INDIA
Modi hails new FDI rules
Prime Minister Narendra Modi yesterday hailed a sweeping liberalization of rules on foreign direct investment (FDI), saying they would make Asia’s third-largest economy the most open in the world. “Key reform decisions were taken at a high-level meeting chaired by the prime minister, which makes India the most open economy in the world for FDI,” Modi said in a tweet. In a second tweet, he said the changes would provide a “major impetus to employment and job creation in India.”
THAILAND
Surplus soars to new heights
The Southeast Asian nation — best known for its beaches, food, military coups and, more recently, the soccer heroes Leicester City — has run up the biggest current-account surplus among major emerging markets. The current-account surplus in the first quarter ballooned to an annualized 10.2 percent of GDP, an improvement that is described as phenomenal. Much of the buffer is down to a steep fall in oil prices — Thailand relies on crude imports for more than 80 percent of its energy needs — and a surge in tourism fueled by Chinese shoppers. Thailand has been using the windfall to replenish its foreign-exchange reserves by about US$20 billion this year, providing a key bulwark if it faces a sudden surge in capital outflows or foreign-exchange market volatility. The increase in reserves has been the fastest of any emerging market. The current-account data also reflects a reluctance by companies and households to spend the dividend from cheaper energy, indicating a deeper malaise in the economy. Savings rates soared to 33 percent of GDP in the first quarter, while investment has slid.
HONG KONG
Brexit fears abate
Stocks in the territory yesterday jumped nearly 2 percent, their biggest one-day gain in almost a month, as Asian markets rebounded on hopes Britain would decide to remain in the EU. The Hang Seng Index rose 1.7 percent, to 20,510.20, while the China Enterprises Index gained 1.8 percent, to 8,639.51 points. Brexit fears abated as three British opinion polls ahead of the EU membership referendum on Thursday showed the “Remain” camp recovering some momentum, although the overall picture remained one of an evenly split electorate. Most Hong Kong sectors rose, with financials and energy shares leading the gains. Stella International Holdings shares tumbled for a second session, after last week’s warning of a significant drop in first-half profit.
CHINA
Banks buy more forwards
The country’s banks last month bought more foreign-currency forwards than they sold for the first time in 17 months, signaling lenders’ clients have turned more optimistic on the yuan as capital outflows abated. Banks bought a net 8.6 billion yuan (US$1.3 billion) of forwards from customers last month, the State Administration of Foreign Exchange said in a statement posted on its Web site yesterday. That compares with record net selling of 428.4 billion yuan in August last year, when policymakers devalued the currency, and is the first time the figure turned positive since December 2014. The change comes after the pace of capital outflows from China slowed to an estimated US$43 billion in April, the least since last June, according to Bloomberg Intelligence.
RSS