Schlagwort-Archive: IMF

India, USA versus China. Conflict or Cooperation?

China and India are emerging countries, are they?

The International Monetary Fund (IMF) defines: “emerging markets are typically countries with low to middle per capita income that have undertaken economic development and reform programs and have begun to ‘emerge’ as significant players in the global economy.”

But the IMF also acknowledges, “there are many ways to categories countries as emerging markets.” So the World Bank and the major financial institutions uses a different categorization.

What‘s left if we categorize with all the different criteria of the different financial instituts like market-oriented reforms, low to middle income, and significant players in the world economy are the following countries: Argentina, Brazil, Chile, China, Colombia, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Thailand, Turkey, Ukraine and Vietnam.

A report from professional services giant PwC looks at which economies around the world will be the biggest and most powerful in the year2050.

10. United Kingdom — $5.369 trillion.

9. Germany — $6.138 trillion.

8. Japan — $6.779 trillion.

7. Mexico — $6.863 trillion.

6. Russia — $7.131 trillion.

5. Brazil — $7.540 trillion.

4. Indonesia — $10.502 trillion.

3. United States — $34.102 trillion.

2. India — $44.128 trillion.

1. China — $58.499 trillion.

https://www.weforum.org/agenda/2017/12/these-will-be-the-most-powerful-economies-in-the-world-by-2050

Today the ranking looks like following:

1. United States Nominal GDP: $19.39 trillion 
GDP (PPP): $19.39 trillion

2. China Nominal GDP: $12.01 trillion 
GDP (PPP): $23.15 trillion

3. Japan Nominal GDP: $4.87 trillion 
GDP (PPP): $5.42 trillion

4. Germany Nominal GDP: $3.68 trillion 
GDP (PPP): $4.17 trillion

5. United Kingdom Nominal GDP: $2.62 trillion 
GDP (PPP): $2.91 trillion

6. India Nominal GDP: $2.61 trillion 
GDP (PPP): $9.45 trillion

7. France Nominal GDP: $2.58 trillion 
GDP (PPP): $2.83 trillion

8. Brazil Nominal GDP: $2.05 trillion 
GDP (PPP): $3.24 trillion

9. Italy Nominal GDP: $1.93 trillion 
GDP (PPP): $2.31 trillion

10. Canada Nominal GDP: $1.65 trillion 
GDP (PPP): $1.76 trillion

https://www.investopedia.com/insights/worlds-top-economies/

The industry nations wonder if they had to support the development of China or India. Both countries are competitors on the market in many terms. And both countries are defined to be the world leaders of tomorrow pointing the USA to rank three.

But China of today has deficits in the financial infrastructure. It‘s role in international money transactions is very small. Most transactions are going through the USA followed by UK and BRD.

So China is looking for cooperation to expand and tries to match with the rules of institutions of abroad. But China does not match the ethnical standards of the western counties and it will not do so. China is still regained by the Communist Party which provides other standards than the West. But despite this differences of opinions China is very successfull with it‘s Road and Belt Initiative and it‘s Silk Road Project. With the Silk Road Project China has installed an institution for it‘s expansive foreign policy. It spans a transport system from China to West Europe and Afrika. It includes harbours, streets, railways and airports.

And there are big transnational monetary flows between China and the USA that allows US banks to invest internationally. To break the US hegemony China founded the AIIB ( Asian Infrastructure and Investment Bank ) which connect the asian market with Europe, USA and other countries.

With the AIIB China also tries to generate demand for it‘s domestic market. In 2016 the AIIB was invested in 30 projects with an volumina of 54bio US$, most of them prefinanced with support of japanese or european banks. It has 87 members, Germany is the biggest non-asian contributor and also member of the council of management. USA tries with pressure to avert the accession of many asian states. South Korea shouldn‘t access the AIIB by the threat that the USA wouldn‘t sell them the DSI System. But the USA sold them the DSI-System despite the accession to the AIIB. Japan is not in the AIIB until today.

