Countries & Regions Archives - Page 183 of 374

December 23, 2013

Russia 1998 crisis haunts Deutsche Bank analyst seeing China bust | Livemint

When the Deutsche Bank AG equity strategist [John-Paul Smith] looks at the country [China], he says he detects some of the same signs of a financial meltdown that led him to predict Russia’s 1998 stock market crash months in advance. China’s expansion is being fueled by soaring corporate borrowing, a high-risk model that needs to be replaced by the kind of free-market measures and budget cuts that fed Russia’s growth in the aftermath of the country’s default and subsequent 44% monthly tumble in the Micex Index, Smith said.

There is potential for a debt trap in industrial companies which can trigger an economy-wide financial crisis as early as next year, Smith said in an interview from London on 12 December, a day after he issued a report predicting China’s slowdown will lead to a 10% decline in emerging-market stocks next year. “If I am wrong on China, I am wrong on everything.”

December 21, 2013

Why Australian manufacturing is dying

The following graphs from the Productivity Commission Preliminary Report on Australia’s Automotive
Manufacturing Industry give an insight into the problems facing Australian manufacturers.

The first graph compares average hourly labor costs for auto-manufacturers in different countries. Australia is second-highest (behind Germany), in terms of labor cost per hour, and roughly 7 times as high as China and India — ignoring local ABS figures for which there are no comparatives.

Hourly Labor Costs

The second graph shows how the rising Australian Dollar has impacted on local auto-manufacturing.

Australian motor vehicle production compared to the trade weighted exchange rate

The local market is not big enough to sustain a competitive auto-manufacturing industry, but that argument does not seem to have hindered five of the top seven global manufacturers — Volkswagen, Hyundai, Toyota, Nissan and Honda — whose local markets are of a similar scale to our own. The difference is that they have adopted a global outlook rather than focusing on their own domestic market as Australia has done.

December 21, 2013

Productivity Commission report says Australian car makers can’t compete on labour costs

An increasing amount of the world’s cars are now built in countries such as Brazil, China, India, Mexico and Thailand, while countries such as Australia, the US, the UK and Belgium have shed workers since 2008.

The [Productivity Commission] report finds labour costs in Australia “relatively high”, although not substantially different to Germany or Japan. “But [they] are four times or more those of China, Thailand and other developing countries where motor vehicle production is expanding,” it found.

December 20, 2013

What Happens When Unemployment Benefits Are Cut? North Carolina Offers a Clue | WSJ

Cutting out benefits can reduce the jobless rate in two ways, says Mr. Feroli [Michael Feroli, chief U.S. economist at J.P. Morgan], pointing to past economic literature. Under the employment effect, people will take jobs even if the work pays less than the job seekers want. In the participation effect, people will drop out of the measured workforce since actively seeking a job (a criterion for being labeled officially unemployed) no longer carries an advantage of receiving jobless benefits.

December 17, 2013

Aussie Dollar leads ASX lower

The falling Aussie Dollar continues to reflect local market weakness. Breach of primary support at $0.89 against the greenback would indicate a primary decline, with a long-term target of $0.81*. The recent Twiggs Momentum peak below zero also suggests a primary down-trend. Respect of support, and recovery above the descending (orange) trendline, is unlikely but would indicate another rally.

Aussie Dollar

* Target calculation: 0.89 – ( 0.97 – 0.89 ) = 0.81

The ASX 200 correction halted above medium-term support between 4900 and 5000, but there are no signs yet of a reversal. Bearish divergence on 13-week Twiggs Money Flow continues to warn of selling pressure. Breach of support at 4900 would warn of a test of primary support at 4650. Respect of support (4900) and Twiggs Money Flow respect of the zero line are both unlikely, but would suggest continuation of the primary up-trend.

ASX 200

Low values on the ASX 200 VIX continue to reflect low market risk.

December 17, 2013

Japan & India hesitate after breakout

Japan’s Nikkei 225 is testing its new support level around 15000. Declining 13-week Twiggs Money Flow warns of long-term selling pressure. Respect of support would confirm a primary advance, with a long-term target of 17500*. But breach of the rising trendline is as likely, and would warn of a correction to the base of the formation at 12500/13000.

Nikkei 225

* Target calculation: 15000 + ( 15000 – 12500 ) = 17500

India’s Sensex made a false break through resistance at 21200, warning of selling pressure. Bearish divergence on 13-week Twiggs Money Flow also indicates medium-term selling pressure. Retreat below support at 20200 would warn of a test of primary support at 18000. Recovery above 21200 is unlikely at present, but would confirm a primary advance to 24000*.

Sensex

* Target calculation: 21000 + ( 21000 – 18000 ) = 24000

December 17, 2013

China and Hong Kong retreat

China’s Shanghai Composite retreated from resistance at 2260 on the daily chart, breach of short-term support at 2180 signaling a correction. Reversal of 21-Day Twiggs Money Flow holding below zero would signal selling pressure, while respect of the zero line would reflect a healthy (primary) up-trend.

Shanghai Composite Index

Hong Kong’s Hang Seng Index retreated to 23000 on the weekly chart. Penetration of the rising trendline suggests a correction to primary support at 22500. Recovery above 23500 is unlikely, but would signal an advance to 24500*.

Hang Seng Index

* Target calculation: 23500 + ( 23500 – 22500 ) = 24500

December 16, 2013

Footsie lags behind

The FTSE 100 continues to display selling pressure, with a large bearish divergence on 13-week Twiggs Money Flow. Failure of primary support at 6400, and breach of the rising trendline, would warn of reversal to a primary down-trend. Follow-through below 6300 would confirm. Recovery above the descending trendline is less likely, but would signal continuation of the primary up-trend.

FTSE 100

* Target calculation: 6700 + ( 6700 – 6400 ) = 7000

December 16, 2013

Euro and DAX lead recovery

European recovery is highlighted by performance of the euro. Breakout above $1.38 would confirm a primary up-trend, with an immediate target of $1.43*. 13-Week Twiggs Momentum troughs above zero indicate a healthy primary up-trend. Reversal below $1.37 is now unlikely, but would warn of another test of primary support at $1.33.

Euro

* Target calculation: 1.38 + ( 1.38 – 1.33 ) = 1.43

Germany’s DAX found support at 9000. Breakout above 9400 would signal an advance to 9800*. Reversal below 9000 is as likely, however, and would test medium-term support at 8500. Short retracements suggest strong buying pressure — also indicated by 13-week Twiggs Money Flow oscillating high above zero.

DAX

* Target calculation: 9400 + ( 9400 – 9000 ) = 9800

December 16, 2013

Canada: TSX 60 finds support

Canada’s TSX 60 found support at 750. Recovery above 780 would signal an advance to 810*. Another 13-week Twiggs Money Flow trough above zero would confirm strong buying pressure. Reversal below 740 remains unlikely, but would warn of a test of primary support at 675/680.

TSX 60

* Target calculation: 780 + ( 780 – 750 ) = 810

Low TSX 60 VIX readings suggest a bull market.

TSX 60 VIX