story. Analysts say the S&amp;P 500 will hit 2150 by the end of the year, a more than 10% increase from Friday's close.</p> <p>ETFs dropped sharply on August 24, during the massive market correction. ETFs should offer investors prices close to the underlying stocks, but that Monday ETFs dropped more than the stocks, writes Barron's. Some of the problems seem to stem reflect the flash crash in 2010. Regulators will need to take a look at how to ensure smooth ETF trading in the event of another such market swing.</p> <p>Leah Zell, head of Lizard Investors, says international small-cap value investing is the way to go. Zell tells Barron's that China's slowdown will be felt unevenly. "International small-cap investing is the last refuge of stock-picking," she says. Lizard looks at investments a year or two out, or even three to five years if possible.</p> <p>&nbsp;<br /> Photo: Jim Bowen <br /> &nbsp;</p>
Weekend Scan: Jobs report misses expectations; Lacker still on track to raise rates
<p>Happy Saturday, folks. While you were sleeping, the U.S. equity markets continued their descent largely thanks to uncertainty over the Fed’s lift-off timing following the non-farm payrolls report. August jobs climbed 173,000, below expectations of a 220,000 rise but Richmond Fed President Jeffrey Lacker was quick to point out that while it didn’t meet expectations, 173,000’s “still a strong number,” and that it isn’t enough to change the picture for monetary policy. The bond market however doesn’t seem to be pricing in that possibility, with short-end yields barely moving from their Thursday levels.</p> <p>Here’s what else you need to know:</p> <p>Chinese pre-crash trading account data inexplicably unavailable. The weekly report published by the China Securities Depository and Clearing Corporation (CSDC) – which details the number of people who opened or closed trading accounts that week – mysteriously ends on May 29, two weeks prior to the Shanghai Composite’s dramatic crash. Whether or not this information was pulled by Beijing, or if the CSDC simply chose to stop publishing these figures, is still unclear. Quartz</p> <p>Mainland banks are going to have a rough year. Ratings agency Fitch says that mainland lenders’ profitability will continue to get screwed in the second half of the year, mostly due to a rise non-performing loans following a sustained deterioration in asset quality. “Weakening asset quality could result in some profit decline in the near term, as banks cannot rely on lowering their provision coverage to generate positive profit growth.” South China Morning Post </p> <p>Egyptian billionaire offers solution to migrants. Naguib Sawiris has offered to purchase an island from Greece or Italy to house hundreds of thousands of migrants that are currently overwhelming Europe. Sawiris says he would give the island independence and provide jobs for the migrants to make it their own country, permanently or temporarily. TIME</p> <p>Good news: there’s more trees than we thought. A new study found 3.04 trillion trees on Earth, 7.5 times the amount thought to exist. On the down side, the number of trees has fallen by 46% since humans arrived on the planet. CNN</p> <p>Top Democrat opposes Iran deal. Sen. Ben Cardin, the top Dem on the Senate Foreign Relations Committee, says he will oppose the nuclear deal with Iran. Cardin’s announcement won’t kill the deal in Congress, but Cardin’s weight does hurt Obama’s efforts. Cardin says he fears the agreement would strengthen Iran in the long run.Politico</p> <p>Indonesia cuts plans for high-speed train. The country has decided to ax what would have been the first high-speed train for the nation, connecting Jakarta and Bandung, because the 93 mile route was deemed too short for a high-speed train. Wall Street Journal<br /> You won’t believe this…<br /> Died: The world’s shortest man. N</p>
Morgan Stanley ranks ‘winning’ and ‘losing’ investment banks in 2015
