CHINA TO IMPROVE CENTRAL.BANK
CHINA CENTRAL BANK: NO LIMIT ON NUMBER OF BANK CARDS THAT ISSUERS CAN GRANT IN CHINA- CHINA CENTRAL BANK: NO LIMIT ON NUMBER OF BANK CARDS THAT ISSUERS CAN GRANT IN CHINA
- CHINA CENTRAL BANK: BANK CARD MARKET OPEN FOR ALL APPLICANTS, NO REQUIREMENT FOR FOREIGN FIRMS TO ESTABLISH JOINT VENTURE
- CHINA CENTRAL BANK OFFICIAL: SAYS CHINA WORKING WITH OTHER COUNTRIES TO URGE U.S. TO RATIFY IMF REFORMS
- CHINA'S VICE COMMERCE MINISTER: CHINA WILL UPHOLD AND SUPPORT MULTILATERAL TRADE SYSTEMS AND OPPOSE PROTECTIONISM
- CHINA'S VICE FINANCE MINISTER: SAYS CONFIDENT CHINA CAN HAVE ECONOMIC GROWTH OF AROUND 7 PCT IN 2015
- CHINA INJECTS 10 BLN YUAN THROUGH 7 DAY REVERSE REPOS - TRADERS
- PBOC SETS YUAN MID-POINT AT 6.3602 / DLR VS LAST CLOSE 6.3622
- CHINA TO REDUCE LEVELS OF FINANCIAL LEVEGAGE, PREVENT SYSTEMIC RISK BY EFFECTIVE USE OF RISK CONTROL TOOLS - ZHOU IN CAIXIN
- CHINA TO BOOST CONFIDENCE IN YUAN, PROMOTE ITS ENTRY INTO SDR BASKET AND TRANSITION TO A FULLY CONVERTIBLE, FREELY TRADED CURRENCY - ZHOU IN CAIXIN
- CHINA SEES YUAN BECOMING AN INTERNATIONAL CURRENCY BY 2020, WITH CROSS-BOARDER YUAN FUNDS ACCOUNTING FOR 1/3 OF TOTAL CROSS-BORDER CAPITAL - ZHOU IN CAIXIN
- CHINA TO CONSOLIDATE YUAN'S STATUS AS A SETTLEMENT CURRENCY, PROMOTE TRADING AND RESERVE FUNCTIONS - ZHOU IN CAIXIN
- CHINA TO STRENGTHEN MONITORING OF CROSS-BORDER CAPITAL MOVEMENTS, SO AS TO STRIKE ROUGH BALANCE IN INTERNATIONAL PAYMENTS - ZHOU IN CAIXIN
- CHINA TO RELAX RESTRICTIONS ON BOND ISSUANCE BY FOREIGN INSTITUTIONS, EXPANDING TYPES OF ISSUERS - ZHOU IN CAIXIN
- CHINA TO FURTHER OPEN CAPITAL MARKETS, RAISING AND THEN GRADUALLY ABOLISHING FOREIGN AND DOMESTIC QUOTAS - ZHOU IN CAIXIN
- CHINA TO GRANT FOREIGN INVESTORS NATIONAL TREATMENT VIA COMPREHENSIVE NEGATIVE LIST, GRADUALLLY OPEN SERVICE SECTOR INCLUDING FINANCE INDUSTRY - ZHOU IN CAIXIN
- CHINA TO SUPPORT AND STANDARDISE INTERNET FINANCING, INCLUDING THIRD-PARTY PAYMENTS, CROWD FUNDING AND P2P - ZHOU IN CAIXIN
- CHINA TO LOWER THRESHOLD FOR PRIVATE CAPITAL TO ENTER BANKING SECTOR - CAIXIN QUOTING ZHOU
- CHINA TO DEVELOP BOND MARKET MAINLY TRADED BY QUALIFIED INSTITUTIONAL INVESTORS AND VIA OVER-THE-COUNTER CHANNELS - CAIXIN QUOTING ZHOU
- CHINA TO DEEPEN REFORMS IN ITS NASDAQ-STYLE SECOND BOARD, NEW THIRD BOARD, TO BUILD MULTI-LEVEL EQUITY MARKET -CAIXIN QUOTING ZHOU
- CHINA'S DIRECT FINANCING BY NON-FINANCIAL ENTITIES TO REACH 25 PCT OF TOTAL SOCIAL FININCING BY 2020 FROM 17.2 PCT IN 2014 - CAIXIN QUOTING ZHOU XIAOCHUAN
- CHINA TO IMPROVE C.BANK COMMUNICATIONS MECHANISMS, GUIDING MARKET EXPECTATIONS TO ENHANCE MONETARY POLICY EFFICIENCY - CAIXIN QUOTING C.BANK GOV
- CHINA TO FOSTER C.BANK POLICY INTEREST RATE MECHANISMS TO DELIVER POLICY INTENTIONS - CAIXIN QUOTING CHINA C.BANK GOV
- CHINA C.BANK GOVERNOR SAYS BEIJING TO IMPROVE ECONOMIC POLICY COORDINATION FOCUSING ON FISCAL AND MONETARY POLICIES
Brazil retail sales pointing to a continued decline of consumption in Q3
- Brazil retail sales fell 3.5% yoy in Q2 following the 0.8% yoy decline in Q1. Given the sharp rise in the unemployment rate in Q3, and the trend in sales in July-August, it is estimated that retail sales declined 7.4% yoy (-0.9% mom) in September. Based on the forecast, therefore, retail sales likely fell 6.1% yoy (sequentially -12.4% qoq annualized) in Q3, consistent with the overall real consumption decline of slightly over 4% yoy.
