Radical Modi could leave a trail of destruction 13 Dec 2016 New Delhi is scrambling to show its banknote recall was worthwhile, after cash flooded back faster than expected. Premier Narendra Modi's pursuit of illicit wealth is well intentioned. But aggressive tactics endanger everything from central bank credibility to fiscal discipline.
China will show Trump more carrot than stick 9 Dec 2016 The People's Republic likes to test out new U.S. presidents. Its response to the TV tycoon’s early tantrums, however, hints at a more measured approach. China will try to avoid provoking Trump on currency and military issues, but take a harder line on investment and trade.
Average Chinese Zhou is not an FX outflow threat 8 Dec 2016 China's FX reserves fell $69 bln in November as corporate capital flows out of China. Some worry ordinary Chinese will be next, mobbing banks to convert yuan to dollars when their quota resets in January. Officials need not over-react. Zhou is happy with his yuan in the bank.
Closing jaws of China cash trap bad news for MNCs 5 Dec 2016 Multinationals in China can bring money in any time they like, but it may never leave. Tightening capital controls will be a major problem for foreign companies in mature sectors, especially for U.S. firms planning to remit profits if Trump cuts taxes on offshore earnings.
South Korea can offer roadmap to cashless Asia 2 Dec 2016 The country wants to go coinless by 2020. That sounds achievable. Electronic payments are already commonplace in one of the most wired nations in the world. It’s the latest currency experiment in the region that offers valuable lessons for a continent hooked on cash.
Dollar strength spells more U.S. bond weakness 30 Nov 2016 As emerging market currencies wilt against a resurgent greenback, countries like India are dipping into their war chests to sell dollars. More may have to follow suit. Sooner or later, this will involve selling Treasuries. It’s more bad news for the battered U.S. bond market.
Mexico’s greatest defense against Trump is time 11 Nov 2016 The U.S. president-elect's victory sent the peso plunging. His trade and immigration policies could, if enacted, turn Mexico into the poor, unfriendly country Trump's overheated rhetoric decried. But economic and political reality suggest patience could pay off.
Trump win creates multiple headaches for Japan 10 Nov 2016 The yen and Japanese stocks whipsawed after the U.S. presidential election. At least for now it looks as if Tokyo will be spared a painfully strong currency. That still leaves the challenges of rising protectionism, economic uncertainty and a weaker U.S. commitment to the region.
Nervous markets shrink UK’s post-Brexit handout 10 Oct 2016 Finance minister Philip Hammond may boost public investment to cushion the blow of leaving the European Union. Infrastructure projects take time to get going, and the falling pound puts a limit on extra borrowing. Meanwhile, higher inflation will leave many feeling worse off.
Sterling mayhem gives glimpse into future 7 Oct 2016 A flash crash saw the pound briefly plunge below $1.20 in Asia. Ultra-thin liquidity, computer-driven selling, and maybe even an erroneous "fat finger" trade might explain the speed of the slide. But there is nothing unbelievable about the levels to which sterling fell.
HarbourVest pushes SVG investors through open door 12 Sep 2016 Its aggressive $1.4 bln bid for the private equity fund comes just a week ahead of SVG updating its net asset value - which may make the offer less generous. Still, over half of the shareholders have accepted already. That suggests their main priority is a clean exit.
China is wrong venue for an SDR revival 1 Sep 2016 Beijing wants to revive interest in Special Drawing Rights, the IMF quasi-currency it is about to join. The World Bank will sell $2 bln of SDR debt in China to help. Global investors badly need an alternative to the dollar but China's rickety bond market is a poor place to start.
Banks’ own bitcoin is in the gift of central banks 24 Aug 2016 UBS has corralled four firms to help it develop a digital bitcoin-like currency so as to slash settlement times. Unlike the libertarian cryptocurrency, this approach depends resolutely on central bank approval. And while it may reduce risk, the benefits could also be a pipedream.
WPP shoos away grey swans 24 Aug 2016 The ad giant posted a strong increase in sales in the second quarter, driven by growth in Europe. Sources of uncertainty like Britain’s exit from the EU are a risk for the industry. But WPP’s scale and spread makes it resilient, at least to risks than can be foreseen.
Big hand points to volatility for Swiss watches 23 Aug 2016 Exports to the UK grew 13.4 pct in July as the weak pound brought bargain-hunting tourists. But globally, shipments continued to slump. Falling, lumpy demand and increasingly mobile customers mean there is little for luxury brands like Swatch and Richemont to set their watch by.
ITV could take lead role in takeover drama 17 Aug 2016 The largest British free-to-air TV group is chasing Peppa Pig-owner Entertainment One. But ITV could become a target itself. A more than 25 pct drop in its share price and the weak pound make it vulnerable to opportunistic bids from European rivals like RTL.
Mongolia’s hangover needs more than IMF medicine 19 Aug 2016 The nomad state hiked interest rates to 15 pct to defend a plunging currency. An IMF rescue seems likely, and the new government has shown it is willing to take the pain needed. Longer-term, the real cure for its economic ills will be to woo nervous foreign investors back.
Sterling not done as pre-Brexit whipping boy 7 Jun 2016 An EU exit would be less disastrous for Britain’s stocks and bonds than its currency. Some firms will gain from weaker sterling, and rate cut speculation may support gilts. But foreigners holding these assets are going to hedge FX exposure, piling yet more pressure on the pound.
Currency controls are grit in China’s M&A machine 1 Jun 2016 A spate of cancelled deals has raised questions about whether Chinese buyers are having trouble getting money out of the country. Though the People's Republic has tightened controls, officials can waive them. But circumventing rules takes time – putting bidders at a disadvantage.
A truly international yuan is a long way off 27 May 2016 New data shows use of the Chinese currency for global payments is declining and has fallen behind the Canadian dollar. China’s plans to internationalise the yuan are at odds with capital controls. Pressure on the yuan makes this a tricky time to liberalise the currency regime.