<p>Morgan Stanley has published a ‘banking report card’ that sizes up the performance of major investment banks in 2015. Finbuzz has obtained a copy of the report and below is a brief summary.</p> <p>2015 certainly has been no cakewalk for big banks as monetary policy, market corrections, and debt crisis make profitability of some investment banks uncertain.</p> <p>Banking analysts at Morgan Stanley have declared 2015 the year of US banks, as these institutions stand to gain the most wallet share.</p> <p>Things are looking good for Morgan Stanley and Goldman Sachs, who are poised to continue to outperform given the high growth of US capital markets. This year major management and strategy changes are expected at HSBC, Credit Suisse, Barclays, BNP, and Standard Chartered in order to boost their return on equity, which is currently 3-4% lower than US firms.</p> <p>Regional players like Wells Fargo in the US and the Nordic and Baltic Nordea in Europe are both set to increase securities finance because they aren’t as constrained as some of the other big players.</p> <p>This graph shows the equities market share change in the first six months of 2015, compared to the same time period last year. The banks on top, such as Goldman Sachs and Morgan Stanley both performed as ‘winners’ in the first half. Barclays had an abhorrent first two quarters.</p> <p>Goldman Sachs and J.P. Morgan were the overall ‘winners’ in equities sales and trading, whereas UBS and Royal Bank of Scotland were ‘losers’.</p> <p>Morgan Stanley, HSBC, UBS, and Credit Argicole topped the fixed incomes and trading this past year. The report attributes this trend to ECB QE, which has given European banks a boost. This is surprising because the ECB QE and de-pegging of the Swiss franc drove many investors to divert their portfolios away from Europe.</p>
Daily Scan: Stocks lower heading into holiday weekend
<p>Updated throughout the day</p> <p>September 4</p> <p>Good evening,</p> <p>Stocks fell Friday after the job report came back mixed. The Dow fell 1.7%, the S&amp;P 500 lost 1.5%, and the Nasdaq slipped 1.1% Friday. Oil also fell, but is still holding above $45/barrel. Nonfarm payrolls rose 173,000 last month, and unemployment fell to 5.1% from 5.3%. Economists had projected a 220,000 jobs boost for the last month. On the up side, revisions for June and July show more jobs were added than originally estimated. The job report doesn't give a clear indication of how the Fed will react at their September meeting, but everyone is antsy for an interest rate decision. Richmond Fed President Jeffrey Lacker said this morning that even though the jobs number didn't meat expectations it is "still a strong number." Lacker says the report didn't chance the picture for monetary policy, and he's still supporting a rate rise. This weekend is Labor Day in the U.S. which means markets will be closed Monday and summer is officially over and there ain't nothing the Fed can do to change that.</p> <p>Here’s what else you need to know:</p> <p>Egyptian billionaire offers solution to migrants. Naguib Sawiris has offered to purchase an island from Greece or Italy to house hundreds of thousands of migrants that are currently overwhelming Europe. Sawiris says he would give the island independence and provide jobs for the migrants to make it their own country, permanently or temporarily. TIME</p> <p>Good news: there's more trees than we thought. A new study found 3.04 trillion trees on Earth, 7.5 times the amount thought to exist. On the down side, the number of trees has fallen by 46% since humans arrived on the planet. CNN</p> <p>Top Democrat opposes Iran deal. Sen. Ben Cardin, the top Dem on the Senate Foreign Relations Committee, says he will oppose the nuclear deal with Iran. Cardin's announcement won't kill the deal in Congress, but Cardin's weight does hurt Obama's efforts. Cardin says he fears the agreement would strengthen Iran in the long run. Politico</p> <p>Indonesia cuts plans for high-speed train. The country has decided to ax what would have been the first high-speed train for the nation, connecting Jakarta and Bandung, because the 93 mile route was deemed too short for a high-speed train. Wall Street Journal</p> <p>It was the best of times and the worst of times for hedge funds. Side by side headlines: "Hedge funds faced a test in August and faltered" AND "Some hedge funds prosper in market tumult." Either way, investors pay 2 and 20. New York Times A and B (paywall)</p> <p>Miserable week for stocks. The Nikkei dropped 7% and the Hang Seng 4.7%. The Shangai Composite, which traded only Monday through Wednesday, lost 2.2%. Friday, European markets were trading about 2% lower and heading for a negative close to the week as well.</p> <p>Hong Kong PMI falls to six-year low. Weak demand, lower output, as well as one the largest and fastest workforce declines since 2003 led the Nikkei Ho</p>
And the world’s best banks are…