As China was very successfull the last decades India lost it‘s hegemony and influence in the asian region. In the 1980‘s and 1990‘s US companies and financial institutes invest in India and built IT industry and support centers in the Goa region. Many hotlines in english language the people around the world use are from india, because of India‘s relatively high education by low income.

Different from China, India opens it economy for foreign investments in 1991. In 2000 India begann to support countries in the south, even India was a developing country with low living standard and a high powerty rate. India receives foreign aid from Germany, Russia, Japan, UK and USA. India doesn‘t accept development aid from other countries like these 5 states. But the development aid India contributed to other states 10fold from 1998 until 2018 to 850mio$.

www. India.budget.gov.in

India‘s development aid includes training of professionals and stipendium programms. It built up the Panafrikan E-network satellite and fiber glass network which connects India with 15 african countries and 5 african universities.

India provides also humanitarian aid to it‘s neighbors. A special role has Afghanistan which India supports with hundreds of small projects including water supply, agriculture and health care directly in the villages, so the people can use the advantage directly in their domiciliary. The parlament was built with the help of India and the ring road, which chains afghan cities and connect Afghanistan to Iran. India needs this connection to deliver exportables to Afghanistan without driving through Pakistan. With Pakistan India has a territorial, high tension conflict in Kashmir. Therefore India has a big interest to establish the trade route with Iran. So India‘s budget for Iran is 6% of it‘s development aid to built the harbour of Chabahar. Chabahar will also be the gate to Arabia and Africa. In 2016 India delived it‘s first wheat to Afghanistan. India builts also a dam, the dam fo friendship in Afghanistan.

India also supports the afghan military. First with training of afhan soldiers in India only. Since Modi is India‘s president the restictions are not so strong and India delivers lethal weapons to Afghanistan. It hopes that it can hamper that terrorist backtracks into Afghanistan after attacks in India. Also it can threaten Pakistan from two sides.

India copies successful projects of China. It founded in 2008 the Indian Africa Forum Summit that lean on the Forum on China Africa Cooperation established successfull in 2000 by the Chinese. In 2008 the Indians found not much interest but in 2015 there were 41 head of governments. India and Japan startet the Asian-African-Growth-Corridor which is a countermodell of the Road and Belt Initiative China‘s. It spans health care systems, medicine-, agrarculture-, nutrition projects, education and training and connects the indian harbours in the indian states of Gujarat and Taminado with Dschibuti, Kenya, Tanzania and the Gulf of Bengal. India assign credits to ECOWAS countries. And the West propagates that the social standards are better than the standards of the Road an Belt Initiative.

With this projects India become direct competitor of China. Also China is interested in good infrastructure and harbours in Iran as it delivers goods to Iran and assuage it‘s need for oil.

China has big iron ore mines in Afghanistan and also a big interest in a good infrastructure und political and economic ties.

As US waiver the sanctions against India because of it‘s aid to Chabahar harbour. Afghanistan wants to start its own fleet to drive over Chabahar harbour because the route costs 50% less than the route over the harbour in Karachi.

A waiver to this Iranian port by the US administration may be claimed as a vindication of Iran President Hassan Rouhani’s determination to give the development of this port to India, and not to China.

India must pay attention to its independency and not get involved in the inimical concurrency of the USA and China with it‘s high tension military occurences in the South China Sea. With it‘s neighborhood to China and the border conflict India could become the spearhead of the USA against China.

An economical cooperation between China and India could lead to real wealth and welfare in both countries as both countries together span over 36% of the world‘s population with a high demand in both countries.

