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16.05.2015

JAPAN (where the sun rises)

   Last week we could see how investors on NIKKEI reacted to Japanese Prime Minister Mr. Abe’s corporate reforms to restoring Japanese economy and improve companies returns. Most tangible issue was monetary easing by the Bank of Japan. Mr. Abe and his government has under the pressure form Japan’s biggest business lobby so called “Keidanren”. Corporate reforms for Japan is highly important as Japanese economy depends on foreign trade affairs. 16th of June Japanese Ministtry of Finance will announce Trade Balance for May. Forecast -226B Yen, previous was -53B Yen. 7th of June 2015 we have received Japanese first quarter Gross Domestic Product (GDP) Data as 3.9%, that measures the annualised change in the inflation-adjusted value of all goods and services produced by the country is higher than market expectations 2.7% (previous data was 2.4%). GDP Price index and Private Consumption data’s were not changed. 

 

 

 

CHINA (warning for world economy)

Chinese economic data’s giving a warning for world economy. In May Chinese export reduced 2.5% and import reduced 17.6%. Trade balance is 59.49B against expected 44.95B. Fall in Chinese export and imports slowing the demand in country and job cuts are not unexpected further. But Chinese government looks like ready to bad scenario however pushed the most effective instrument for country’s economic growth by investing through state-owned “China CIFCO Investment Co. Ltd.” multi-billion USD projects as China Railway Fund in country and even Europe’s new infrastructure fund.

 

RUSSIA (from Russia with love)

Russia is going to reform his economy and attempt to convert his economic structure form consuming to producing economy under sanctions followed by last year’s annexation of Crimea and ongoing support of pro-Russian rebels in eastern Ukraine. Reduced access to capital has hurt the Russian economy and small and medium-sized businesses. While state-owned large companies Rosneft or Gazprom have also been shut out of international capital markets, they still have access to the balance sheets of Russian banks, particularly the two state-owned giants, Sberbank and VTB. In spite of sanctions, US and UK energy companies like ExxonMobil and E.ON continues trade and investment relations in Russia with their Russian business partner Rosneft. 

 Russia’s common argument regarding to sanctions sounds like “EU and US are losing much more that Russia, cause Russia turned his face to China and Turkey to import the goods. Sanctions shown that Russia must concentrate to self produce his own”. For information, in first quarter  Russia produced cheese 30% more than in the same period of 2014 in first quarter. 

 World Bank forecasting that Russian GDP will fall 3.8% and poverty rises 14.2% in 2015. Russian officials commented as 12.1%. Central Bank of Russia has announced in 11th June 2015 that his reserves in USD are slightly rising and amounted to 361.6B. In 15th of June 2015 Central Bank of Russia should announce his Interest Rate Decision. Expectations are in fall around 100 base points means 11.50% as previous 12.50%. If it happens we could wait for local currency Ruble will fall a bit against major foreign currencies USD and Euro.

 

 

 

TURKEY (nothing personally, just business)

   Turkish general elections results shown that 13 years ruling party AKP gone with the wind from the government as a single ruling party. The new elected pro-Kurdish party HDP was surprise of the election results. These days Turkish elected parties (AKP, CHP, MHP and HDP) have to find consensus to formate a new coalition government. Many of secular people in Turkey warns to CHP, MHP and HDP to set coalition government against AKP and bury of Erdogan’s ambitions to becoming a king. “Erdogan loses his chance to become Turkey’s Vladimir Putin” reported Reuters. Turkish electors said to Erdogan’s ambitions, nothing personally, just business.  

 Turkey has growing economy, last week we have received Industrial Production Data rising 3.8% against forecasted 3.1% (previous was 4.7%). GDP in first quarter also raised 2.3% against 

 

forecasted 1.6% (previous was 2.6%). But as usual Turkey has chronic fiscal current account deficit, 11th of June 2015 Central Bank of Turkey announced 3.41B current account deficit for April. Forecasted data was 3B, previous 4.96B in the same month 2014.

 

European Union (lame horse)

EU economy slowly going out of crisis regarding to datas approving finish stagnation by slightly rise of consumer prices and inflation (consumer price index of EU is 0.3%) . But it does not mean everything going good for EU as Greek dept problem is waiting for resolving on the table. EU leaders stumbling Greece to get agreement with creditors on negotiations, Greece is annoying requirements of IMF the main creditor. Greece has the last chance to get agreement with ECB and IMF to avoid default on Thursday 18th of June 2015. 

 Beside of all investor confidence index in EU is falling up to 17.1 reported German Sentix GmbH (previous was 19.6). 12th of June 2015 Eurostat announced that EU Industrial Production data sharply reduced up to 0.8% against expected 1.1% (preivous 2.1%). Eurostat will announce EU Trade Balance for April in 15th of June 2015, previous was 23.4B in April 2014. We will pay attention to speech of European Central Bank President Mr. Draghi in Monday, 15th of June 2015.

 EU must hurry about TTIP (Transatlantic Trade and Investment Partnership) with US, that could add 119B euros annually to Europe’s economy and 95B euros to the US.

 

United States

Core retail sales on May in US raised 1% against forecasted 0.7% (previous was 0.1%) that measures the change in the total value of sales at the retail level in US. Core retail sales shows us

 

consumer spending trends. For May the Producer Price Index was also slightly higher than expected in US. The Producer Price Index measures the change in the price of the goods sold by manufacturers. It’s a leading indicator of consumer price inflation, which accounts for the majority of overall inflation. 17th of June 2015 we will receive another important data for US, Federal Open Market Committee (FOMC) members will vote on where to set the interest rate. Market expectations is FOMC will not change the interest rate and it will stay 0.25%.

 

 

Kafkas Baranseli

Baranseli Financial Settlements 

 

 

 


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