The document discusses the growing prominence of the Chinese yuan (CNY) as an alternative international reserve currency to the US dollar. It notes that China's GDP and foreign exchange reserves have grown rapidly in recent decades. Standard Chartered Bank predicts that by 2020, 28% of China's international trade will be denominated in yuan, China's capital account will be more open, and the yuan will be a freely floating currency. The document suggests the international community should consider establishing a new reserve currency to replace the dollar and reforming international financial institutions to be less US-centric.
Future of Currency - Initial PersepctiveFuture Agenda
An initial perspective on the future of currency by Patrick Teng, CEO of Six Capital in Singapore. This is the starting point for the global future agenda discussions taking place as part of the futureagenda2.0 programme. www.futureagenda.org
Superlatives sound commonplace in the financial industry, but foreign exchange earns them year in and year out. It is by a wide margin the world’s largest, most liquid marketplace. Yet, surprisingly, FX, the world’s largest and most active marketplace, often lacks for the attention its size merits. This report, sponsored by INTL FCStone, explores the risks, challenges and opportunities of the FX market and highlights strategies experts use to manage this large and complex market.
Ashton Global seeks to identify emerging portfolio managers that generate alpha by investing in non-traditional equities and special opportunities.
https://www.ashtonglobal.com/
https://twitter.com/ashtonglobal
https://www.facebook.com/ashtonglobal?ref=hl
This document discusses preparations individuals can make as the U.S. dollar faces risks of devaluation or hyperinflation due to unsustainable government debt and deficits. It recommends getting out of Treasury bonds, investing some cash in currencies of U.S. creditor nations like China, opening an offshore bank account in Switzerland, keeping stashes of foreign currencies, silver coins, and gold coins to preserve purchasing power outside of dollars. The overall message is the dollar's value and status as the world's reserve currency are at risk so diversifying out of dollars into tangible and foreign assets is prudent.
Fasanara Capital | Investment Outlook
1. The Future Is Wide Open: Avoid The ‘Illusion Of Knowledge’ Trap
The single most dangerous thinking trap / optical illusion for investors today is to look at Trump, Brexit and Italy Referendum as non-events, buried in the past. We believe that 2017 may likely be driven by the same factors that failed to shape 2016. The non-events of 2016 are likely to be the drivers of 2017. Finally, we will get to find out if Brexit means Brexit, if Trump means Trump, if a failed Italian referendum means early elections and a membership of the EMU in jeopardy down the line.
2. Structural Shift: These Are Transformational Times
The macro outlook of the next years will be influenced the most by these structural trends:
› Protectionism, De-Globalization & De-Dollarization. In Pursuit of Inclusive Growth
› End of ‘Pax Americana’. The ascent of China. Geopolitical risks on the rise
› End of ‘Pax QE’. Markets without steroids, but still delusional.
› 4th Industrial Revolution: labor participation rate falling from 63% to 40% in 10 years?
3. Our Baseline Scenario: Bubble Unwind, Equities and Bonds Down
Starting this 2017, our major macro convictions are as follows:
› Global Tapering to progress
› US Dollar to keep grinding higher
› European Political Instability to worsen
› US Equities to weaken
Mexico and the US: Rising Volatility, Economic, Finance, and Bank RiskNomi Prins
Nomi Prins: Presentation to the Annual Financial Investigation Congress in Mexico City, August 28, 2015 on Economic and Financial Risks for the United States and Mexico
This document discusses shifting global power dynamics and economic alliances in light of President Trump's "America First" policies. It notes the US withdrawal from TPP and Paris Climate Accord, as well as ongoing shifts of power from West to East. Japan finds itself needing to navigate these changes. Key topics analyzed include low global growth despite monetary easing, rising corporate debt levels, divergent central bank policies and growing assets, and evolving trade agreements' effects on Japan. The outlook suggests pivotal issues will involve Asian leadership, infrastructure vs. military spending, asset bubbles and systemic risk, and potential changes in central bank leadership.
Nomi Prins Presentation to The Aspen Institute México, May 2017Nomi Prins
Speech / Presentation to The Aspen Institute Mexico, Mexico City, Mexico by Nomi Prins. Topic covered NAFTA, Financial Regulations and U.S-Mexican Relations.
Future of Currency - Initial PersepctiveFuture Agenda
An initial perspective on the future of currency by Patrick Teng, CEO of Six Capital in Singapore. This is the starting point for the global future agenda discussions taking place as part of the futureagenda2.0 programme. www.futureagenda.org
Superlatives sound commonplace in the financial industry, but foreign exchange earns them year in and year out. It is by a wide margin the world’s largest, most liquid marketplace. Yet, surprisingly, FX, the world’s largest and most active marketplace, often lacks for the attention its size merits. This report, sponsored by INTL FCStone, explores the risks, challenges and opportunities of the FX market and highlights strategies experts use to manage this large and complex market.
Ashton Global seeks to identify emerging portfolio managers that generate alpha by investing in non-traditional equities and special opportunities.
https://www.ashtonglobal.com/
https://twitter.com/ashtonglobal
https://www.facebook.com/ashtonglobal?ref=hl
This document discusses preparations individuals can make as the U.S. dollar faces risks of devaluation or hyperinflation due to unsustainable government debt and deficits. It recommends getting out of Treasury bonds, investing some cash in currencies of U.S. creditor nations like China, opening an offshore bank account in Switzerland, keeping stashes of foreign currencies, silver coins, and gold coins to preserve purchasing power outside of dollars. The overall message is the dollar's value and status as the world's reserve currency are at risk so diversifying out of dollars into tangible and foreign assets is prudent.
Fasanara Capital | Investment Outlook
1. The Future Is Wide Open: Avoid The ‘Illusion Of Knowledge’ Trap
The single most dangerous thinking trap / optical illusion for investors today is to look at Trump, Brexit and Italy Referendum as non-events, buried in the past. We believe that 2017 may likely be driven by the same factors that failed to shape 2016. The non-events of 2016 are likely to be the drivers of 2017. Finally, we will get to find out if Brexit means Brexit, if Trump means Trump, if a failed Italian referendum means early elections and a membership of the EMU in jeopardy down the line.
2. Structural Shift: These Are Transformational Times
The macro outlook of the next years will be influenced the most by these structural trends:
› Protectionism, De-Globalization & De-Dollarization. In Pursuit of Inclusive Growth
› End of ‘Pax Americana’. The ascent of China. Geopolitical risks on the rise
› End of ‘Pax QE’. Markets without steroids, but still delusional.
› 4th Industrial Revolution: labor participation rate falling from 63% to 40% in 10 years?
3. Our Baseline Scenario: Bubble Unwind, Equities and Bonds Down
Starting this 2017, our major macro convictions are as follows:
› Global Tapering to progress
› US Dollar to keep grinding higher
› European Political Instability to worsen
› US Equities to weaken
Mexico and the US: Rising Volatility, Economic, Finance, and Bank RiskNomi Prins
Nomi Prins: Presentation to the Annual Financial Investigation Congress in Mexico City, August 28, 2015 on Economic and Financial Risks for the United States and Mexico
This document discusses shifting global power dynamics and economic alliances in light of President Trump's "America First" policies. It notes the US withdrawal from TPP and Paris Climate Accord, as well as ongoing shifts of power from West to East. Japan finds itself needing to navigate these changes. Key topics analyzed include low global growth despite monetary easing, rising corporate debt levels, divergent central bank policies and growing assets, and evolving trade agreements' effects on Japan. The outlook suggests pivotal issues will involve Asian leadership, infrastructure vs. military spending, asset bubbles and systemic risk, and potential changes in central bank leadership.
Nomi Prins Presentation to The Aspen Institute México, May 2017Nomi Prins
Speech / Presentation to The Aspen Institute Mexico, Mexico City, Mexico by Nomi Prins. Topic covered NAFTA, Financial Regulations and U.S-Mexican Relations.
Boston consulting group’s 2014 global wealth reportngocjos
- Global private wealth grew 14.6% in 2013 to $152 trillion, driven by strong equity market performance and new wealth in emerging markets.
- North America and Western Europe remained the wealthiest regions but Asia-Pacific grew the fastest, closing the wealth gap.
- The number of global millionaires reached 16.3 million in 2013, up from 13.7 million in 2012, with the most located in the US.