Institutional Investors conference, „Value Intelligence“, discussed strategies for the future

The biggest conference in Germany for institutional investors, „Value Intelligence“, happened in Munich this week. In this conference the institutional investors inform themselves about the possibilities to make revenue in the future and form their new strategies of their investments. Part of the attendees of the value intelligence are assecurances, banks, foundations, pensionfonds, family offices and parts of the press. Referents on this event were beside others Prof. Bruce Greenwald, Columbia Business School, New York and James Montier, GMO, London. Prof. Bruce Greenwald who former predicted that the Eurozone fall into pieces said, the Euro-Zone will exists in the future. But it would be an advantage for the poorer south states to divide from the richer north. Mr Montier doesn’t see any problem that the state adopt the debts of the crisis because the state can print money. So the state has not the same constraints like companies. The state could form it’s monetary policy more freely than the private economy. And therefore the national debt will be no problem for the economy. Systemic risk only exists in the private sector. And Prof. Greenwald confirms that the debit for the creditors have been steadily decreased for the last years. For the states the decline of the debit was much more. So Japan, where the net debt is about 150% of the GDP has with a nominal rate of 0,5%, respectively 1% rate load effective, a real rate load of 1,5% of GDP. For Montier is the state debt of Japan no problem, as long the interest rate stay lowly. The national debt is more the result of the crisis than the crisis is the result of the national debt. The quantitative easing is an instrument to control the rates. It is not inevitable that quantitave easing produce inflation. In the sight of the institutional investors the central banks don’t print money. Quantitave Easing is a big programm to change long term national debt to short term reserves at the central banks and this is no process that generates inflation. The biggest problem is that there are countries which protect their industry sector. If they conserve their structure too aggressively they could face deflation and slowing growth. They are endeavoring to export their own problems and produce more financial inequalitiy.

But the central banks can steer the rates to any level they want. If investors sell their treasuries the central bank buy them. The rate does not matter about that. They only have to obey the currency.

That is a nice new doctrine. It may be right from the vantage point of the present of the instituional investors. But what about Greece, Ukraine, Italy or the USA. What about the bankrupt Cities like Detroit and states like California, the different cities and administrative districts in Amerika and Europe which are under rescue shield?

Argentina is under US pressure to control patagonian region

A day after the Senate approved the proposed debt exchange as a way to circumvent U.S. court rulings Argentina government diskusses swapping global Argentine bonds for paper governed by local law. After a New York court had ruled that Argentina is prohibited from paying holders of its restructured bonds without also paying the hedge funds $1.3 billion plus interest.

In 2002 bondholders got less than 30 cents on the dollar as Argentina defaulted on about 100 bio $ in bonds, because a small group of hedge funds went to court for full repayment.

Argentina steadfastly refuses to pay the holdouts in full, saying that to do so would open the country to a raft of new lawsuits. Argentina fights against recession and inflation. With the swap Argentina tries to to circumvent the U. S. Court rufling and hold liquidity. „There is obviously willingness among many creditors, or bondholders, to participate in the sovereign debt payment law, in order to get the money that is owed to them,“ cabinet chief Jorge Capitanich told reporters. The debt swap bill, passed by the Senate on Thursday. It will allow holders of 29 bio $ in bonds under foreign law the choice to swap them for papers governed by Argentine or French law.

In need of financing to develop its vast Patagonian shale oil and gas fields, Argentina will be unable to issue fresh international debt until the lawsuits are settled.

With Patagonia shale oil and gas field Argentina is sitting atop of a shale bounty that could transform the outlook for the Western Hemisphere’s supply and secure the South American country’s energy self-sufficiency for decades. And it is in an area where you’ve already got oil industry activity. There are service companies, pipelines and infrastructure, and you have also knowledge of the rocks.

Asked what was the key reason behind the decision of US based Corporation Chevron to increase its investment in Vaca Muerta, Robertson answered: “We like the rock. That’s first and foremost. Drilling costs are coming down and the well results so far were sufficient to warrant additional investment.”

BP, CNOOC, Chevron and Sinopec will start 2017 to drill more than 1500 wells to produce 50,000 barrel/day of crude oil and 3 billion cubicfeet/day of natural, so YPF.

The  Chevron Corporation is operating in Argentina for many years where it produces currently 21,000 barrels of crude oil and 4 million cubic feet of natural gas per day and has signed Heads of Agreement to spent $1.24 billion capital expenditure to explore and develop the shale oil and gas in the Vaca Muerta Basin within the Neuquen Province in Argentina.

