Tag Archives: China

India`s Prime Minister Narendra Modi is doing something right and they can surpass China very soon

Theresa May is negotiating with the European Union and investors are concerned about a hard landing on these Brexit deals. It`s difficult to know exactly the outcome of the Brexit deal but what we do know is that the British economy grew 1,7% YoY in the second quarter of 2017.

Not so much compared to Chinas 6,9% growth, which is the best G20 country followed by India at 5,7%. Britains economy fell from 2,0% to 1,7% and that is the opposite direction of India`s growth. Can India grow by a greater margin than China this year?

 

 

According to IMF, Indias economy will grow by a greater margin than China in 2017. Not only that. Indias innovation growth rate is expected to rise significantly over the next 15 years, placing it ahead of Russia and close to surpassing China, according to a new report.

China is the leading nation in terms of innovation among BRICS countries, but India`s Prime Minister Narendra Modi must be doing something right. India is set to see a surge in innovation and could surpass China by the end of the next decade.

According to Chinas Science Technology Exchange Center, Indias innovation growth rate is expected to rise significantly over the next 15 years, placing it ahead of Russia.

India`s economy is expected to grow by 7,2% in 2017, according to IMF. A new study highlights the growth that can be expected in intellectual advances, such as science and technology, which are often perceived as indicators of future growth.

It`s BRICS Innovation Competitiveness Report 2017 predicted that the innovation competitiveness of India would see a significant rise with its growth rate probably surpassing China between 2025 – 2030.

What is India`s Prime Minister Narendra Modi actually doing right? He has been taking notable steps forward in innovation, supported by a reform agenda.

Government schemes such as Digital India, which expands the countrys online infrastructure, and StartUp India, which promotes financial backing for entrepreneurs, have been unveiled to boost the countrys innovation and technology sectors.

India`s growing information technology and scientific expertise have also helped turn it into an increasingly dominant outsourcing hub.

So far, China is still the leader in terms of innovation competitiveness among BRICS nations, followed by Russia, South Africa, Brazil and India.

Europe is struggling to follow. Ireland is the best country with its 6,10% growth, followed by Romania with 5,9% growth and Estonia with 5,7% growth YoY.

At the bottom in Europe we find Norway with only 0,20% growth, Macedonia by its 0% and at the very bottom Liechtenstein with negative -1,9% growth.

Monaco, Liechtenstein and Luxemburg are the richest countries in the world measured by GDP per capita.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Advertisements

Leave a comment

Filed under Emerging markets

Are China and the United States dependent on each other?

Both China and the United States should be happy with a strong dollar and a weak RMB or Yuan. Americans are happy because they can buy cheap products from China right now. Chinese people should also be happy because they are a export-driven economy.

This is the opposite of what the U.S stands for. The United States are not a export-driven economy, so the business relationship is profitable for them both. But what will happen if a conflict between those two destroy this business relationship?

 

trading

 

First of all; the exporters in China sell goods to the U.S and receive U.S dollars in return. But that is a problem for China in the long run because of an increasing imbalance between U.S dollars and Yuan. China need to do something.

When China sell goods to the U.S, they receive too much U.S dollars, so they must sell their dollars through exports to get RMB because their workers want to get paid with Renminbi, and that again will increase the USD supply and raise the demand for RMB.

PBOC (People`s Bank of China) carried out active interventions to prevent this imbalance between the U.S dollar and Yuan. PBOC buys the available excess U.S dollars from their own exporters and gives them the required Yuan.

They can print as much as they want but their intervention creates a scarcity of U.S dollars which keeps the USD rates higher. China hence accumulates USD as forex reserves. So, what is really going on between them?

Normally, a country in international trading will get paid in their own currency. If your country buy products more than they sell, the mechanism of those two currencies is self-correcting. People sending you goods will get paid in your own currency, which means the supply of your currency will increase.

The value of your currency will depreciate in value against other currencies, and if you sell more than you sell, you can start exporting more and import less to come back in balance again. This is how it is self-correcting with no intervention from any authority, but the U.S and China business is different.

We know that China do everything they can to keep their own currency low. This is how they are competitive in the international market. If the RMB appreciates, China`s export business will be hit and their unemployment will increase.

