China's debt:GDP ratio hits 237%; 1MDB on the edge; EU eyes its own blacklist; Zespri eyes Chinese orchards; UST 10yr yield 1.89%; oil up, gold down; NZ$1 = 68.5 US¢, TWI-5 = 71.7

Here's my summary of the key events over the weekend that affect New Zealand, with news Zespri is planning to grow kiwifruit in China.

But first in China, their debt-to-GDP ratio rose to an eye-watering 237% in the first quarter of 2016. They may have GDP growing at +6.9% but they have had debt levels growing at over twice the growth in GDP in every quarter except two since 2009. The cumulative impact of that divergence has brought an unsustainable imbalance. It is more volatile because unlike other countries where sovereign debt underscore their imbalance, in China's case it is corporate debt that is their Achilles heel.

Emerging markets can affect us. Troubled Malaysian government investment fund 1Malaysia Development Bhd. must make a US$50 mln payment on a US$1.75 bln loan later today as it faces the possibility of a default that could trigger defaults on billions more of its debt. The ripples could get very bumpy.

The Panama Papers fallout is drawing the EU closer to establishing its own black list of tax havens. There already is a list of 31 by the OECD but it looks like additional countries may be in the EU sights. I wonder if it will include New Zealand.

In China, Zespri said it is considering growing kiwifruit in China as part of a plan to source it from local growers and ensure a year-round supply.

In Australia, their large (AU$117 bln) sovereign fund has turned bearish. they reportedly have close to 23% of the Fund's vaue in cash. The NZ Superfund (NZ$30 bln) is nowhere near as negative having less than 5% in cash.

In New York the benchmark UST 10yr yield is at 1.89%. Investors are bracing for a further rise in bond yields in a sign that views on the global economy have turned more optimistic following a run of better-than-expected data.

The oil price starts at just under US$44/barrel in the US, while Brent is now just over US$45/barrel. In fact, oil is now at a five-month high as falling US crude production provides more evidence that the market is rebalancing to permanently lower prices. By the end of 2016 this new price level will have washed through the economy and oil will not have the price drag we have seen for the past two years.

The gold price fell US$17 at the end of last week to US$1,232/oz.

In the rest of the world the NZ dollar will open at 68.5 US¢, at 88.9 AU¢, and at 61 euro cents. The TWI-5 index is now at 71.7 and now back in the middle of its 2016 range.

If you want to catch up with all the local changes on Friday, we have an update here.

The easiest place to stay up with event risk this week is by following our Economic Calendar here ».