Immediately after the Standard & Poor’s announced its historic decision to downgrade the U.S. last Friday, the official Chinese agency Xinhua published a scathing editorial condemning the wastefulness of Western countries and their “addiction to debt”.
“The U.S. government had to put up with the painful fact that the good old days when you can simply borrow enough money to get out of the paste, which is mixed already irretrievably lost”, the Chinese agency, pointing out that China is the largest foreign creditor of the United States. The unspoken implication behind the fierce criticism that China, unlike the U.S. is a country that understands “the general principle that everyone should live according to their income”. Indeed, at the end of 2010 declared gross debt of the central Chinese Government was only 17% of gross domestic product (GDP) of the country – the debt burden much lower than the U.S. (87%), Britain (80%) and Japan (210%). Late last year, S & P, and Moody’s raised the credit rating of China, S & P refer to the moderate leverage, strong exports and rosy outlook for the Chinese economy as a whole. The Chinese government is far from sober, and chaste borrower to be submitted. When assessing the actual debt situation in the country, rating agencies typically use an indicator known as the “general government debt.” This includes debt obligations of the central and local governments as well as those of social security funds. Debt burden in most developed countries like the U.S. is estimated in this way.
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February began with strong increases in stock market indexes in the U.S. after good data on the expansion of the manufacturing sector in the country early in the new year. This is evident index of business activity in the factory sector in the U.S., which unexpectedly rose to 60.8 points in January to 58.5 points in December. Its value shows that in January the manufacturing sector in the country has achieved the fastest growth rates over the past nearly seven years. Thanks to the growth in employment in the sector it is their highest levels since 1973 Earlier today, economic data from Europe and Asia have confirmed and growth of the factory sector in China, India and the Eurozone. Not so encouraging were, however, cost data in the construction sector in the U.S. shrank by 2.5 percent in December, taking into account the decrease for the second straight month. Construction remains one of the weakest points of the U.S. economy, along with the labor market. However, investors focused on the best data on the manufacturing sector and the leading index S & P 500 rose by 1.1 percent to 1299 points an hour after the start of trading. The index of 30 of the largest and most actively traded companies Dow Jones IA increased by 0.6 percent to 11,982 points while the index of companies by the exchange Nasdaq – Nasdaq Composite, rose by 1.2 percent to 2731 points. Good financial results of Exxon Mobil announced that over $ 9 billion profit for the last three months of 2010, helped the U.S. indices to rise yesterday despite the market instability caused by civil unrest in Egypt.
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The stock market indexes in Asia and the Pacific recorded its largest drop since August during today’s session after the Chinese central bank unexpectedly attacks to curb bank lending in the country’s Bloomberg. China’s central bank unexpectedly increased the minimum reserve requirement for the largest commercial banks from 17% to 17.5%. The measure is temporary and will remain in force over the next two months. Meanwhile, falling prices for metals and energy commodities have led to sales in the mining and energy companies. The regional index MSCI Asia Pacific fell by 1.5 percent to 128.39 points, the number of cheaper shares in its composition is four times larger than appreciation. MSCI Asia Pacific has made his sixth winning week last Friday because of rising expectations that the Federal Reserve will join the Bank of Japan with new measures to inject liquidity into the banking system and economy. Rising yen fell today shares of exporting companies on the exchange in Tokyo. Nikkei 225 fell the most among regional indexes – by 2,1% to 9 388.64 points. The economic data today showed that consumer attitudes of Japanese households for the economy worsened for the third consecutive month in September.
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July brought increases in all markets in the Asian and Pacific region, which offset part of their losses incurred during the previous two months. But stock markets were volatile in anticipation of clearer signs for the development of world economy in the second half of the year, after economic data deteriorated in recent weeks, most of these United States. With the strong growth to identify the stock exchange in Shanghai, where the main Shanghai Composite Index jumped nearly 10 percent in July, while the index of the largest and most frequently traded companies CSI 300 rose by 12%. The reason for this has hopes that the Chinese government will postpone or delay the measures to limit bank lending and speculation of the real estate market in the country. Most of last month have increased notably shares of Chinese companies in the sector of real estate. Their lead from the beginning of this month amounted to 16 percent, which ranks them first among the five industry groups represented in the Shanghai Composite. Shanghai Composite jump of 10% in July by the largest since July last year. During the previous three months, it decreased by between 8% and 10% and became the most loser stock measure in the world this year with a loss of 20%. In the middle of the month it became clear that the Chinese economy has slowed its pace of growth to 10.3 percent in the second quarter from 11.9 percent in the first.
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On Thursday, the U.S. indexes are traded with almost all fall session, ultimately S & P 500 recorded its third straight decline. Trading began with the rise of the main indicators for the euro after a moment passed over the 1.3100 against the dollar. Negative mood came from weak corporate accounts of some major technology companies. Nvidia fell 9.9 percent to 9.13 dollars. Manufacturer of computer graphics lowered its forecast for sales in the second quarter, taking a drop in demand in Europe and China. For the second quarter Symantec, in addition to weaker sales and earnings forecast below analysts’ expectations. The biggest maker of antivirus software session ended with a decline of 11.18 percent to 13.03 dollars for security. Colgate-Palmolive also failed to meet sales expectations, leading to a decrease in the Company’s shares by 6.84 percent to 78.12 dollars. Intel and Hewlett-Packard were among the most unprofitable companies in Dow Jones Industrial Average, cheaper respectively 1.41% and 1.53% respectively to 21.03 and 46.41 dollars per share. From Goldman Sachs financial sector is marked by a growth of 3.65 percent to 152.58 dollars per share. Citigroup ended the session with a growth of 3 cents to 4.12 dollars level.
