The Week that FINished

Japan
Trans-Pacific Partnership
deal to be announced 'in
principle': Japan
http://www.straitstimes.co
m/business/economy/tppnegotiators-to-announcedeal-in-principle-japan
Officials
negotiating
an
ambitious Pacific trade pact
could announce a deal "in
principle" on Sunday (Oct 4)
after days of gruelling talks,
Japan's
Economy
Minister
Akira Amari said. Mr Amari told
Japanese journalists that there
had been "major progress" on
Sunday morning and that a
solution had been found to the
main roadblock to a deal, how
to
protect
developers
of
biologic drugs. "We are making
preparations now to announce
a deal in principle this
afternoon," he said, according
to a translation of his remarks
supplied
by
Japanese
journalists. That suggested
there would still be some loose
ends to wrap up after five days
of ministerial talks in Atlanta
on what will be the world's
largest free trade zone, the
Trans-Pacific Partnership (TPP).
The
talks
between
representatives of 12 countries
comprising 40 per cent of the
global economy - including
Canada, New Zealand, Mexico
and others - have gone three
days past the scheduled
ending and Mr Amari made
clear he was not willing to
extend another day.
Prime Minister Shinzo Abe's
efforts
to
push
through
structural changes to recharge
Japan's economy got a boost
as negotiators reached a deal
on a Pacific trade pact that
would create the world's
biggest regional trade zone.
The Trans-Pacific Partnership
(TPP), if ratified by lawmakers
in the 12 member nations,
gives
Mr
Abe
more
ammunition to fight opposition
in the agriculture sector while
widening Japan's market for
exports of cars and auto parts.
Attracting
overseas

Vol.10

United states

India

Dollar Falls on Retail Sales,

Inflation Data

Make in India push: Boeing

mulls assembling either
Apache or Chinook
helicopter in India

http://www.wsj.com/article
s/dollar-weakens-ondownbeat-u-s-salesnumbers-1444828471
A batch of disappointing U.S.
economic data sent the dollar
tumbling broadly. The WSJ
Dollar Index, which tracks the
greenbacks value against a
basket of 16 currencies, fell
nearly 1% to its lowest since
the end of June, 2015. The
dollar weakened 0.8% against
the euro and 0.7% versus the
yen which is its weakest close
since Aug. 24, when financial
markets
were
roiled
by
concerns about the pace of
economic growth, especially in
China. U.S. sales at retailers
and restaurants increased a
seasonally adjusted 0.1% in
September
from
August.
Stripping out motor vehicles,
retail and food sales fell 0.3%
last month. Economists had
forecast sales would rise 0.2%
in September and fall 0.1%
when cars were excluded.
After removing volatile food
and energy categories, core
prices fell 0.3%. Economists
had forecast overall prices
would slide 0.2%, and core
prices would increase 0.1%.
The data available reduces the
chances
of
the
Federal
Reserve raising interest rates
in the near term further
undercutting the rationale for
bullish dollar bets. In 2014 and
early
2015,
the
dollar
strengthened on the belief
that the Fed was nearing a
move to lift borrowing costs,
but that rally sputtered early
this year as the U.S. economy
hit a soft patch. Higher
interest rates make a currency
more attractive for investors,
boosting its relative value.
Low Inflation can be attributed
to low energy prices, reduced
demand from abroad directly
slowing U.S. exports, cutting
into incomes and jobs in the
manufacturing
sector
and
constraints in job and wages

