Tuesday, October 29, 2013

Financial Review: Market Stabilized in 2013 Q3

Worldwide financial markets have become stabilized in 2013 Q3 (third quarter), mainly because of the positive signs from Europe on its structural deficit 'improvement' as well as from U.S. Federal Reserve on its continuous asset purchase program. Below you can check out our table summary for all vital business or financial hottest news in 2013 Q3 (July to September):

Jul. 3:(1) China State Council confirmed a pilot project for Shanghai to establish its free trade zone (FTZ). For more about Shanghai development, please read: Shanghai Development Plan.
(2) Crude oil price spiked and passed over USD$100 per barrel again, the first time since September 2012, due to massive anti-government protests in Egypt.
Jul. 9:(1) U.K. decided to transfer administration of LIBOR (London Inter-Bank Offered Rate) to U.S. NYSE Euronext.
(2) S&P's (Standard & Poor's) downgraded Italy sovereign-debt credit rating to BBB, just 2 notches above junk status, on continuous economic recession of the country.
Jul. 10:(1) China exports and imports in June both unexpectedly dropped, which signaled an economic slowdown of the country. For our own China exports and imports annual forecast, please read: Annual Trade Balance.
(2) Brazil Central Bank (BCB) COPOM (Monetary Policy Committee) raised its benchmark Selic annual interest rate to 8.5% in order to tame local inflation pressure.
(3) Indonesia Central Bank (ICB) also unexpectedly raised its benchmark annual interest rate to 6.5% in order to help retaining investor confidence on the weakening Rupiah currency.
(4) Bank of Japan (BoJ) formally confirmed moderate economic recovery, the first time for over 2 years.
Jul. 12:Fitch downgraded France sovereign-debt credit rating to AA+ from the top Triple-A (AAA) on uncertain economic growth.
Jul. 15:Japanese TPX (Tokyo Stock Exchange) successfully merged with OSE (Osaka Securities Exchange) to become the third largest exchange by listed companies in the world after Nasdaq OMX and NYSE Euronext.
Jul. 18:Detroit went municipal bankrupt, and became the biggest bankruptcy city ever in U.S. history.
Jul. 19:PBoC (People's Bank of China) removed administrative controls on minimum lending interest rates to facilitate competition among domestic banks and support loans for local SME (Small-and-Medium-sized Enterprises). You may also read: Interest Rate Reform.
Jul. 23:(1) China Premier Li Keqiang confirmed targeting 2013 CPI (Consumer Price Index) at around 3.5% and 2013 GDP (Gross Domestic Product) at 7.5% (GDP bottom line set as 7%). For our own economic targets, please read: 2013 CPI and 2013 GDP.
(2) U.S. Wells Fargo (WFC) surpassed Industrial & Commercial Bank of China (ICBC) to become the biggest commercial bank by market capitalization in the globe.
(3) Japan became the 12th member country to join Trans-Pacific Partnership (TPP), a Pacific region free-trade agreement led by U.S.
Jul. 29:EU (European Union) and China reached mutual agreement in Brussels on trade dispute of solar power module products. Chinese photovoltaic panels exporting to Europe should then meet a minimum price floor per watt and be limited by a maximum gigawatts capacity per year.
Jul. 31:U.S. BEA (Bureau of Economic Analysis) started implementing a new GDP (Gross Domestic Product) formula with revised accounting rules to give extra weights on intellectual assets and intangible R&D (Research and Development) investments. For China GDP formula, please read: GDP formula.
Aug. 1:(1) U.S. S&P500 Index hit a new record-high and surpassed 1700 level on good jobless claims data.
(2) Russia President Putin finally decided to offer Edward Snowden, who disclosed the spying activities run by U.S. surveillance program, asylum for at least a year.
Aug. 5:Washington Post was acquired by Amazon Founder for USD$250 million.
Aug. 6:Reserve Bank of Australia (RBA) cut its benchmark interest rate to a new record-low level of 2.5% on weak global commodity demands.
Aug. 12:HKEx (Hong Kong Exchanges) launched a new CES (China Exchanges Services) 120 Index Futures trading. You may read also: Stock Analysis of HK and PRC.
Aug. 14:Israel and Palestine resumed peace talks in Jerusalem.
Aug. 16:Chinese state-controlled EverBright securities encountered the biggest trading error ever in Shanghai Stock Exchange (SSE).
Aug. 22:(1) U.S. Nasdaq OMX trading system shut down by an unexplained technological problem and suspended all securities trading for 3 hours.
(2) China State Council officially approved a pilot scheme for Shanghai to establish the first free trade zone (FTZ) in the country. You may read also: Hong Kong vs. Shanghai.
Aug. 30:China Securities Regulatory Commission (CSRC) imposed an insider-trading penalty amounted RMB 523 million, a record-high level in PRC regulatory history, on Chinese state-controlled EverBright securities for its improper trading operations on August 16, 2013.
Sep. 3:Xinjiang Kashgar was officially approved by NDRC (National Development and Reform Commission) as the second financial service centre in China after Shanghai Liujiazui.
Sep. 4:Crude oil price spiked as US Senate FRC (Foreign Relations Committee) approved military action towards Syria against Bashar Assad.
Sep. 6:(1) Bank of International Settlements (BIS) reported that Singapore surpassed Japan as the largest forex market in Asia and Hong Kong became the top 5 forex market in the world. You may read also: Singapore vs. Hong Kong.
(2) Chinese government-debt futures resumed listing on CFFE (China Financial Futures Exchange) after a 18-year ban since 1995.
Sep. 9:Japan Nikkei 225 Index gained after International Olympic Committee (IOC) announced that Tokyo defeated Istanbul and Madrid to host 2020 Summer Olympic Games. Source: 4th Arrow of Abenomics.
Sep. 10:Xinhua-Dow Jones IFCD (International Financial Centers Development) Index showed that China Hong Kong already surpassed Japan Tokyo, the first time ever, to become one of the top 3 financial centres in the world after U.S. New York and U.K. London. You may read also: Best Chinese Cities.
Sep. 12:(1) Syria leader Bashar Assad agreed to hand over all his chemical weapons as led by Russia to stop potential war against U.S.
(2) Hurricane Ingrid originating from the Pacific and Tropical Storm Manuel originating from the Gulf of Mexico, at the same time hit Mexico seriously.
Sep. 17:Zhejiang Yiwu became the fourth finance reform trial zone in China, after Zhejiang Wenzhou, Fujian Quanzhou as well as Pearl River Delta region.
Sep. 18:DOW (Dow Jones Industrial Average) Index hit its record-high as U.S. Federal Reserve FOMC (Federal Open Market Committee) surprisingly did not start reducing QE (Quantitative Easing) size.
Sep. 19:European Union (EU) finance officials agreed on working out a new structural deficit formula to help reducing pressure for austerity measures originally required to recover from European debt crisis.
Sep. 22:Former CCP (Chinese Communist Party) top leader and Chongqing party secretary Bo Xilai sentenced to life in jail by Shandong People's Court.
Sep. 23:A massive 7.7 magnitude earthquake hit Baluchistan in Pakistan, and became the strongest earthquake for Pakistan since 2005.
Sep. 27:U.S. President Obama communicated with Iran new Premier Rowhani in a historic telephone call, the first time top leaders of U.S. and Iran spoke directly in recent 34 years.
Sep. 29:China officially started running its first pilot Shanghai free trade zone (FTZ) where RMB (Renminbi) free convertibility will be facilitated there. You may read also: Our RMB Target.
Sep. 30:U.S. Senate rejected a bill from Republican-controlled House that aimed at funding U.S. government but also delaying the launch of Obamacare (Affordable Care Act).

