Asia Finance

Shanghai to Become Regional Hub for International Commerce

by

At Shanghai’s 23rd International Business Leaders’ Advisory Council (IBLAC), over 500 government officials were told that the city is on its way to becoming a regional base for international trade within Asia’s economy.

“It’s the beginning of an Asian century,” Maurice Greenberg, the former chairman of IBLAC, said. “Shanghai is not only the major port of entry in Asia, but also the world’s trade center- with its population, talent and business environment, it has everything necessary to become a leader, not only in Asia, but the world.”

Numerous VIPs agreed, stating that the goals would be reached by 2020. According to former U.S. secretary of commerce Carlos Gutierrez, as well as Shanghai Mayor Han Zheng, the city will undoubtedly become a world leader in business, finance, shipping and trade.

“Shanghai has transformed into a modern metropolitan city from one that was traditionally industrial and commerce-based,” said Mayor Zheng. “Looking to the future, we plan to build the city into a market with the capacity to allocate resources to the world.

“In order to do so, we must insist on building a market driven by innovation, and developed strategically.”

Asian Shares Increase as Eurozone Meetings Continue

by

Asian shares saw a dramatic increase following this weekend’s meetings in Europe, which resulted in “good progress.” According to European finance ministers, the Eurozone plans to boost its $610 billion rescue fund in an effort to draw investors and convince markets that it is indeed capable of protecting floundering countries such as Italy and Greece.

Few real details were released after the meetings, though. Investors have continued to focus on the yen, which has reached a record post-war high of 75.78 against the dollar. As a result, Japanese finance minister Jun Azumi has called for “decisive steps” to slow the currency’s dramatic rise, amid concerns that the yen will hinder the country’s export market.

Hong Kong and Shanghai both climbed this week as well, as improved manufacturing data was released from China, but Europe’s crisis does not seem to have slowed. Debates are still common as the Eurozone struggles to find a solution for the economic issue without further provoking its richer nations, such as Germany, who have placed their limit after repeatedly bailing out the region’s weaker members.

“The mood of trading is generally optimistic that Eurozone policy makers will announce significant measures on Wednesday to bolster the bailout fund and resolve Greece’s debt crisis, while also supporting the region’s banks,” explained Stan Shamu of IG Markets.

Asian Stocks Fall as World Concern Heightens

by

Asian stocks have dropped, deepening the hole of the regional benchmark index’s biggest quarterly deterioration in over two years.

Sony Corp fell 6.2% in Tokyo, reaching its lowest price in 24 years, while Toyota Motor Corp, the largest carmaker in the world, fell 2% as well. Building materials, suppliers and mining companies have also seen significant losses.

“The U.S. is not falling into recession, but it’s definitely slowing down,” said Diane Lin of Pengana Capital in Sydney. “We might face more risks, particularly in a market that hasn’t had enough of a correction.”

In Tokyo, the MSCI Asia Pacific Index fell 2.8%, hitting 109.99., just before the meeting with the EU finance ministers. Nearly seven stocks fell for each that rose in the measure, and every one of the ten industry groups weakened.

The world’s concern increases as the gauge drops more than 20%, the European debt crisis worsens and the U.S. economic growth recedes.

Japan Stalling as Yen Rises?

by

Financiers across the globe were disappointed in Japan’s move to counter the rising strength of the yen.

Early this past Wednesday, the dollar relinquished gains in comparison to the yen in Asia, increasing concerns and prompting additional measures to stem the growth. Japanese Finance Minister Yoshihiko Noda then held a press conference to discuss such measures.

The conference ended with a statement pledging a $100 billion facility dedicated to limiting the yen’s rise by encouraging mergers and acquisitions, as well as providing aid to domestic corporations in securing energy resources. The ministry will also now require currency trading reports from leading financial groups until September.

Investors around the world were unimpressed with the results of the conference, explaining that the measures would have no real impact on the situation and would not be enough to contain the increase.

“They’re hoping to get as much as they can from talk, just ramping up the threat without taking any more steps,” said Sean Callow of Westpac.

Yuji Kameoka of Daiwa Securities added that “The FX market is a global market. It is hard to contain FX movement with only these measures.”

Morgan Stanley’s Growth Estimate for Asia Drops as Inflation Increases

by

Like many other financial firms, Morgan Stanley has noted the withdrawal of international investors from stocks in Asia as the economies in the region begin to falter.

One example of this is South Korea, as the won continues to decrease in value. Morgan Stanley’s growth estimate for the nation has been lowered from 4% to 3.6%, while Deutsche Bank AG has lowered its expectations for China’s expansion as well, claiming that the economic crisis throughout the rest of the world will lessen the demand for Asian exports.

“Reported downgrades of economic forecasts reduced appetite for regional assets,” explained Lee Jin III of Hana Bank. “Stock market declines affected Asian currencies including the won.”

Finance Minister Bahk Jae Wan has confirmed that inflation issues continue to plague South Korea and that the government plans to use “all possible” measures in an effort to stabilize prices. For example, the Bank of Korea left interest rates unchanged for a second month in a row, following three major increases this year.

Yuan Strengthens, But Asian Stocks Plunge

by

For the first time in seventeen years the yuan has surpassed 6.4 per dollar, thanks to the Federal Reserve’s efforts to keep interest rates low. According to the International Monetary Fund, the stronger yuan will help governments reduce inflation and rebalance the nation’s development, as well as stabilize the global economy.

“The inflation and trade data, together with the Fed’s policy to maintain extremely low interest rates, have fueled faster appreciation,” explained Banny Lam of CCB International Securities in Hong Kong. “Strong economic growth, supported by the latest export figures, also provides investors with confidence to buy the yuan in these turbulent times.”

However, the European debt crisis has had a negative effect on the positive turns in Asia. In countries such as Japan, stocks have suffered severe losses. Mazda Motor Corp, the Japanese carmaker, is one of many companies highly dependent on Europe. Mazda has slumped 4.3 percent, while Canon Inc., Nikon Corp. and numerous others have met similar fates.

“As Europe’s debt crisis spreads, concern is mounting about damage to the financial system,” explains Mitsushige Akino at Ichiyoshi Investment Management Co. “We may slip back into a global equity slump.”