Month: December 2021

Turkish producers say extreme volatility in the lira is hurting them more than high interest rates as President Recep Tayyip Erdogan wages a war against borrowing costs at the expense of price stability.From machinery to packaging and construction, industry has for weeks been battered by unprecedented swings in the lira. The currency has shed just over a third of its value against the dollar since September amid Erdogan’s calls for the central bank to lower rates as he seeks to spur economic growth and shore up his waning popularity ahead of 2023 general elections.The lira, the worst-performing emerging-markets currency in the world, clawed back some losses after Erdogan on Monday introduced emergency measures — effectively an interest-rate hike in disguise — in an effort to stem the volatility. But there’s been little let-up in the currency’s gyrations.

Inflation is surging in Brazil, forcing a country with one of the highest death rates from Covid-19 to grapple with the economic fallout of the pandemic.While the global economy is forecast to rebound more than 4% next year, including in countries bordering Brazil, more economists expect Brazil to remain stuck in recession during 2022 as it battles one of the world’s highest annual inflation rates of 10.7%.“Brazil really stands out—its inflation rate has risen much faster than almost any other emerging economy, and you can really see that hitting consumers,” said William Jackson, chief emerging-markets economist at the London-based research firm Capital Economics.

Inflation rates from Canada to Germany have climbed to the highest level in decades as businesses and consumers emerge from lockdowns, boosting energy prices and prompting supply bottlenecks. U.S. inflation hit a 39-year high in November, the government reported Friday.

At 10.7%, Brazil’s 12-month inflation rate is the third-highest among the major developed and emerging economies that form the Group of 20, after Turkey and Argentina, according to the Organization for Economic Cooperation and Development. A severe drought, the worst in almost a century, has contributed to inflation, drying up hydroelectric reservoirs and adding to demand at more-expensive thermal plants.A sharp depreciation in the Brazilian real—which has lost about 25% of its value against the dollar over the past two years—has increased the price of imported goods including fuel, adding to inflation.

Stop us if you’ve heard this before: Market strategists are predicting that 2022 will finally be the year when investors choose value stocks -— like banking, oil, consumer, industrial and healthcare companies — over Big Techs, such as Apple (AAPL), Amazon (AMZN) and Facebook owner Meta (FB).It’s been a common refrain among stock pickers for several years. But the so-called FAANGs, as well as Microsoft (MSFT), Tesla (TSLA) and Nvidia (NVDA), continue to dominate the market weighting of the S&P 500. So will investors really finally quit these leaders of the Nasdaq for cheaper bargain stocks?For what it’s worth, that appeared to be happening Monday. The Dowsoared more than 700 points, or 2.1%, led by gains in Walgreens (WBA), Amgen (AMGN), American Express (AXP), Boeing (BA), Visa (V) and Coca-Cola (KO). But the Nasdaq was up by less than half that amount.

The People’s Bank of China on Monday said it would cut the reserve requirement ratio for most banks by half a percentage point, starting December 15. That move, which reduces the amount of money that banks have to keep in reserve, will unleash some 1.2 trillion yuan ($188 billion) for business and household loans.The decision — the second cut to that ratio this year — came on the same day China’s Politburo signaled that it may take more aggressive actions to protect the economy in 2022. The Chinese Communist Party’s leadership team, chaired by President Xi Jinping, said in a statement that “ensuring stability” would be a top priority in the coming year.

China cut the amount of cash most banks must hold in reserve, acting to counter the economic slowdown in a move that puts the central bank on a different policy path than many of its peers.

The People’s Bank of China will reduce the reserve requirement ratio by 0.5 percentage point for most banks on Dec. 15, releasing 1.2 trillion yuan (US$188 billion) of liquidity, according to a statement published Monday. 

The reduction was signaled by Premier Li Keqiang last week when he said that authorities would cut the RRR at an appropriate time to help smaller companies, and is the second reduction this year. The decision comes after recent data showed the economy and industry stabilizing, although Beijing’s tightening curbs on the property market have led to a slump in construction and worsened a liquidity crisis at developer China Evergrande Group and other real-estate firms. 

The cut is a “regular monetary policy action,” the PBOC said, pre-empting expectations that the decision was the start of of an easing cycle. “Prudent monetary policy direction has not changed,” it said, adding that the bank “will continue with a normal monetary policy, maintaining the stability, consistency and sustainability of policy, and won’t flood the economy with stimulus.”

However, with the U.S. Federal Reserve and other global central banks looking to tighten policy, the move to add stimulus by the PBOC makes the divergence between China and much of the rest of the world even clearer. 

More than two decades ago, India began its transformation into a global IT powerhouse, ushering in an era of wealth and job creation never before seen in the country.Now, Asia’s third largest economy is ready for the next big frontier in tech: Coming up with a new generation of software companies like Zoom or Slack.The Covid-19 pandemic has forced business around the world to make huge investments in digital infrastructure, furthering the influence of companies providing software-as-a-service, or SaaS. Businesses spent an extra $15 billion per week last year on tech as they scrambled to create safe remote working environments, according to a KPMG survey.