Therefore, China requires RMB in order to continue to have a lower currency than the USD, and thus offer cheaper prices. If they stops interfering in the previously described manner, the RMB would self-correct and appreciate in value. That is not China`s strategy.

So why doesnt other countries do the same? Its not so easy. The biggest challenge is that this strategy leads to high inflation. But China are able to control that. They have a tight, state-dominated control on its economy and is able to manage inflation through other measures like subsidies and price controls.

China can withstand any political pressure from other importing nations, which is not feasible in the case of other countries. In the 1980s, Japan had to give in to the U.Ss demands when it tried to curb JPY rates against the USD, so China is a strong nation.

4 trillion dollars of U.S reserves is what China have had since 2014, and they have found the U.S treasury securities to offer the safest investment destination for Chinese forex reserves. China also have a lot of Euro, and they need to invest such huge stockpiles to earn at least the risk-free rate.

Forex reserve money is not money you can gamble away in risky stocks. Real estate and other countries treasuries are also too risky, compared to U.S debt.

The huge U.S deficit trade with China gives China a reason to continue to buy treasury securities. The gigantic size of the monthly deficit is around $30 billion, so treasuries are among the best available option for China.

Buying U.S treasuries enhances China`s money supply and creditworthiness. Selling or swapping such treasuries would reverse these advantages.

U.S debt offers the safest heaven for Chinese forex reserves, which effectively means that China offers loans to the U.S so that the U.S can keep buyng goods China produces.

The more surplus China have with the U.S, the more U.S dollar and U.S debt the want.

What China is really doing is to loan to the U.S (purchase US debt) and that again enable the U.S to buy Chinese products, which is a win-win situation. Both benefit and are locked in a state of inter-dependency, and a conflict between them is a huge lose-lose strategy.

Some people are worried about China`s surplus with the U.S and what will happen if they are dumping its U.S forex reserves? We know what happened with GBP during the World War II. Other countries sold GBP reserves and UK faced a currency crisis.

Its economy deteriorated due to the excess supply of its currency, leading to high interest rates. This will not happen if China start to dump USD because the U.S reserves will either return back to the U.S or end up in other nations.

Not only that. It will be worse for China. An excess supply of U.S dollars would lead to a decline in USD rates, which in return will make RMB valuations higher. That will lead to more expensive products from China, and make them lose their competitiveness.

China won`t do that.

If they do, the U.S can start to print money which will reduce the value of the USD and increase inflation, and that will work in favor of U.S debt. That will be good for the U.S but very bad for the creditor China.

 

wall

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

 

Leave a comment

Filed under Politics

China goes down and Africa up

Chinas GDP is still high, but its falling and it can go below 4%. The Chinese economy grew an annual 6,8 percent in the fourth quarter of 2015 which is the weakest since first quarter of 2009. For the full year of 2015, GDP expanded by 6,9 percent which is the weakest growth in 25 years.

China`s GDP annual growth rate came in at 3,80 percent in the fourth quarter of 1990, and peaked at an all-time high of 15,40 percent in the first quarter of 1993. GDP annual growth rate in China averaged 9,88 percent from 1989 until 2015.

 

China

 

Consumer prices in China rose 2,3 percent YoY in February of 2016 which is up from 1,8 percent in January. This is the highest inflation rate since July 2014. Inflation rate in China reached a record low of -2,20 percent in April of 1999, and an all-time high of 28,40 percent in February of 1989. Inflation rate in China averaged 5,51 percent from 1986 until 2016.

The most important components of the CPI basket in China, are Food with a 31,8 percent of total weight and Residence at 17,2 percent. Consumer prices rose 2,3 percent in February this year and that is the highest inflation rate since July 2014, as politically sensitive food prices surged 7,3 percent over the Lunar New Year holiday and cold weather.

Africa is another growth story. A quick look at the chart tell us a new fx bull market is imminent. Rand looks great vs pound.

 

Kenya

 

South Sudan is the youngest nation in the world and they are officially recognised as a country in July 2011. Despite taking about 75 percent of old Sudan`s oil reserves, it is one of the poorest regions in Africa and government revenues are still dependent of foreign aid.

