China’s Crash Course: How a Turbulent Year
Derailed Reform - (online.wsj.com) China
had one of the best-performing stock markets in the world in 2015. Yet it was a
dismal year for Chinese markets. Chinese stocks suffered an unprecedented summer crash that wiped out 43%, or $5 trillion, of
their value at one point. That was followed by an abrupt 2% currency devaluation in August that sent shock waves through
global markets. Bold reforms seen as crucial to Beijing’s efforts to turn
around a slowing economy, such as a modern stock-listing system and lighter
capital controls, stalled as the market turmoil unnerved authorities. The
episodes demonstrate the stresses China is experiencing as it tries to shift
its economy from one fed by debt and heavy industry into one driven by
consumption. For investors, the events of 2015 jolted their faith in China’s
capacity to continue driving global growth. Authorities have backtracked on financial
liberalization and
roiled the country’s finance industry with investigations into brokers, traders and regulators in an effort to
apportion blame for the stock market’s sharp pullback.
It
Starts: Tech Trouble Mucks up Silicon Valley Real Estate Party - (www.wolfstreet.com) And
so in this new world, Yahoo does something peculiar: it’s trying to dump its
Holy-Grail expansion property. During the boom years, tech companies, including
Yahoo, were buying huge properties in Silicon Valley to build each their very
own Taj Mahal. During the glory days in 2006, while its revenues were still
rising, Yahoo, which owns its 1 million-square-foot headquarters in Sunnyvale,
bought 48.6 acres in Santa Clara near the peak of the market for $106 million.
A few years later, it obtained approvals to build its own Taj Mahal: up to 3
million square feet of office space, triple the size of its headquarters,
spread over 13 buildings, enough for 12,000 people. Yahoo was dreaming big. It
tore down the existing structures on this property but never moved forward with
its grandiose building plans. In 2014, the Levi’s Stadium opened nearby, and
Yahoo began working a deal to convert its property into a parking lot.
Stournaras Warns on Measures as Tsipras Defiant
on Pensions - (www.bloomberg.com) Bank
of Greece governor Yannis Stournaras gave a stark warning about the risk of
Greece failing to reach an agreement with its creditors on a set of measures
attached to the country’s bailout as Prime Minister Alexis Tsipras reiterated
his government won’t succumb to “unreasonable” demands for additional pension
cuts. The European Union is now much less prepared to deal with another Greek
crisis, Stournaras wrote in an article published in Kathimerini newspaper, in
an unusually strong public intervention, as Europe’s most indebted state braces
for negotiations with creditor institutions on a set of tough economic steps,
including pension and income tax reform. A repeat of the 2015 standoff which
pushed Greece to the verge of leaving the euro area would entail risks that the
country’s economy may not be able to withstand, the central banker said. After
months of brinkmanship which resulted in the imposition of capital controls
last summer, the government of Alexis Tsipras signed a new bailout agreement
with the euro area committing Greece to economic overhauls and additional
belt-tightening in exchange for emergency loans of as much as 86 billion euros
($93.4 billion).
European Stocks Pare Annual Gains With Worst
December Since 2002 - (www.bloomberg.com) With
another day of declines, European stocks completed their worst December since
2002, trimming a fourth annual advance. The Stoxx Europe 600 Index fell 0.4
percent in the last trading day of the year, taking its monthly drop to 5
percent and paring the 2015 gain to 6.9 percent. The volume of shares changing
hands was more than two-thirds lower than the 30-day average on Thursday, with
markets including Germany, Switzerland and Italy closed, while the U.K., France
and the Netherlands shut early. “It has not been a good end to 2015, with low
liquidity making market weakness even more pronounced,” said Ramiro Loureiro,
an analyst at Banco Comercial Portugues SA’s Millennium unit in Lisbon. “I do
think 2016 will start better, especially now valuations are more attractive.
The risk is that the global economy goes the wrong direction.”
Dow
Futures Dump 300 Points From New Year's Eve Highs As China Crashes - (www.zerohedge.com) With
China closing the morning session limit down, US equity futures are extending
their losses (even though crude futures are holding some of their gains). The
initial knee-jerk jump as crude rose on Saudi tensions has been entirely erased
and Dow Futures are now down 300 points from New Year's Eve highs... Happy
New Year. China closed the morning session "not off the lows" with a
bloodbath in ChiNext and Shenzhen...
Big oil to cut investment again in 2016 - (www.bloomberg.com)
China's Two-Speed Economy Stays Intact as Factories Slump, Services Gain - (www.bloomberg.com)
Europe’s Fractious Politics Loom as Threat to Markets - (online.wsj.com)
Putin names United States among threats in new Russian security strategy - (www.reuters.com)
Vietnam protests after China lands plane on disputed Spratlys - (www.reuters.com)
China Rejects Vietnam's Protest Over Flight to Disputed Islands - (www.bloomberg.com)
Iran predicts 'divine vengeance' after Saudis execute Shi'ite cleric - (www.reuters.com)
Shi'ites across the Middle East decry execution of Saudi cleric - (www.reuters.com)
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