- Private wealth is projected to grow at a 5.4% annual rate through 2018 to $198 trillion, with Asia-Pacific accounting for half of new wealth.
International Monetary System: The International Financial System - Reform of International Monetary Affairs
- The Bretton Wood System and the International Monetary Fund, Controversy over Regulation of International
Finance, Developing Countries' Concerns, Exchange Rate Policy of Developing Economies.
Is trade really an engine for growth and development ar nabArnab Ghosh
Trade has generally been an engine for growth, with global trade increasing 145-fold between 1950-2004. However, developed countries have disproportionately benefited, occupying over 65% of world trade in 2002. While developing countries have opened their economies and increased trade as a percentage of GDP, they obtained fewer benefits due to factors like limited market access and subsidies in developed countries. Now, large developing countries like the BRIC nations (Brazil, Russia, India, China) are growing rapidly and may eclipse developed economies by 2050, reflecting a shift toward a multipolar world with more balanced global power.
This lesson focuses on global economic flows. Global trade operates through various economic networks such as supply chains, international production networks, global commodity chains and, most importantly, global value chains. Global
value chains follow the creation of value through different stages, from the creation of a product, to its disposal after use.
This document discusses the future of China's economy. It notes that China's GDP growth has slowed to around 6% annually, half of what it was in the 1990s. China is taking on significant debt to continue driving growth. There is a need for China to boost private consumption and move away from debt-fueled investment and exports. The future of China-Canada economic relations and the potential for a free trade agreement are also discussed.
Here is a brief look at China including debt, public policies, transparency, trade, etc.
China has become a world leader as such it is important for the countries around the world to review their relationships with China.
Contemporary issues and Challenges in Global Economic Environment - Indian perspective: Globalization and
its Advocacy, Globalization and its Impact on India, Fair Globalization and the Need for Policy Framework,
Globalization in Reverse Gear-The Threatened Re-emergence of Protectionism. Euro zone Crisis and its impact
on India, Issues in Brexit, World recession, inflationary trends, impact of fluctuating prices of crude oil, gold
etc.
This document discusses two companies, Unilever and GlaxoSmithKline, that have significant exposure to emerging markets like India through their operations and investments. It warns that this exposure leaves the companies vulnerable as geopolitical tensions rise globally in what the document calls "The Great Game". For Unilever, 57% of its sales come from emerging markets like India, making it highly susceptible to volatility. For GlaxoSmithKline, 26% of its profits come from emerging markets, including a planned 50% increase in investment in India, but the Indian pharmaceutical market has low margins, price caps, and heavy regulation. The document advises investors to avoid these two companies due to the risks posed by their emerging market exposure as
This section examines the relationship between the Japanese yen and the US dollar over a 12-month period. It finds that the yen appreciated against the dollar, reaching a 14-year high in November 2009, but declined at various points when the Japanese government intervened verbally or through monetary policy to devalue the yen. Key factors that influenced the currency fluctuations included differences in price inflation and interest rates between the two economies, as well as shifting market psychology. The yen's appreciation has economic implications for Japan, such as making exports less competitive and posing challenges for monetary policy effectiveness.
With such an unpredictable 2016 behind us where Brexit and the election of new US president Donald Trump sent shock waves through the world, the question is, what can we expect for 2017?
International Monetary System: The International Financial System - Reform of International Monetary Affairs
- The Bretton Wood System and the International Monetary Fund, Controversy over Regulation of International
Finance, Developing Countries' Concerns, Exchange Rate Policy of Developing Economies.
This document summarizes a paper that investigates factors influencing the U.S. dollar's status as the world's primary reserve currency and whether that status may change. It discusses how the U.S. dollar became the dominant global reserve currency following World War II due to America's unmatched economic power. However, over decades global economic growth has increasingly come from foreign economies rather than the U.S. The paper will explore challenges to the dollar from the euro, yuan, and other currencies, and whether a multi-reserve currency system may emerge.
The purpose of this chapter is to contribute to the discussion of a number of issues concerning macroeconomic policies that should be appropriate for developing countries. We shall take into account the broader political picture of changes in the international economy, reflected objectively in terms of the nature of the balance of payments constraints facing the ‘emerging markets’ and specially the Latin American economies since the early 1990s. It is within this wider context that we present our account of the particular case of Brazil.
the Brazilian experience has some peculiarities that make it an interesting testing ground for the presumed benefits of the process of financial globalization and the policies of trade and financial opening.
Many will agree that the slow growth and extremely high inflation experienced in Brazil in the 1980s had much to do with debt crisis and the subsequent interruption of capital flows towards Latin America. Indeed, in what became known as the ‘lost decade’ Brazil experienced a severe balance of payments constraint that slowed growth and triggered the acceleration of inflation. Since the early 1990s, foreign capital started again flowing towards Brazil in large quantities, first mainly as portfolio capital but towards the end of the decade more and more as foreign direct investment. one could well have expected that this large amount of foreign capital would improve ‘quality’ (presumably increasingly ‘cold’ rather than ‘hot’ money), by alleviating the balance of payments constraint, and would have had a big effect on both inflation stabilization and in the resumption of fast economic growth.
However, what the actual record shows is that the impact on inflation stabilization, although starting a bit late, only by mid-1994, was in fact more drastic than anybody could have reasonably expected. Inflation fell spectacularly and has remained extremely low ever since. on the other hand, the growth performance was, to say the very least, extremely disappointing. this chapter will try to make sense of this experience using a combination of some features of the international situation and of particular policies followed by the Brazilian state.
Most Latin American economies followed more or less the same broad pattern of fast disinflation and slow growth with the notable exception of Chile and partial exception of Argentina. therefore the Brazilian story, in spite of its peculiarities, may arguably be seen to reflect a more general pattern.
We shall begin our discussion in the following section with a brief account of the operation of the current international monetary system, a system that we call the ‘floating dollar standard’, and of other salient features of the international trade and financial environment faced by the ‘emerging’ developing economies since the early 1990s. the third section shows how this new international environment affects and changes the nature of the balance
This article aims to analyze the process that is leading the dollar to its end as a world currency due to the lack of confidence caused by the lack of currency ballast, the decline of the US economy, the possibility of the explosion of the US public debt bubble and, also, for the political use of the dollar as a weapon to impose the political will of the American government, aiming at maintaining its hegemony at the global level. The dollar may be replaced by a world currency (SDR - Special Drawing Rights: a currency created by the International Monetary Fund used for payments between countries), the gold standard or a digital currency, such as the digital Yuan, which is being implemented in China.
OFIP Q4 2011 - The Year Of Living Dangerouslybwoyat
- The document provides a quarterly commentary from OceanForest Investment Partners on market performance in Q4 2011 and their outlook.
- Key events from 2011 included political upheaval in North Africa/Middle East, natural disasters, and economic turmoil. The US stock market gained 1.99% while other markets declined.
- The portfolio managers expect more volatility globally in 2012. Their portfolios are positioned defensively with cash levels from 12-19% depending on the mandate. They remain focused on high-quality dividend-paying stocks.
Fasanara Capital | Investment Outlook
1. Fake Markets: How Artificial Money Flows Kill Data Dependency, Affect Market Functioning and Change the Structure of the Market
Hard data ceased to be a driver for markets, valuation metrics for bonds and equities which held valid for over a century are now deemed secondary. Narratives and money flows trump hard data, overwhelmingly.
‘Fake Markets’ are defined as markets where the magnitude and duration of artificial flows from global Central Banks or passive investment vehicles have managed to overwhelm and narcotize data-dependency and macro factors. A stuporous state of durable, un-volatile over-valuation, arrested activity, unconsciousness produced by the influence of artificial money flows.
- Passive Flows: The Prehistoric Elephant In The Room
- ETFs Are Taking Over Markets
- The Impact of Passive Investors on Active Investors: the Induction Trap
- How Narratives Evolve To Cover For Fake Markets
- Defendit Numerus: There is Safety in Numbers
- What Could We Get Wrong
2. Be Short, Be Patient, Be Ready
Markets driven by Central Banks, passive investment vehicles and retail investors are unfit to price any premium for any risk. If we are right and this is indeed a bubble (both in equity and in bonds), it will eventually bust; it is only a matter of time. The higher it goes, the higher it can go, as more swathes of private investors are pulled in. The more violently it can subsequently bust.