They had massive growth in 2014. South Sudan expanded 15,90 percent in 2014 which is an all-time high, but it`s a young nation and keep in mind that they reached a record low of -46,10 percent in 2012.

Kenya has been experiencing steady growth for some years now. The World Bank predicted a growth rate of 6,6 percent in 2016 and 7 percent next year. How are they doing it? The growth comes from massive investments in infrastructure and jobs, and they are taking steps to improve the business climate, and a boost in exports.

This can be risky.

The threat of terrorist attacks from Al-Shabaab cause security concerns. Kenyas tourism industry is one of the countrys key sectors and Al-Shabaab has a negative impact on that industry. Their manufacturing sector has also been stagnant for some years. In addition, there is a lack of competition and minimal production.

Kenya is still highly dependent on agriculture and the sector made a significant 26 percent of the countrys GDP annually, and another 25 percent indirectly. The sector accounts for 65 percent of Kenyas total export.

Manufacturing is also important for Kenya`s growth. Investment opportunities include manufacturing of fertilizer, agro-processing, machine tools and machinery, garments, and engineering products for both domestic and export markets.

 

sb-wall5

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

1 Comment

Filed under Emerging markets

The World`s biggest oil producer

The United States has surpassed Saudi Arabia as the world`s biggest oil producer in 2014. The oil shale revolution has started to change the economy as the U.S produced 90% of the energy it consumed last year.

India has recorded the highest growth in energy consumption among major economies.

BP said the U.S shale revolution helped it overtake Saudi Arabia as the world`s biggest oil producer and surpass Russia as the world`s largest producer of oil and gas.

 

crude-oil

 

On the other hand, Chinese growth in consumption slowed to its lowest level since 1998 as the economy rebalance away from energy intensive sectors, though China remained the world`s largest growth market for energy.
The United States produced 15,9 percent more oil in 2014 at 11,6 million barrels of oil per day to topple Saudi Arabia`s 11,5 million bpd production, according to BP Plc`s Statistical Review of World Energy released today.
Russia was placed third with 10,8 million bpd oil production.
The United States surpassed Russia as the world`s largest producer of oil and gas, and they produced 1,250,4 million tons of oil and oil equivalent natural gas last year. This compared with Russia`s 1,062 million tons of oil equivalent. According to BP, world primary energy consumption slowed markedly, with growth of just 0,9 percent last year, a lower rate than at any time since the late 1990`s.
BP Group Chief Executive Bob Dudley said: “The eerie calm that had characterised energy markets in the few years prior to 2014 came to an abrupt end last year. However, we should not be surprised or alarmed.”
“These events may well come to be viewed as symptomatic of a broader shifting of the tectonic plates that make up the energy landscape, with significant developments in both the supply of energy and its demand. Our task as an industry is to meet today’s challenges while continuing to invest to meet tomorrow`s demand, safely and sustainably,» he added.

 

It seems like Saudi Arabia has a new strategy. They are pumping more oil despite weak oil prices, and their acute pressure to cut production is off. The heavyweight of OPEC is less concerned about the price of crude oil, and more concerned about delivering fuel to its growing economy.

Kuwait and the United Arab Emirates are also drilling at record rates, while Iraq is shrugging off widespread civil conflict to increase production. Even Iran is preparing plans to develop more oil fields. The surging output has taken much of the mystery out of what the delegates of the 12 OPEC countries will do when they assemble in Vienna this week to set production levels for the next six months.

The oil prices is stable at around $60 a barrel, and OPEC has already pushed the cartel`s output 3 percent above the current target, and production appears to be heading even higher. Saudi Arabia was the primary force that made OPEC the swing producer in global markets, for decades.

«Is Saudi Arabia still willing to play the swing producer and juggle the whole domestic economy, refineries, power plants, desalination, petrochemicals, just to meet the expectations of either OPEC or no-OPEC producers? The answer is no, obviously not,» said Sadad Ibrahim al-Husseini, a former executive vice president for Saudi Aramco, the state oil company.

After Saudi Arabia`s production peaked in 1980, it cut supplies later in the decade and again in the 90`s to top up prices. The Saudis followed the same playbook when oil prices briefly sank during the 2008 global financial crisis and the economy slump the next year.
When political turmoil rocked Libya, another producer, during the Arab Spring, Saudi Arabia increased production to keep markets and its own revenue stable.

