Wednesday, January 16, 2013

Financial Review: Markets Rebounded in 2012 Q4

Global financial markets had continued their positive rebound trends in 2012 Q4 (fourth quarter) as we expected in Q3. Below summary table is our executive list of all vital business or financial news in 2012 Q4 (October to December):

Oct 8:European Union (E.U.) officially launched its European Stability Mechanism (ESM) with initial lending capacity of EUR 200 billion.
Oct 9:(1) Eleven Eurozone countries in European Union (E.U.) agreed to introduce new tax on financial trading transactions for funding E.U. and also discouraging risky financial trading.
(2) U.K. Financial Services Authority (FSA) allowed relaxing the 10% core capital ratio requirements against risk-weighted assets for banks.
(3) China central government unveiled its development plan by 2025 for the new Guangdong Nansha special economic zone.
Oct 10:Lenovo surpassed Hewlett-Packard (HP) to become the top-selling personal computer manufacturer in the world in 2012 Q3, the first time after 7 years since its acquisition and integration with IBM PC business section in 2005.
Oct 11:Greece unemployment rate reached record high level of 25.1% in July.
Oct 12:Harvest MSCI ETF became the first HKD-RMB Dual-Currency ETF in the world. Source: Harvest MSCI A-share Index ETF.
Oct 13:China exports sharply rebounded to reach record high monthly amount of USD$186.35 billion in September.
Oct 24:China Dagong Global Rating announced to jointly set up a new multilateral credit rating agency, Universal Credit Rating Group headquartered in Hong Kong, with U.S.-based Egan-Jones Ratings and Russia-based RusRating.
Oct 26:Hong Kong announced to re-adjust Special Stamp Duty (SSD) and introduce new Buyer's Stamp Duty (BSD) to cool down its overheated housing market. Read also: Special Stamp Duty (SSD) in H.K.
Oct 29:(1) Hurricane Sandy heavily hit U.S. and became the second costliest storm behind Katrina for the country.
(2) Hong Kong topped Singapore to list the first Dual-Currency shares with RMB-denominated IPO in the world. Source: Hopewell Highway RMB IPO. Reference: Investing in RMB-denominated IPO in H.K.
Oct 30:Bank of Japan (BoJ) increased its asset-purchasing size again to JPY 66 trillion (was JPY 55 trillion), although its credit-lending size remained unchanged at JPY 25 trillion. Total size of its quantitative easing package then became JPY 91 trillion (was JPY 80 trillion). This additional JPY 11 trillion would buy JGBs (Japanese government bonds) for around JPY 5 trillion, shorter-term T-Bills (Japanese treasury discount bills) for another JPY 5 trillion, and also risk assets such as REITs (Real-Estate Investment Trusts) or ETFs (Exchange-Traded Funds) for the remaining JPY 1 trillion.
Nov 7:Barack Obama (Democrat) defeated Mitt Romney (Republican) and was elected as the U.S. 44th president.
Nov 10:China global trade surplus increased to USD$32 billion, the highest level in recent 4 years.Read also: our 2012 Trade Surplus Target.
Nov 13:European Union (E.U.) Summit agreed to give Greece two more years to meet its fiscal budget deficit target by 2016 (was 2014) and lower its debt-to-GDP ratio to 120% by 2022 (was 2020).
Nov 14:Russell Street in Hong Kong Causeway Bay surpassed Fifth Avenue in New York to become the highest retail rent location in the world.
Nov 15:Xi Jinping offically became the new-generation leader of China Communist Party.
Nov 19:Moody's Investors Service (MIS) became the second major rating agency after S&P's (Standard & Poor's) to cut France's sovereign-debt credit rating to Aa1 from AAA. Institutional investors which could only hold triple-A sovereign debts rated by at least two major rating agencies were then pushed to sell their French debts that rated AAA only by Fitch.
Nov 21:Isarel agreed to ease fire with Hamas at Gaza region, after peace talks initiated by Egypt.
Nov 27:European Union (E.U.) financial ministers finally agreed to release EUR 43.7 billion bailout funds (with 2 instalments EUR 34.4 billion and then EUR 9.3 billion) to Greece. This agreement represented lowering Greece debt-to-GDP ratio from 180% to 124% by 2020 and 110% by 2022. That meant an immediate 20% hair cut by private Greece debt holders and European Central Bank (ECB) would also buy Greece debt at about 35% of original value.
Nov 29:Palestine was historically approved by United Nations (U.N.) General Assembly with an upgraded status to non-member state from observer state.
Nov 30:(1) Eurozone unemployment rate reached record high level of 11.7% in October.
(2) Moody's Investors Service (MIS) cut credit ratings of EFSF (European Financial Stability Facility) and ESM (European Stability Mechanism) from Aaa (triple-A) to Aa1 due to the recent France's rating downgrade.
(3) Japan approved a new stimulus package worth JPY 880 billion in government spending.
Dec 8:Canada government approved CNOOC (China National Offshore Oil Corporation) to buy Nexen Inc. for USD$15.1 billion. This CNOOC ( deal became the largest Chinese overseas acquisition ever.
Dec 10:China Exchanges Services Company Limited (CESC), a joint venture (J.V.) equally owned by Hong Kong, Shenzhen and Shanghai Stock Exchanges, started to introduce a new CES China 120 Index (CES120), its first cross-border index for mainland China A-shares as well as Hong Kong listed PRC enterprises. Read also: Stock Analysis For PRC and HK Stock Markets.
Dec 12:(1) U.S. Federal Reserve FOMC (Federal Open Market Committee) initiated QE4 (fourth round of quantitative easing or called QE forever) to buy extra amount of longer-term government bonds worth USD$45 billion each month (so totally USD$85 billion each month combined with purchase of USD$40 billion mortgage-back securities) after expiry of OT2 (Operation Twist) or MEP (Maturity Extension Program) by end-2012, and also keep current federal funds rate exceptionally-low until unemployment rate drops below 6.5% and projected inflation rate (inflation expectation) raises over 2.5%. Read also: QE3 Quantitative Easing Policy.
(2) North Korea launched its first satellite successfully.
(3) Hong Kong government raised statutory minimum wage from HKD$28 to HKD$30 per hour.
Dec 13:European Union (E.U.) finally approved to release EUR 49.1 billion disbursement fund to save Greece.
Dec 14:China SAFE (State Administration of Foreign Exchange) announced to remove the previous USD$1 billion ceiling on investments in its capital markets by foreign sovereign wealth funds and overseas central banks.
Dec 16:(1) China CEWC (Central Economic Work Conference) set 6 goals in 2013 to speed up urbanization process for boosting domestic consumption.
(2) Singapore finalized negotiations on free trade agreement (FTA) with European Union (EU).
Dec 17:Japanese Yen fell as conservative Liberal Democratic Party (LDP) of Shinzo Abe won general election boosted BoJ (Bank of Japan) easing bets.
Dec 18:Media reported that China annual CEWC (Central Economic Work Conference) had set 2013 GDP target at +7.5% for the second year and 2013 inflation target at +3.5%. You may also read our GDP and CPI Targets.
Dec 19:(1) China International Marine Containers (CIMC 2039.HK) became the first listing with H-shares that were converted from domestic B-shares. This was the first time domestic PRC investors could officially hold offshore H-shares in Hong Kong.
(2) Trading of first-ever RMB derivative warrants became available in Hong Kong. You may also read our RMB Target.
(3) Media reported that China would allow QFIIs (Qualified Foreign Institutional Investors) to participate in stock index futures trading on CFFEx (China Financial Futures Exchange). You may also read our SSE Index Target.
(4) U.S. regulators fined Swiss UBS AG totally USD$1.5 billion as penality for its LIBOR (London InterBank Offered Rate) manipulation. This was the second biggest penalty ever imposed on banks, just after HSBC's USD$1.9 billion penalty for settling U.S. charges about laundering of drug cartel money.
Dec 20:(1) Bank of Japan (BoJ) increased its asset-purchasing size again to JPY 76 trillion (was JPY 66 trillion), although its credit-lending size remained unchanged at JPY 25 trillion. Total size of its quantitative easing package then became JPY 101 trillion (was JPY 91 trillion).
(2) China Securities Regulatory Commission (CSRC) agreed with Hong Kong Securities and Futures Commission (SFC) to relax overseas Initial Public Offering (IPO) listing requirements for Chinese corporates on Hong Kong Stock Exchange (HKSE), thus supporting financing needs of PRC SMEs (small and medium-sized enterprises) and service sectors. Read also: SMEs Financing Support in China.
Dec 22:Lumber futures prices climbed to 6-year high as U.S. housing market rebounded, China imports boosted but Russia outputs plunged.
Dec 27:PBoC (People's Bank of China) allowed cross-border RMB lending (with librarated interest rates) directly from Hong Kong banks to Shenzhen Qianhai, a pilot economic zone for RMB convertibility on capital accounts. Read also: Interest Rate Liberalization Reform.
Dec 31:U.S. House of Representatives approved fiscal cliff agreement allowing 2 more months until end-February 2013 for Republicans and Democrats to discuss how to cut government spending from federal budget. This agreement also raised tax for top individual earners with annual income above USD$400K.

