第四次全国金融工作会议今召开 三大焦点受关注

第四次全国金融工作会议今召开 三大焦点受关注

第四次全国金融工作会议今日将在北京召开。继去年的中央经济工作会议之后，各方期待这次会议能为中国经济确立更多制度化、规范化的政策。作为每隔5年 一次的中国金融界最高规格会议，"金融国资委"能否正式组建、存款保险制度以及金融体制改革能否顺利推进，成为舆论关注的焦点。

组建金融国资委再次提上议程

据了解，金融国资管理仍然是本次全国金融工作会议的焦点议题。"金融国资委"能否正式组建，成为本次会议的一大看点。

据报道，在财政部主持的组建方案中，金融国资委将以目前财政部金融司为基础，纳入汇金公司，将银监会、央行等监管部门对金融机构的行政管理权限也可能集纳于其中；同时，金融国资委为直属国务院的正部级机构。

广东金融学院代院长陆磊之前接受《21世纪经济报道》采访时就曾表示，是否成立金融国资委，争议的关键在于我国对金融资产是采取行政管制的方式还是市场化的方式进行管理。

金融国资委如能顺利成立，"一行三会"的职能定位也将进一步清晰，其目前所有的人事权等都将划拨金融国资委，央行将成为彻底的宏观调控部门，"三会"则清晰定位于监管职能。

存款保险制度有望推进

久未破局的存款保险制度，有望通过此次会议加快出台进程。

中国的存款保险制度已探讨有十年之久，由于各部委对其出台的时机和具体费率设定等核心内容的一直存在争议，存款保险制度一直处于徘徊状态。

这一制度涉及银行业金融机构的市场化退出机制，即市场化风险补偿机制，机构的倒闭由市场埋单而不再是国家财政担保，这一制度亦是《金融机构破产条例》出台的先行条件，但始终都没有明确的推出时间表。

2010年初，国务院决意加快建立存款保险制度，命央行牵头制定详细方案。按照分布走的设想，先在央行内设一个存款保险基金，而非作为实体的存款保险 公司；先临时性推出"全额保险"，将来再过渡到"限额保险"。待到未来条件成熟时，再设立完全独立的存款保险公司。存款保险机构的保险基金由各投保银行按 照存款的一定比例交纳。

随着中国式存款保险制度方案的推进，争议由存款保险是否具有监管权、放在哪个部门之下的制度设计，转变为对具体问题的担忧。监管当局深感棘手的是，像农信社这样数量众多、问题重重、尚未完成改革进程和财务重组的存款类机构，加入存款保险制度后，会不会出现后遗症。

法兴银行中国经济分析师姚炜在接受《第一财经日报》采访时表示，在取消存贷款利率管制之前，必须首先建立存款保险制度，通过促使金融机构为储户投保，以防御风险。

金融体制改革仍是焦点

国家行政学院决策咨询部副主任陈炳才接受《中国经济报》采访时表示"从每次开会的时间上看，正好都是遭遇外部重大冲击与内部重大调整关键时期。"他说，银行改革和金融监管是历届会议的讨论重点。

去年，温州等地的资金链断裂事件引发了社会对于民间信贷和小额信贷监管的关注。这在金融领域专家看来，正是目前我国金融体系建设不完善的必然后果之 一。多数机构预期，2012年中国经济外部环境将因为欧美经济陷入危机而充满不确定性。因此，应认真查找潜在风险，进一步深化金融改革，为金融业长期稳定 发展奠定坚实基础。

央行货币政策委员会委员夏斌此前接受采访时表示，金融改革现在的最大挑战，是如何在国内各种复杂的矛盾中，始终如一地坚持市场导向的原则，这是金融改革的首要原则、核心准则。

夏斌认为，当今全国金融市场的制度框架已基本形成，全国的金融市场已深度统一，市场上任何一项新的金融改革措施出台，往往会波及全国。要把握好金融改革开放中合理的节奏、次序和政策部署的衔接配合，以改革助推金融业的发展。 (中国网)

China central-bank chief on yuan, 2012 forecasts

By Hu Shuli and Zhang Jiwei

BEIJING ( Caixin Online ) — Amid global economic uncertainty, People’s Bank of China Gov. Zhou Xiaochuan is one of the world’s most talked-about central bankers.

Zhou attracts as much attention as U.S. Federal Reserve Chairman Ben Bernanke and European Central Bank President Mario Draghi because the world’s financial markets are vitally interested in China’s interest-rate trends, bank deposit reserve ratio adjustments, and yuan-dollar exchange rates.

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Zhou is a big-thinking strategist with firm ideas about financial reform. He’s also a tactician who can find opportunities for promoting reform in any situation. He harmoniously pursues realism and idealism, seeking gradual progress while pushing for financial reform.
The year 2011 was difficult and complex for China’ economy. The year 2012 will be no different. What does Zhou see ahead, and what lessons can be learned from the past year?
In an interview in December, shortly after the Chinese government set its 2012 policy goals at the annual Central Economic Work Conference in Beijing, Zhou sat down with Caixin to discuss his personal views and the central bank’s views toward inflation and monetary-policy adjustments, interest-rate control, exchange-rate reform, capital-account liberalization and the internationalization of the yuan. His comments follow:

Caixin: China’s macro-economic policies were adapted to fit changing economic situations in 2011. How do you see the economic situation in 2012 and corresponding policy options?

