Posts Tagged ‘ Economy ’

Australia economy the worst is still to come

Western economy that has defied the financial crisis and kept growing . Australia economy was built on the emerging market bubble .

Assets which boomed off the back of aggressive emerging market growth will come under increased scrutiny with Australia particularly vulnerable.

That is the view of Alexander Friedman, CIO of UBS Wealth Management, who believes certain EM-linked markets are not properly reflecting the slowdown in the developing world.

He said:

‘While low valuations keep us neutral on EM equities, we reiterate our negative position on Australian equities and the Australian dollar, and are adding a new theme expressing a negative view on Australian financials, all of which are overvalued EM-linked assets.’

Emerging markets, Friedman said, are undergoing a two stage transition as foreign capital flows reverse direction.

‘If capital stops flowing, countries tend to go through two phases. First there’s a “crisis prevention” phase in which a country draws on any available liquidity reserves to prevent widespread bankruptcies.’
‘Then there’s a “reform” phase in which countries try to reduce their reliance on foreign capital,’ he said.

Reform phases

In the reform phase, Freidman said the key question is whether previous foreign inflows were channelled into profitable enterprise or speculative ones. One sign of the latter is foreign ownership of local assets.

On this count we are cautious on South Africa, where foreign bond holdings represent a massive 86% of the country’s reserves. This makes interest rates and the rand particularly vulnerable to a reversal,’

he said.

A second sign Freidman is wary of is misallocated capital, and among EM economies, he points out China’s investment-to-GDP ratio of 48% as ‘far too high’.

With producer prices in deflation for the past 18 months the economy is clearly suffering from overcapacity.’‘Imbalances have been able to persist and even grow as vast liquidity in the banking system created by the People’s Bank of China’s de facto dollar peg has fuelled credit growth to unprofitable enterprises, such as the steel industry,

Chinese transition

While Freidman notes the importance of reforms, and a key focus of China’s government, he remains realistic about the implications this transition will have on the world’s second-largest economy.

‘We expect the Chinese economy to continue to disappoint expectations over the course of the year, and believe recently announced measures to lower taxes for small businesses, support trade, and reform railway investment will directly affect the economy in only a limited way. We project growth to slow to 7.2% year over year in the fourth quarter.’

‘We continue to believe in the long-term emerging market consumption growth story but believe near-term performance will be challenging due to the headwinds to EM growth described above,’ Freidman said.

Aussie Falls to Lowest in More Than Two Years

Bloomberg reports Aussie Falls to Lowest in More Than Two Years as Home Loans Slow

Australia an ‘overvalued EM-linked asset’ says UBS WM’s CIO

Australia’s dollar fell to the lowest in more than two years versus the greenback after home-loan approvals grew at the slowest pace in three months, boosting the case for further cuts to borrowing costs.

The Aussie slid against all but one of its 16 most-traded peers amid speculation the U.S. central bank will reduce stimulus this year, narrowing Australia’s interest-rate advantage. Standard & Poor’s lifted the U.S. credit outlook to stable from negative, supporting the view that the Federal Reserve could taper asset purchases under its program of quantitative easing. New Zealand’s kiwi dollar fell.

“Housing is the one area most likely to make up for the mining investment downturn, and it’s disappointed,” said Joseph Capurso, a Sydney-based foreign-exchange strategist at Commonwealth Bank of Australia.

Australian Insolvencies Hit Record

Australian insolvencies hit record for month of April.

A new April record has been set for Australian companies becoming insolvent. Some 941 firms were put under administration, marking the highest tally for that month since records were first made public in 1999.

Some 941 firms were put under administration, according to an FTI Consulting analysis of Australian Securities and Investments Commission records.

Almost 3450 companies have gone into administration so far this year, compared with 3524 during the same period in 2012.

But the number is higher than the opening four months of 2008 to 2011, which included the global financial crisis.


IMF raises growth for Japan

On Tuesday IMF raised its economic growth estimate for Japan in 2013 . This is due to Abenonics effect on the economy , USA &China and world growth was reduced .

IMF projected that the Japanese economy will grow 2.0 % this year in terms of inflation-adjusted gross domestic product, up 0.4 %point from its April forecast . They saw growth for 2014 reduced based on global environment .

The IMF also projected the global economy will expand 3.1%this year, down from its earlier estimate of 3.3 percent, before growing 3.8 percent in 2014, also down from its earlier forecast of 4.0 percent!
As always some do better than others ,

Abenonics has taken effect now lets see if the policy changes will come or this can easily be Changed to the good or bad .

Tony Evans


Japan exports improve most since 2010 over 10%

We seeing Abenomics arrow 1 & 2 having a huge effect on the exports.
That’s one full quarter of improving result , showing that the market is going right way .