As you may already know, the above 2012 Q4 financial review table is an extension of our Q3 summary table (Source: Financial Review 2012 Q3 (Third Quarter)). Regarding all our financial reviews in the past years, you shall read: Our Complete List of Financial Reviews.

In brief conclusion, global financial markets had rebounded and continued to have positive trends in 2012 Q4. One of the most important issue in 2013 Q4 happened on December 12 when U.S. Federal Reserve FOMC (Federal Open Market Committee) initiated QE4 (fourth round of quantitative easing or called QE forever) to buy extra amount of longer-term government bonds worth USD$45 billion each month (so totally USD$85 billion each month combined with purchase of USD$40 billion mortgage-back securities). U.S. Federal Reserve also historically set its unemployment rate target at 6.5% and its projected inflation rate target (inflation expectation) at 2.5%.

Additionally, there was some positive progress for U.S. fiscal cliff problem in the last minutes in 2012 Q4 as House of Representatives passed bill that allowed 2 more months for negotiations about government spending cuts. In the other part of the world such as China, Japan, Eurozone, Hong Kong, Singapore, Russia, Canada, Greece, Brazil, U.K. etc, their markets had rebounded as well during the final quarter. Most of them also had some positive progress for their business or financial issues in 2012 Q4 as mentioned in our above summary table.


Post a Comment

Popular Articles in this Week (Top 10)

Not What You Want?

Try More Search in Our Website Here...