Caixin Online

People's Bank of China Gov. Zhou Xiaochuan

Zhou Xiaochuan: The Central Economic Work Conference clearly articulated macro-economic policy, taking into account two considerations: Efforts to prevent an economic downturn, and efforts to restrain inflation.
First, we are encountering concurrent issues in the international arena, including an evolving European debt crisis, U.S. economic uncertainty, and slowing growth in emerging economies. More importantly, the international economy is changing rapidly, and its outlook remains uncertain. Thus, we must be prepared to respond to new situations.
On the other hand, looking at China’s domestic economy, local governments will have leadership reshuffles in 2012, and the capacity for growth in the Chinese economy is still great. At the same time, the consumer-price situation has changed for the better, and the need to control inflation is not as pressing as it was in early 2011. Of course, there are still uncertain factors, such as the impact that the real-estate market will have on the national economy.
Overall, we need to plan for the worst external environment without relaxing efforts to keep prices from rising too quickly. We need to rationally manage inflationary expectations. Meanwhile, economic structural adjustment is still a difficult task. Macro-economic policy makers need to weigh all these issues.

China’s consumer price index (CPI) grew 4.2% in November, 1.3 percentage points below October’s and below market expectations. How do you view this change?

The target of 4% inflation set for full-year 2011 may have been hard to achieve. Ultimately, it was likely to be around 5%. Technically speaking, year-on-year monthly comparisons sometimes give wrong impressions. Since the global economic crisis of 2008, economic data have fluctuated significantly, making for a large base-number effect for year-on-year comparisons. The effect of the base number must be considered in all monthly year-over-year numbers.
I have always advocated the use of seasonally adjusted sequential data, which reflects CPI trends quickly. In short, inflation control has achieved some results and is moving in the right direction, but we cannot be too optimistic.
From the perspective of the domestic driving force contributing to the growth of the Chinese economy, the quality of life for Chinese people needs further improvement. There is still plenty of potential in urbanization, and there is still room for expanding the nation’s infrastructure on a large scale. These projects are all somewhat government-led.
Looking at national conditions and China’s stage of development, the domestic economy is prone to overheating. Looking internationally, CPI growth in emerging markets is generally higher than in developed countries. This is not to say that there is currently a risk of overheating, but that inflation cannot be taken lightly.

How do you assess the effects of China’s integrated use of quantitative tools and target-price-based instruments to achieve regulatory goals in 2011?

There are several aspects that require attention. First, the frequency and intensity of using quantitative tools and price controls are different. If you only look at the frequency of adjustments, it seems quantitative tools are used more often. But you need to look at the different strengths of the adjusted results that different tools accomplish.
Second, excess liquidity needs to be restrained. Only by estimating the existing liquidity situation can you judge whether a policy adjustment’s strength is appropriate. Third is the judgment of neutrality. Because of the international imbalance, there should be quantitative hedging. Only when hedging reaches a certain point is it neutral. That is, you must distinguish tightening, neutrality and loosening based on quantity.
Of course, you have to consider the mutual impact of quantitative and price-based policies. In reality, they are connected. This can be seen clearly through a study of short-term borrowing rates on the interbank market. Quantitative adjustments bring price reactions. Conversely, interest-rate adjustments bring quantitative changes in liquidity.

Since November, the Chinese financial institutions’ yuan funds outstanding for foreign exchange have continued to decrease. Has this provided a certain amount of room for choice in monetary policy?

We’ve always had a relatively wide space for setting monetary policy. The policy trade-off is mainly related to macro-control goals. For example, deciding whether to pursue higher employment or lower inflation requires repeated consideration of a balanced goal. Other future uncertainties will affect changes in policy objectives.
Of course, there will also have some constraints, and every policy choice brings some negative effects. Differing economic conditions in China’s eastern, central and western regions, and a lack of domestic and international synchronization will generate arbitrage in opportunities. As long as the arbitrage is not on a massive scale, it is a question of balancing the positive and negative effects of policy, which requires making judgment calls.

You mentioned that now is a special time (for China’s economic development). But is it also a time of reform?

Sometimes, reform’s timing is complicated. Often, difficult reforms that require strong commitments are launched when pressures are relatively great. This is what we saw with the design of exchange-rate reform in 1993 (which was implemented Jan. 1, 1994). At the time, people said exchange-rate reform required three conditions: very strong exports; adequate foreign-exchange reserves; and experience in macro-economic regulation. The situation at the time was just the opposite, but reform was still pushed forward.

Calls for market-oriented interest-rate reform have been heard frequently over the past year. How do you see the timing for further reform, and the risks?

Market-oriented reforms on interest rates are always being encouraged. Specific implementations should be introduced in an orderly fashion, and on the basis of overseas economic situations. From a sequencing perspective, the first step is, through reform, to put hard restraints on financial institutions. In this way, the competitive behavior of market players becomes more orderly, and price-liberalization issues are not too great.
From past experience, soft restraints on financial institutions’ competition behavior will always be ineffective, and there will be problems. It should be said that with joint-stock reforms and successful listings of 2010, the soft restraints and fair-competition issues of financial institutions are gradually being resolved, and conditions are there for interest-rate market reforms to advance.
When comparing international and domestic situations, domestic and foreign pressures have differed mainly since the financial crisis. China maintained a relatively high rate of growth, while some developed countries kept interest rates at zero. Advancing market reforms for interest rates at a time when there are wide gaps between interest rates will create some special problems.

The upcoming U.S. presidential election has created some pressure for yuan appreciation. On the other hand, from a market perspective, the yuan has showed a tendency to devalue. What is your opinion of this trend and any corresponding advancement for exchange-rate reform?

