Wednesday, June 8, 2011

Global Market Weekly Review, 23 May - 4 June 2011

Group of Eight leaders said a strengthening global economy will pave the way to cuts in the debt built up during the recession that followed the 2008 financial crisis. Europe vowed to fight its fiscal woes with “determination,” while President Barack Obama promised a “clear and credible” U.S. deficit-reduction strategy. Japan was allowed to put off savings measures until its economy rebounds from the March earthquake and tsunami.

Australia’s economy shrank in the first quarter by the most in 20 years after flooded coal mines, railways and farmland hurt exports. 1Q11 GDP fell 1.2% QoQ (4Q10: +0.8%). That was the biggest drop since Australia’s last recession in 1991 and compared with the median estimate of -1.1%.

Global food costs may extend gains as it will take time for producers to catch up with demand driven by the rapid growth of emerging economies, the Bank of Japan’s assistant governor said. The surge in commodity prices is also being spurred by increased trading of financial products linked to commodities such as exchanged-traded funds and indexed investment products, Hiroshi Nakaso, who leads a Group of 20 panels studying global commodity inflation.

China’s central bank urged “paying attention” to the credit risks of local-government financing vehicles because their debts have long maturities and are difficult to oversee. Some companies set up by provincial and municipal governments to fund infrastructure projects are unsustainable, the People’s Bank of China said. The loans are “generally large, with long maturities, and it is difficult to oversee
their use,” the central bank said.


Source: ING Funds Berhad

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