The risk of a combined bust of equity and bonds is a plausible one. It matters all the more as 90%+ of investors still work under the basic framework of a balanced portfolio, exposed in different proportions to equity and bonds, both long. That includes risk parity funds, a leveraged version of balanced portfolio. That includes alternative risk premia funds, a nice commercial disguise for a mostly long-only beta risk, where premia is extracted from record rich markets that made those premia tautologically minuscule.
The document provides an end-of-year summary and outlook for 2017 from an investment manager. It discusses:
1) Continued political turmoil and uncertainty in Europe that contributed to volatility in currency and bond markets.
2) Expectations that the US Federal Reserve will continue raising interest rates in 2017 and that Janet Yellen will not be reappointed as chair.
3) Anticipation that proposed US infrastructure spending and tax cuts under Trump will boost the economy and US dollar.
Jamestown Latin America | Trends + Views | Currency AnalysisFerhat Guven
The document discusses currency risk for US dollar-based real estate investors in Latin America. It finds that:
1) Currencies in the region have depreciated significantly against the US dollar this year, improving purchasing power for US investors.
2) Currency risk is reduced as currencies like the Brazilian real that were previously overvalued have moved closer to fair value.
3) Holding real estate assets in a basket of Latin American countries provides diversification benefits, as the currencies do not move in perfect tandem and have correlations below 1.
The document lists several important holidays celebrated in India including Republic Day on January 26th, Holi on March 8th, Gudi Padwa on March 23rd, Maharashtra Day on May 1st, Independence Day on August 15th, and Ramzaan on August 20th.
Sari buah belimbing manis tidak memberikan pengaruh yang signifikan terhadap volume urin mencit walaupun diberikan dalam dua konsentrasi yang berbeda. Analisis statistik menunjukkan hasil tidak signifikan karena fhitung lebih kecil dari ftabel.
Boston consulting group’s 2014 global wealth reportngocjos
- Global private wealth grew 14.6% in 2013 to $152 trillion, driven by strong equity market performance and new wealth in emerging markets.
- North America and Western Europe remained the wealthiest regions but Asia-Pacific grew the fastest, closing the wealth gap.
- The number of global millionaires reached 16.3 million in 2013, up from 13.7 million in 2012, with the most located in the US.
- Private wealth is projected to grow at a 5.4% annual rate through 2018 to $198 trillion, with Asia-Pacific accounting for half of new wealth.
International Monetary System: The International Financial System - Reform of International Monetary Affairs
- The Bretton Wood System and the International Monetary Fund, Controversy over Regulation of International
Finance, Developing Countries' Concerns, Exchange Rate Policy of Developing Economies.
Is trade really an engine for growth and development ar nabArnab Ghosh
Trade has generally been an engine for growth, with global trade increasing 145-fold between 1950-2004. However, developed countries have disproportionately benefited, occupying over 65% of world trade in 2002. While developing countries have opened their economies and increased trade as a percentage of GDP, they obtained fewer benefits due to factors like limited market access and subsidies in developed countries. Now, large developing countries like the BRIC nations (Brazil, Russia, India, China) are growing rapidly and may eclipse developed economies by 2050, reflecting a shift toward a multipolar world with more balanced global power.
This lesson focuses on global economic flows. Global trade operates through various economic networks such as supply chains, international production networks, global commodity chains and, most importantly, global value chains. Global
value chains follow the creation of value through different stages, from the creation of a product, to its disposal after use.
This document discusses the future of China's economy. It notes that China's GDP growth has slowed to around 6% annually, half of what it was in the 1990s. China is taking on significant debt to continue driving growth. There is a need for China to boost private consumption and move away from debt-fueled investment and exports. The future of China-Canada economic relations and the potential for a free trade agreement are also discussed.
Here is a brief look at China including debt, public policies, transparency, trade, etc.
China has become a world leader as such it is important for the countries around the world to review their relationships with China.
Contemporary issues and Challenges in Global Economic Environment - Indian perspective: Globalization and
its Advocacy, Globalization and its Impact on India, Fair Globalization and the Need for Policy Framework,
Globalization in Reverse Gear-The Threatened Re-emergence of Protectionism. Euro zone Crisis and its impact
on India, Issues in Brexit, World recession, inflationary trends, impact of fluctuating prices of crude oil, gold
etc.
This document discusses two companies, Unilever and GlaxoSmithKline, that have significant exposure to emerging markets like India through their operations and investments. It warns that this exposure leaves the companies vulnerable as geopolitical tensions rise globally in what the document calls "The Great Game". For Unilever, 57% of its sales come from emerging markets like India, making it highly susceptible to volatility. For GlaxoSmithKline, 26% of its profits come from emerging markets, including a planned 50% increase in investment in India, but the Indian pharmaceutical market has low margins, price caps, and heavy regulation. The document advises investors to avoid these two companies due to the risks posed by their emerging market exposure as
This section examines the relationship between the Japanese yen and the US dollar over a 12-month period. It finds that the yen appreciated against the dollar, reaching a 14-year high in November 2009, but declined at various points when the Japanese government intervened verbally or through monetary policy to devalue the yen. Key factors that influenced the currency fluctuations included differences in price inflation and interest rates between the two economies, as well as shifting market psychology. The yen's appreciation has economic implications for Japan, such as making exports less competitive and posing challenges for monetary policy effectiveness.
With such an unpredictable 2016 behind us where Brexit and the election of new US president Donald Trump sent shock waves through the world, the question is, what can we expect for 2017?
International Monetary System: The International Financial System - Reform of International Monetary Affairs
- The Bretton Wood System and the International Monetary Fund, Controversy over Regulation of International
Finance, Developing Countries' Concerns, Exchange Rate Policy of Developing Economies.
This document summarizes a paper that investigates factors influencing the U.S. dollar's status as the world's primary reserve currency and whether that status may change. It discusses how the U.S. dollar became the dominant global reserve currency following World War II due to America's unmatched economic power. However, over decades global economic growth has increasingly come from foreign economies rather than the U.S. The paper will explore challenges to the dollar from the euro, yuan, and other currencies, and whether a multi-reserve currency system may emerge.
The purpose of this chapter is to contribute to the discussion of a number of issues concerning macroeconomic policies that should be appropriate for developing countries. We shall take into account the broader political picture of changes in the international economy, reflected objectively in terms of the nature of the balance of payments constraints facing the ‘emerging markets’ and specially the Latin American economies since the early 1990s. It is within this wider context that we present our account of the particular case of Brazil.
the Brazilian experience has some peculiarities that make it an interesting testing ground for the presumed benefits of the process of financial globalization and the policies of trade and financial opening.
Many will agree that the slow growth and extremely high inflation experienced in Brazil in the 1980s had much to do with debt crisis and the subsequent interruption of capital flows towards Latin America. Indeed, in what became known as the ‘lost decade’ Brazil experienced a severe balance of payments constraint that slowed growth and triggered the acceleration of inflation. Since the early 1990s, foreign capital started again flowing towards Brazil in large quantities, first mainly as portfolio capital but towards the end of the decade more and more as foreign direct investment. one could well have expected that this large amount of foreign capital would improve ‘quality’ (presumably increasingly ‘cold’ rather than ‘hot’ money), by alleviating the balance of payments constraint, and would have had a big effect on both inflation stabilization and in the resumption of fast economic growth.
However, what the actual record shows is that the impact on inflation stabilization, although starting a bit late, only by mid-1994, was in fact more drastic than anybody could have reasonably expected. Inflation fell spectacularly and has remained extremely low ever since. on the other hand, the growth performance was, to say the very least, extremely disappointing. this chapter will try to make sense of this experience using a combination of some features of the international situation and of particular policies followed by the Brazilian state.
Most Latin American economies followed more or less the same broad pattern of fast disinflation and slow growth with the notable exception of Chile and partial exception of Argentina. therefore the Brazilian story, in spite of its peculiarities, may arguably be seen to reflect a more general pattern.
We shall begin our discussion in the following section with a brief account of the operation of the current international monetary system, a system that we call the ‘floating dollar standard’, and of other salient features of the international trade and financial environment faced by the ‘emerging’ developing economies since the early 1990s. the third section shows how this new international environment affects and changes the nature of the balance
This article aims to analyze the process that is leading the dollar to its end as a world currency due to the lack of confidence caused by the lack of currency ballast, the decline of the US economy, the possibility of the explosion of the US public debt bubble and, also, for the political use of the dollar as a weapon to impose the political will of the American government, aiming at maintaining its hegemony at the global level. The dollar may be replaced by a world currency (SDR - Special Drawing Rights: a currency created by the International Monetary Fund used for payments between countries), the gold standard or a digital currency, such as the digital Yuan, which is being implemented in China.