A lot of results have been achieved in yuan exchange-rate reform in recent years. In judging whether the exchange rate is at equilibrium, the current international comparison is mainly based on the current-account balance. From the perspective of the current-account balance, the yuan exchange rate has moved closer to the equilibrium point over the past few years.
There is a problem with lagging relations between the exchange rate and current-account balance. Exchange-rate adjustments will quickly affect decisions made by some manufacturers, such as whether to sell products internationally or domestically, or whether to procure domestically or abroad. But the deeper response involves adjusting capacity. A combination of adjustments to investing and factors of production are needed for them to adapt, and there will be a lag period, which is more obvious in China.
Changes in exchange rates cause readjustments in production capacity. For example, reallocating resources from the manufacturing industry to the service industry requires a process in order for changes to occur gradually.
China’s current-account surplus (mainly trade surplus) reached a peak in 2007 and 2008, and subsequently began to fall. The current-account surplus at the end of 2011 may have ended up, being only around 3% percent of GDP. A current-account balance inclining toward equilibrium is the result of structural and exchange-rate adjustments.
Worrying too much about exchange-rate adjustment and trade balance issues is inappropriate and useless because there is a process for resource allocation and adjustment. In reality, China has significantly developed toward equilibrium, although there will be fluctuations.
As for exchange-rate reform, the closer the yuan is to the equilibrium level, the fewer difficulties will result from reform. At the same time, as the trading band expands and controls are further reduced, reform’s difficulties will be smaller, and the conditions for yuan convertibility on the capital account will be increasingly present. In fact, exchange-rate reform has, on the whole, developed for the better, with a number of international political implications.

Is the current two-way volatility of the yuan a temporary phenomenon, or does it fundamentally indicate that the yuan exchange rate has already been overshot?

In the past, people said expectations for the yuan were one-way appreciation. Until close to the equilibrium level, it would experience two-way expectations and two-way volatility. This sort of natural, bi-directional floating state is the goal that reform has pursued. But to truly reach this state may take more time. The movement in the current foreign-exchange market is still mainly related to the external environment.
Speaking of foreign direct investment, many European and American investments in China did not bring the money back or even pay dividends in the past. Undistributed profits remained in a company’s accounts. Now, if funds are tight in a parent company’s host country, more profits (from Chinese operations) will be sent back (to the parent). Considering domestic factors recently, enthusiasm for overseas investment has rapidly increased.
In the past, many traders settled foreign trade payment in advance and made long-term purchases of foreign currency, resulting in a relatively high demand for yuan. Now, financing conditions for foreign trade are changing, and settlements are being postponed. This situation makes for periodic changes in foreign-exchange supply and demand. Of course, there are individual cases of control-evasion and using fake trading backgrounds for exchange arbitrage. For these and other reasons, the Hong Kong Non-Deliverable Forward contract has changed direction.
On the whole, these changes still have to be monitored. The most important thing is to look at economic fundamentals. Looking at the foreign-exchange market, we still need to look at whether the current account is in surplus or deficit, (and) whether the net direct investment is flowing in or out; that is, whether direct investment from foreign businesses minus China’s outgoing direct investment is positive or negative.
China’s commodity trade surplus in 2011 may have been as high as $150 billion, and total FDI is still quite large. ... Overall, the capital account and current account are still in surplus. The balance has improved significantly, but there have been no reversals for the fundamentals. Exchange-rate movements need to be monitored further.

With the exchange rate approaching to the equilibrium point, can capital-account convertibility be put on the agenda as well?

Some things still need clarification regarding capital-account convertibility. In the past, there was an argument that full convertibility was understood as the highest standard. But in reality, international organizations have not clearly defined this. Most developed countries are not 100% freely convertible; maybe they only reach an 80% or 90% level.
Second, retaining necessary oversight is not an obstacle to the realization of convertibility. An internal International Monetary Fund opinion in 2010 said that to maintain macro-economic stability, it is rational for countries to implement a certain degree of management or employ temporary management measures for a capital account, especially for unusual, short-term capital flows.
In China’s case, there are three principles to consider in the development of policy goals in the area of capital-account convertibility. First, prudent macro-economic management of private and public debt must be implemented to prevent broad mismatches of currencies.
Second, necessary oversight of cross-border financial transactions must be carried out. Currently, there are three oversight aspects that are internationally recognized and for which there is consensus: Money laundering, terrorist financing, and excessive use of tax havens must be prevented.
Third, short-term, cross-border, speculative cash flows must be properly managed.
Discounting the above factors, comparing the 40 sub-items relating to capital-account convertibility required by the IMF, one finds that, in fact, we are not far from the goal of capital-account convertibility.
There are two main difficulties. First, our concerns and worries about overseas investment by companies and residents are relatively high. This should be adjusted. The government’s main responsibility is to educate investors, letting them accumulate their own knowledge and gradually undertake their own risks.
Another control is aimed at the problem of foreign companies coming to China to raise funds. Currently, foreign institutions are permitted to issue yuan debt in China, but equity financing is still prohibited. However, the China Securities Regulatory Commission is paying efforts to study the issues, and the overall trend is to gradually liberalize. From this point of view, we are not far from capital-account convertibility.
There is another prerequisite for capital-account convertibility, which is for the yuan exchange rate to be close to the equilibrium exchange-rate level. If the difference is too great, the hole for arbitrage will be relatively deep.

How do you view relations between yuan internationalization, market-oriented reform of the capital account, and maintaining the value of foreign reserves?

