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Roubini Global Thought Leaders

China Buying JGBs, Japan Buying Treasurys

We pay particular attention to the purchases of China, Japan and other reserve accumulators. The most recent data from the U.S. Treasury, reflecting July purchases, suggest that Japan is closing in on China’s status as the largest foreign holder of Treasurys. China and Japan both have over US$800 billion in U.S. Treasurys and are by far the greatest foreign Treasury holders. They also have not insignificant stocks of agency debt. Chinese demand, at least through direct channels, has been waning, while Japan’s purchasing of Treasurys has crept up.…

Happy Belated Birthday OPEC?

Yesterday was OPEC’s 50th birthday.  The occasion is being met with celebration in Vienna, the host of the OPEC secretariat, and in OPEC capital cities (see FT beyond BRICS for more).  Production still remains well below the 2008 peak, or even the average of 2006-8 (despite oil averaging around US$75 per barrel for most of the last year), but was inching up until mid-year and is currently at a price level where all but OPEC’s overspenders can balance their budgets.  All in all, assume status quo of unchanged production at OPEC’s next meeting in October, as the prospects for oil demand growth cool along with the global economy. In the longer-term demand, particularly from EM Asia (and oil exporters themselves), should keep prices high.…

Kuwait: Struggling to Build Up Infrastructure

Kuwait has lagged behind as political deadlock delayed an infrastructure push. Its power deficits have been amplified by the fact that no new capacity has been added since 1990, and infrastructure is both old and overstretched. In June it came within a hairbreadth of outstripping the national supply threshold. Although the government managed to bring in emergency turbines and ration supply, these problems will recur before new capacity comes online. As noted in our last Outlook, RGE is pessimistic about the timelines the Kuwaiti government has set out for implementing the infrastructure plan approved early in 2010. While the plan is a step forward, the network of overlapping laws (both the public-private partnership law and power law might apply to partnerships in the power sector) and vested interests could cause delays, since there is a need both to build new plants and to renew the grid. Foreign expertise, if not foreign funds, will be in high demand, including from the Asian and European players who have been active in other GCC countries.…

Asian Market Snapshot: Stocks Gain on Speculation Japan and U.S. Governments Will Support Growth

Asian markets traded higher after the BoJ expanded its JPY 20 trillion bank loan facility to JPY 30 billion as a strengthening yen threatens the recovery. (See RGE critical issue: Is Yen Intervention in the Offing?). Markets, however, pared back some of their gains as the size of the increase disappointed.  The MSCI Asia Pacific Index rose 0.2% to 117 led by material producers, while the MSCI ASIA APEX 50 rose 0.9% to 740. In Japan, stocks advanced as the central bank increased the size of its liquidity facility. The Nikkei 225 gained 1.8% to 9,149. Technology (up 2.64%) and industrials (up 1.94%) led the gains. Canon rose 2.4% while Honda gained 1.6%.…

Asian Market Snapshot: Stocks Gained on Optimism About Corporate Earnings and Better than Expected U.S. Job Data

Asian markets opened lower but quickly pared back their losses to close up for the last day of the week amid optimism about corporate earnings and better than expected U.S. initial jobless claims. Yesterday after Asian markets closed, the U.S. labor department reported that jobless claims dropped more than expected. Initial claims dropped in the week ending August 21st to 473K from an upward revised number of 504K. The median economists’ estimate from the Bloomberg survey was 490K. (See RGE critical issue: U.S. Labor Market: Initial Unemployment Decline, But Still Elevated).  The MSCI Asia Pacific Index rose 0.6% to 117, closing the week down 1.5% while the MSCI ASIA APEX 50 rose 0.1% to 733 to end the week down 2.1%.…

Asian Market Snapshot: Most Stocks Rise on Cheap Valuation, Weaker Yen and Speculation Fed Will Act

In a choppy trading day Asian markets opened higher and traded lower in the first hours before paring back losses to close higher for the day.  Cheap valuation sparked the gains as investors speculated that prices have fallen excessively relative to earnings. The MSCI Asia Pacific Index fell 1.4% to116 while the MSCI ASIA APEX 50 lost 0.8% to 733. In Japan, stocks rose on a weaker yen and speculation that stocks were undervalued. The Nikkei 225 rose 0.7% to 8,906 led by exporters as the yen weakens. Yahoo Japan climbed 5.7% while Suzuki Motor rose 2.9%.…

Asian Market Snapshot: Stocks Fall on Dismal Investor Sentiment Over Sluggish U.S. Home Sales and Ireland’s Downgrade by S&P

In a choppy trading session, Asian markets sold off after the National Association of Realtors reported disappointing U.S. housing data after Asian markets closed yesterday. U.S. existing home sales plunged 27.2% m/m in July, worse than the 13.4% m/m decline economists surveyed by Bloomberg expected. Previously owned homes purchases rose at an annual pace of 3.83 million. (See RGE critical issue: U.S. Housing Demand: The Post-Homebuyer Tax Credit Collapse Continues). Further support of the selloff came from S&P’s one notch downgrade of Ireland’s long term sovereign credit rating from AA to AA-. (See RGE critical issue:  Irish Debt Fears Return After S&P Downgrades Sovereign Rating to AA-) The MSCI Asia Pacific Index fell 1.4% to 116 while the MSCI ASIA APEX 50 lost 0.8% to 733.…

Asian Market Snapshot: Most Stocks Fall Amid Speculation on U.S. Home Sales Report

Asian markets traded lower all throughout a choppy trading day as investors speculate on weaker U.S. home sales data due later today. Economists surveyed by Bloomberg expect home sales to fall to 4.65 million from 5.37 million in June. (See RGE Critical Issue: U.S. Housing Demand Languishes Following Tax Credit Expiration)  The MSCI Asia Pacific Index fell 0.8% to 117 led by 225 the Nikkei.The MSCI ASIA APEX 50 lost 1.1% to 738.…

Asian Market Snapshot: Stocks Fall over Concerns of Upcoming U.S. Data

Asian markets opened and traded lower all throughout the day as investors speculate on weaker U.S. data due later this week. The MSCI Asia Pacific Index was unchanged at 118 as losses in auto and electronics shares offset gains in utilities. The MSCI ASIA APEX 50 lost 0.3% to 746. In Japan, stocks declined as investors anticipate weak U.S. data this week and on comments made by Finance Minister Yoshihiko Nado who said that he hasn't heard of any scheduled meeting between Prime Minister Naoto Kan and BoJ Governor Masaaki Shirakawa to discuss the rising yen. The Nikkei 225 lost 0.7 % to 9,117. Sharp declined 2.5% while Honda, with 84% overseas exposure, fell 0.5%.…

Asia Market Snapshot: Stocks Fall for the First Time in Four Days on Weakening International Demand

Asian markets opened lower before falling to close even lower on concern that international demand is softening. Investors’ sentiment remains pessimistic amid dismal U.S. initial jobless claims. (See RGE Critical Issue: U.S. Labor Market: Initial Unemployment Claims Climb Higher).  The MSCI Asia Pacific Index lost 1.4% to 118, closing the week up 0.5% while the MSCI ASIA APEX 50 lost 0.5% to 748 to end the week flat. In Japan, stocks declined on concerns that international demand is weakening. The Nikkei 225 lost 2% to 9,179. Sharp declined 2.7% after news reports that the company is cutting its liquid-crystal display output. Toyota, with 30% exposure to North America, fell 1.8%. Convenience same store sales rose 0.5%y/y in July after falling 1.5% y/y in June.…