http://economictimes.indiat
imes.com/news/defence/ma
ke-in-india-push-boeingmulls-assembling-eitherapache-or-chinookhelicopter-inindia/articleshow/49407918
.cms
American
aviation
giant
Boeing today said it plans to
assemble either its Chinook
heavy-lift
helicopters
or
Apache attack choppers in
India even as it gears to offer
the
possibility
of
manufacturing a fighter jet
aircraft in the country." We are
much closer to have assembly
(of) one of those airplanes
(choppers) here. That will play
out and that's our strategy.
This market is too important,
capability is too high and
commitment is significant and
that kind of commitment is
important for us," Boeing
Chairman Jim McNerney said.
He said that given the global
nature of Boeing products and
technology, the American firm
can play a key role in Make in
India initiative. "If the politics
here allows this initiative, to
continue
with
the
same
momentum that it has today,
for the next five years, the
goal
of
moving
the
manufacturing contribution to
the economy from 14 per cent
to 25 per cent is achievable.
The capability is here," he
said.
This is a huge push towards
achieving Indias target of
25% contribution of
manufacturing sector to the
GDP as it will act as an
indicative to all the big MNCs
that India has the capability to
become the manufacturing
backyard of the world and the
political scenario has changed
in India. Companies like
Foxconn and Boeing, are
setting up manufacturing
facilities in India should help
India. India governments

12th 18th October 2015

The Week that FINished

Vol.10

investment and expanding

exports
through
structural
shifts and deregulation are
key to Mr Abe's growth plans,
as the nation is burdened with
a
shrinking
and
aging
population. The key issues in
the
TPP
agreement
are
symbolized by the four Rs,
the first referring to rules,
second referring to regions,
third referring to reform and
fourth referring to rice.

growth that leads to low

consumer sentiments and low
retail sales. US businesses
created only 142,000 jobs in
September,
according
to
official figures, about 64,000
fewer
than
expected
by
analysts. Low inflation also
increases the burdens of debt,
reduces
hiring,
reduces
business
investments
and
keeps wages down.

Russia

Oil
India

Ukraine Readies for Russia

Court Battle After Debt
Vote Passes
http://www.bloomberg.com
/news/articles/2015-1015/ukraine-passes-debtdeal-in-13-bonds-as-russiaonly-outlier
Ukraine said it is ready to go
to court over a bond owed to
Russia after the government in
Moscow failed to participate in
an $18 billion restructuring
that was approved by all other
investors. Russia didnt take
part in voting on Oct. 14 on an
agreement
that
involved
accepting a 20 percent writedown on a $3 billion note due
Dec. 20, 2015. Russia has said
the bond was a loan to the
government
and
therefore
should not be part of debt
restructuring. Finance Minister
Anton Siluanov said he is
considering a plan for a
possible
default
and
is
prepared to take Ukraine to
court.
The
Russian
government
bought the $3 billion bond
from
the
government
of
former Ukrainian President
Viktor Yanukovych in early
2014. Yanukovych fled Ukraine
in February 2014 following
months of protests over his
refusal to sign an association
agreement with the European
Union. Ukraines economy has
been badly battered since the
annexation of Crimea by
Russia in March 2014 and the
start of the ensuing conflict in
the eastern Donbass region
that has left more than 8,000

House Votes to
Export Ban

should continue in their efforts

in reforms to make India a
better place to do Business.
Big ticket reform like Land
acquisition, GST, Labour
reforms still pending which
when done should open up
massive opportunities in India.

South East Asia

Lift

Oil-

http://www.wsj.com/article
s/house-votes-to-lift-oilexport-ban-1444411778
The
U.S
House
of
Representatives passed a bill
to lift the crude oil export ban
on Friday, despite opposition
from the White House. The ban
was put in place during the
1970s Arab Oil Embargo
which saw domestic gasoline
prices skyrocket after crude oil
supply was restricted to the
US. The bill was passed with a
261-159 majority in favor of
lifting, failing to reach the 290
votes necessary to overturn a
presidential veto. Only Twentysix Democrats voted with
Republicans in support of the
measures. The bill will now
move to the Senate where its
prospects
are
uncertain
because
of
White
House
threats to veto any measure
that ends the crude export
ban. The White House issued a
statement saying Congress
should work to move the
country to cleaner sources of
energy. The administration
advocated measures including
ending billions of dollars in tax
breaks for oil companies and
instead investing in wind and
solar
power
and
energy
efficiency.
The oil export ban was placed
almost 40 years back but
recent domestic oil and gas
boom in the US with the
development
of
new
technologies has changed the