Energy consumption in Saudi Arabi is growing and its growing at an average of 6 percent over the last decade, while any shift to nuclear power or renewable sources like solar has been slow.

«No cut is coming,» said Rene G. Ortiz of Ecuador, a former secretary-general of OPEC. «Each and every country, and particularly the Saudis and the other monarchies of the gulf, will protect their market share and increase their market share as much as possible,» he said.

Chesapeake Energy Corp and Exxon Mobil Corp are both shale drillers. They both spent about $120 billion last year in the U.S, and the surge in output and a slowdown in the demand have pushed crude oil prices down.
The number of rigs drilling in shale fields are down by half from an October peak, BP Chief Executive Officer Bob Dudley said.

«The shale revolution hasn`t run out of steam in the U.S,» Dudley said.

 

 


Click the link below and check out the Fan Fund

https://www.eventbrite.com/e/fan-fund-tickets-15580655159


 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. UA-63539824-1.

 

Leave a comment

Filed under Commodities, Energy

What is the most dangerous war?

The new film San Andreas cracked well over $60M mark internationally this weekend to help boost its worldwide come to $118,5M, just in front of its China bow tomorrow. This is business for Warner Bros./Village Roadshow.

The film which stars Dwayne «The Rock» Johnson, knocked last week`s top film Tomorrowland, which debuted with $40,7M. Earthquake disaster movie San Andreas has topped the US box office over the weekend, allaying fears that audiences in quake-prone regions would avoid seeing it.

It is registered a little earthquake in Northern California about three hours ago, but it was just a little one (2,4). The biggest today is seen in North of Svalbard (5,1). A magnitude -7,8 earthquake struck off the southern coast of Japan on Saturday, shaking buildings in Tokyo and interrupting subway service, but causing no major damage or injuries.

If you haven`t seen the film yet, take a look at the official trailer below.

 

 

What`s worse than the nature being angry like an earthquake or a volcano? What about an asteroid? We are in big trouble if one of these giant rocks ends up on a collision course with Earth. What about a war? A World War III? Made by human beings.

We can solve a problem by diplomatic solution, but we can`t deal with an asteroid. We can`t deal with a volcano. Neither an earthquake.

We can stop a World War III, but not a big rock from space.

Former NSA intelligence analyst John Schindler said last week that a senior NATO official told him that the world would «probably be at war» sometime this summer. He is not alone to say so. The investor legend George Soros warned that we «are on the threshold of a Third World War.»

John Schindler`s tweet was retweeted more than 1,000 times, but no one in the media covered it. Soros said in remarks at a Bretton Woods conference at the World Bank that a trigger for a global military conflict can start as China`s economy slows down.

«If there is a military conflict between China and an alley of the U.S, like Japan, it is not an exaggeration to say we could be on the threshold of a Third World War. It could spread to the Middle East, then Europe and Africa.»

Soros called on the U.S to make a «major concession» and allow China`s currency to join the International Monetary Fund`s basket of currencies. Yuan will then be a rival to the dollar as a global reserve currency.

If so, China would have to make similar major concessions to reform its economy, such as accepting the rule of law, and an agreement along these lines will be difficult to achieve, but the alternative is a brutal war, Soros said.

«Without it, there is a real danger that China will align itself with Russia politically and military, and then the threat of third world war becomes real, so it is worth trying.»

This comes in a time when Europe engages in some of its biggest ever war games near Russia. If the War starts, it will be multi faceted and poses risks to markets. Modern warfare would involve many facets including cyber warfare and currency war.

Around a million asteroids are located between Mars and Jupiter in the «asteroid belt.» The craters on the Moon were formed by asteroids and some think it was an asteroid that wiped out the dinosaurs. The human beings survived. What can wipe out the humans on this planet?

«If we`re lucky it won`t be nuclear,» Schindler said in his tweet last week.

 


Click the link below and check out the Fan Fund

https://www.eventbrite.com/e/fan-fund-tickets-15580655159


 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. UA-63539824-1.

Leave a comment

Filed under Politics