Introduction for digital and physical goods

Although the Federal Reserve reaffirmed its commitment to stay with low rates for an extended period, the recent spike in oil prices has made things tough. The fragile recovery has almost sealed the fate of interest rates at least until the end of the year even if it means that inflation rises in the near term. The commodity price rally witnessed now is a product of both supply side concerns triggered by recent geopolitical events and demand pick up in emerging economies such as China and India. Additionally, the dollar’s weakness is also exerting upward pressure on commodities denominated in the dollar. Real consumer spending growth slackened to 2.7 percent in the first quarter from the 4 percent pace in the fourth quarter despite nominal spending rising 0.8 points to 6.6 percent. Thus inflation has taken roughly 2.1 percentage points out of consumer spending. If prices keep rising, real spending slows down further in the second quarter. A notable slow down in the second quarter cou

By Simona Stankovska Inflationary pressures in China are a serious risk to Asia-Pacific markets, especially if expectations of further price rises get embedded in the popular psyche, says Angus Tulloch, manager of the £5.39bn ($8.8bn) First State Asia Pacific Leaders fund. In line with this view, Mr Tulloch is taking a cautious approach and positioning the fund conservatively. He attributes recent underperformance to this caution, saying the fourth quartile positioning in the IMA Asia ex Japan sector over the three months to April 30 was due to the lack of exposure to Australian, Chinese, Hong Kong, Korean or Taiwanese banks, which performed strongly up until the end of March. The fund returned 0.7 per cent compared with 3.6 per cent for the benchmark MSCI AC Asia Pacific ex Japan Index, and the sector average of 2.3 per cent. Mr Tulloch has added Taiwan-based Siam Commercial Bank to the portfolio, but has no plans to add Australian, Chinese or Korean banks, arguing there is c

By Leslie Hook in Beijing Those who believe the commodities bull market has run its course could do worse than cite China. For the world’s biggest buyer of everything from cotton to iron ore, it has been an unusually quiet year. Imports of some raw materials have actually fallen, confounding expectations that strong demand would drive prices even higher. Copper is a good example. Chinese imports of refined copper were down 25 per cent from January to May compared with the same period of last year. Ivan Glasenberg, chief executive of Glencore, the world’s largest commodities trader, neatly captured the mood this month when he said: “We see a pullback in China and it will continue.” Although Mr Glasenberg also cautioned that the slowdown in imports would probably be short-lived, his comments have triggered an intense debate in the markets over whether Chinese demand is really slowing down or whether the country, after stockpiling raw materials last year, is simply running down its i

By Gregory Meyer in New York and James Politi in Washington Corn futures have suffered their steepest fall in 15 years after record prices prompted US farmers to defy wet spring weather to plant a sharply increased acreage of the grain. The decline in the corn (maize) price – if it persists – could help support the Federal Reserve’s view that the recently seen higher US inflation could be transitory. Lower food prices could also bode well for the US economic outlook. In its June statement, the Federal Open Market Committee, which sets interest rates, cited “higher food prices” and their damping effect on consumer spending as one of the conditions restraining the ­economy. Three weeks ago corn was less than a penny short of $8 per bushel, an all-time high, and analysts warned that prices would need to stay high to keep critically low stocks from running out before harvest time. But the US Department of Agriculture said on Thursday that farmers in fertile states such as Iowa, M

French IMF Chair hopeful Christine Lagarde hopes to win over China's support for IMF chair bid. Dr. Sven Grimm Centre for Chinese Studies Stellenbosch University Timing counts for a lot in politics. Decision time for the new chair of the International Monetary Fund (IMF) will soon be upon us- in fact the final day for nominations is today, 10 June- but has it all come too suddenly? The IMF chair, Dominique Strauss-Kahn, has stepped down under unfortunate circumstances, but not really surprisingly so. His resignation was, in fact, a foreseeable development – even if the reason for it was not. Mr. Strauss-Kahn was eyeing a candidacy for the French Presidency. As chair of the IMF, he could not campaign in France simultaneously. So the fact that a new head of the IMF has to be chosen around June was known. This was the moment for the BRICS (Brazil, Russia, India, China and South Africa) to throw a candidate into consideration. Reforms of the Bretton Woods institutions – comp

Here at Morningstar, our stock analyst staff has nearly a thousand years of collective investment experience. In this final lesson of the stocks Investing Classroom, we've boiled down some of our most salient observations into 20 suggestions we think will make you a better stock investor. 1. Keep it simple Keeping it simple in investing is not stupid. Seventeenth-century philosopher Blaise Pascal once said, "All man's miseries derive from not being able to sit quietly in a room alone." This aptly describes the investing process. Those who trade too often, focus on irrelevant data points, or try to predict the unpredictable are likely to encounter some unpleasant surprises when investing. By keeping it simple--focusing on companies with economic moats, requiring a margin of safety when buying, and investing with a long-term horizon--you can greatly enhance your odds of success. 2. Have the proper expectations Are you getting into stocks with the expectation tha