10 things you should know

about
Singapore's
monetary policy
http://www.straitstimes.co
m/business/economy/10things-you-should-knowabout-singaporesmonetary-policy
Singapore's central bank is
expected by economists to
ease monetary policy on
Wednesday (Oct14) - in effect,
allowing the Singapore dollar
to weaken - to support a
struggling economy.
Just like Indian Economy, the
Singapore monetary policies
have been controlled by the
Monetary
Authority
of
Singapore or MAS. The above
link provides details of how
the policies work in Singapore.
The country has been facing
deflationary conditions from
the last 10 months, reasons
being the slowdown of the
Chinese economy, decreasing
fuel prices etc. Thus, this calls
for easing of the monetary
policy from the central bank
by various stakeholders to
create money supply in the
economy and to help in GDP
growth which say a negative
rate in the last Qtr. of -4.6%.
Being a net exporting country
its economy is by large
dependent on its export, but
the
decreasing
demand
around the globe has posed a
threat
to
the
Singapore
economy.
WHAT
DO
ECONOMISTS
EXPECT
MAS
TO
ANNOUNCE
ON
WEDNESDAY AND WHY?

12th 18th October 2015

The Week that FINished

Vol.10

dead and displaced more than

1.4 million people. The World
Bank predicted earlier in
October that Ukraine's gross
domestic product would fall by
12 percent by year's end.
Ukrainian officials battled for
months to have creditors led
by Franklin Templeton agree
to the 20 percent write-down
on the $18 billion worth of
bonds. Following this Ukraines
dollar bonds handed investors
47
percent
this
year,
outstripping
any
other
sovereign securities. Investors
holding $15 billion worth of
Eurobonds approved the deal
Wednesday. Ukraine needed
to lower its debt in order to
meet
the
International
Monetary Funds $17.5 billion
bailout conditions. Russias
rejection of the restructuring
could threaten IMF funding
because the crisis lenders
policy doesnt allow it to lend
to countries which are in
arrears on payments to other
sovereigns. The IMF has yet to
say whether it regards the
bond as official- or privatesector debt.

global oil and gas landscape.

The US now produces 9.3
million barrels of oil a day an
increase of almost 80% since
2008. The lifting of ban will
put a check on the oil supply
glut in the US which puts a
downward pressure on the US
produced crude. The US
refiners
were
getting
advantage on account of
cheap oil inside the US and
exporting the refined products
in the international market.
While lowering the profits for
the refiners, allowing exports
will boost the profit for US oil
producers. The government
has already allowed for export
of ultra-light crude oil to
Mexico last year and US is also
exporting 500,000 barrels of
crude a day to Canada.

Brazil

China

Brazil's Real Tumbles on

Speculation
Finance
Minister to Resign

Chinas Economy May Be

Even Bigger Than You
Think

FIIs to pump $2.55 billion

into Indian debt market;
Rupee set to strengthen
further

http://www.bloomberg.com
/news/articles/2015-1015/china-s-economy-maybe-even-bigger-than-youthink

http://economictimes.indiat
imes.com/markets/forex/fiis
-to-pump-2-55-billion-intoindian-debt-market-rupeeset-to-strengthenfurther/articleshow/493155
58.cms

http://www.bloomberg.com
/news/articles/2015-1016/brazil-s-real-tumbleson-speculation-financeminister-to-resign

Brazils real led world losses

and stocks pared gains on
speculation
that
Finance
Minister
Joaquim
Levy
is
preparing
to
resign.The
currency tumbled as much as
3.7 percent while the Ibovespa
posted a weekly drop after
Veja Magazine said that Levy
plans to hand his resignation
to President Dilma Rousseff on
Friday. The finance minister
has been seeking to push
through spending cuts and tax
increases needed to prevent
further cuts to the countrys
credit rating. Vejas columnist
Vera Magalhaes reported that
Levy plans to quit amid
frustration over the lack of