OFIP Q4 2011 - The Year Of Living Dangerouslybwoyat
- The document provides a quarterly commentary from OceanForest Investment Partners on market performance in Q4 2011 and their outlook.
- Key events from 2011 included political upheaval in North Africa/Middle East, natural disasters, and economic turmoil. The US stock market gained 1.99% while other markets declined.
- The portfolio managers expect more volatility globally in 2012. Their portfolios are positioned defensively with cash levels from 12-19% depending on the mandate. They remain focused on high-quality dividend-paying stocks.
Fasanara Capital | Investment Outlook
1. Fake Markets: How Artificial Money Flows Kill Data Dependency, Affect Market Functioning and Change the Structure of the Market
Hard data ceased to be a driver for markets, valuation metrics for bonds and equities which held valid for over a century are now deemed secondary. Narratives and money flows trump hard data, overwhelmingly.
‘Fake Markets’ are defined as markets where the magnitude and duration of artificial flows from global Central Banks or passive investment vehicles have managed to overwhelm and narcotize data-dependency and macro factors. A stuporous state of durable, un-volatile over-valuation, arrested activity, unconsciousness produced by the influence of artificial money flows.
- Passive Flows: The Prehistoric Elephant In The Room
- ETFs Are Taking Over Markets
- The Impact of Passive Investors on Active Investors: the Induction Trap
- How Narratives Evolve To Cover For Fake Markets
- Defendit Numerus: There is Safety in Numbers
- What Could We Get Wrong
2. Be Short, Be Patient, Be Ready
Markets driven by Central Banks, passive investment vehicles and retail investors are unfit to price any premium for any risk. If we are right and this is indeed a bubble (both in equity and in bonds), it will eventually bust; it is only a matter of time. The higher it goes, the higher it can go, as more swathes of private investors are pulled in. The more violently it can subsequently bust.
The risk of a combined bust of equity and bonds is a plausible one. It matters all the more as 90%+ of investors still work under the basic framework of a balanced portfolio, exposed in different proportions to equity and bonds, both long. That includes risk parity funds, a leveraged version of balanced portfolio. That includes alternative risk premia funds, a nice commercial disguise for a mostly long-only beta risk, where premia is extracted from record rich markets that made those premia tautologically minuscule.
The document provides an end-of-year summary and outlook for 2017 from an investment manager. It discusses:
1) Continued political turmoil and uncertainty in Europe that contributed to volatility in currency and bond markets.
2) Expectations that the US Federal Reserve will continue raising interest rates in 2017 and that Janet Yellen will not be reappointed as chair.
3) Anticipation that proposed US infrastructure spending and tax cuts under Trump will boost the economy and US dollar.
Jamestown Latin America | Trends + Views | Currency AnalysisFerhat Guven
The document discusses currency risk for US dollar-based real estate investors in Latin America. It finds that:
1) Currencies in the region have depreciated significantly against the US dollar this year, improving purchasing power for US investors.
2) Currency risk is reduced as currencies like the Brazilian real that were previously overvalued have moved closer to fair value.
3) Holding real estate assets in a basket of Latin American countries provides diversification benefits, as the currencies do not move in perfect tandem and have correlations below 1.
The document lists several important holidays celebrated in India including Republic Day on January 26th, Holi on March 8th, Gudi Padwa on March 23rd, Maharashtra Day on May 1st, Independence Day on August 15th, and Ramzaan on August 20th.
Sari buah belimbing manis tidak memberikan pengaruh yang signifikan terhadap volume urin mencit walaupun diberikan dalam dua konsentrasi yang berbeda. Analisis statistik menunjukkan hasil tidak signifikan karena fhitung lebih kecil dari ftabel.
The document lists several important holidays celebrated in India including Republic Day on January 26th, Holi on March 8th, Gudi Padwa on March 23rd, Maharashtra Day on May 1st, Independence Day on August 15th, and Ramzaan on August 20th.
Understanding the coming domination of chinese yuanmnathani
This document discusses the growing prominence of the Chinese Yuan as an alternative international reserve currency to the US Dollar. It notes that China's GDP and foreign exchange reserves have grown rapidly in recent decades, while its currency has steadily appreciated. It predicts that by 2020, the Yuan will be more widely used in international trade and financial markets. The document advocates for reforms to international financial institutions to give emerging economies more influence, and the introduction of a new reserve currency to replace the dominant US Dollar.
The document discusses whether the Chinese yuan will become the next global reserve currency. It outlines factors that influence a currency being used as a reserve, including the size and importance of the economy, open financial markets, and macroeconomic policies. Currently the US dollar dominates as a reserve currency, but its position is weakening due to rising debt and China's increasing influence. The yuan is moving towards becoming a reserve through currency swaps and trade deals settled in yuan. However, the yuan faces challenges to becoming a reserve like lack of convertibility and large bond markets. China needs reforms to make the yuan freely floating and develop its financial systems before the yuan can replace the dollar as the dominant global reserve currency.
Economic development is influenced by both domestic and international forces. Theories of economic development point to roles for domestic policy and international influence in aiding development. This is shown in Rostow's model of stages of growth. The example of Chad demonstrates that without changes to domestic policy and leadership, increased capital from resources will not necessarily lead to more development, even with oversight from international organizations like the World Bank. Both domestic accountability and international support through projects and investment can spur economic growth, but education is also needed. There are roles for both domestic governments and international institutions in increasing development.
This document analyzes the economic relationship between China and the United States. It discusses how China has rapidly grown to become a global economic power on par with the US. While the US previously dominated global trade and GDP, China has seen strong growth and may surpass the US economy by 2020. The analysis examines trade flows, GDP trends, and the impacts of China joining the World Trade Organization. It also considers cultural and political differences between the democratic US and communist China, and how both countries must adapt to each other for mutual economic benefit in the globalized world.
The yuan is increasing in use internationally as China's economy grows, but the dollar still dominates global trade and finance. Some countries are trying to reduce dollar dependence by using the yuan more, such as in Latin America due to trade links with China. For the yuan to become a leading currency, China needs reforms like free capital movement. Institutions like the AIIB and lending in local currencies indicate the yuan's role will likely continue expanding.
This document analyzes the impact of globalization on China's economy. It discusses how China historically engaged in international trade along the Silk Road but closed its doors at times. Globalization greatly increased in China after economic reforms in the 1970s opened the country up. It has since benefited tremendously from international trade and foreign investment, experiencing rapid economic growth of 8-10% annually. While globalization has boosted China's economy, it also leaves China's growth dependent on the global business cycle and vulnerable to downturns like in the Global Financial Crisis.
The document discusses globalization and its impacts. It begins by defining globalization as the closer integration of countries through reduced trade barriers and costs of transportation and communication. It then outlines some of the major international institutions involved in governing globalization, including the IMF, World Bank, and WTO. The document also discusses some of the opportunities and threats presented by globalization, such as increased inequality, environmental impacts, and threats to cultural diversity. It raises issues about the appropriate level of global regulation and discusses Joseph Stiglitz's critique of how international institutions have pursued globalization.
This document discusses the widespread consensus views about China's growing economy and questions whether that consensus may be wrong. It argues that China's GDP growth is likely overestimated and driven by massive credit expansion rather than real economic activity. If China's top export markets in the US and Europe do not recover as expected, many of China's loans may not be repaid, suggesting China's economy is weaker than the numbers indicate. The document questions whether China can sustain its high growth rates going forward.
The document discusses the increasing role and importance of the Chinese yuan (renminbi) in the global monetary system. It outlines the history and development of the yuan currency in China. It then analyzes the yuan's growing status as an international currency, comparing it to the role currently played by the US dollar and euro. The document predicts that the yuan will likely become one of the world's major currencies within the next decade as China's economy continues to grow in size and influence. Chinese authorities are taking steps to increase the yuan's use in international trade and as a reserve currency held by other nations and institutions.
The document discusses the global financial crisis and its effects on India. It notes that while India saw high GDP growth and a booming stock market in recent years, the crisis caused inflation, slowing growth, a falling stock market, and a declining rupee. The root causes of the crisis are said to be the rapid globalization and integration of financial markets beyond the control of national institutions. A world currency is proposed as an eventual solution to better regulate global capital flows and promote stability and growth worldwide.
