Prime Minister David Cameron should, if the pollsters and bookmakers are right, win his campaign to keep the U.K. in the European Union. But if things go wrong between now and the June referendum his biggest challenge will be to persuade the poor, for whom he has done little, that Brexit won't make them better off.
Friday, April 29, 2016
Thursday, April 28, 2016
Tuesday, April 26, 2016
Monday, April 25, 2016
The euro's future still looks far from secure. The European Central Bank is defending its independence amid an attack on its negative interest-rate policies by Germany. European Commission President Jean-Claude Juncker admitted last week that "the European project has lost parts of its attractiveness." Greece is still wrangling over the terms of its next bailout payment. And at the end of this week, a geeky decision in a corner of the bond market could send the bloc back into crisis mode.
Friday, April 22, 2016
Thursday, April 21, 2016
Bad debts at Asian banks have climbed to their highest since the global financial crisis and the trend will likely worsen as regional economies battle against China's slowdown and volatile oil and commodities prices, a Reuters data analysis shows.
The bad loans pile at 74 major listed Asian banks, excluding Indian and Japanese banks, reached $171 billion at the end of 2015, the survey of banks showed, the highest since at least 2008. Non-performing loans (NPLs) jumped 28 percent from a year earlier, nearly twice the growth in 2013.
Indian and Japanese banks were not included as their fiscal year ends in March.
With economic growth in the region slowing, analysts expect the asset quality of Asian lenders will continue to deteriorate as banks start publishing quarterly earnings, forcing them to make writedowns that will hurt profit and depress valuations.
Asian central banks have cut interest rates to ensure abundant liquidity, but uncertain economic growth and weak export demand will likely lead to more loan defaults in the near term, analysts and bankers said.
"We expect asset quality to weaken and bad loans to increase ... the key factor we see is Asia entering into more challenging phase of the credit cycle," said Gene Fang, Moody's associate managing director for financial institutions group.
"In the recent past, we saw relatively strong growth and low interest rates, which encouraged loan growth and higher leverage. But growth has now weakened, most significantly in China, which is impacting the rest of the region."
The average ratio of bad loans to gross credit for 29 Asian banks for which this data is available stood at 1.9 percent last year - the highest since 2009, the survey showed. In 2008, the ratio stood at 2.5 percent.
In China, where the economy grew 6.9 percent in 2015 - the weakest pace in a quarter of a century - bad loans surged to a decade-high at the end of December, with Moody's expecting continued asset quality pressure over the next 12-18 months.
Top Chinese lenders including Industrial and Commercial Bank of China (601398.SS), Agricultural Bank of China (601288.SS) and Bank of Communications (601328.SS), will report March quarter results next week.
Last year, the total bad debt pile for all listed and unlisted Chinese banks stood at $297 billion.
Japanese banks' average ratio of bad loans to gross credit stood at 2.5 percent at the end of last year, a slight improvement from 2.7 percent at the end of 2014, Thomson Reuters data showed.
In India, where the central bank is forcing a debt clean-up, total distressed debt surged nearly a third between September and December to $120 billion. The March quarter will probably show a further increase, analysts said.
Thailand's fourth-largest bank Kasikornbank (KBANK.BK), which published quarterly results on Wednesday, expects the ratio of non-performing loans to total loans to rise to 3.5–3.6 percent this year from 2.7 percent last year, Admit Laixuthai, a senior vice president at the bank, told Reuters.
"NPLs for the whole banking system are likely to rise further this year as the overall economy remains weak … I can't tell when NPLs will peak. It depends on the economic situation."
(Additional reporting by Manunphattr Dhanananphorn in BANGKOK; Editing by Lisa Jucca and Jacqueline Wong)
Wednesday, April 20, 2016
Monday, April 18, 2016
Friday, April 15, 2016
Thursday, April 14, 2016
Central bankers usually worry about when to remove the punch bowl of cheap finance but when they gather in Washington, D.C. this week they will face a different problem: how to force the world to drink.
Amid a flood of cheap money and a historic experiment with negative interest rates, households, corporations and banks in the developed world have turned their backs on borrowing. Credit growth has flat-lined and an array of metrics indicate the world has become a more cautious place, potentially upending whatever bang for the buck central banks might expect.
In the U.S. households are paying down mortgages instead of borrowing against homes to fund consumption, altering behavior that arguably helped fuel the 2007 financial crisis but that also contributed to economic growth. A Chicago Federal Reserve Bank composite index of household, bank and corporate leverage has been below average for nearly four years.
European and U.S. companies are socking away cash and the Bank of Japan's descent into negative rates has yet to boost consumption, corporate investment, or even faith in an economic rebound.
Even as global liquidity expands, the appetite for it remains moribund.
“You can’t create demand from thin air. What’s needed is to create an environment in which companies and households feel confident to spend,” said a senior Japanese policymaker directly involved in Group of 20 negotiations that will continue in Washington this week.
“There’s a growing sense globally that monetary policy alone cannot cure all problems.”
HOW TO INFLATE DEMAND
The policymakers assembled in Washington will be focused on how to inflate demand. Along with more cautious consumers and companies in developed nations, China is in retreat and likely to scale down investment and purchases of raw materials as its economic transition continues.
The IMF's preferred and oft-repeated solution is for government spending to pick up the slack, particularly on infrastructure, as well as for labor market and other reforms that will make economies grow faster because they are more efficient.
Absent those measures, the economic outlook is likely to remain mediocre. The IMF cut its growth forecast for the fourth time in a year.