<p>Global Finance has recently released its annual World’s Best Banks report and guess who topped the list this year in the investment banking category? Let me give you a hint; it’s founder built U.S. Steel.</p> <p>That’s right, Jamie Dimon’s “port in the storm” snatched this year’s award from last year’s winners, Bank of America Merrill Lynch, while over in the FX space, long-time FICC juggernaut Deutsche Bank lost its crown to Citigroup, highlighting just how much the German giant has changed since the LIBOR trials.</p> <p>Here are the rest of the winners:</p> <p>Corporate Bank: Mitsubishi UFJ Financial</p> <p>Consumer Bank: BBVA</p> <p>Emerging Markets: ING</p> <p>Asset Management for Corporates: Deutsche Asset &amp; Wealth Management</p> <p>Global Custody: BNY Mellon</p> <p>Cash Management: Citi</p> <p>Trade Finance: HSBC</p> <p>Global Finance apparently chose the winners via performance, reputation, as well as management excellence, and will be honoring the awardees in Singapore during the SIBOS conference, as well as in Lima, Peru during the IMF/World Bank Annual Meetings.</p> <p>I’m sure some of you might disagree with the picks here though. Goldman, for instance, is currently on top of the FT’s overall league tables while Dealogic currently places them in second place right after JP Morgan. What do you think guys? I’m curious what you have to say here. I'm fairly certain Citi's right were it should be in regards to FX.<br /> Photo: Steve Jurvetson</p>
Restoring faith in Hong Kong property
<p>Just about everyone you meet in Hong Kong seems to be an expert on the property market. They will tell you the price per square foot for apartments in smart areas and rundown districts, and argue about what’s a bargain and what’s a rip-off.</p> <p>But all of them agree on one thing: buying real estate in the territory is a surefire way to make money in the long run.</p> <p>So front page splashes on Thursday that property sales for August slumped to their lowest level in 18 months is a bit worrying, even enough to rattle the most zealous believers in bricks-and-mortar.</p> <p>Residential transactions plunged nearly 28% compared to July and more than 37% year-on-year according to the Hong Kong’s Land Registry. The SCMP reported that leading developers such as Henderson Land are slashing prices or offering cheap mortgages. But investors are sitting on their hands, nervously watching stocks plunge on the Chinese mainland.</p> <p>And here’s the irony.</p> <p>Research by Reuters has revealed that the Chinese government has forked out at least $70 million buying Hong Kong properties during the past year as Beijing swells its presence after last summer’s mass democracy protests.</p> <p>The shadowy Chinese Liaison Office has bought 62 apartments, filling them with new staff to keep tabs on any resurgence of “Occupy Central” civil disobedience in the territory. And there are no signs that the spending binge is about to end.</p> <p>So while a faltering Chinese economy and a collapsing Shanghai stock market threatens faith in Hong Kong property, tougher Big Brother vigilance could send prices higher.<br /> Photo: Hank Anderson</p>
Daily Scan: Nikkei hits seven-month low; World markets cut risk ahead of jobs report
<p>Updated throughout the day</p> <p>September 4</p> <p>Good evening everyone. Risk was definitely off today as the world’s markets seem to be waiting with baiting breath for tonight’s non-farm payrolls report. A good reading here might seal the deal on a rate hike this month, while a bad one would surely push it off to a later date. The selling during the lower half of the session however seemed a little panicky, which could be attributed to Hong Kong’s terrible PMI reading earlier in the day but with the Nikkei hitting seven-month low, it might be something else altogether. Anyway, here’s how the major Asia-Pacific markets fared this week:</p> <p>Day<br /> Week</p> <p>Nikkei 225<br /> -2.2%<br /> -7%</p> <p>Hang Seng Index<br /> -0.7%<br /> -4.7%</p> <p>ASX<br /> +0.3%<br /> -4.2%</p> <p>The Chinese markets were closed Thursday and Friday; the Shanghai Composite lopped off 2.2% in its shortened week. European markets aren’t doing too well, despite Mario Draghi’s assurance that he’ll expand stimulus “if warranted.” The FTSE 100 retraced gains to fall 1.63%, the DAX – exacerbated by Germany’s surprise drop in factory order – slid 1.75%, while the CAC slumped 1.83%.