Lets hope this continues .the big test will be the up and coming election , if Abe wins then we can see some proper structural changes , if he gets 2/3 majority we can see some constitutional changes !

The third arrow missed the target the first time hope his next aim is better

Japan exports improve most since 2010.

It has been three years since Japan enjoyed this level of exportation. In May, shipments shot up 10.1% from the previous year, marking the third consecutive month of improvement.

Shipment exports picked up in key markets such as the US, rising 16.3% from a year earlier, whilst shipments to China increased 8.3%.

A weaker Yen boosted exporters’ business in May, as it made Japanese goods cheaper overseas, thus increasing profits in an industry that Japan largely depends on.

Such positive date therefore boosts Prime Minister Shinzo Abe’s plan to revive the economy.

Morgan Stanley Analyst Shuji Tonouchi explained that the breakdown shows that export volumes are still a little weak, but demand from the United States is ‘doing well’. Overall, he added, “We can certainly say that exports are headed in the right direction”.

On the other hand, imports also rose by 10% in May from a year ago and therefore, the trade balance came to a deficit of 993.9bn yen. This marks the 11th straight month that Japan has posted a deficit, as energy import costs continue to be high after nuclear plants were shut down.


Japan’s First Quarter GDP Rose Annual 3.5% vs Forecast 2.7% Rise



Japan’s First Quarter GDP Rose Annual 3.5% vs Forecast 2.7% Rise


Japan’s economy grew more than analysts estimated in the first quarter as consumer
and exports climbed.

The key factor is consumer spending s up , they key factor .A BOOMING  stock market is making consumers feel richer helping to fuel spending and growth in the world’s third-biggest economy.


The yen has weakened more than 16% against the USD and 14% against the € this year, the largest declines of the 16 major currencies. The Nikkei 225 Stock Average (NKY) rose 45% , more than twice the gain in the Standard & Poor’s 500 Index.

Japanese government bonds halted the biggest three-day slide in almost a decade yesterday after the central bank announced a 2.8 trillion yen infusion of funds. Benchmark 10-year yields traded at 0.85 percent yesterday after surging .


All good news , may it continue in Japan .

Tony Evans

From A booming Japan


¥24m /£180k /$240k – Watch for sale in Tokyo

Walking to a meeting in Ginza and saw this in the window ,¥24m /£180k /$240k for a watch .If there’s a recession in Japan , no ones told them !

This is why Japan will succeed they have the money to do so .

Tony Evans
Tokyo Japan


Japanese Economy Gives Investors A Yen For Risk

A great article on iExpats on the JPY and how Abenomics is changing Japanese mentally and the world attitude to risk in Japan .

A very good read.

Japanese Economy Gives Investors A Yen For Risk
By Lisa Smith March 22, 2013

A number of different factors have joined together to encourage investors to ditch safe assets and head for riskier investments.

Many professional investors are heading towards Japanese equities because of the country’s weak yen which helps boost exports and increasing confidence among Japanese companies.

Others are ditching Australian bonds and reducing their gold holdings.
The downward slide of the UK pound is also making British equities more attractive, particularly in those firms which trade in dollars or export in volume.
To underline this move, one major player, Baring Multi Asset Fund, has increased its equity exposure in Japan from zero at the end of last year to a current standing of 4% – and they are looking to invest more.

Flagging economy

Fund manager Andrew Cole said that the Japanese government’s manipulating of the yen was helping to boost the flagging economy and, as a result, the recovery in Japanese equities was sustainable.

He added: “The measures taken by the Bank of Japan appear to be more credible than anything we have seen in the past and, as such, we believe Japanese equities are set to provide good opportunities for investors.”

Mr Cole says gold exposure has been reduced and will need an unorthodox fiscal intervention in the US for the price to keep rising.

The fund is also slashing the proportion of assets which are hedged in Sterling from 79% last autumn to 68% in the first quarter of this year.

They are also selling Australian bonds as government debt in safe havens comes under pressure and investors move to riskier profiles against what is seen as an expensive asset class.

The outlook of Barings is underlined by a Credit Suisse report which highlights two reasons as to why investors are adopting a riskier stance for their investments.

Stops and starts

The first, they say, is that economic growth in the US will pick up this year and lead the global recovery and, secondly, that the world’s central banks will raise interest rates this year as they leave their stimulus measures behind them.

However, they warn that the markets will fluctuate dependent on economic data being published but that the swings will be pauses rather than peaks and troughs and that the markets will continue their upturn.

Economists at Credit Suisse are predicting an up-coming slowdown in the world economy but this will not be followed by a sharp decline in growth and that the market’s mood of optimism could be undermined leading to short term falls.

The firm also points to the Japanese economy enjoying a strong rebound this year with better growth figures for both China and Europe.


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