China, the devaluation possibility

China, the devaluation possibility

Izabella Kaminska

| Jun 28 13:31 | 7 comments | Share

A couple of points from Deutsche Bank’s GEM Equity strategy team on Friday to file under the “it’s China, not the Fed, that’s driving everything at the moment” meme:

…‘we believe that the improvement in the Chinese economic and corporate data, which has become evident since the end of August, is not sustainable’ and that ‘the Chinese growth story is starting to unravel’. As regular readers will know, our negative structural view derives from an examination of the relationship between the corporate sector and the state, especially at a local level, which we have documented in two longer research reports (China’s corporate sector; a messy transition’, 15 May 2012, and ‘China; no quick fix for the Beijing model’, 30 August 2012). Read more of this post

Beijing Residents Told to Stay In as Smog Exceeds Exposure Limit

Beijing Residents Told to Stay In as Smog Exceeds Exposure Limit

Beijing told its 20 million residents to avoid outdoor activities as a U.S. Embassy pollution monitor showed levels of smog surpassing hazardous levels in the Chinese capital.

Concentrations of PM2.5, fine air particulates that pose the greatest health risk, rose to 520 micrograms per cubic meter at 3 p.m. near Tiananmen Square from an average of 260 in the past 24 hours, according to the Beijing Municipal Environmental Monitoring Center. That reading was more than 20 times higher than the World Health Organization recommendations of no higher than 25 for day-long exposure. Read more of this post

Low-Key Politician Ding Xuedong to Take Helm of China’s $500 Billion Sovereign Wealth Fund

Updated June 28, 2013, 12:32 p.m. ET

Low-Key Politician to Take Helm of China’s $500 Billion Fund

Ding Xuedong Is Set to Be Named Head of China Investment Corp.

LINGLING WEI

BEIJING—A relatively obscure senior politician with little international experience is taking the reins of China’s $500 billion sovereign-wealth fund, an appointment that comes as it tries to adapt to a quickly changing global landscape. Ding Xuedong, 53 years old, is set to be named chairman of China Investment Corp., according to people with direct knowledge of the matter. His appointment would end months of speculation over the position sparked by China’s once-a-decade leadership change. Read more of this post

Henry Paulson Sees Volatility, Pain as Fed Programs Phased Out

Henry Paulson Sees Volatility, Pain as Fed Programs Phased Out

Phasing out the Federal Reserve’s stimulus and monetary accommodation will cause some market volatility and pain, said former U.S. Treasury Secretary Henry Paulson.

The Fed (FED) has been making $85 billion in monthly bond purchases and holding the key interest-rate target near zero to spur job growth and faster U.S. economic expansion. The central bank will probably taper its asset purchases later in 2013 and stop them around mid-2014 as long as the economy performs in line with its projections, Chairman Ben S. Bernanke said June 19. Read more of this post

Bonds Tied to Mortgages Poised for the Biggest Losses Since 1994

Bonds Tied to Mortgages Poised for the Biggest Losses Since 1994

Government-backed U.S. mortgage bonds declined after a two-day rally, extending quarterly losses that are on track to be the worst in almost two decades.

Fannie Mae’s 3 percent, 30-year securities fell about 0.2 cent today to 97.6 cents on the dollar as of 11:19 a.m. in New York, down from about 103 cents on March 28, according to data compiled by Bloomberg. A Bank of America Merrill Lynch index tracking the more than $5 trillion market lost 2 percent this quarter through yesterday, the most since the start of 1994. Read more of this post

Lula Default Scare Echoed in Brazil’s Worst Bond Sell-Off

Lula Default Scare Echoed in Brazil’s Worst Bond Sell-Off

Brazilian government bonds are suffering the biggest quarterly losses since the run-up to former President Luiz Inacio Lula da Silva’s election in 2002 led to speculation that the nation would default.

Dollar-denominated bonds from Brazil, Latin America’s biggest nation, plunged 7.55 percent since the end of March, the biggest slide since a 16 percent drop in the third quarter of 2002 before Lula’s October election that year. The loss this quarter exceeds a decline of 6.15 percent for countries with triple-B ratings, according to Bank of America Corp. Read more of this post

This Time Is Different: Gold’s Plunge Doesn’t Lure Retail Buyers; Unlike after April selloff, Chinese and Indian consumers hold back; Gold Miners Trade Like Junk as Bullion Sinks Below $1,200

June 28, 2013, 6:27 a.m. ET

This Time Is Different: Gold’s Plunge Doesn’t Lure Retail Buyers

Unlike after April selloff, Chinese and Indian consumers hold back

CLEMENTINE WALLOP And BIMAN MUKHERJI

When gold prices tumbled in the spring, the world’s biggest buyers took advantage of the lower prices to snap up coins, bars and jewelry. In the current selloff, consumers in China and India are holding back.

That has worsened gold’s decline. It has now fallen 39% from its peak in 2011, and it dropped below $1,200 an ounce in U.S. trading Thursday for the first time in nearly three years. Read more of this post