- Assuming the current trend is maintained in Q4, the economy is probably heading for a full year consumption decline of more than 3% as against the current forecast of -2.6%. In fact, the risk is towards the downside, as the labour market deterioration is expected to accelerate in Q4. The precarious fiscal situation and the resulting pressure to cut the social security spending will bring additional downside risk to the full year consumption forecast. With consumption easily heading for more than a 3% contraction this year, the 2015 growth forecast also looks too optimistic at the moment.
- Furthermore, the above-mentioned factors (fiscal situation and the labour market) and the credit growth deceleration led by high interest rates will also prove to be detrimental to the medium-term consumption outlook. Substantial investment and growth momentum will be needed to reverse the current downward trajectory in private consumption.
India’s inflation to move up
- India's headline CPI for October 2015 is expected to print at around 5.02% yoy, higher than the September 2015 CPI print of 4.40% yoy. The expected spike in inflation is due to the waning of the favourable base effect. It is believed that the sub-4% CPI recorded (the lowest inflation recorded under the new series) in July and August did not necessarily reflect the reality of the situation. "We expect October headline CPI inflation to cross 5% for the first time since June 2015, with prices of fruit and vegetables as well as those of pulses likely to be the major drivers", notes Societe Generale.
- With deficient rainfall leading to lower production of pulses even as demand continues to rise, India has resorted to importing large quantities of pulses to keep prices in check. Yet, available indications suggest prices have continued to soar. Inflation is not expected to rise going forward. However, headline inflation will remain below the RBI's near-term target (6% by January 2016).
Australia's employment growth heading for another 4½-year record
- Employment growth in Australia measured by the year-on-year rate has been on a rising trend since January 2014, and this trend is expected to have extended to October and a rate of 2.2%. At this level, employment growth is well above the recently downgraded rate of population growth (of working age) of 1.5%, and hence consistent with declining unemployment; provided that participation does not rise too quickly.
- Broadly speaking, employment conditions are likely to have remained solid at the start of Q4, given the continuing rebalancing of growth away from resource investment towards the more labour-intensive sectors of residential construction and services exports. Business sentiment has also been quite firm, with improving employment indications. Moreover, though employment growth in Q3 was strong (1.8% qoq saar), the gains came at the start of the quarter and in September the survey reported a small decline. In other words, October's labour market report should benefit from a statistical rebound.
- Although the participation rate is expected to recover part of September's 0.15pp decline, a 20k employment gain should be sufficient to allow a marginal decline in unemployment, given that at current rates of participation the demographic increase in the labour force is around 15k per month. And as the unemployment rate was a very close to the rounding point in September (6.16%), a decline to 6.1% is expected. This would strengthen perceptions that unemployment in Australia has peaked.
UK housing survey to provide update on approvals trend
- UK September lending data delivered a surprise fall in mortgage approvals. Housing demand conditions remain firm with the problem being more one of unresponsive supply rather than demand weakness. "We had thought that supply constraints would gradually ease, allowing approvals to continue a gentle upward trend and we still believe that basic story to be correct", says Societe Generale.
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The RICS survey provides a reliable leading indicator of approvals in the form of new buyer enquiries. Whilst the rate of change of enquiries may have peaked, it is still well above that of actual approvals. It is expected to see a small rise in enquiries which should provide reassurance that approvals are still on an upward trend. Sales expectations should remain firm.
Bank of England adopts more dovish tone
- Bank of England adopts more dovish tone. In contrast to recent Fed pronouncements, the "Super Thursday" output from the MPC, in particular the November Inflation Report, struck a decidedly more dovish tone over the near term with downgrades to Bank staff projections for GDP growth and inflation over 2015 and 2016. To some extent this reflected softer-than-expected outturns for both during Q3. But the downside impacts of both a moderation in emerging market growth and the recent rise in sterling are also forecast to be stronger than previously thought.
- Nonetheless, the projected elimination of spare capacity over the next year and an inflation overshoot at the end of the two-year policy horizon suggest that the current market expectation that the first increase will not take place until early 2017 may be overdone. Now the first hike is expected in August 2016.
Strong US labour market figures support December lift-off
- October employment report, which showed much stronger-than-expected rises in non-farm payrolls and pay growth, alongside a further fall in the unemployment rate, has lent support to recent statements by Fed Chair Yellen, Vice-Chair Fischer and New York Fed President Dudley that a rise in the policy rate at the December FOMC meeting remains firmly on the table.