This new year is starting, it's the year of change for PPPs. Compliments are strengthened, but the procedures are simplified. Faced with the ever-increasing number of scams, mainly caused by all internet scammers, PPPs have started to have a bad reputation. To offer greater transparency and 100% security, we offer in our trade programs the possibility of using a:
INTERACTIVE BROKAGE ACCOUNT
It is simply a trade account, owned and managed by the customer. At no time does he lose his money from sight ... everything is explained in the attached guide.
Presentation delivered by Chris Leung, Chief China Economist, Executive Director, DBS Bank at the marcus evans Private Wealth Management Summit APAC fall 2019 in Macao.
This document provides an overview of emerging markets, including their history, characteristics, and impact on the global economy. It discusses how emerging markets are transitioning economies experiencing rapid growth. Some key points:
- Emerging markets account for 85% of the world's population and 60% of the land area, with vast natural resources, but currently only 25% of global output.
- Characteristics include large, young labor forces, government involvement in economies, and high economic growth rates.
- Projections show emerging markets' combined GDP will overtake developed economies by 2030-2035, and the top emerging markets will surpass the G7 by 2040. This signals a realignment of the global
The document discusses China's policy of currency devaluation and its impacts. It notes that since 2003, China has devalued its currency to gain a competitive advantage in exports. This has boosted Chinese exports while hurting exports of other countries. The devaluation also allows China to run large trade surpluses. However, constant large trade surpluses through devaluation are not a sustainable long-term strategy and China should restructure its economy and let market forces determine its currency value more.
- The RMB's rise as an international currency is inevitable due to China's economic size and trade relationships. However, this process will be gradual rather than straightforward, described as "creeping internationalization."
- Currently, offshore RMB is primarily used for trade settlement, investment flows, and reserve management. Trade settlement in RMB is growing rapidly, led by Hong Kong, though it remains a small percentage of global trade. Investment flows are expected to drive more innovation in offshore RMB markets.
- Countries deepening economic ties with China will increase RMB holdings for strategic reasons, even if trade and investment are not yet substantial. New offshore RMB hubs will emerge alongside Hong Kong, with London and Singapore
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Cryptocurrency is digital money that operates independently of a central authority, utilizing cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies are decentralized and typically operate on a technology called blockchain. Each cryptocurrency transaction is recorded on a public ledger, ensuring transparency and security.
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Understanding Ponzi Schemes
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Understanding the coming domination of Chinese Yuan
1. Prepared by : Manoj Nathani
Oct 17, 2013
The case for Chinese Yuan
as an Alternate Currency
to the USD
2. Change is the only constant
— The change of power from US Dollar to Chinese Yuan is happening right now, therefore, either
one can sit idly and watch it happen or participate and profit from it.
— Remember, nothing lasts forever.
Source: JPM, Hong Kong Monetary Authority, December 2011
3. Do you Renmibi?
Standard Chartered bank’s Research Team started a Renmibi (or CNY) Globalization Index (RGI) in Dec 2010 that has
increased by over 1,000% in just 3 years! This index measures the rate of globalization of CNY.
Source:
http://www.standardchartered.com/en/resources/global-en/pdf/Research/Offshore_Renminbi__Taiwan_joins_the_RGI.pdf
4. Do You Renmibi?...Cont’d
The following is paraphrased from the most recent research dated Oct 9, 2013 by Standard Chartered Bank:
Summary:
The Renminbi is likely to be a big part of your business sooner than you think. If you trade with China, you’ll be invoicing in it,
paying it, and receiving it from your clients. If you operate in China, you will be issuing debt in Chinese yuan (CNY) and using
CNY instruments to hedge your FX and rates risk. If you are running a global portfolio, then the Renminbi
will – sooner or later – be a key part of your investment strategy, whether in FX, equity or
credit products.
Some Predictions:
By 2020, we expect 28% of China’s international trade to be denominated in Renminbi, some USD 3tn a year.
By 2020, we believe the US dollar (USD), EUR and CNY FX and rates markets will dominate global financial markets. Daily CNY
FX turnover should grow from the current USD 120bn to exceed USD 500bn.
We expect China’s capital account to be ‘basically open’; i.e., open but with some Chinese characteristics, by 2020. Direct
investment will flow much more easily than today, with only large deals subject to approval requirements. Portfolio flows will
take place within significantly expanded QFII and QDII frameworks.
As the onshore capital markets become more accessible to offshore investors, the offshore market will also expand. We
anticipate that the offshore Renminbi debt market to grow 30% a year, and to be worth CNY 3tn (USD 500bn) by 2020.
We expect a cross-border Renminbi payment clearing system China International Payment System (CIPS) to be fully operational
by 2015. This will ensure global Renminbi liquidity.
We expect the Renminbi to be a basically freely floating currency, and SHIBOR to operate as China’s equivalent of the federal
funds target rate.
Source: http://www.standardchartered.com/en/resources/global-en/pdf/Research/Do-you-renminbi.pdf
5. China tells US about a new
reserve currency
The article below appeared on Oct 13, 2013 in China’s official media to suggest that US should stay away from meddling in
foreign countries, stop attacking others, respect international law, be ready to prepare for a NEW INTERNATIONAL RESERVE
CURRENCY and embrace substantial financial reforms.
Commentary: U.S. fiscal failure warrants a de-Americanized world
English.news.cn 2013-10-13 09:57:25
By Xinhua writer Liu Chang
BEIJING, Oct. 13 (Xinhua) -- As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to
bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.
Emerging from the bloodshed of the Second World War as the world's most powerful nation, the United States has since then been trying to build a global empire by imposing a postwar
world order, fueling recovery in Europe, and encouraging regime-change in nations that it deems hardly Washington-friendly.
With its seemingly unrivaled economic and military might, the United States has declared that it has vital national interests to protect in nearly every corner of the globe, and been
habituated to meddling in the business of other countries and regions far away from its shores.
Meanwhile, the U.S. government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as
torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders.
Under what is known as the Pax-Americana, we fail to see a world where the United States is helping to defuse violence and conflicts, reduce poor and displaced population, and bring
about real, lasting peace.
Moreover, instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world
by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.
As a result, the world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites, while bombings and killings have become virtually daily routines in
Iraq years after Washington claimed it has liberated its people from tyrannical rule.
Most recently, the cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous
dollar assets in jeopardy and the international community highly agonized.
Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all
nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.
To that end, several corner stones should be laid to underpin a de-Americanized world.
For starters, all nations need to hew to the basic principles of the international law, including respect for sovereignty, and keeping hands off domestic affairs of others.
Furthermore, the authority of the United Nations in handling global hotspot issues has to be recognized. That means no one has the right to wage any form of military action against
others without a UN mandate.
Apart from that, the world's financial system also has to embrace some substantial reforms.
The developing and emerging market economies need to have more say in major international financial institutions including the World Bank and the International Monetary Fund, so that
they could better reflect the transformations of the global economic and political landscape.
What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.S. dollar, so
that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.
Of course, the purpose of promoting these changes is not to completely toss the United States aside, which is also impossible. Rather, it is to encourage Washington to play a much more
constructive role in addressing global affairs.
And among all options, it is suggested that the beltway politicians first begin with ending the pernicious impasse.
Source: http://news.xinhuanet.com/english/indepth/2013-10/13/c_132794246.htm
7. China’s GDP – The numbers
— China’s GDP has grown from below USD 1 trillion in
Dec 1997 to well over USD 8.3 trillion in Dec 2012
(16 years, 8 times growth).
— Dec 2012: USD 8.3 trillion (5.9 times growth in 1
decade, 196 times growth in 2 decades and 408
times growth in 3 decades)
— Dec 2002: USD 1.4 trillion
— Dec 1992: USD 422bn
— Dec 1982: USD 203bn
8. China’s Per Capita GDP
• Despite having a massive 1.35bn population, China’s per capita GDP has risen from USD 501 in 1985
to USD 1,504 in 1995, to USD 4,114 in 2005 & USD 9,233 in 2012. Since 1995, it’s an explosive 6.1
times growth! Per Capita rapid growth indicates long term sustainable & all inclusive growth which is
set to continue to rise in the years ahead.