This agreement comes at a critical period for Argentina as it should start to import natural gas and refined products although it is recognized to hold ones of the largest reserves in the world for shale oil and gas.

Chevron estimates that 2014 capital and exploratory expenditures will be $39.8 billion, including $4.8 billion of spending by affiliates.

At the same time NML Capital served subpoenas this week to Bank of China (BOC) and Industrial and Commercial Bank of China (ICBC) in an effort to obtain information on $6.8 billion in financing for deals signed by the two countries in July.

„We want to understand the mechanics of these credit facilities to establish whether assets to which Argentina has a legal title could surface in jurisdictions where we would be able to attach them,“ a lawyer advising Elliott told.

The subpoenas are aimed at a facility provided by China Development Bank, ICBC and BOC to finance the onstruction of two hydroelectric dams in Argentina’s southern Patagonia region and a loan from China Development Bank and ICBC to finance the Belgrano Cargas railway project.

Both deals were signed by Argentine President Cristina Fernandez and her Chinese counterpart, Xi Jinping, during an official visit of a Chinese delegation to Buenos Aires.

Where to invest in real estates

Standard & Poors reports that the prices for real estates will increase in 2014 in Germany. In other european countries like France and Italy there will be no turn. But since 2010 the housing prices in German cities, especially for condomiums are increased by 20%. In 2013 the prices for condomiums in Hambnurg, München, Köln, Frankfurt, Stuttgart, Düsseldorf and Berlin are increased by an average of 9% the German Central Bank announced in it’s monthly report in February 2014.

The German Central Bank warns for a real estate bubble in the large cities of Germany. The real estates there are overvalued by 25%, so the German Central Bank. But Standard & Poors say, that there is no bubble in sight because before that increase there was a decade of stagnation.

Deutscher Immobilienmarkt zieht an

Also the development of the british housing market is seen as brisant. More and more are warning for a bubble, because the prices increased very much the last years. The most mortgages in England have a variable rate, so that many houseowners could struggle, if the Bank of England increase the rates for the mortgages. Tfhis could be possible because of the economic upturn on the island. Due to that risk the Bank of England simulate a collapse in housing prices by 35% in it’s stress tests. Experts say, that this stress test could be difficult for Lloyds and Royal Bank of Scotland, because they have a lot of mortgages based on real estates in their books.

Also the other bank supervisors of EU will simulate collapses of housing prices by 19%. Target is to find out lacks of liquidity in simulated situations.

http://www.faz.net/aktuell/finanzen/meine-finanzen/mieten-und-wohnen/nachrichten/steigende-immobilienpreise-deutschland-fuehrt-im-euroraum-12919293.html

In Germany the increase of the prices for construction is minimal. In May 2014 the prices incereases 1.7% year to year. The prices for shell construction increases by 1.4% and for lining the prices increases by 1.9%, both in May 2014 year to year. Prices for upgrading houses increased by 2.2% in May 2014 year to year.

Also the netto rents increased by 1.6% in December 2013 year to year.

https://www.destatis.de/DE/ZahlenFakten/GesamtwirtschaftUmwelt/Preise/BauImmobilienpreise/AktuellBauleistungspreise.html

But in Ireland the housing prices decreases between 2007 and 2012 about 50% and are recovering now. In Spain the real estate loose 30% worth still loosing worth now. The economy in Ireland is still recovering. The demand is still very high and therre are only a few objects to buy. Especially in dublin the prices are rising very fast. In a report n-tv warns for the beginning of a new housing bubble.

http://www.n-tv.de/wirtschaft/Irland-steht-vor-neuer-Immobilienblase-article12921611.html

But both countries could be a worth to think about a real estate investment.

 

The chinese holiday island Hainan is in upper mood. Real estates are an increasing investment again.

