China & East Asia 02 Jan 2017 by Tojo Jose

China becomes one of the largest investors in the US

China becomes one of the largest investors in the US

China is buying the world. Europe and US are scared of the Chinese money that is conquering tech companies and hotels. In 2016, Chinese foreign investment in the US has reached $51.09 bn, according to Mergermarket -a data analytics firm. Chinese have made 65 M&A deals in the US, raising their investment by 360%. In Donald Trump’s US, Chinese investment is not expected to come down in the coming years as well. In 2015, Chinese investment in the US was just 11.5 bn. One of the controversial investment by the Chinese that revealed the intention and nature of their investment was the acquisition of German robotic firm Kuka. After bunch of concerns from the Germany, and all

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China & East Asia 21 Sep 2016 by Tojo Jose

Bank of Japan brings new policy to step up monetary easing

Bank of Japan brings new policy to step up monetary easing

Bank of Japan has reinforced its monetary easing programme by introducing another innovative tool. This time, the Japanese central bank has set a cap on the 10-year bond yields. Over the last eight years after the financial crisis, central banks were innovating new policy instruments under unconventional monetary policy tag. The main component of the new ceiling of ten year bonds is the "yield curve control" under which the bank will seek to control short-term and long-term interest rates. Japan is going through sharp fall in economic activities reflected by very low GDP growth rate. Accompanying the poor income growth Japan is reeling under deflationary pressure. Japan’s

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China & East Asia 01 Aug 2016 by Tojo Jose

Uber exits China after making ceasefire with Didi

Uber exits China after making ceasefire with Didi

In a surprising development, global taxi ride app leader Uber had announced to merge its Chinese businesses with its opponent and local grown rival Didi Chuxing. The new move will make both firm consolidate their businesses with cross holding of shares rather than making war on each other. As part of the deal Didi will acquire all of Uber China’s operations and investors in Uber China will get a 20 per cent stake in Didi. Uber exits China with a 5.89 per cent stake in its rival— but would have “economic interests” equivalent to 17.7 per cent in Didi. Both companies were in intense price and non-price wars during the last few years. incentives to clients a

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China & East Asia 21 Jun 2016 by Tojo Jose

Nikesh Arora quits Softbank amidst disagreement with founder Masa

Nikesh Arora quits Softbank amidst disagreement with founder Masa

Softbank’s promised CEO and Indian origin executive Nikesh Arora resigned from the Japanese tech company. His resignation came after the Japanese business world's difficulty in adapting a non-Japanese head and later disagreement with the founder Masayoshi Son. Arora was one of the highly paid executives in the world but was in serious trouble due to lack of support from shareholders of the company. The Japanese shareholders were generally unhappy about the big salary package to an executive from outside their cultural territory. The lack of synergy transformed into accusations against the India born executive for conflict of interest, financial misdeal high paid salary et

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China & East Asia 16 Mar 2016 by Tojo Jose

China to impose Tobin tax on speculative capital flows

China to impose Tobin tax on speculative capital flows

China’s central bank -the People’s Bank of China (PBC) has indicated that it is considering introduction of tax on short term capital flows to check volatility in its currency. The Yuan is under pressure as capital outflows intensified amidst weak macroeconomic performance. Tobin tax is a form of capital transaction tax aimed to stop speculative short term capital or otherwise called hot money. It is this short term capital that usually goes to the banking sector, capital market and other financial assets that is quickly withdrawn during a crisis. The tax was previously advocated by economist James Tobin. In its usual from, Tobin tax is imposed on both inflow and outf

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China & East Asia 02 Feb 2016 by Tojo Jose

Politically neutral Germany gets key position in China led AIIB

Politically neutral Germany gets key position in China led AIIB

In the China led AIIB, Germany will get key position of a vice president and Chief Operating Officer. Both functions will be done by the same person. As per the information published by South China Morning Post, there will be four other vice presidents besides the German nominee. The other vice presidents will be from India, South Korea, UK and Indonesia. India as the second largest share holder of the bank after China will have the Chief Financial Officer as well; as its vice president will be the CFO.   Britain who shocked its evergreen ally US while joining the AIIB will get a vice president post and he will be in charge of communications. UK is the ninth largest share ho

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China & East Asia 19 Jan 2016 by Tojo Jose

China records its lowest growth in 25 years; peers fear devaluation of Yuan

China records its lowest growth in 25 years; peers fear devaluation of Yuan

China has officially confirmed that its growth rate in 2015 was 6.9%, the lowest growth the country has registered during the last twenty five years. The official data about the economy’ performance came at a time when financial markets and policy makers fearing a backlash from the slowing Chinese economy. Data was revealed by National Bureau of Statistics- China’s national income accounting entity. Chinese official media- the global times has described the growth rate as ‘within the people’s expectations’. Premeier Li Kequiang has mentioned the increasing downward pressure on the economy that is complicated by poor global demand. The declining grow

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China & East Asia 12 Jan 2016 by Tojo Jose

Oil may dive to new lows under Chinese impact-warns forecasters

Oil may dive to new lows under Chinese impact-warns forecasters

Crude prices that reached its eleven year low and trading near to early $30s may fall to new lows. According to ace forecasters, decline of the world’s largest commodity buyer- China, may push oil to the new lows. Morgan Stanley has predicted that China’s economic uncertainty and its spread effect on the rest of the Emerging Markets may bring down crude prices to $20. In the past, investment bankers and rating agencies have made varied prediction for the future price path of crude extending from $20 to $80. Other major trackers of crude –Bank of America, Goldman Sachs, Citigroup and Merrill Lynch also reported that a scoop to $20s is very possible. Crude price

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China & East Asia 08 Jan 2016 by Tojo Jose

China brings harsh measures to rebalance financial markets and currency

China brings harsh measures to rebalance financial markets and currency

After prolonged loss of the currency’s value and frequent shut down of the stock market, China has launched stringent measures to correct its market and currency. Reports from financial quarters indicate that the government and the central bank are issuing unpublished warnings to banks and corporate to stop buying dollars beyond a level. This latest move on checking dollar outflow, which is called capital control, is usually adopted by an ordinary developing country while facing foreign currency scarcity. The Peoples Bank of China has already sold significant amount of Dollar into the foreign exchange market to stop further depreciation of its currency. In December itself,

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China & East Asia 04 Jan 2016 by Tojo Jose

China manufacturing sector contraction brings shocks in markets and currencies across Asia.

China manufacturing sector contraction brings shocks in markets and currencies across Asia.

Stock markets across Asia that opened for the first time in 2016 witnessed sharp falls after China’s manufacturing sector reported contraction. The contraction of manufacturing sector in China was reported in the Nikkei Asian Review index which was brought by Japan’s publications giant - Nikkei. The worst trend happened in China where stock trading has stopped after leading indices – the Shanghai composite and the Shenzhen Composite fell by around 7% on Monday morning. The stock market reaction came after the official manufacturing index of China – Purchasing Managers Index (PMI) reported a decline indicating contraction of manufacturing activities f

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