10. China’s Currency
• Chinese Yuan is the only currency in the world to have appreciated continuously since
1994 with the insignificant exceptions in 2002, when it declined just by 0.0005 bps, and
in 1999 by 0.0006 bps. Prior to 1994, it did depreciate over the previous decade. Post
1994, appreciation is correlated to the 8 fold rise in China’s GDP, which never happened
previously as fast, as well as the build up of it’s massive cash reserves.
11. China’s Trade Surplus
• China’s trade surplus has been running above zero for decades but has significantly risen since
1994. It is above USD 20-25bn PER MONTH since 2006 until date. China did not have trade deficit
between 1990 to 2003 and then from 2004 until 2010 on a monthly basis! On an annual basis,
they have not had a deficit since 1990!!
• Chart of China’s trade surplus (or current account surplus) since 1990.
12. China Foreign Exchange Reserves
• China’s FX reserves are at a massive USD 3.66 trillion as of Sep 30, 2013. They were almost zero in 1996 and have risen
from USD 73bn in 1995 to USD 3.5 trillion today which is a growth of 47.9 times in just 18 years! With the continued
savings from the trade surplus of USD 240 to 300bn per annum, this growth is set to continue for many years to come.
• China’s reserves are bigger than the annual GDP of Germany!, OR, equal to Canada and India’s GDP combined, OR,
Russia and Brazil’s GDP combined!
• Source: http://www.bloomberg.com/news/2013-10-14/china-s-biggest-reserves-jump-since-2011-shows-inflow.html
13. CNY as a global trade currency
— In 1998, CNY was No. 30 globally as trade currency & declined to No. 35 in 2001. However, since 2004
it jumped to 29, then No. 20 in 2007 & No. 17 in 2010 & in 2013 it shot up to the Top 10 worldwide at
No. 9.
— CNY is used for trade settlement more than SEK, NZD, RUB, HKD, NOK, SGD etc for the first time in
2013.
— In comparison, INR has declined from No. 15 level worldwide in 2010 to No. 20 levels as it has been
previously at same 20 levels since the 1990’s.
— Source: BIS: Sept 2013, Page 12: http://www.bis.org/publ/rpfx13fx.pdf
— According to the same report, trading in CNY has jumped by over 300% in the last 3 years. Source:
http://qz.com/121618/the-chinese-yuan-is-now-the-ninth-most-traded-currency-in-the-world-is-the-
yuan-standard-upon-us/
— Meanwhile, liquidity is getting ramped up into hundreds of billions of yuan in HK, Taiwan and
Singapore individually. http://www.chinadaily.com.cn/xinhua/2013-09-20/content_10155853.html
— Chinese banks have been appointed clearing banks in Singapore (Feb 2013) and previously in Taiwan
(2012) and HK (2004). http://www.thechinatimes.com/online/2013/02/6605.html
— All importers of Chinese goods are being asked to settle trade in CNY more strongly since 2012 across
Europe and USA.
http://www.economist.com/news/leaders/21571442-rise-chinas-currency-will-change-way-world-does-
business-yuan-money
— It is estimated that by 2020, CNY will be the 4th largest global trade currency.
http://www.scmp.com/business/banking-finance/article/1307306/yuan-seen-taking-fourth-spot-
global-use-2020
14. China’s CNY swap list of countries
for bilateral trade in CNY
The list of countries who have signed up with China to do bilateral trade in CNY instead of in USD are as follows:
Russia: Nov 2010: http://www.ibtimes.com/china-russia-currency-agreement-further-threatens-us-dollar-248338
Japan: Dec 2011: USD 10bn: http://www.china.org.cn/video/2011-12/28/content_24267618.htm
UAE: Jan 2012: USD 5.6bn : http://english.peopledaily.com.cn/90778/7709301.html
Australia:: March 2012: USD 31bn
http://www.globalpost.com/dispatch/news/business-tech/120322/china-and-australia-sign-31bn-currency-swap-deal
Chile: June 2012: http://news.xinhuanet.com/english/china/2012-06/27/c_123334167.htm
UK: Feb 2013: http://www.bankofengland.co.uk/publications/Pages/news/2013/033.aspx
Brazil: March 2013: USD 30bn:
http://www.bloomberg.com/news/2013-03-26/china-brazil-sign-currency-swap-agreement-for-30-billion.html
Singapore: March 2013: USD 48bn:
http://www.bloomberg.com/news/2013-03-08/china-singapore-double-currency-swap-agreement-to-48-billion.html
S. Korea: March 2013: USD 56.5bn:
http://www.bloomberg.com/news/2013-03-08/china-singapore-double-currency-swap-agreement-to-48-billion.html
France: April 2013: USD
http://www.reuters.com/article/2013/04/13/us-china-france-currency-idUSBRE93C01S20130413
15. China’s CNY swap list of countries
for bilateral trade in CNY - Cont’d
Taiwan: Aug 2013: USD 48bn:
http://www.bloomberg.com/news/2012-08-31/taiwan-signs-yuan-clearing-deal-with-china-creates-new-rate.html
Hungary: Sep 2013: USD 1.63bn: http://www.globaltimes.cn/content/810175.shtml#.Ulu_RRazuIk
Indonesia: Renewed Oct 2013: USD 17bn:
http://www.thejakartaglobe.com/news/indonesia-extends-currency-swap-agreement-with-china/
Total of 19 countries with deals of USD 320bn
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130326000117&cid=1202
This number is now at 25 countries including the ECB.
Latest deal done in Oct 2013 is with the ECB for USD 57bn:
http://www.bloomberg.com/news/2013-10-10/ecb-sets-currency-swap-line-with-pboc-as-euro-china-trade-rises.html
Research done by BBVA Bank, HK branch: May 2013:
http://www.bbvaresearch.com/KETD/fbin/mult/WP_1318_tcm348-388479.pdf
16. China Oil Consumption & Car
Sales
— Not only has China become the largest importer of oil but it’s per capita consumption is growing very
rapidly which is a very solid sign of all inclusive industrial growth. Future growth is even higher:
http://www.mckinsey.com/client_service/automotive_and_assembly/latest_thinking
— China is now the largest oil importer: http://www.bbc.co.uk/news/business-24475934
— This chart of per capita oil consumption shows massive growth (2.5 times) since 1994 when the real
exponential growth began in China.
17. China’s Bond Market
China does not need to issue any bonds or receive new funds from overseas due to its large cash reserves and
state owned banking system. However, for 3 main reasons they need to issue bonds:
1) to create a bond yield curve to allow for comparisons with other countries and assess market risks
2) to diversify risk from banking system and;
3) to allow foreign market participants to invest in Chinese companies through offshore USD & CNY bond
markets
Resources to understand more about China’s bond markets:
Govt of China:
http://www.chinabond.cn/Channel/318983
Goldman Sachs:
http://www.goldmansachs.com/gsam/docs/fundsgeneral/general_education/economic_and_market_perspectives/china_bond_market_faq.pdf
Private Institutional Investor from USA:
http://www.harvestkrane.com/wp-content/uploads/2013/03/Introduction_to_offshore_china_v4.pdf
18. China & US 10 year bond yields :
Comparison
• Over the last 30 years since 1980’s, US bond yields have declined continuously until mid 2012. Since then, US 10 year
yields have started rising for factors such as US ratings downgrade, unusually low US interest rates plus the Govt’s inability
to function as the most recent cause in Oct 2013. Meanwhile, Chinese interest rates on the 10 year bonds have remained
stable since 2005 between 3% to 4%. US rates have wildly gyrated from 5% to 1.4% and now at 2.7% levels in Oct 2013
and expected to go over 3% shortly.
• Such volatile movements in the US interest rates have created instability around the world and hence CNY has better
chances to show stability in the years ahead (and profitability in currency and bonds both unlike US currency and USD
denominated bonds). The US volatility is compounded by the lower ratings, high debt, high unemployment and the case for
higher interest rates in 2014 and 2015, than in 2012 or 2013.
19. China’s Sovereign Rating
The international ratings agencies have upgraded China continuously since 1999. As of today, the sovereign
rating of China is rated AA- by S&P, Aa3 by Moody’s and A+ by Fitch.
