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March 1, 2013
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  Top Stories 
  • U.S. revises 4th-quarter GDP to 0.1% gain; jobless benefit claims fall
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    As expected, revised government figures showed the U.S. economy did not contract but rather grew in the fourth quarter, although the minuscule 0.1% expansion was disappointingly low. Meanwhile, the Labor Department reported that initial claims for jobless benefits fell by 22,000 last week, beating projections and adding to recent signs of economic recovery. Reuters (2/28) LinkedInFacebookTwitterEmail this Story

  • India unveils budget that tries to strike a balance
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    India's new budget attempts to strike a balance between new spending on social sectors and defense and the need to be fiscally prudent by scaling back subsidies and raising taxes on upper incomes. "I am confident that, when I ask the relatively prosperous to bear a small burden for one year, just one year, they will do so cheerfully," Finance Minister P. Chidambaram said of the new budget, which boosts overall spending 16%. Meanwhile, the government's chief economic adviser, C. Rangarajan, predicted the budget will help India achieve 6.5% growth in the new fiscal year. The Wall Street Journal (2/28) , The Economic Times (India)/Press Trust of India (2/28) LinkedInFacebookTwitterEmail this Story

  • India's growth rate disappoints in latest quarter
    India's economy turned in a markedly poorer performance than expected in the October-December quarter, with growth of just 4.5% from a year before. The figure was down from 5.3% year-on-year growth in the previous quarter and indicated quick recovery is unlikely as the country continues to struggle with high inflation. The Wall Street Journal (2/28) LinkedInFacebookTwitterEmail this Story
  • European democracy may imperil austerity agenda
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    European recovery prospects that were dim before Italy's elections this week have only darkened further after the indecisive outcome. That result, elevating populist Beppe Grillo against discredited establishment parties, may also point to eventual gains for others like Grillo across Europe. "If the Italy situation goes on for several months, it will begin to put back the European recovery," commented Richard Barwell, senior European economist at Royal Bank of Scotland Group. Bloomberg (2/28) LinkedInFacebookTwitterEmail this Story

  Reader Survey 
  • Mr. Xi Jinping and others in China's new leadership team highlighted several policy goals in the 18th party congress last November. These are likely to be ratified in next week's National People's Congress. In your view, which of the following policy goals below is the most important?
    Fighting corruption, eliminating bureaucracy and encouraging government officials to conduct themselves honorably  48.24%
    Lowering the GDP share of infrastructure, investment spending and net exports, while increasing consumption  25.88%
    Reforming the capital markets as well as liberalizing the renminbi and interest rates  18.82%
    Improving social fairness and income equality within the "scientific development" framework  7.06%
  • Our most recent poll asked respondents to prioritize the policy goals that came out of last November's 18th National Congress, which are likely to be ratified at next week's National People's Congress. Some 48% of the respondents rated the policy goal of "fighting corruption, eliminating bureaucracy and encouraging government officials to conduct themselves honorably" as the most important. This response appears consistent with the efforts of the new leadership in China, which organized work group meetings on these topics soon after the 18th National Congress. The seasoned and respected vice premier Wang Qishan (王岐山) was appointed Secretary of the Central Commission for Discipline Inspection as well as a member of the Politburo Standing Committee to focus on dealing with corruption. Indeed, there appears to be renewed vigor in the discussion of "sunshine laws" since the 18th National Congress, and trial programs for asset disclosure by government officials are being implemented in select districts in Guangdong and other areas. Mr. Xi Jinping was quoted in January using the metaphor "tigers and flies are to be attacked at the same time (苍蝇老虎一起打)" to stress that corruption, whether on a large or small scale, will not be tolerated. The policy goal of "lowering the GDP share of infrastructure, investment spending and net exports, while increasing consumption" got slightly more votes than "reforming the capital markets as well as liberalizing the renminbi and interest rates" -- 26% and 19%, respectively. Although the goal of social stability appears to be a key concern of China's central government, only 7% of respondents thought that "improving social fairness and income equality within the 'scientific development' framework" was the most important policy goal. The poll results from the global edition of the Financial NewsBrief are remarkably similar. Samuel Lum, Director, Private Wealth & Capital Markets, CFA Institute
  Market Activities 
    European investors were cheered Thursday amid prospects of further stimulus by the European Central Bank and indications that a coalition government may come together in Italy, with the Stoxx Europe 600 rising 0.96% to 289.94. In the U.S., the market took a breather after two days of strong gains as the S&P 500 edged down 0.09% to 1,514.68. Here is a continually updated list of global stock indices. The Wall Street Journal (3/1) , Bloomberg (2/28) , CNNMoney (2/28) LinkedInFacebookTwitterEmail this Story
  • Asian shares climb on positive signs from abroad
    Cuing off further strong signals from the U.S. Federal Reserve over its bond buying program and relief at signs that Italy's indecisive election result hadn't yet undermined the eurozone, shares rose strongly Thursday across Asia. The Nikkei jumped 2.71% to 11,559.36, the Hang Seng rose 1.96% to 23,020.27, the Kospi added 1.12% to 2,026.49 and the ASX climbed 1.34% to 5,104.10. MarketWatch (2/28) LinkedInFacebookTwitterEmail this Story
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  Economic Trends & Outlook 
  • Analysts see warning signs in China's economy
    Much of the surge in borrowing across China is going toward repaying debts rather than other purposes that would generate revenue, signaling that the nation's economy is losing efficiency, analysts say. "We can see that the ratio of money to gross domestic product has been increasing, which means the economy needs increasing capital to promote than previously. ... Accumulation of debts is pushing up the leverage ratio among companies, with the whole economy more difficult to shore up," said Liu Yuhui, director of the financial lab at the Chinese Academy of Social Sciences, a government think tank. China Daily (Beijing) (2/28) LinkedInFacebookTwitterEmail this Story

  • Better Australian home, business numbers dim rate-cut prospects
    Prospects for a March rate cut by Australia's central bank receded with a rise in new-home sales and an optimistic forecast for private new capital expenditure in 2013-14. In particular, the bank is likely to key on mining investment, which now doesn't appear set to reach a peak until later in the year. "Overall, this report is not a trigger for a March rate cut," said TD Securities strategist Alvin Pontoh. The Sydney Morning Herald (Australia)/Reuters (2/28) LinkedInFacebookTwitterEmail this Story
  Capital Markets & Financial Products 
  • Investors turn bullish on China over urban push
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    With official policies aimed at expanding China's urban population in a bid to accelerate growth, money managers are betting in that direction as well. Chinese equities are climbing back from a sell-off in 2012, and investors in emerging markets are now bullish on China, with an urban emphasis that takes into account the potential for property companies and others that could benefit from a renewed government push. The Wall Street Journal (2/27) LinkedInFacebookTwitterEmail this Story

  Industry & Regulatory Update 
  • SSARIS shuts down Japan fund of hedge funds
    With assets dwindling, SSARIS has closed its Japan fund of hedge funds, one of a range of such funds offered by the alternatives affiliate of State Street Global Advisors. The move comes after Japanese hedge funds on average returned 6% last year, about half the rate for Asian funds outside Japan. (2/28) LinkedInFacebookTwitterEmail this Story
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