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28 February 2013
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  Top Stories 
  • EU leaders warn Italy to stick with austerity
    EU leaders pressured Italian political parties to find a way to form a government that will make tough choices to bring spending and borrowing under control, warning that turning away from austerity isn't an option. European Council President Herman Van Rompuy warned that market confidence in the eurozone will be undercut if Italy abandons economic reform and budget discipline. Bloomberg (26 Feb.), National Public Radio/The Associated Press (27 Feb.) LinkedInFacebookTwitterEmail this Story
  • Iran is upbeat about nuclear talks
    Iran's chief negotiator in talks with representatives from the U.S., Britain, France, China, Russia and Germany about its nuclear program was optimistic about progress made. Saeed Jalili, secretary of Iran's Supreme National Security Council, said proposals were "more realistic" than before. He said some suggestions from the "P5+1" group were based on ideas Iran offered at an earlier meeting in Russia. Islamic Republic News Agency (Iran) (27 Feb.), Ha'aretz (Tel Aviv, Israel) (27 Feb.), BBC (27 Feb.) LinkedInFacebookTwitterEmail this Story
  • OECD encourages investors to scrutinize sovereign ratings
    The Organization for Economic Cooperation and Development says investors should take a close look at sovereign credit ratings. "Since the track-record of 'sovereign-risk pricing' is not very impressive, suggested market measures of this risk (including ratings) should be treated with great caution," according to an OECD report. "Downgrades and their implications for the supply of 'safe sovereign assets' should not be taken at face value but more carefully scrutinized." Bloomberg (27 Feb.) LinkedInFacebookTwitterEmail this Story
  • Senate confirms Lew as Treasury secretary
    Twenty Republican senators joined Democrats in confirming Jack Lew as U.S. Treasury secretary. The 71-26 vote came despite some concerns about Lew's experience in the private sector. Lew said his priorities will be reducing expenses of entitlement programs, revamping individual and corporate tax codes and encouraging China to shift to an exchange rate determined by the market. Bloomberg (28 Feb.), The Wall Street Journal (27 Feb.) LinkedInFacebookTwitterEmail this Story
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  Reader Survey 
  • Xi Jinping and others in China's new leadership team highlighted several policy goals in the 18th party congress in November. These likely will be ratified in next week's National People's Congress. In your view, which of the following policy goals is the most important?
    Fighting corruption, eliminating bureaucracy and encouraging government officials to conduct themselves honorably  47.52%
    Lowering the GDP share of infrastructure, investment spending and net exports, while increasing consumption  21.76%
    Reforming the capital markets as well as liberalizing the renminbi and interest rates  20.16%
    Improving social fairness and income equality within the "scientific development" framework  10.56%
  • Poll analysis: 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 47% of 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 goals of "lowering the GDP share of infrastructure, investment spending and net exports, while increasing consumption" and "reforming the capital markets as well as liberalizing the renminbi and interest rates" received about equal votes -- 22% and 21%, respectively. Although the goal of social stability appears to be a key concern of China's central government, only 11% 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 Asia-Pacific edition of the Financial NewsBrief are remarkably similar. -- Samuel Lum, Director, Private Wealth & Capital Markets, CFA Institute LinkedInFacebookTwitterEmail this Story
  Market Activity 
  • Asian-Pacific markets rise after Bernanke's bond-buying statement
    Most Asian-Pacific markets rose Thursday as investors took comfort in assurances by Federal Reserve Chairman Ben Bernanke that the central bank's bond-buying program won't be significantly reduced in the near future. Japan's Nikkei 225 jumped 2.7%. South Korea's Kospi gained 1.1%. Australia's S&P/ASX 200 added 1.3%. Hong Kong's Hang Seng Index rose 2%. China's Shanghai Composite moved up 2.3%. Bucking the trend, India's Sensex was down 1.5%. MarketWatch (28 Feb.), The Economic Times (India) (06 Mar.) LinkedInFacebookTwitterEmail this Story
  • Italy's borrowing cost rises less than expected
    Italy's inconclusive general election, which raised the possibility of political paralysis, pushed up the cost of borrowing less than many market experts expected. Italy sold $5.2 billion of 10-year bonds yielding 4.83%, up from the 4.17% it got on 10-year bonds sold in January. MarketWatch (27 Feb.) LinkedInFacebookTwitterEmail this Story
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  • Analysis: Farmland boom could turn into bust
    Soaring commodity prices have produced equally impressive prices for U.S. farmland, but experts warn that a farmland bust might follow, repeating a boom-and-bust cycle of the 1970s, according to The Economist. Kansas State University research says the average farm debt-to-asset ratio was higher in 2010 than in 1979. "If commodity prices take a dive downwards, the future for some farmers will be far less golden," the magazine notes. The Economist (tiered subscription model) (23 Feb.) LinkedInFacebookTwitterEmail this Story
  • Regulators might delay Volcker rule further
    U.S. regulators are hammering out details of the Volcker rule, but they are finding it difficult to reach agreement. The logjam likely will lead to postponement of the rule, sources say. Meanwhile, Occupy the SEC has called on a federal court to order regulators to finalize the Volcker rule. Reuters (27 Feb.), The Wall Street Journal (27 Feb.) LinkedInFacebookTwitterEmail this Story
  • German parliamentary panel passes HFT legislation
    A parliamentary committee in Germany has approved a bill that would require firms that use high-frequency trading to register with regulators. "We have passed important legislation on high-frequency trading, closing a gap in a previously unregulated area of the financial market," committee member Ralph Brinkhaus wrote in an e-mail. "This brings us another step closer to fulfilling our goal from the coalition agreement to leave no financial product, no financial actor, and no financial market unregulated." Bloomberg Businessweek (27 Feb.) LinkedInFacebookTwitterEmail this Story
  • Libor manipulation was impossible to notice, Turner says
    U.K. Financial Services Authority Chairman Adair Turner told a parliamentary commission that manipulation of the London Interbank Offered Rate was impossible to detect. "We could not have got at it by intensive supervision," he said. "You just cannot have a police force big enough to spot all these problems." Reuters (27 Feb.) LinkedInFacebookTwitterEmail this Story
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