S&P Rating Effective
AA- 12/16/2010 - Upgrade
A+ 07/31/2008 - Upgrade
A 07/27/2006 - Upgrade
A- 07/20/2005 - Upgrade
BBB+ 02/18/2004 - Upgrade
BBB 07/20/1999 - Downgrade
BBB+ 05/14/1997 - Upgrade
BBB 12/07/1992 - Upgrade
20. China – World’s Largest Sovereign
Wealth Fund
According to ESADE, a non profit university based in Spain, China has now become the largest Sovereign
Wealth Fund in the world with USD 743bn in assets, leaving Norway as No. 2 and Abu Dhabi as No. 3:
http://www.esade.edu/web/eng/about-esade/today/news/viewelement/289708/1/china-overtakes-norway-
in-having-the-worlds-largest-sovereign-fund
A fascinating research study done by US-China Economic and Security Review Commission:
http://origin.www.uscc.gov/sites/default/files/Research/China%20Investment%20Corporation_Staff%20Report_0.pdf
China has spent USD 40bn in just the US shale gas revolution:
http://www.bloomberg.com/news/2013-03-05/china-joining-u-s-shale-renaissance-with-40-billion.html
China has set up a separate office in USA, just to acquire US assets in Private equity, real estate and
other assets to diversify away from US fixed income debt:
http://online.wsj.com/news/articles/SB10001424127887324787004578494632401290050
According to PwC, China will overtake US economy and become the largest in the world by 2017.
http://www.pwc.com/en_GX/gx/world-2050/assets/pwc-world-in-2050-report-january-2013.pdf
21. China : Infrastructure Spending
Roads, Railways, Airports, Ports, Nuclear Power are being built and trillions of yuan are being spent each year to
support the rise of China:
http://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/documents/Infrastructure-in-
China-201302.pdf
Nuclear Power: China had 7 nuclear plants in 2011 with production of 12.6m kW capacity, currently 13 are under
construction with 34m kW additional capacity. By 2020, it is expected to reach 58m kW and become the highest
nuclear power producer in the world.
Oil & Gas: Refining has grown since 2002 from 5.9 bpd to 11m bpd in 2011. There is a China-Kazakhastan & China-
Myanmar pipeline under construction. China already has become the largest importer of oil beating USA in 2013.
Airports: China had 147 airports in 2007, 180 airports in 2011 and will reach 230 airports by 2015. In 2007
according to passenger volumes, there were just 10 airports with more than 10m passengers, in 2011 were 21.
Ports: Shanghai is the world’s busiest port and 2 more cities of Busan & Shenzen come in the Top 5 ports worldwide.
Railways: 40,000 kms of railway tracks shall be completed by 2015. Instead of completing 120,000 kms target by
2020, it will now be achieved by 2015.
Roads: Since 2000, annual growth of roads is at 16%. China has the second highest road network in the world of over
75,000 km. Highway plan is to build upto 83,000 by 2015.
Vehicles: total vehicles registered per year has grown from 40m vehicles in 2003 to over 160m vehicles in 2010.
22. China : Asian Infrastructure bank
In order to make itself grow strongly and create peace with neighbours, China needs to support its
neighbours. If neighbours are doing well, China will do even better by creating regional demand for goods
and services.
On Oct 3, 2013, while US debt default discussions were going on, and Obama skipped his APEC meeting in
Bali, Indonesia, China announced prior to the APEC meeting on Oct 7 and 8, 2013 that China would like to
create a regional infrastructure bank and this news was announced by the Chinese President himself.
http://www.economist.com/blogs/analects/2013/10/asian-infrastructure-bank-1
This will create demand as well as more regional peace and the ultimate benefit would be more business
within the region and sharing of best practices while not relying on the western agencies for financial
support and creating infrastructure similar to being built across China!
According to McKinsey this is a USD 1 trillion opportunity in Asia:
http://www.mckinsey.com/insights/financial_services/asias_1_trillion_infrastructure_opportunity
Asian countries have reserves of USD 6 trillion to protect themselves from a US debt default and the crisis
in US is creating a strong reason for all Asian nations to come together and plan at the cost of US Dollar.
Under the Chiang Mai Initiative, the ASEAN countries including China have created a USD 240bn reserve
fund for currency swaps between themselves.
http://www.reuters.com/article/2013/10/11/us-asia-economy-reserves-idUSBRE99A09O20131011
23. China – Some more statistics
China produces 10 times more steel than US does:
http://www.worldsteel.org/dms/internetDocumentList/bookshop/Word-Steel-in-Figures-2013/document/World%20Steel%20in%20Figures%202013.pdf
http://www.thechinamoneyreport.com/2013/09/25/china-produces-more-steel-in-6-weeks-than-the-u-s-does-all-year/
China does more than double the number of space missions than US. A dragon in space: China's space programme
can no longer be ignored
http://www.space.com/23206-is-the-us-passing-the-spaceflight-baton-to-china.html
http://www.wired.co.uk/news/archive/2013-07/01/china-space-programme
China is spending in cash to clean up pollution:
http://blogs.wsj.com/chinarealtime/2013/10/15/to-help-cut-pollution-china-offers-cash-rewards/
http://www.cbc.ca/news/world/china-to-cough-up-283-billion-to-clean-up-air-pollution-1.1324866
Military spending: While China and Russia are spending more, US is cutting military spending though it is still No.
1. China may exceed US military spending by 2025.
http://english.pravda.ru/world/americas/17-04-2013/124314-rearms_race-0/
http://www.businessinsider.com/china-military-spending-projection-2013-1
China produces 10 times more cement than the second largest producer (India) globally. USA used be No. 2 in
2001 behind China but has become No.3 in consumption after being overtaken by India.
http://www.ficem.org/pres/THOMAS-ARMSTRONG-LA-INDUSTRIA-DEL-CEMENTO-EN-CIFRAS.pdf
http://capitalmind.in/2012/10/china-way-ahead-of-rest-of-world-on-cement-and-steel-production/
24. China : Urbanization Trends
In China, since 2011 more people have migrated to live in urban centers than in rural areas for the first time
in their history. The urbanization focus is coming right from the top at the PM level. Over 51% of China’s
population now lives in cities.
China’s Urbanization drive:
http://english.cri.cn/8706/2013/10/10/2561s791489.htm
Premier Li Keqiang Wants More Chinese in the Cities
http://www.businessweek.com/articles/2013-06-06/premier-li-keqiang-wants-more-chinese-in-the-cities#p1
China’s urbanization drive, according to McKinsey:
http://www.mckinsey.com/insights/asia-pacific/chinas_urbanization_imperative
In fact, China has signed up agreements with EU to help them in sustainable urbanization:
http://eeas.europa.eu/delegations/china/eu_china/sustainable_urbanisation/sustainable_urbanisation.htm
A brilliant article by the New York Times in June 2013 on the massive move to urbanization in China on
the largest migration in the history of the world:
http://www.nytimes.com/2013/06/16/world/asia/chinas-great-uprooting-moving-250-million-into-
cities.html?pagewanted=all&_r=0
25. China’s Outward Investment Stock
Since 2004-2005 period, China’s outward foreign investment across the world has grown to a total of USD
424bn as on Dec 2012 from a tiny USD 50bn in 2005.
26. China’s Global Acquisition Spree
China has been acquiring major assets overseas since 2005. China has spent over USD 386bn in acquisitions and USD 219bn in
engineering contracts.
In 2012, Chinese outbound investment set new records both in the U.S. and around the world.
http://www.heritage.org/research/reports/2013/01/chinas-global-investment-rises-the-us-should-focus-on-competition
Chinese secure foreign oil in $100B buying spree:
http://www.upi.com/Business_News/Energy-Resources/2013/06/26/Chinese-secure-foreign-oil-in-100B-buying-spree/UPI-41271372279165/
According to World Resources Institute, Washington, USA, “due to the country’s unprecedented economic growth, China’s
overseas investments have increased exponentially in recent years. Between 2009 and 2010, two Chinese state-owned banks
lent more money to other developing nations than the World Bank did. In fact, between 2002 and 2011, China’s outward foreign
direct investment (OFDI) stock grew from $29 billion to more than $424 billion.”
http://insights.wri.org/news/2012/12/closer-look-chinas-overseas-investment
China's ambitious plans for its huge reserves
http://www.bbc.co.uk/news/business-22567974
China’s foreign oil drive set to continue
https://www.google.ae/?gws_rd=cr&ei=61deUqKiGsmNtQbs-IGICQ#q=http%3A%2F%2Fwww.ft.com%2Fintl%2Fcms%2Fs%2F0%2F7a91eeaa-9491-11e2-9487-00144feabdc0.html%23axzz2hfWf2O4z+
China’s Mission Of Acquisitions
http://www.energyburrito.com/chinas-mission-of-acquisitions/
China's investment in Africa increases 20.5 pct annually
http://news.xinhuanet.com/english/china/2013-08/29/c_132673248.htm
27. Internationalization of CNY
Isn’t it wise to enter into CNY before it becomes more international in scope?