It should be said that this problem is a relatively weak link in research inside every circle. In theory, an optimal sequence should be designed in advance. Not every reform can be advanced following conventional procedures.
Some currently ask: How did the yuan become internationalized before convertibility? At the same time, they say other conditions are not yet in place. Will beginning to use yuan in place of foreign currency for import payments not cause China’s foreign-exchange reserves to grow faster?
Therein lie questions about understanding foreign-exchange reserves. Some voices say higher reserves are purely bad. This idea is not comprehensive. It should be understood that the side effects of excessive reserves emerge when reserves increase too quickly, leading to a surge in funds outstanding for foreign exchange. If sterilization is inadequate, inflationary pressure will increase. Using yuan to pay for imports on the surface looks like replacing a portion of foreign-reserve payment, but some foreign-exchange reserves do not need to be sterilized.
Theoretically, reforms should first remove all unnecessary control policies and achieve capital-account convertibility, and then push for overseas settlement of the yuan. But deregulation will not necessarily lead to an international currency.
Promoting cross-border use of the yuan stems from an opportunity seen at the beginning of the financial crisis. South Korea’s capital outflows were quite conspicuous, and the country hoped to carry out a currency swap with China to increase liquidity and market confidence. But under those circumstances, if China had used U.S. dollars for the swap, it would have been unacceptable, because no one knew how the crisis would evolve. Thus, using local currency was proposed. Subsequently, more than 10 countries launched currency swaps with China, and wanted to go a step further by using yuan for trade and investment settlement.
At that time, the market confidence in the dollar had declined due to the impact of the crisis. This was a little providential. This sequence of events certainly did not conform to general rules. But if neighboring countries welcome the yuan without it being convertible, why stop it?
Of course, the basic logic is that we will have to streamline the procedure sooner or later. The sequence of what we do now may be contrary to common sense of the past, but this is not necessarily a bad thing, because it was created by opportunity. It can also force us to do things we had not done.
The internationalization of the yuan depends primarily on the degree of its acceptance by the market. First, this is affected by the progress of China’s reform and opening. With slow reform, its popularity will fall.
Second, [it is] related to the sustainability and stability of macro-economic growth. China’s macro-economy now is relatively good, but in fact we have many difficulties and challenges

BRIC Decade Ends as Growth Peaked: Goldman

Q

By Michael Patterson and Shiyin Chen - Dec 28, 2011 3:35 AM ET

    

In the past decade, mutual funds poured almost $70 billion into Brazil, Russia, India and China, stocks more than quadrupled gains in the Standard & Poor’s 500 Index and the economies grew four times faster than America’s.

Now Goldman Sachs Group Inc. (GS), which coined the term BRIC, says the best is over for the largest emerging markets.
BRIC funds recorded $15 billion of outflows this year as the MSCI BRIC Index sank 24 percent, EPFR Global data show. The gauge, which beat the S&P 500 by 390 percentage points from November 2001 through September 2010, has trailed the measure for five straight quarters, the longest stretch since Goldman Sachs forecast the countries would join the U.S. and Japan as the top economies by 2050.
“In emerging markets, we’re waiting for things to get worse before they get better,” said Michael Shaoul, the chairman of Marketfield Asset Management in New York who predicted in February that developing-nation stocks would fall this year. The $845 million Marketfield Fund (VONEMBI) has topped 97 percent of peers in 2011, data compiled by Bloomberg show.
BRIC indexes may fall another 20 percent next year, buffeted by the liquidity squeeze stemming from Europe’s sovereign debt crisis, Arjuna Mahendran, the Singapore-based head of Asia investment strategy at HSBC Private Bank, which oversees about $499 billion, said in an interview. Nations such as Indonesia, Nigeria and Turkey may overshadow the BRICS in the next five years as they expand from lower levels of growth, he said.

BRICs Slowdown

“The slowdown we’re seeing in the BRICs will continue for most of the first half,” Mahendran said. “Compared to the U.S., corporate profits haven’t been that good as companies face higher wages, higher interest rates and currency volatility, and at best, we’ll only start to see the effects of monetary policy loosening in the second half of 2012.”
Gross domestic product in the four countries rose at the slowest pace in almost two years last quarter and Goldman Sachs said this month that their potential economic growth rates have probably peaked because of a smaller supply of new workers. Even as Brazilian and Russian policy makers start to lower borrowing costs, profit growth in the MSCI index will slow to 5 percent next year from 19 percent in 2011, trailing the S&P 500 by five percentage points, according to more than 12,000 analyst estimates compiled by Bloomberg.
Average economic growth in the BRIC countries will decelerate to 6.1 percent next year from a high of 9.7 percent in 2007, according to September estimates by the International Monetary Fund. That would narrow the gap over America’s expansion to 4.3 percentage points, the smallest since 2004, the IMF data show. Global GDP may increase 4 percent next year, restrained by 1.1 percent growth in the euro area, the Washington-based fund said.

‘Meaningfully Slower’

Slowing exports to Europe and government restrictions on real-estate investment are curbing the expansion in China, the biggest emerging economy. India’s growth has been hampered by the fastest interest-rate increases since 1935 and the rupee’s decline to a record low, which fueled inflation and deterred foreign investment. Brazil and Russia, whose growth during the past decade was spurred by surging commodity demand, have been hurt by falling metals prices and the slowdown in China.
“In emerging markets across the board, all the numbers are pointing toward meaningfully slower growth” next year, Rajiv Jain, who oversees about $15 billion as a money manager at Vontobel Asset Management Inc. in New York, said in a Dec. 5 phone interview.
Jain’s emerging-market equity fund beat 98 percent of peers this year, buoyed by holdings of beverage and tobacco companies whose profits are resilient to economic slowdowns.

