US and Europe 13 Jul 2015 by Tojo Jose

Euro Zone and Greece reaches on agreement about the bailout

Euro Zone and Greece reaches on agreement about the bailout

European Union has agreed to extend a third bailout package to Greece after night long negotiations. The terms of the bailout is not immediately known. But indications are that Athens has to introduce more stringent measures to avail an immediate funding of nearly 35 billion Euros. Media reports shows that Greece has to place its government owned assets in a separate trust to meet the emergency debt payment in future. This was a demand that met resistance from Greece in previous negotiations. Germany, the super power of the currency union has demanded the measure to ensure that Greek bailout will not result in economic injury to the Euro zone. Both sides- the creditor and debt

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US and Europe 12 Jul 2015 by Tojo Jose

Euro zone divided on Greek rescue package

Euro zone divided on Greek rescue package

EU’s two poles of power – Germany and France are divided on the nature of commitment that should be made by Greece to get immediate bailout money and thus preventing Greek exit from Euro. A traditional hardliner and financial discipline advocate; Germany has demanded that has Greece has to make some immediate legislative reform measures legally to get the emergency aid. France on the other has observed that the existing commitment by Greece is enough. Paris is known for socialist version of crisis management and a different French voice has encouraged conflicting opinion among other members. Differences in the EU means that fresh crisis in the bailout talks now h

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Emerging Markets 10 Jul 2015 by Tojo Jose

BRICS Declaration warns global instability and potential spillovers of West’s easy money policy

BRICS Declaration warns global instability and potential spillovers of West’s easy money policy

The BRICS declaration at the Ufa summit has warned that the global economy is going through a difficult and instability phase. It also gives more ideas about the newly launched New Development Bank (NDB). As per the declaration, the NDB will closely associate with another Brettonwoods alternative set up- the AIIB. Global economy is in instability The declaration signed by the five counties that hold nearly 40 percent of world’s population and one third of the world GDP has cautioned fragile recovery of global growth and the group is “concerned about potential spillover effects from the unconventional monetary policies of the advanced economies”. The US Fed

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Emerging Markets 09 Jul 2015 by Tojo Jose

BRICS’s New Development Bank launched; first loan may go to the sanction hit Russia

BRICS’s New Development Bank launched; first loan may go to the sanction hit Russia

BRICS has officially launched the New Development Bank at the Russian city of Ufa, where the seventh meeting of the BRICS state heads meeting is taking place. The bank will be headed by its first President, K V Kamath of India. Kamath has told that the new bank will raise money from both internal (within BRICS) and external sources.   Fund raising is an important task of the bank as the structure of the new institution is equal contribution from all members. This means that the heavy weight China and the small member – South Africa have to contribute equally. "We will explore resource raising on various markets - hard currency markets and local currency markets,"

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China & East Asia 08 Jul 2015 by Tojo Jose

Markets in Panic: Burst in China continues;Indian market absorbs the shock

Markets in Panic: Burst in China continues;Indian market absorbs the shock

The stock market’s steep fall continues in China despite many precautionary measures by the Chinese central bank. Leading index the Shanghai Composite is down by 4.7%, recovering from an 8 % scoop early in the day. The fresh faults are despite stopping of trade in nearly 50% of the listed companies. Earlier, 1476 listed companies have stopped their trading in the exchanges. Hong King's Hang Seng lost 5.8% while the Nikkei of Japan has lost 3.14%. The Indian market that surprisingly withstood the Greek shock on the previous day seems to be deeply affected by the Chinese burst. Mid day, both Sensed and Nifty lost around 1.9%.  Sensex and Nifty plunges following the C

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China & East Asia 08 Jul 2015 by Tojo Jose

China to supply central bank liquidity into the stock market and bans share selling by big share holders

China to supply central bank liquidity into the stock market and bans share selling by big share holders

China has come out with extraordinary and extreme measures to stop the crash in the equity market. Two new measures that were rare in use were to be deployed to prevent what the Chinese authorities describe as the irrational drop in share prices.   The first one–large shareholders are not allowed to sell shares of listed companies. Investors who holds more than 5% share in listed companies are banned from selling those shares for the next six months. Second, in a rare step, the central bank will provide liquidity to support the market. Chinese stocks continued their free fall as the Shanghai Composite Index closed down 5.9 per cent after falling as much as 8 per ce

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China & East Asia 07 Jul 2015 by Tojo Jose

China’s stocks disobey government support measures and continues to fall

China’s stocks disobey government support measures and continues to fall

World’s strictly regulated economy- China is undergoing a rare market experience over the last fifteen days. Its stock market is falling steeply. Most surprising and worrisome is that the market is not obeying government’s effort to block the decline. The Composite Shanghai index has fallen by 1.8% on Tuesday, July 7, reversing the slight gain made on the previous day. China’s stock market has grown by 117% in the last eight months before June. From mid June, the index has fallen by nearly 30 percent. Later, the government has introduced many market stabilization measures but the stock prices scooped down after looking at government signals for one day. C

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US and Europe 06 Jul 2015 by Tojo Jose

Greece vote towards Euro exit; Asian markets starts falling

Greece vote towards Euro exit; Asian markets starts falling

Greece has intimated a strong No to the European bailout norms with 61.31% votes in favour of it. The sizable majority for ‘no’ to the reforms comes as a shock to the Europe’s creditors and it may give more strength to Syriza to move towards declaring a default and an inevitable exit from Euro. Financial markets in Asia that opens first after the no vote results started jolting to the news though some of them are recovering as trading progresses. Early financial market reports shows Japanese Nikkei index falling by 1.5%, and later recovering. Malaysia’s currency - ringgit fallen sharply against the Dollar. Trade in markets where dependence on FPIs is

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US and Europe 05 Jul 2015 by Tojo Jose

Three immediate effects of a ‘no’ vote in Greece

Three immediate effects of a ‘no’ vote in Greece

As Greece is going through a referendum on the bailout terms suggested by its creditors, the world economy is waiting anxious. What will happen to Greece, the Euro zone and to the world economy if the Greek people say no to the reform measures? Opinion polls indicated that Greeks appear strongly divided over bailout decision. This is despite the hard-line campaign for ‘no’ made by the radical ruling leftist Syriza. Reports are that as the voting hours reaches, there is rising ‘yes’ and a photo finish possibility. This shows that Greek people are quickly losing belief in the economy management capability of the Syriza team. The effects of a no vote wil

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US and Europe 03 Jul 2015 by Tojo Jose

Greece needs more money says IMF; opinion polls on referendum show rising ‘yes’.

Greece needs more money says IMF; opinion polls on referendum show rising ‘yes’.

The Greek crisis is moving towards a decisive face with more suspense. Fresh opinion polls for Sunday’s referendum indicate people airing ‘yes’ to bailout and Euro is increasing. This is despite Prime Minister Alexis Tsipras’ call for ‘No’ to the EU Plan and his description of EU creditors as blackmailers. A victory for ‘yes’ will be interpreted as a vote of no- confidence in the ruling Syriza party’s ability to manage the economy. In another development, the IMF has warned that Greece’s debt over the next three years is bigger and Athens need around €60 bn to overcome its debt problem. The IMF who uses the gen

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