Experts believe internationalization may happen over the next 15 years:
http://news.xinhuanet.com/english/business/2013-06/29/c_132496560.htm
Future International Monetary Order:
http://www.dec.org.ae/news/details.aspx?id=267
Harvard Kennedy School on Navigating the rise of China’s currency:
http://harvardkennedyschoolreview.com/a-roadmap-for-rmb-internationalization-navigating-the-economic-and-political-challenges-to-the-rise-of-
chinas-currency/
The New Financial Free Zone that allows liberalization of currency experiments:
http://www.piie.com/blogs/china/?p=3272
Research from DBS bank, Singapore suggests that it is a good sign that Onshore deregulation (creating a free zone) is happening for CNY
with offshore expansion (creation of overseas swap agreements and overseas settlement banks)
https://www.dbsvresearch.com/research/DBS/research.nsf/(vwAllDocs)/BF39014AA63DBA0848257BF6002D410D/$FILE/cnh_130930.pdf
(Please copy and paste this link)
China – Africa trade rising:
http://www.chinafrica.cn/english/africa_report/txt/2013-10/01/content_570424.htm
Even the Bundesbank (Central Bank) of Germany agrees that the future reserve currency may be CNY:
http://www.bundesbank.de/Redaktion/EN/Reden/2013/2013_07_03_nagel.html
German Chancellor Angela Merkel has already signed agreements to trade with China in Yuan instead of USD since Aug 2012:
http://www.reuters.com/article/2012/08/30/germany-china-yuan-idUSB4E7JG00D20120830
28. Petro Yuan – Oil Trading in CNY
It may come as a shock to many that CNY has already started trading oil in the Chinese currency since 2012!
The above decision was one of the most important decisions that China has made and was a major historical point in
Nov 2012 and then in Apr 2013.
If oil is traded in a certain currency, then any country who buys oil must have that currency, which is facilitated by an
oil exchange, that creates huge demand for that currency and large holdings of that currency globally. This is one of
the important reasons why oil has been traded by OPEC/Saudi Arabia since the time oil was found in the Middle East
in USD and this agreement was signed by OPEC in 1973 by Henry Kissinger and Richard Nixon with Saudi Arabia.
Beijing Petroleum Exchange starts fuel oil spot trading in Nov 2012:
http://news.xinhuanet.com/english/china/2012-11/29/c_132007999.htm
http://usa.chinadaily.com.cn/business/2012-11/30/content_15974115.htm
New spot trading platform to enhance influence in Apr 2013:
http://english.people.com.cn/90778/8226692.html
http://www.cnme.net.cn:8081/ews/enNews!selectEnFrontNews?navId=17
China has been buying Iranian oil since May 2012 in CNY:
http://www.bbc.co.uk/news/business-17988142
Russia and China have already agreed since 2011 to trade in rubles and yuan instead of USD.
http://en.ria.ru/business/20110623/164798920.html
29. Renmibizing the US Dollar?
Absolutely!
According to this excellent research by DBS Bank, Singapore, which I completely agree with, China is NOT
worried about its USD bond holdings of USD 1.3 trillion but more about havoc in its CNY.
https://www.dbsvresearch.com/research/dbs/research.nsf/(vwAllDocs)/3ECB2FEEDDA57F6E48257C04000A20CE/$FILE/CH-US%20Renminbi-izing%20the%20dollar%20131014.pdf
(Please copy and paste this link)
This is the single biggest reason that China is insisting on more business persons worldwide using the CNY
instead of USD, because this further stabilizes the CNY. As we have seen earlier, CNY is being used by
almost 25 countries (and growing) in their trade with China.
Various countries want to be international centres of finance and have local CNY settlement which also
China is gradually allowing HK, Singapore, Taiwan and now London. Banks in NY and Dubai, Toronto and
Frankfurt are also allowed to let business clients hold CNY for trade purposes if the country has signed CNY
swap agreement with the Chinese Central Bank else a Chinese bank with presence in a country can facilitate
the same.
30. Hot News : Oct 15, 2013
First offshore centre outside of HK is
LONDON!
Entire countries are lining up outside China to ensure they get access to the lucrative CNY business.
On Oct 15, 2013, during a visit by the Chancellor of UK Treasury and the Mayor of London jointly, it was
announced that London will become the first offshore centre among the western countries who will be
allowed to invest in MAINLAND CHINA in various securities as well as most likely issue the first CNY bond of
the largest bank in the world – ICBC from their onshore China Head Office rather than from their offshore HK
branch. This will allow investors access to CNY while having accounts in London. The limit is only USD
13.1bn and mostly will be restricted to a select few banks whose names are yet unknown.
In return, UK will allow Chinese banks to open offices in UK with less restrictions.
http://www.euronews.com/newswires/2162016-london-to-be-next-offshore-centre-for-chinas-yuan-after-hk/
London to be next offshore centre for renminbi
http://www.ifre.com/pm-london-to-be-next-offshore-centre-for-renminbi/21113324.article
31. China : Further Reforms
In November 2013, the first Party Meeting will be held after the election of the new President Ji Xinping in
March 2013. This is expected to be a major announcement platform and shall be used to create reforms in
3 major areas for the next 5 year plan:
1. Anti-corruption Measures
2. Economic Reforms
3. Local Govt. reform to reduce their intervention powers
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20131001000065&cid=1101
‘Diamond decade’ in sight if problems tackled
http://www.globaltimes.cn/content/818218.shtml#.Ul7UGBazuIk
32. Conclusion
Based on the data provided in the slides previously, it is important to understand the various steps that China has taken over the
years and its rapid overall growth including articles from the China’s political elite proposing for change in the global financial
system. This is mainly due to political issues in US, Govt shutdown and the fact that US is no longer AAA nor a risk free country.
The strong GDP and cash reserves provide a strong backbone to the Chinese economy and this is truly reflected in the strength of
their currency, regardless of the impact of the global financial crisis worldwide.
China’s exports continue to rise, their GDP continues to add over USD 500bn per annum, their cash reserves continue to rise,
trade settlements in yuan keep rising, more countries keep getting approvals for yuan settlement and it’s global military and
economic clout keeps rising.
The currency has had no setback whatsoever since 1994 & has had an unprecedented straight line growth ever since.
China has created bond markets & equity markets for the foreign investors. Latest step being the launch of a free trade zone in
Shanghai in Oct 2013 where CNY can be traded or held without any restrictions and allowing London to become a global yuan
trading/settlement/investment centre similar to HK and Singapore.
We are still some years away from full convertibility in order to allow for free flow of money mostly outward but also inward into
China. Internationalization of any currency has to be done in baby steps so that it does not explode & fails.
http://www.swift.com/assets/swift_com/documents/about_swift/RMB_White_paper_internationalisation.pdf
Holding CNY and investing in its bonds and just the currency itself before it becomes important every single day is a must for
any portfolio, subject to the country being authorised by China to settle CNY for cash, deposits or bonds.
Selective banks only in Singapore & HK are allowed by China to hold CNY for clients & place as cash, deposits or bonds. Stocks
may be invested either via HK listed shares or via mutual funds in USD or CNY from Singapore or HK only thus far.
33. Thank You
For any questions or comments, please do not hesitate to contact:
Manoj Nathani
Principal Advisor & Founder
OAKTREE Management Consulting JLT
P. O. Box 34560, Dubai, UAE
Mobile: +971 50 5584 871
Tel: +971 4 4508 684
Email: nathanimanoj1@gmail.com
Linkedin: www.linkedin.com/in/nathanim
Skype: live:mnathani
Office 307, X-3 Tower, Cluster X, JLT, Dubai, UAE
34. Disclaimer
This report is prepared solely for knowledge purposes and does not constitute any form of investment advice
and should not be construed as an advertisement, solicitation, invitation, representation or inducement to
buy or sell securities in any jurisdiction. Readers should make their own investment decisions or seek
appropriate professional advice.