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Most stock indexes in Asia and Pacific region increased its value today after losing three consecutive sessions before, after being revived hopes that the Chinese government will slow the rate at which restricts investment in real estate in the country. By the investment company International Strategy & Investment Group expressed confidence today that three months China will soften its policy of limiting growth in the real estate sector because of rising risks to global economic slowdown and inflation. Meanwhile, speaking to government officials in Beijing showed that domestic demand in China will probably grow at a rapid pace in the second half of the year. They expect China’s economy to withstand the risks arising from debt crisis in Europe and a possible slowing U.S. economy. These statements strongly increased by 2.2% to 2 528.73 points wider Chinese index Shanghai Composite. He became the most profitable in the region today, followed by the Australian S & P / ASX 200 with a growth of 1 percent to 4 403.60 points and the Hang Seng, which rose 0.9 percent to 20 264.59 points.
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Chinese economy slowed its pace of dynamic growth in the second quarter, rising by 10.3 percent compared with same period of 2009. During the first three months of this year gross domestic product (GDP) of the country increased by 11.9 per cent yoy. The government in Beijing, however, taken several steps to cool bank lending and slow the pace of growth in the real estate sector over the past few months. This, together with the effects of fiscal crisis in Europe may have contributed to slower GDP growth in the second quarter. He was less than expected and analysts of growth of 10.5 percent. China’s economy should grow at least 8% a year, so that employs numerous workers in the country. Series data for China today also showed that annual inflation slowed to 2.9 percent in June compared with 3.1 percent in May. Producer price level in turn increased by 6.4 percent over the past 12 months to June, which is less than the production of the 7.1 percent inflation in May. This will reduce pressure on the Chinese central bank to tighten monetary policy. Industrial production in China on the other hand has grown by 13.7% yoy, which was its weakest growth rate in the last nine months. For comparison, it surged by 16.5 percent in May and 17.8 percent in April compared with the corresponding months of 2009, market analysts expect it to grow more with 15.2 percent on an annual basis. These data highlight the risk of overheating Chinese economy is diminishing and this is likely to weaken the pressure on the government of Prime Minister Wen Jiabao to impose restrictions on bank lending and investment properties. In 2009 China’s banks granted record amount in home loan comparison and businesses, and housing price inflation in the 70 largest cities in the country at record pace this year. Worries about excessive appreciation of the shares of stock companies in China, in turn, decreased by 25% the main stock measure in the country Shanghai Composite.
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The national stock indexes in Asia and Pacific region rose strongly today, bringing the regional stock measure MSCI Asia Pacific the largest of its increase for the past two weeks. MSCI Asia Pacific, which covers the stock markets in ten Asian countries, Australia and New Zealand increased by 1.1 percent to 113.07 points and is on track to record its highest session from June 21 onwards. Earlier today, it decreased by 0.9% due to the volatility of financial markets in recent weeks caused by concerns about Debt Crisis in Europe. Low ratios of price and expected profit (P / E) of shares in its composition, however, gave a signal to investors purchasing. Increases in mining companies in the region continued for a second day after news of major acquisitions in the sector on Monday. Well presented yet producers of copper and aluminum after losing their series, which lasted nine sessions. Among national indexes most today is the main Chinese stock increase meter Shanghai Composite, which added 1.9 percent to 2 409.42 points. He drive him from their lowest level in 15 months, which reached yesterday. In Hong Kong’s Hang Seng rose 1.2% to 20 084.12 points. In Japan the Nikkei 225 rose 0.8 percent to 9338 points, stock optimism was supported by a rally in China. In Taiwan Taiex added 1.5 percent to 7 548.48 points for second straight day, a South Korean Kospi index rose 0.6 percent to 1 684.94 points.
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The Prime Minister of China Wen Jiabao warned that the global economy remains unstable and at risk because of the indebtedness of the countries which increases the possibility for a second economic downturn. With regard to the risk of second cycle downturn of the global economy Jiabao states that must be carefully and act decisively to prevent a risk of such. Therefore, as it is too early to be thinking about stopping programs to promote growth. “All countries must coordinate their actions and to strengthen their support to the economy, is confident Jiabao. “The world economy is stable and is beginning to brighten, but recovery is slow and there are many uncertainties and destabilizing factors,” he said. Against the backdrop of problems that can be seen in many developed countries, China remains stable, and growth of the country is threatened, he graduated Jiabao. The country of China was diced as the second largest economies of the world, because of large number of US and European investments in the last 10 years.
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The U.S. and China are still the two best places in the world for investment in renewable energy sources (RES), shows the latest global survey of Ernst & Young “renewable energy – an index of the attractiveness of countries. Currently, when restoration began to speak of the world economy by the global economic crisis, access to capital remained the biggest challenge facing the sector of renewable energy sources. The U.S. budget for 2011 announced in February 2010, includes a commitment in 2012 to double generating capacity of renewable energy. The country’s interior ministry also has plans to develop such energy sources. China changed its law on renewable energy sources to help increase the amount of green energy. The Chinese government plans to establish a new National Fund for funding scientific research and development of products and systems sector of renewable energies.
Shortage of capital
At a time when capital markets are under pressure and expectations are that this situation will persist for some time, access to capital will be the most serious challenge. “Energy markets in the world are increasingly competing for the attention of new investors. There is also competition between different infrastructure sectors and without inadequate capital. Economic crisis, in particular the crisis in lending led to a contraction of the activities of investors.
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