With the economy facing

strong headwinds, China has
found a friend in a recent CSIS
report
which
claims
the
Chinese economy to be bigger
than what is being thought.
With the national economic
data set to be released on the
coming Monday, the report
sheds
light
on
the
methodology that China uses
to
calculate
the
growth
numbers and why an up
gradation in the has not
materialized as of now.
Over the past couple of
decades a growing section of
financial
analysts
and

A majority of economists
surveyed by Bloomberg and
Reuters expect MAS to ease
monetary policy for a second
time this year as Singapore's
economic performance has
worsened since its last review
in April. As with much of the
rest of Asia, Singapore's tradedependent economy has been
knocked by a sharper-thanexpected slowdown in China
and uncertain recoveries in US
and Europe. It would meet the
definition
of
a
technical
recession,
the
first
for
Singapore since the depths of
the financial crisis in 2008early 2009.
MAS' current policy setting
does not allow for further
depreciation of the Singdollar,
which would help Singapore's
exports, a key driver of
economic growth. But some
economists say there is a
more-than 50 per cent chance
of
no
MAS
move
on
Wednesday. They point to
MAS' last review in which it
emphasised the risks of a tight
labour market driving up
inflation.

Fixed Income

Foreign institutional investors

(FIIs) are primed to pump as
much
asRs 16,500 crore
($2.55 billion) into the Indian
debt market on Monday with
higher limits set by Reserve
Bank kicking in on government
securities. The expected dollar
inflow is likely to prop up the
rupee further and add to
positive sentiment in the stock
market as foreign investors
look to make the most of the
relative stability of the local
currency, bankers said. Also,
while yields are
set to
decline, these will still be
higher
than
most
other

12th 18th October 2015

The Week that FINished

support for his fiscal efforts,

without saying how she got
the information. Fitch Ratings
lowered Brazils debt rating to
the cusp of junk Thursday,
delivering
the
fourth
downgrade under Rousseffs
watch. Standard & Poors cut
the country to junk last month,
citing the governments rising
debt burden, difficulty in
shoring up its budget and
reviving an economy thats
forecast to post the longest
recession since the 1930s.
Speculation Brazils Finance
Minister Joaquim Levy would
resign his post amid a political
crisis that has paralyzed an
already stalled economy sent
the currency tumbling late
Friday. Levy planned to quit
during
a
meeting
with
President Dilma Rousseff on
Friday after nine months
struggling to get his austerity
measures
approved
by
Congress,
Veja
Magazine
columnist
Vera
Magalhaes
reported without saying where
she got the information. Local
media reports that Levy has
been facing criticism within
the government -- and that
former President Luiz Inacio
Lula da Silva has been calling
for his resignation -- have
increased in recent weeks as
Levy faced resistance to his
proposals for spending cuts
and tax cuts that he says are
needed to shore up the
countrys budget.

Vol.10

journalists have speculated

that Chinas numbers paint a
more flattering picture of the
worlds
second
largest
economy. However, a report
published by the Centre for
Strategic and International
Study (CSIS) has pointed out
that Chinas economy is in fact
much bigger than what the
official estimates suggest.
China currently measures GDP
using the United Nations
System of National Accounts
standards set in 1993, which
has a narrower coverage of
services sector, while the bulk
of developed nations use the
latest standards set in 2008. If
revisions are made as per the
2008 standards then the
service sector contribution
would be 22.2% higher than
what it is today. Measures of
R&D expenditure by the
country would also be revised
upward.
What
these
calculations suggest is that
China is not doing as badly as
is suggested. The debt to GDP
picture would be less dire and
gross output per worker
slightly
higher,
indicating
better labor productivity
The question that arises is
that why has China not
upgraded
to
the
new
standards
despite
better
health
of
indicators
so
projected?
Notwithstanding the technical
challenges of an up gradation,
it has more to do with the
political importance of Chinas
growth figures. The newer
methodology would result in
the country having a larger
base which would eventually
result in even lower GDP
growth numbers.