2011 Losses

The BSE India Sensitive Index led declines among BRIC equity gauges this year, falling 23 percent. China’s Shanghai Composite Index also dropped 23 percent, while Russia’s Micex retreated 18 percent and Brazil’s Bovespa sank 16 percent. The 21-country MSCI Emerging Markets Index (MXEF) lost 20 percent, while the S&P 500 gained 0.6 percent.
The MSCI BRIC Index slid 0.8 percent as of 8:30 a.m. inLondon and the MSCI Emerging Markets Index dipped 0.6 percent, set for the lowest close in a week. The Shanghai Composite gained 0.2 percent, the Sensex dropped 1.1 percent, while the Micex was little changed.
Egypt’s EGX30 Index (EGX30) tumbled 49 percent this year, the biggest decline in emerging markets, as political turmoil stifled tourism and deterred foreign investment following the popular uprising that ousted President Hosni Mubarak. The Philippine Stock Exchange Index posted this year’s largest gain, advancing 3.2 percent after higher consumer spending countered the global economic slowdown.

Peak Expansions

Longer-term economic growth rates in the BRIC nations are poised to drop as their working-age populations increase more slowly and then eventually shrink, according to a Goldman Sachs report on Dec. 7 titled “The BRICs 10 Years On: Halfway Through The Great Transformation.”
“We have likely seen the peak in potential growth for the BRICs as a group,” Dominic Wilson, an economist at Goldman Sachs, wrote in the report. Wilson made the New York-based firm’s first detailed long-term forecasts for the BRIC nations in 2003, two years after Jim O’Neill, then head of economic research, coined the term.
O’Neill, now chairman of Goldman Sachs’s asset-management unit, declined an interview request for this story. His latest book, “The Growth Map,” talks of “rosy prospects” for the BRICs as well as the potential of the “Next Eleven” most populous emerging economies.

Fund Flows

Goldman Sachs’s bullish outlook for the BRIC nations proved prescient as the economies expanded at an average pace of 6.6 percent during the past decade, more than four times faster than America, according to IMF data. Investors poured about $67 billion into Brazil, Russia, India, China and BRIC mutual funds from 2001 to 2010, data compiled by Cambridge, Massachusetts-based EPFR Global show.
This year’s fund outflows were the biggest on an annual basis since at least 1996, according to EPFR Global. India equity funds recorded about $4 billion of net withdrawals, while China funds lost $3.6 billion. Investors pulled $2.2 billion from Brazil, $326 million from Russia and $5.3 billion from funds that invest in all four of the BRIC countries. All emerging-market funds tracked by EPFR Global had about $47 billion of outflows, leaving assets under management at $605 billion.

Rate Cuts

Large fund outflows are a contrarian indicator because they may signal pessimistic investors have already sold, setting the stage for a trough in share prices, according to Jonathan Garner, the chief Asia and emerging-market strategist at Morgan Stanley in Hong Kong. Emerging-market funds recorded about $48 billion of outflows in the five months ended October 2008, when developing-nation stocks began a rally that sent the MSCI emerging-market index up 108 percent in 12 months.
Emerging-market stocks will probably outperform U.S. equities next year as central banks in developing countries cut interest rates to stimulate economic growth, said James Paulsen, the chief investment strategist at Wells Capital Management in Minneapolis. The MSCI emerging-markets gauge (MXBRIC) rose an average 35 percent after the BRIC nations began cutting interest rates in 2003, 2005 and 2008.
Brazil has reduced its benchmark Selic interest rate by 1.5 percentage points since August to 11 percent. China lowered banks’ reserve requirements in November for the first time since 2008, while forwards contracts in Russia and India show that traders are betting on interest-rate cuts in the next 12 months.
In the U.S., the Federal Reserve has pledged to hold interest rates near zero until at least mid-2013.

Easing Policies

“I like the emerging markets better than anything right now,” Paulsen said in a Dec. 7 interview on Bloomberg Television. “Most of these emerging-market policy officials are turning to easing policies.”
While the MSCI BRIC index has dropped to 8.4 times estimated profit from 13 times at the start of the year, valuations are still higher than they were a decade ago. The MSCI India Index trades for 15 times profit, up from 13 times in 2001, according to data compiled by MSCI Inc.
India’s price-earnings ratios have climbed to an 8 percent premium over U.S. stocks from a 63 percent discount 10 years ago, data compiled by MSCI show. The discount on Chinese shares narrowed to 35 percent from 59 percent, while it shrank to 29 percent from 76 percent in Brazil and dropped to 60 percent from 87 percent in Russia, based on MSCI indexes.

Relative Valuations

Compared to the U.S., valuations for BRIC markets don’t look cheap enough, said Ok Hye Eun, a Seoul-based fund manager at Woori Asset Management Co., which oversees the equivalent of $15 billion.
“BRIC markets won’t be an attractive destination for a while because there are still ongoing risks,” said Ok, citing the prospects of a potential collapse in China’s real estate market and the outlook for economic reforms in India. “I see more opportunities in the U.S.”
ICICI Bank Ltd. (ICICIBC), India’s biggest private lender, trades for 14 times profits, a 42 percent premium over San Francisco-based Wells Fargo & Co., even as analysts predict slower earnings growth at the Mumbai-based bank, according to data compiled by Bloomberg. ICICI Bank profits will increase 10 percent in the current fiscal year, compared with 28 percent at Wells Fargo, the biggest U.S. bank by market value, the estimates show.

Want Want, Redecard

Want Want China Holdings Ltd. (151), a Shanghai-based maker of food and beverages, is valued at 36 times profits and analysts project earnings will increase 7.7 percent this year. The Hong Kong-listed shares are twice as expensive as Northfield, Illinois-based Kraft Foods Inc., which trades for 17 times earnings and may boost profits 13 percent, analyst estimates compiled by Bloomberg show.
Redecard SA (RDCD3), Brazil’s second-biggest card-payment processor, trades for 15 times profits, versus 12 times for New York-based American Express Co. Sao Paulo-based Redecard’s earnings will probably slip 3.8 percent this year while American Express posts a 19 percent gain, analyst projections compiled by Bloomberg show.
Outflows from emerging-market funds may continue next year as economic growth and company results disappoint investors, according to John-Paul Smith, the London-based emerging-market strategist at Deutsche Bank AG. Money managers surveyed by Bank of America Corp. from Dec. 2 to Dec. 8 said their emerging-market holdings are still 23 percent higher than benchmark weightings even after they cut positions from last month.