- Meanwhile, remarks from Governor Brainard, who had previously argued against an early hike in the absence of clear evidence that inflation was set to return to target, struck a more conciliatory tone. This week will see several other FOMC members add their voices to the policy debate. Of particular interest will be the views of the Chicago and Boston Fed Presidents, Evans and Rosengren respectively, both of whom have previously argued against an imminent rate rise. Otherwise, it is a quiet week for US data with both October retail sales (Fri) and preliminary November University of Michigan consumer sentiment index (Fri) expected to support the robust domestic picture. 10 November 2015 support by ZATco & 20News
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Time for Chinese activity growth to rebound
- It has been six months since the bottoming out of credit growth. Past history suggests that activity growth should start to turn up now. Earlier this month, the Caixin manufacturing PMI report improved more than expected from 47.2 to 48.3, while the official reading was unchanged at 49.8.
- Hence, industrial production growth is expected to have ticked up to 5.8% yoy in October from 5.7% yoy in September. Fixed-asset investment growth should have also rebounded from the historical low of 6.8% yoy in September to about 9% yoy, possibly led by infrastructure investment. The housing sector remains a swing factor and the assumption is for a slow recovery in the coming quarters.
- Finally, nominal retail sales likely grew a tad slower at 10.8% yoy in October (vs 10.9% yoy previously). However, that would have been due entirely to softer inflation, whereas the real growth rate probably strengthened to 11.1% yoy.
UK headline earnings growth should continue to rise
- The labour release should report that the LFS unemployment rate held steady at 5.4% in the three months to September but the more timely claimant count data for October is likely to show a rise of 5k, which would be the third consecutive monthly increase and reminds that the underlying pace of employment growth is weakening.
- Nevertheless, the output gap is shrinking - the BoE Staff estimate of the long term equilibrium unemployment rate is "around 5%" - and that should lead to a continuing increase in total earnings growth from 3.0% to 3.3% 3mth yoy in the 3 months to September. Regular pay growth should, however, be stable at 2.8%. 10 November 2015 support by ZATco & 20News
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Muted global growth for another two years undermines resilience to negative shocks
Global growth will be lacklustre over the next two years as the slowdown in China and other emerging markets continues to weigh on the world economy, Moody's Investors Service said in a report published today.- Forecasts that G20 GDP growth will average 2.8% in 2015-17, only 0.3 percentage point higher than in 2012-14 and below the 3.8% average recorded in the five years before the global financial crisis. The rating agency's latest forecasts are broadly unchanged from its last quarterly Global Macro Outlook in August. "Muted global economic growth will not support a significant reduction in government debt or allow central banks to raise interest rates markedly," said the report's author Marie Diron, Senior Vice President, Credit Policy. "Authorities lack the large fiscal and conventional monetary policy buffers to protect their economies from potential shocks."
- G20 GDP growth is forecast to rise slowly to 2.8% in 2016 and 3% in 2017 from 2.6% in 2015. Emerging markets' contribution to G20 GDP growth in 2015-17 will fall to the lowest levels since the early 2000s. The combination of persistently low commodity prices and subdued global growth will maintain disinflationary pressures, weigh on revenues and hamper attempts to deleverage.
- The main risks to the economic outlook would stem from a bigger than expected global fallout from the Chinese slowdown and a larger impact from tighter external and domestic financing conditions in other emerging markets. "The direct effects on the global economy from both of these potential risks would likely be limited," Ms Diron adds. "However, advanced economies would be unable to do much to shore up global growth, given policymakers' limited room for manoeuvre on fiscal and monetary policy and the high leverage we're seeing in a number of sectors and countries."
- In China, Moody's forecasts GDP growth of just under 7% in 2015, 6.3% in 2016 and 6.1% in 2017. The gradual economic slowdown reflects a trade-off between further reforms - aimed at lessening the economy's dependence on investment and credit and increasing the influence of market mechanisms -- and the risk of jeopardising employment and social stability.
- Commodity prices are unlikely to rise significantly in the next few years. A large inventory build-up, a slow supply response and muted demand from China and other key importers will all weigh on prices.
- Moody's expects no significant rise in prices for energy, metal and mining commodities in the next two years. For commodity producers, the economic effects of low commodity prices will spill over into other sectors through supply chains and weaker growth in household income.
- As well as weaker commodity prices, a range of country-specific factors will contribute to lower growth in emerging markets and could lead investors to reassess growth and return prospects in some countries. For example, political uncertainty will be a negative factor in Brazil and Russia and infrastructure shortages will hamper growth in South Africa.
- Slow growth in emerging markets will not derail growth in advanced economies, where the economic outlook is likely to be supported by more accommodative monetary policy in the years ahead. Growth is expected to be broadly stable in the US, Europe and Japan. For 2015-17, Moody's forecasts average GDP growth at around 2.5% in the US, the UK and Korea and 1.5% for the euro area.