emerging markets, bankers

added. RBI
had
notified
October 12 as the date for the
first phase of the expanded
limits. "In aggregate terms,
this is expected to open up
room for additional investment
ofRs 1.20 trillion (Rs 1.20 lakh
crore) in the limit for central
government
securities
by
March 2018 over and above
the existing limit of Rs 1.53
trillion (Rs 1.53 lakh crore) for
all government securities," RBI
had said.
RBI cut the policy rate by a
steeper-than-expected
50
basis points on September 29.
A
basis
point
is
0.01
percentage point. With global
oil prices remaining below
$55-60 a barrel, inflation will
continue to remain soft, giving
room for further rate cuts,
bankers said. The expectation
is that the central bank will cut
the borrowing cost by another
25 basis points, supporting a
further drop in the benchmark
yield. The outlook for food
inflation could improve if the
increase
in
sown
area
translates
into
higher
production, RBI said in its
September
monetary
policy. To
be
sure,
the
benchmark 10-year bond yield
has already dropped sharply
from a peak of 7.72 per cent
on September 28 following
RBI's rate cut announcement.

Eurozone and UK

12th 18th October 2015

The Week that FINished

Germany, the eurozones economic
engine, is sputtering as its biggest
companies struggle
http://business.financialpost.com/investin
g/global-investor/germany-the-eurozoneseconomic-engine-is-sputtering-as-itsbiggest-companies-struggle
Ever since the European sovereign debt crisis
erupted five years ago, the eurozone could
count on one country to be a source of
economic stability and growth Germany.
But Europes economic engine is sputtering. In
an announcement that shocked the market late
Wednesday night, Deutsche Bank AG said it
expects to lose more than six billion euros in
the third quarter a record loss for the
countrys largest financial institution. Analysts
had predicted the bank would record a profit of
one billion euros.
That announcement comes as Germanys
largest company, Volkswagen AG, continues to
deal with the fallout from its stunning
emissions scandal.
The worrying corporate news could hardly
come at a worse time for the German
economy. On Thursday, Germanys national
statistics office said exports fell 5.2 per cent in
August from July, the sharpest monthly decline
since the financial crisis.
Germany is certainly not used to so much
economic disappointment. The country has
consistently been a bright spot in the eurozone
and has helped prop up the monetary unions
basket cases, such as Greece.
But it is clear that export-dependent Germany
is feeling the fallout of a global economy that
is expected to register its smallest growth rate
since the financial crisis this year, according to
the International Monetary Fund.
The fate of Volkswagen will have a strong
impact on both the German economy and the
stock market, given that the brands and
businesses tied to the company represent
around 500,000 to 600,000 workers 1.5 per
cent of all employees in Germany.

Vol.10

Banking and nothingness

http://www.economist.com/news/financeand-economics/21674778-europesdithering-banks-are-losing-ground-theirdecisive-american-rivals-banking?
zid=307&ah=5e80419d1bc9821ebe173f4f
0f060a07
Seven years after the height of the financial
crisis, Europes large banks still behave as if
they are in the thick of the storm. Plans for
radical restructurings are shelved before they
are even implemented, often accompanied by
management defenestrationBarclays is one
of four big European banks with new leaders.
And they have dithered on the most basic
questions, for example on how much capital
they need or whether to scale back misfiring
investment-banking arms.
European indecisiveness stands in sharp
contrast to Americas large banks, which
restructured more quickly. Returns are below
pre-crisis levels, but their balance sheets are
stronger and management teams bedded in.
European banks are still weighed down by noncore units and dud loans; Americas banks have
moved on.
Most big European banks, including Deutsche
Bank and HSBC, trade at a discount to tangible
book value: in theory, they would be better off
wound up and money returned to shareholders.
Bar Citi, Americas largest banks trade at a
premium to book value.
The argument that is staring at the face of the
European banks is the fact that they need to
change their approach and their method of
operations, downsizing in the European
Banking industry is inevitable. Deustsche bank
is considering to hold back on dividends for the
first time in decades. European slowdown has
impacted the investment banking vertical of
the big European banks the most, this clearly
indicates that apart from the deflationary
pressures and price stability the European
Central Bank should seriously consider reviving
the banking sector confidence among the
European businesses.

12th 18th October 2015