‘Structural Weaknesses’

“There will be a lot of volatility, but as people realize the underlying structural weaknesses of the BRIC economies, you’ll see money coming out,” Deutsche Bank’s Smith said in a telephone interview on Dec. 19.
China’s economic data have trailed estimates for the past two months, based on Citigroup Inc.’s Economic Surprise Index, a gauge of how much reports are missing economist projections in Bloomberg News surveys. Chinese manufacturing contracted by the most since 2009 in November, while new home prices declined in 49 of 70 cities tracked by the government the same month.
By contrast, U.S. data is beating analyst expectations by the most in nine months, according to the country’s Citigroup surprise index. Manufacturing in America expanded at the fastest pace in five months in November, the Institute for Supply Management said. Initial jobless claims fell to the lowest level since 2008 in the week ended Dec. 10, while U.S. housing starts in November climbed the most in 19 months, government data show.
Per-share earnings in the MSCI BRIC index trailed analysts’estimates by 13 percent last quarter, according to data compiled by Bloomberg. S&P 500 profits beat projections by 4.4 percent, the data show.

Labor Supply

While Goldman Sachs still expects the BRICs to join the U.S. and Japan as the world’s biggest economies by 2050, the bank predicted this month that the four nations’ contribution to the global expansion will diminish during the next few decades. Economic growth in the BRICs may fall to about 4 percent by 2050 as working-age populations dwindle, Goldman Sachs said.
The number of people aged 15 to 64 in Russia has already started to drop, while Chinese workers may peak at around 1 billion and begin falling by 2020, according to estimates by the United Nations. Brazil’s peak may come by 2040, with India’s topping out by 2060, the New York-based United Nations said. The U.S. will keep adding workers through 2100, the forecasts show.
“In the last decade, simply recognizing that the BRICs were the story was largely enough to propel outsized investment returns,” Goldman’s Wilson wrote in this month’s outlook report. “It is much harder to accept that simply believing in their long-term growth dynamics can be a sufficient investment thesis now, if it ever was.”
To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net.
To contact the editor responsible for this story: Laura Zelenko at lzelenko@bloomberg.net

Europe Crisis Reflects Deeper Ideological Divide: Eric Fine

By Eric Fine Nov 24, 2011 7:00 PM ET3 Comments

 

The crisis gripping Europe reflects a much larger problem: The world’s policy makers have fundamentally opposing views of how to manage their currencies and economies. Unfortunately, there’s no happy solution.

Let’s examine the ideologies. In the U.S., the dominant crisis narrative is that authorities faced a once-in-a-hundred-years storm in the financial panic of 2008. The only proper response, then, was for the Federal Reserve to provide unlimited funds until confidence returned and longer-term solutions were possible. Many Americans apply this lens to Europe, and conclude that the European Central Bank must similarly print money to solve its crisis now.

Germans, together with many emerging-market policy makers, see a very different narrative. To them, the crisis is the result of governments repeatedly building up debts in response to economic slowdowns -- the same explanation U.S. authorities offered for emerging-market crises in the late 1990s. They might further note that the U.S. hasn’t used the time bought with the Fed’s largess to address underlying problems, such as the sorry state of public finances.

These poles reflect deeply held beliefs, not intellectual or moral failures, as those on opposite sides of the divide appear to think. There’s no objective truth. Nobody really knows how much debt the U.S. and the euro area, which issue the world’s two leading reserve currencies, can bear. It’s also unclear how much inflation the citizens of advanced nations will tolerate before they lose faith in their currencies. As the U.S. and Europe test new limits, we may soon find out.
Monetary Policy

Consider monetary policy. Many in the U.S. believe the Fed can expand its balance sheet indefinitely, if necessary. They rightly point out that investors pile into the haven of dollars and U.S. Treasury bonds in times of crisis, and that this revealed preference suggests the dollar’s reserve-currency status is unassailable. Given the experience of the Great Depression of the 1930s and the stagflation of the 1970s, they reasonably conclude that bank runs should be treated with limitless liquidity, and that inflation can ultimately be resolved.

Germans draw their beliefs from a darker history. Between the two world wars, central-bank financing of government deficits fueled the hyperinflation that helped bring down theWeimar Republic and set the stage for the rise of Nazism. Many emerging markets have also learned painful lessons about what can happen when central banks become perceived as primarily lenders to government and enablers of fiscal incontinence. Their response to the American line is that if the fiscal and monetary authorities don’t establish credibility, suffering a bout of austerity may be far less bad than social breakdown. Not surprisingly, the charter of Germany’s Bundesbank forbids lending to government.

Can these differences be reconciled? One seeming compromise-- which will probably be proposed if the world faces another period of systemic risk -- is to invoke a new global reserve currency, namely the International Monetary Fund’s so-called Special Drawing Rights. If the IMF had the ability to issue unlimited SDRs, it could boost the reserves of central banks at will.

Such a move, though, would probably face opposition from the German side of the ideological divide, which would view it as yet another attempt to finance profligacy with funny money.