After the real estates bubble in 2011 the properties on Hainan Island, the chinese holiday paradies, is in upper mood. More and more international Hotels growing at the beach sites of the island, as the chinese growing middle class discovers the islands to make their holidays there. Also the agrar sector of the island is growing and with the increasing demand of tourists the farmers need new technology to curb the harvest of the fields, and the yield with it. So the farmers had an increase of earnings of 50% in the last years as the technology they used increased. Many farmers still cultivate their fields with traditionally methods, so cows pull the plow in the rice fields and the plants are set by the farmers with the hand into the bottom. But this process couldn’t hold on, because the customer demand need more efficient methods. As strawberries are the new fruit the chinese tourists love, the farmers let the strawberries grow on the sunny island. Also the fishers on the island which partial still live with their family on their fisherboats expect support from the government to modernize their fleet.

So it is worth for investors and people who love to make their holidays on this nice place to think about an investment now, because the prices could increase fast in the future.

Also the Hainan real-estate-compamies are in the mood to increase.

Hainan Haide Industry Co Ltd

Increased from 7000 to 9000 chinesische Yuan y-t-y with a peak at 9500 Yuan in April 14th, 2014.

Hainan Zhenghe Industrial Group Co Ltd has more than doubled since December 2014.

Also Hainan Pearl River Holdings Co Ltd trended up since December 2014

http://www.bloomberg.com/markets/companies/real-estate-oper-develop/4/

Ukraine a second Greece?

Geschrieben von Friedrich Bier Mo, Februar 24, 2014 08:02:36

The Ukraine’s reseres are very low.

http://www.imf.org/external/np/sta/ir/IRProcessWeb/data/ukr/eng/curukr.htm

By Comparison the reserves of BRD.

http://www.imf.org/external/np/sta/ir/IRProcessWeb/data/deu/eng/curdeu.pdf

The problem is not caused by the protests. Standards & Poors warns in July 2013, that Ukraine could fall into illiquidity.

http://www.bloomberg.com/news/2013-07-04/turkey-and-ukraine-among-most-at-risk-of-liquidity-squeeze-s-p.html

Since the protests the Ukrainian currency, the Hryvnia, decrease for 7% from 10.02.2014 to 23.02.2014..

http://www.exchange-rates.org/history/UAH/EUR/G/180

Already in November 2013 Investors sold Ukraine’s dollar notes. The yields reached record highs. In November Ukrainian’s foreign reserves dwindled by 9 percent, according to central bank data published on Dec. 6.

Ukraine faces almost $17 billion of debt payments in the next two years. The government sold 2.2 billion hryvnia of local-currency notes due in five and seven years on 09.12.2013 at an average yield of 14.25 percent and 14.3 percent.

http://m.treasuryandrisk.com/2013/12/09/ukraine-interbank-rates-soar-to-20-percent

One Ukrainian Hryvnia was worth 0,1123 US$ at 23.02.2014.

http://www.forex-ratings.com/currency-exchange-rates/?currency1=UAH

Interbank lending rates spike to 20%.

http://www.zerohedge.com/news/2013-12-10/ukrainian-overnight-rates-spike-20-bank-liquidity-fears-soar
In Kiev on Friday, 21.02.2014, people stood in line in front of the banks to save their money, because they fear a liquidity crash.

EU Foreign Policy Chief, Mr. Ashton, urged Ukrain to ask for IMF support.

Standard & Poors downgraded the economy by one notch, from CCC+ to CCC, saying „our view that the political situation has deteriorated substantially“, with negative outlook on 21.02.2014. That means further downgrades in future are possible.

http://www.bbc.co.uk/news/business-26285792

Ukraine faces $3.6 billion in debt repayments including interest through the end of June
http://www.bloomberg.com/news/2014-03-14/imf-funding-spat-shouldn-t-slow-ukraine-aid-lowey-says.html.

Ukraine has debt 1.89 bio $ resulted of russian gas deliveries. If Ukraine debt reaches 2 bio $ Russia will stop the delivery of natural gas.