As a warm reminder, our exclusive 2013 Q3 financial review summary above is typically an extension of our 2013 Q2 summary (Reference: Financial Review 2013 Q2 (Second Quarter)). To find out all our full financial review summary checklists for previous quarters, please read: Summary Checklists of our Financial Reviews.

To conclude, global financial markets were becoming more stable in 2013 Q3 (third quarter) than 2013 Q2. In Europe, pressure for austerity measures originally needed to deal with European debt crisis was eased, thanks to the top European Union (EU) finance officials who were working out a new structural deficit formula to help making fiscal deficit data of PIIGS (Portugal, Italy, Ireland, Greece and Spain) countries look better.

In U.S., pressure for unsustainably high Debt-to-GDP ratio was also eased, thanks to U.S. BEA (Bureau of Economic Analysis) who started implementing a new GDP (Gross Domestic Product) formula with revised accounting rules to give extra weights on intellectual assets and intangible R&D (Research and Development) investments. U.S. then suddenly obtained several percent gain in its GDP total size, thus lowering its Debt-to-GDP ratio without real improvement on national productivity.

Another good news was that U.S. Federal Reserve FOMC (Federal Open Market Committee) surprisingly did not start reducing QE (Quantitative Easing) size as the financial market originally expected on September 18, which clearly told market investors that U.S. economy was still lacking of requisite conditions to favor QE exit.


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