Here's my summary of the key events over the weekend that affect New Zealand, with news that UDC may be getting Chinese owners.
But first, sales and traffic at physical American retail stores on Thanksgiving Day and Black Friday were down -5% on last year. Looking for a boost, many such stores offered heavy discounts but more customers shopped online, and this sector reported gains of +18%. Between them both, sales are expected to be up +3.6%.
And the Americans reported that their trade deficit rose in October, and the result was quite a bit worse than expected. Exports fell -2.8% while imports rose +1.1%. Of course, none of that is a problem for their trading partners.
In fact, China is claiming its factories and other producers are improving their profitability. Data released over the weekend shows industrial profits rose +8.6% year on year in October. Part of this improvement is because price hikes are now sticking. And they also report rail freight volumes up 11.2% in the same period.
And China's central bank has tightened monetary conditions in the past week or so, effectively raising interest rates by +0.25% by stealth.
In Australia, the AFR is reporting that ANZ is in final negotiations to sell UDC to China's HNA Group.
China may be in some sort of ascendancy now, but that can't last. Their demographics are always going to be an issue for them. But the sheer scale of their problem may in fact be much more daunting.
In New York, the UST 10yr yield is unchanged today, at 2.36%.
The US benchmark oil price is noticeably lower and now just on US$46 a barrel, while the Brent benchmark is now just on US$47 a barrel. And it being reported by Platts that the US is now a net exporter of natural gas.
The gold price was down sharply in Asian trading over the weekend, but has since recovered some of that fall and is now at US$1,178/oz, a -US$6 net fall.
The New Zealand dollar will start the week a little higher at 70.4 US¢. On the cross rates it is also level pegging at 94.6 AU¢, and against the euro at 66.5 euro cents. The NZ TWI-5 index is still at 76.3.
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 today is by following our Economic Calendar here ».
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8 Comments
Re the Chinese aging problem - not a problem; send them out here, the Kiwi taxpayer will take care of them:
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11741910
These folk came in under the so called family reunification scheme - now both in care in a special race specific facility - the kids have left the country.
Of course no such option exists for actual Kiwis. My old Mum really struggles to understand the foreign rest home staff and we have to pay for the whole care. The brain (due to dementia) can no longer make the connection from a poorly pronounced word to its intended meaning. I have to translate when I'm there, God knows how she gets on when I'm not.
interest raising is now the trend, I hope people have prepared for it
WESTPAC, National Australia Bank online and other banks are planning to raise fixed and variable home loan rates by up to 60 basis points
http://www.news.com.au/finance/business/banking/westpac-increases-inter…
China today is extraordinarily homogenous. It sustains that by remaining almost entirely closed to new entrants except by birth. Unless someone is the child of a Chinese national, no matter how long they live there, how much money they make or tax they pay, it is virtually impossible to become a citizen. Someone who marries a Chinese person can theoretically gain citizenship; in practice few do. As a result, the most populous nation on Earth has only 1,448 naturalised Chinese in total, according to the 2010 census. Even Japan, better known for hostility to immigration, naturalises around 10,000 new citizens each year; in America the figure is some 700,000 (see chart).
http://www.economist.com/news/briefing/21710264-worlds-rising-superpowe…
Of course China's mercantilist system allows them the earn US$ from exports and use their internal monopoly money to pay for wages , rent, interest , internal transport and non -imported materials ( inputs) .
The net effect is they have sheds full of real money which is "profit" they dont need or require that they need to place somewhere , so why not buy UDC ?
Its interesting to note that the the biggest bank in China bought effective control of South Africas bank (Standard Bank )
Donald Trump should keep his promise , sort out China's dishonest and unfair behavior and level this playing filed .
A 45% tax on all Chinese goods imported into the US ( payable by the exporter in US$) would be a great place to start .
Nothing like taking the mercantilist's ill-gotten and unfair gains away to level the playing field
A very salient point posted on Investing in Chinese Stocks. To avoid overcrowding in certain of Beijing's neighbourhoods, the Beijing city government is trying to discourage migrant workers, by shutting schools to migrant workers' children and relocating local marketplaces (https://investinginchinesestocks.blogspot.com/2016/11/beijing-cant-even…). The city government has failed to meet their population reduction/relocation targets, and this in the capital city of the greatest command economy in the world:
Remember this when someone tells you China can stop currency outflows and control the value of the yuan.
The biggest risk for financial markets isn't that Beijing can't control the economy, it's that so many people still believe it can.
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