Thursday, May 12, 2011

Global Market Weekly Review, 12-05-2011

China’s central bank said controlling inflation is its top priority, even after a manufacturing survey indicated that growth may slow in the second-biggest economy. “Stabilizing prices and managing inflation expectations are critical,” the People’s Bank of China said in a first-quarter monetary policy report published on its website. Bank reserve requirements have no “absolute ceiling,” the report said, restating a 16 April comment from Governor Zhou Xiaochuan.

Portugal reached an agreement with officials preparing its European Union-led bailout that will provide as much as EUR78 billion (US$116 billion) in aid and allow more time to reduce the country’s budget deficit. The three-year plan set goals for a budget deficit of 5.9% of Growth Domestic Product (GDP) this year, 4.5% in 2012 and 3.0% in 2013, Prime Minister Jose Socrates said. The government in March targeted a deficit of 4.6% of GDP this year, 3.0% in 2012 and 2.0% in 2013.

European Central Bank officials warned of catastrophic consequences if Greece is allowed to restructure its sovereign debt. “Default or debt restructuring is a dramatic economic and social event for the country which experiences it -- I would call it political ‘suicide’ -- which leads many into poverty,” Executive Board member Lorenzo Bini Smaghi said. Fellow board member Juergen Stark said restructuring “wouldn’t be a solution to the problems that Greece needs to overcome.

Source: ING Funds Berhad

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