</p> <p>Here’s what else you need to know:</p> <p>Hong Kong PMI falls to six-year low. Weak demand, lower output, as well as one the largest and fastest workforce declines since 2003 led the Nikkei Hong Kong Purchasing Managers’ Index to fall to 44.4 in August. That's well below its 48.2  reading in July and its worst showing since February 2009. Markit</p> <p>Japanese wages miss estimates – badly. Japan’s manufacturing industry may be growing at a fast clip, but its labor market is continuing to disappoint. Labor cash earnings for the land of the rising sun grew just 0.6% in July, far below an estimated climb of 2% and even more worrisome if you adjust for inflation. It is. however, the first real wage rise the nation has experienced since 2012. Silver linings, man. Financial Times (paywall)</p> <p>China swaps Australian mining for the country’s agriculture. After plunking ungodly amounts of money into the nation’s mining industry, China is now investing in Australian agriculture. Not only is China the No. 1  buyer of meats, wheats, and various other treats, it is now Australia’s largest investor in the agricultural sector, plowing as much as $450 million into the industry in 2014 alone. Wall Street Journal</p> <p>ECB ready to expand stimulus. European Central Bank President Mario Draghi says the bank is projecting slower than expected economic growth in the eurozone, and the ECB will “act if warranted.” Wall Street Journal (paywall)</p> <p>Debris found confirmed to be from missing MH370 flight. French investigators say they are certain that a piece of an airplane wing that washed up on a remote Indian Ocean island came from Malaysia Airlines Flight 370, which disappeared in March 2014 with 239 people on board. The New York</p>
Daily Scan: US stocks have mixed Thursday; Jobs data due out Friday
<p>Updated throughout the day</p> <p>September 3</p> <p>Good evening,</p> <p>U.S. stocks had a mixed day, starting slow gains in the morning before fading in the afternoon. The Dow closed up 0.1%, as did the S&amp;P 500. The Nasdaq lost 0.4%. The Stoxx Europe 600 ended Thursday up 2.4%. Oil is sneaking its way back up before the holiday weekend, closing just short of $47/barrel. Wednesday afternoon, the Federal Reserve released the Beige Book, its survey of businesses. Bottomline: Things are looking good. Investors will be examining same-store sales today to measure just how robust the American consumer is. Of course, Friday brings the mother of all economic datapoints -- the monthly jobs report. Survey says: nonfarm payrolls in August will edge up to 223,000 from 215,000 in July. Stay tuned.</p> <p>Here's what else you need to know:</p> <p>The Reunion debris is definitely from missing flight MH370. French investigators have confirmed that the debris found on an island in July is without a doubt from Malaysia Airlines Flight 370. The French were the last group holding out on a certain confirmation of the debris. CNN</p> <p>Kentucky clerk headed to jail. Kim Davis, the Kentucky clerk refusing to give out marriage licenses since same sex marriage was legalized, was found in contempt of court and jailed Thursday. Her office will start processing paperwork for same sex marriage licenses Friday. USAToday</p> <p>Dewey &amp; LeBoeuf defense rests. The lawyers for three former Dewey &amp; LeBoeuf executives plans to formally rest Tuesday without calling a single witness. The lawyers will also renew a request to dismiss the case, which accuses the execs of defrauding lenders and creditors. New York Times</p> <p>U.S. government extends healthcare nondiscrimination to transgender people. Health insurers and medical providers must treat all patients equally, regardless of sex. Earlier this year, a study found that 42% of female-to-male transgender adults reported verbal harassment, physical assault, or denial of equal treatment in a doctor's office or hospital. Reuters</p> <p>Images of dead child put face to migrant problem. Photos of a 3-year-old Syrian Kurd boy who drowned near Turkey are tugging heart strings everywhere. The horrible images of the child show how desperate the migrant situation is, as thousands have perished this year alone. The boy's mother and 5-year-old brother also died, and his father is in the hospital. Wall Street Journal</p> <p>Donald Trump will sign GOP loyalty pledge. A Trump associate says that the presidential candidate will sign the pledge to endorse the Republican nominee, preventing a third-party run. The move will help put Trump on Republican primary ballots more easily, and will undermine his opponent's attacks on the possibility of him running as an independent. </p>