Numerous factors to weigh on China banks this year, economist says This year is shaping up as a year of major risks for China's banks, according to Xiang Songzuo, chief economist at the Agricultural Bank of China. Xiang cites the convergence of several factors, including shadow banking, industrial overcapacity, the burden of local government debt and the possibility of lower housing prices. "All these problems will be manifested in more bad loans, and that's why the banks will have an increasingly difficult time," Xiang said. China.org.cn (China)/Xinhuanet (5/8) ECB holds rates but points to June adjustment The European Central Bank left its rates on hold Thursday, but President Mario Draghi strongly hinted that an adjustment will be forthcoming at the bank's meeting next month. Policymakers await further data, but Draghi said that "the strengthening of the exchange rate in the context of low inflation is cause for serious concern." In all, his remarks were taken to mean the bank may be preparing for negative interest rates. Bloomberg (5/8), Bloomberg (5/8) Becalmed global economy heralds Great Moderation Experts are converging around the notion that the global economy is settling into a second round of the so-called Great Moderation that preceded the 2007 crisis. Market volatility and measures of risk are low and giving equities a growing advantage over bonds. Overall, persistently low interest rates, a policy focus on unemployment and calm markets are making for a "new macro-economic reality," said Ian Harnett, managing director at Absolute Strategy Research. Bloomberg (5/8)  | Director, Curriculum Projects
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| | | | | Philippines to test banks' exposure to real estate Noting the problematic nature of real estate lending in many banking systems, the Philippine central bank is planning stress tests for the nation's lenders in a bid to avoid a property bubble. The plans include introduction of a residential property-price index by midyear. Bloomberg (5/8) | | Economic Trends & Outlook | U.S. wage gains seen pushing Fed on rates One little-discussed factor that may drive the U.S. Federal Reserve to raise rates this year is the recent trend in wage gains, including the 2.3% annualized rise recorded last month, according to Deutsche Bank international economist Torsten Slok. Looking ahead, an economy that stays in recovery mode will lead to "more and more wage pressure" and "will force the Fed to turn more hawkish," Slok said in a report. Bloomberg (5/8) U.S. jobless claims decline The number of Americans filing for unemployment benefits fell last week. Although the four-week moving average for claims was up, analysts say the longer-term trend is encouraging as employers cautiously step up hiring while awaiting signs of stronger consumer demand. Bloomberg (5/8) Australia job picture improves as hiring picks up Australia's jobless rate held steady at 5.8% last month as employers added 14,200 jobs, suggesting an economy that continues to mend and pushing the Australian dollar higher. "Full-time jobs growth has improved markedly so far this year. Further, these indicators are consistent with the unemployment rate sitting around its current level, or possibly a little lower, in the near term," said Justin Fabo, senior economist at Australia & New Zealand Banking Group. Bloomberg (5/7) | | Capital Markets & Financial Products | Survey finds Australian investors looking overseas Offshore assets are the object of increasing interest from Australian investors looking for higher returns in what appears to be a less risky global environment, according to a survey by Certitude Global. "While it is true that a number of investors expressed concerns about some of the big issues, including instability in the Ukraine and Russia, a slowdown in the Chinese economy and the possibility of another market crash, this clearly did not influence their positive outlook for international markets," said Certitude CEO Craig Mowll. The Sydney Morning Herald (Australia) (5/8) | Chae Sun-Byoung is promoted at Bank of Korea Chae Sun-Byoung has been named director general of reserve management at the Bank of Korea. Chae comes to the job from a series of previous posts at the bank, including the departments of investment management, investment strategy and risk management. AsianInvestor.net (5/8) | Please contact one of our specialists for advertising opportunities, editorial inquiries, job placements, or any other questions.
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