Globalisation of the world’s money markets has taken a big step forward as stock exchanges in Brazil, Hong Kong, Russia, India, South Africa announced they will cross-list each others’ stock index futures and contracts for index options.
Category archives: Energy / Environment
The unintended consequences of QE
Quantitative Easing was intended to kick-start the economy by tackling the credit crunch, making new credit available in the US and Europe. What actually happened was that the financial institutions preferred to place the money where they could get a bigger return — emerging markets — with the result that not only did the intended …
Global salaries are equalising
But the change is coming slowly. http://www.ft.com/cms/s/0/3aa54f1a-f3fe-11e0-b221-00144feab49a.html
Renminbi begins its rise against the dollar
For the record, the renminbi rose 0.6 percent against the dollar today, the largest rise since 2005. Chinese authorities are believed to have engineered the rise in response to growing criticism from the US, where critics believe it is undervalued by as much as 40%.
Iron ore prices hold
Large institutional investors believe that iron ore prices are unlikely to drop, even if the world enters a double-dip recession. The London Metals Index is down just over 20% this year, but iron ore has fallen less than one percent. In part, this is because the market in iron ore derivatives is relatively young (just over …
“Oil surges on hopes of bank rescue deal”
The volatility we have come to expect in oil showed its face again as oil closed up around 8%-10% on the week on news of a nearing deal on the Eurozone crisis. We can expect this to continue. High oil prices will dampen the economy, which drive prices down again, so will grow the economy …
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Even billionaires can struggle
It is not only low income families who are struggling at the moment — billionaires have their problems too. The Bakrie family in Indonesia has a track record of buying companies, mortgaging them and using the new capital to buy more businesses. Its debt now stands at more than $3bn and the family has interests …
Intervention with China’s banks
Following yesterday’s story about the fragility of the Chinese banking sector, the Chinese government today announced that it is increasing its stakes in the country’s largest banks. Chinese bank shares have fallen around 30% in the past few months. http://www.ft.com/cms/s/0/2caa65ec-f329-11e0-8383-00144feab49a.html
Gloomy global economic outlook
Volatility is making it difficult for fund managers to predict the future, and as a result they are trending towards pessimism. The focus is less on earnings growth and more on “balance sheet strength and sustainability”. At the same time, steel companies are still braced for falling prices as buyers delay orders because of nervous …
China’s “financial frailty”
Here’s a story you don’t hear every day. In 2009 China encouraged local government to borrow heavily to finance local infrastructure projects. The low interest rates they set to fund this spending spree (and keep the renminbi down) have led investors to place their savings with “shadow banking system”. That has now grown larger than …