This suggests a second option will arise: to create some global standard to which the value of individual currencies can be tethered. Central banks would guarantee their currencies’value in gold, or against a basket of commodities. People with backgrounds in emerging markets would recognize such a commodity standard as essentially identical to a currency board, in which a central bank guarantees the exchange rate of its currency against that of a reserve currency. Currency boards tend to come about when people lose confidence in the fiscal and monetary authorities, almost always as a result of permanent monetization of government debt. Sound familiar?

Cautionary Tale

For policy makers who see the SDR as an answer, the recent European experience offers a cautionary tale. The European Financial Stability Facility represents an attempt to create a new balance sheet to bail out governments. Doing so in a crisis hasn’t worked out well, as the troubles of financially weak states have infected the stronger ones. This is why China, likeGermany, is reluctant to become a backstop for Europe. Once that happens, every new “crisis” will drag them in deeper, increasing the likelihood of contagion.

In the short term, the probable outcome is a continued policy muddle. Some central banks will follow the Fed’s example and keep expanding their balance sheets, while others will try to hold the line, like the ECB. To prevent the effects of such opposing policies from leaking across borders, countries might start to employ capital controls.

If the sides ever do agree on a single new architecture, it will probably happen in one of two bad ways. Financially strong countries, such as China and Germany, may become so infected by the weaker countries that the attractiveness of printing money overwhelms ideological constraints. Alternatively, the financially weak nations might give in to demands for austerity and tough choices.

In the final analysis, either option will be painful.

(Eric Fine is a managing director at Van Eck Global. He manages accounts that have positions in the sovereign and corporate debt of various countries, including a net short position in European sovereign debt. The opinions expressed are his own.)
To contact the writer of this story: Eric Fine at EFine@vaneck.com
To contact the editor responsible for this story: Mark Whitehouse at mwhitehouse1@bloomberg.net

三大积极因素助力A股企稳回升

三大积极因素助力A股企稳回升

受欧美大跌影响早盘直接低开，蓄势震荡一个小时后，股指突然发力上攻，并强势翻红。截止收盘，沪指报2397点，上涨2.49点，涨幅0.10%。

是什么原因促使股指企稳回升的？我们认为主要有三大因素：

1、央行表态浙江6家农信银行恢复存准率16%，这意味着定向宽松政策正在逐步推进。

2、换届后IPO首发通过率明显下降，表明证监会开始整治A股弱势的根源，利好股市。

3、神秘资金逆势拉抬四大行，疑似国家队再出手。

盘中的这波异动拉升是在银行为首的权重股带领下起来的，其实近期四大行的表现明显强于股指，主要是因为随着近期的频频下跌，股指再次来到汇金大举增持的点位，这意味着汇金也将面临被套的局面，同时作为国家队也有护盘维稳的要求，所以很有可能就是它们再次出手大举买入。据监测，目前主力资金明显流入、正加速入场，使很多个股快速翻红上涨。

总的来看，目前政策面已经悄然转向，继汇金大举增持四大行、国务院力挺小微企业、财政部宣布减税后，部分地区的存准率也开始有下调松动趋势，这意味着定向宽松的政策利好正在不断酝酿，有助于A股的企稳筑底。

投资者应该注意的是，据我们详细研究，目前操作要想获利，只能买入一类股：那就是国家政策大力扶持的品种，同时像前期暴涨的文化传媒概念也是同样的原因。(广州万隆)

President Barack Obama channeled the national frustration with the economy that threatens his political standing and challenged the U.S. Congress to pass a $447 billion jobs plan tilted heavily toward the Republican prescription of tax cuts.

President Barack Obama channeled the national frustration with the economy that threatens his political standing and challenged the U.S. Congress to pass a $447 billion jobs plan tilted heavily toward the Republican prescription of tax cuts.

The president, speaking before a joint session of Congress, demanded six times that lawmakers act “right away” on a plan that would boost spending on infrastructure, stem teacher layoffs and cut in half the payroll taxes paid by workers and small business owners.

“The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy,” Obama told the lawmakers yesterday.

Job growth stalled last month and the unemployment rate has hovered at or above 9 percent for more than two years. The president’s job-approval ratings are falling to new lows as public doubts about his stewardship of the economy rise. Public opinion of Congress has dropped even lower.

Tax cuts account for more than half the dollar value of the president’s latest plan to turn the economy around, and administration officials said they believe that will have the greatest appeal to Republicans in Congress. The president dared his adversaries to oppose a provision that would extend and deepen payroll tax cuts due to expire Dec. 31.

“I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live,” he said. “Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away.”

Common Ground
House Majority Leader Eric Cantor, a Virginia Republican who has been a frequent critic of Obama, said there may be areas of common ground, such as tax reductions for small businesses.

“That’s something we Republicans have been advocating for quite some time now,” Cantor said in a Bloomberg Television interview. He also indicated Republicans may support extending the payroll tax for workers.

Still, some other Republicans were hesitant.

“I am not sure that a payroll tax holiday is really going to spur the economy,” said Representative Bill Huizenga, a Michigan Republican. He added that “a better tax break would be something that would spur along innovation and wealth generation” and creates “ancillary jobs.”

The 2012 presidential election and the political consequences of public blame for inaction on joblessness formed an undercurrent in the speech. Even as Obama warned against delay, he noted “the next election is 14 months away.” He said he would take his case for passage of the bill “to every corner of the country.”

On the Road
He speaks today in Richmond, Virginia, in Cantor’s congressional district. On Sept. 13 he’s scheduled to travel to Columbus, Ohio.

Hours before Obama addressed Congress and a national television audience, Federal Reserve Chairman Ben S. Bernanke said policy makers will discuss at their next meeting this month the tools they could use “to promote a stronger economic recovery in the context of price stability.” In a speech to economists in Minneapolis, Bernanke stopped short of signaling what he believes is the central bank’s best option to aid the economy.

