30 Dec 2011: WEEKLY REVIEW + Chinese Manufacturing dips

FTSE 100 5553 Down 23bp
S&P 500 1263 Up 107bp
NIFTY 50 India 4624 Down 47bp

My weekly 2 cents:

  • Economic: Successful Italian bond auctions have seen mood improve slightly in the Eurozone, while German, French and Italian leaders are confident that they will be able to implement austerity measures to a successful degree in Italy for it to be steered out of a financial meltdown. However, having said that, the Italian Fundamentals do not justify the size of its rescue package, and Italy will have to regain its competitiveness to be able to regain financial stability through liberalisation of its service industry and labour markets. On the positive side, Italy is now in a much more comfortable position as compared to Spain or Greece, which should significantly lower its borrowing costs in the near future. Moving towards Asia, Japan’s stable currency has led to increase in its demand in this risk-averse environment, thereby pushing up its value compared to all its peers. But this has also had a negative effect of reducing the value of Japanese exports, and some companies might have to cut down on the jobs. China’s indices have been down this year, and its manufacturing output/demand has also reduced in this last quarter mainly because of its tight monetary and fiscal policies and a dip in inflation, but the Govt is now trying to relax financial regulations to regain ground from this slump.
  • Markets: Markets continue to be unpredictable for now, but the last week has seen a major rise in Japanese markets, and also European indices, owing mainly to some positivity in the Eurozone. Even though Dollar has gotten stronger of late, the Chinese Remnibi and the Japanese Yen have outperformed the USD over recent times, while Pound and Euro are still slightly volatile.
  • Corporate: Toyota’s sales have shown a major drop this year due to the natural disasters in Japan, but they are all set to recover as the leading automobile producers in the year to follow. BNP looks to wind up its retail business in Russia, and has positioned itself for a slowdown in Debt markets for 2012. Samsung and Sony’s joint venture of LCD production (under the name JVC) will come to an end, as Samsung will buy Sony’s entire stake in the company. France telecom looks to fund its Asian/African ventures by selling off its entire business in Switzerland (Orange-Switzerland) to Apax


Major Stories

  • Chinese manufacturing falls for second consecutive month
    • Chinese manufacturing activity declined for the second running month in December, but ‘has shown signs of stabilisation’
    • Due to the falling inflation and slowing growth, China have been forced to relax its tight monetary policies such as the trimming the banks’ minimum reserves to lower levels
    • Shanghai Composite Index is down 22% this year, and at its lowest since 2009
  • ‘Italy back from brink’: Monti
    • Italian PM, Monti says Italy is back from the brink
    • Italian Govt’s next focus would be a package of measures to regain competitiveness by economic liberalisation in the labour market
    • Monti also claims that Italy is in a much better position than Spain in terms of future financial outlook
  • Credit Agricole and BNP suffer sliding bond sales
    • Credit Agricole and BNP Paribas, top arrangers of Corporate French bonds this year are positioned for a slowdown for 2012
    • They have raised the lowest debt this year since 2007
    • BNP’s DCM head explains this has happened due to higher volatility in the market, and ‘nervous market conditions’
  • UK home prices show first drop after four months
    • Average home price drops 0.2% for the first time since Sept 2011
    • This trend may continue into 2012

3 thoughts on “30 Dec 2011: WEEKLY REVIEW + Chinese Manufacturing dips

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