Treasuries and the Standard & Poor’s 500 Index futures declined after Obama detailed his plan. Ten-year yields climbed two basis points to 1.99 percent as of 10:35 a.m. in London. S&P 500 futures fell 0.3 percent.

Covering the Cost
Obama stressed that he would pay for the entire jobs package with offsetting spending cuts and increases in tax revenue over the next decade. He said he would announce the offsets by Sept. 19.

Obama didn’t mention the total cost in his televised address. Nor did he utter the word “stimulus,” though Republican lawmakers were quick to draw comparisons with the $825 billion spending and tax-cut program of 2009 that has become unpopular with voters.

Representative Kevin McCarthy of California, the third- ranking Republican in the House, dubbed the new plan “Stimulus 2.0.”

The package includes spending favored by Democratic constituencies. It would include a $105 billion infrastructure proposal for school modernization, transportation projects and rehabilitation of vacant properties. Most of the economic impact from the infrastructure spending would be next year though some of it would come in 2013, according to an administration official, who briefed reporters on condition of anonymity.

‘Make a Difference’
“Ultimately, our recovery will be driven not by Washington, but by our businesses and workers,” the president said. “But we can help. We can make a difference.”

The administration estimated that $35 billion it’s seeking in direct aid to state and local governments to stem layoffs of educators and emergency personnel would save the jobs of 280,000 teachers, according to a White House fact sheet.

The centerpiece of the plan is the cuts in payroll taxes, which cover the first $106,800 in earnings and are evenly split between employers and employees. Obama would reduce the portion paid by workers next year to 3.1 percent from 6.2 percent. The rate had been cut 2 percentage points under the terms of a tax deal reached last year, and that reduction is set to expire Dec. 31.

The White House also would use temporary payroll tax reductions next year to offer incentives for new hiring and assist small businesses.

Helping Smaller Firms
Businesses would get the same 3.1-point reduction on taxes they pay on the first $5 million of their payroll, a limit that skews the benefit toward smaller firms. The full 6.2 percent employer contribution would be waived on the first $50 million net increase in a company’s payroll.

The proposal includes additional tax credits for hiring veterans and workers who have been unemployed more than six months. The administration also wants to make it illegal for employers to discriminate against applicants who are unemployed.

The fiscal boost from the jobs package next year would be larger than in the first year of the 2009 economic stimulus, said Mark Zandi, chief economist at Moody’s Analytics Inc.

Zandi, who was briefed on the plan before the president’s speech, forecast that passage of the entire jobs package would add 2 percentage points to economic growth next year and bring down the unemployment rate by 1 percentage point compared with current policy, under which a temporary payroll tax cut and extended unemployment benefits both expire Dec. 31.

Long-Term Unemployed
In a step aimed at the long-term jobless, Obama proposed granting states authority to pay unemployment benefits to people who have been out of work for more than six months while they train for jobs at businesses at no cost to the employer for up to eight weeks.

States also would be able to use unemployment-insurance funds to make up for wages lost by workers whose hours were cut back in lieu of a layoff and for those 50 and older who took a lower-paying job after a layoff.

The White House wants to incorporate the changes in the unemployment-insurance program along with a one-year continuation of extended unemployment benefits. The extended benefits cover jobless workers for up to 99 weeks.

The administration considered and rejected a temporary repatriation holiday that would allow companies to return overseas profits without paying corporate income taxes on the proceeds. The White House concluded that it wouldn’t have as great an impact on job growth as the new hiring incentives, the administration official said.

The official said the small businesses targeted by the tax incentives confront credit constraints and often have sustained declines in the value of the collateral they can use.

To contact the reporter on this story: Mike Dorning in Washington D.C. at mdorning@bloomberg.net

Norway buffs armor as currency wars open new front

Norway buffs armor as currency wars open new front

September 8, 2011, 1:26 PM.Central bank alarms are ringing in Scandinavia now that currency traders must roam further north to find a safe-haven alternative to the Swiss franc USDCHF.

Norway’s krone rose 2% against the euro Tuesday, its biggest jump since Jan. 2009, after the Swiss National Bank said it would prevent its currency from rallying over a certain level against the euro — sending some investors seeking a safe-haven in the krone and Swedish krona. The Norwegian krone USDNOK has gained about 1% against the U.S. dollar since the SNB move. Read more on Swiss move.

But the Norwegian central bank appears ready to step in to make the krone less attractive.

On Thursday, Norges Bank Governor Oystein Olsen directly addressed the krone’s jump after the SNB move, and warned:

A krone that is too strong can over time result in inflation that is too low and growth that is too weak. In that case, monetary policy measures will be taken. In Norway, the key policy rate is the relevant instrument.

After the speech, Citi currency analyst Greg Anderson said that “the pertinent issue for FX markets is the amount of appreciation that Norwegian authorities will tolerate before beginning to interfere as the Swiss ultimately chose to do.” Citigroup economists think there’s now a strong possibility of a Norwegian rate cut at the central bank’s Sept. 21 policy meeting if the krone keeps rising.



But the Norwegian central bank, which in 2009 became the first major European institution to hike interest rates since the credit crunch, has a little more wiggle room than its Swiss counterparts did. In Norway, benchmark interest rates are at 2.25%. In Switzerland, where central bank authorities failed to stave off the Swiss franc’s rise with more conventional currency interventions before Tuesday’s vow to buy unlimited quantities of euros, rates are near 0%. But Norway may not be able to hold out for long.

“Like the SNB, the Norges Bank may eventually arrive at a point where intervention is necessary,” wrote Anderson in emailed comments. “In fact, given the Swiss experience and the way markets learn, the evolution to that point may be relatively rapid.”