By Kim Young-gyo HONG KONG, May 9 (Yonhap) -- Chinese Internet companies are rushing to list their shares on the U.S. stock market following a recent series of successful initial public offerings (IPOs) by their peers, analysts said Monday. Last week, RenRen Inc., one of the biggest social networking services in China, raised US$743 million through an IPO for listing on the New York Stock Exchange. It was immediately followed by Chinese mobile security provider NetQin, which sold shares worth $89.13 million. "The Chinese stocks are aggressively sought after in the U.S.," said Li Daxian, a researcher at China's Yingda Securities. "They can be sold at a better price on the Nasdaq stock market than in the GEM," he said, referring to the China's own Growth Enterprise Market (GEM), which launched in October 2009 in the southern city of Shenzhen, in an aim to cater to small and mid-sized companies. Many China-based Internet companies have been

By Jin Baisong Since the moves of the US Federal Reserve System and Treasury Department have forced the dollar to decline, US Treasury bonds should have lost their charm. So, why does China continue to buy them? China is the fastest-growing buyer of US Treasuries, and its foreign exchange reserves increased by $199 billion last year to reach $2.85 trillion. This has sparked concerns because there already is excessive liquidity in the Chinese market. Yet China needs to hold the US Treasuries as an important way of safeguarding its economic security, given that the international financial order is dominated by the dollar. Besides, the world's major financial institutions have given the Treasuries the thumbs-up sign in terms of security, liquidity, creditability and profitability. Going by this logic, China is justified in holding huge amounts of the Treasuries. The question that arises is why Beijing is increasing its reserve of US Treasuries when it is beyond its reach to maint

Like any other commodity, in the stock market, share prices are also dependent on so many factors. So, it is hard to point out just one or two factors that affect the price of the stocks. There are still some factors that are that directly influence the share prices. Demand and Supply - This fundamental rule of economics holds good for the equity market as well. The price is directly affected by the trend of stock market trading. When more people are buying a certain stock, the price of that stock increases and when more people are selling he stock, the price of that particular stock falls. Now it is difficult to predict the trend of the market but your stock broker can give you fair idea of the ongoing trend of the market but be careful before you blindly follow the advice. News - News is undoubtedly a huge factor when it comes to stock price. Positive news about a company can increase buying interest in the market while a negative press release can ruin the prospect of a stock. H

Have you ever considered what sorts of factors contribute to changes in stock market prices? For many new investors, this is likely to be one of the first questions that they ask. Often, they are unprepared for the complexity of the answer for there are numerous factors involved in price fluctuation. In fact, there are so many that it is difficult to narrow in on one specific reason for the change; it may that it is never as simple as a single factor. Rather, stock market prices are affected by combinations of factors varying from external world events to changes in foreign currency conversion rates. As you develop experience as an investor, it becomes increasingly important to keep many of these factors in mind since knowing the affects of these factors can make a difference between whether you succeed or fail. It is with this in mind that this article is meant to identify some of the top factors that are responsible for changes in stock market prices since there is no way to

It probably comes as no surprise that Nouriel Roubini – also known as Dr Doom – is bearish on China and its current growth model. Based on “two trips” to China recently the good doctor has come up with a devastating prognosis. So is the man famous for predicting the downfall of the US housing market and subsequent global credit crisis about to notch up a second nostradamus award? Here’s a taste of his views on China, as first published on Project Syndicate: “China is rife with overinvestment in physical capital, infrastructure and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns and brand-new aluminium smelters kept closed to prevent global prices from plunging.” “Eventually, most likely after 2013, China will suffer a hard landing. All historical episodes of excessive investment – i

By Alexandra Stevenson Shorters of overseas-listed Chinese stocks are coming out of the woodwork and they’re more shameless than ever. At an event in Bevery Hills devoted entirely to reverse mergers, a group of short sellers – many of whom are producing research alleging Chinese companies are fraudulent, and then taking positions against them to profit from share price falls – grabbed the chance to broadcast their success. “This is harvest time for our side. If you don’t see a bunch of really wealthy guys up here, you’re not looking close,” one investor said, according to Reuters. That investor was John Bird, who has been especially vocal about his short positions. “This has been making more money than you can imagine.” But not everyone at the conference was pleased about the recent deluge of US-listed Chinese companies who have had to announced SEC investigations and/or have had their trading halted by US exchanges, Reuters reports. Speaking about short sellers like Andrew L

China called on third countries to keep out of its territorial disputes while pledging not to use force, in an apparent attempt to prevent further escalation in a disagreement with Vietnam over the South China Sea. “We hope that countries that are not parties to the South China Sea dispute truly respect the efforts of the countries concerned to resolve their disputes through consultation,” Hong Lei, foreign ministry spokesman, said on Tuesday. He added that China would not resort to force or the threat of force. The remarks came as Vietnam conducted a live-fire naval exercise in the South China Sea, which China claims in its entirety, amid rapidly deteriorating bilateral relations. Vietnam has accused China of aggressive harassment of its oil-prospecting ships since late May, and has allowed anti-China demonstrations to take place. At the weekend, the Vietnamese government said it would welcome efforts by the US and other nations to help resolve the territorial dispute. Two leading US

By Kathrin Hille,Ben Bland in Beijing,in Hanoi China called on third countries to keep out of its territorial disputes while pledging not to use force, in an apparent attempt to prevent further escalation in a disagreement with Vietnam over the South China Sea. “We hope that countries that are not parties to the South China Sea dispute truly respect the efforts of the countries concerned to resolve their disputes through consultation,” Hong Lei, foreign ministry spokesman, said on Tuesday. He added that China would not resort to force or the threat of force. The remarks came as Vietnam conducted a live-fire naval exercise in the South China Sea, which China claims in its entirety, amid rapidly deteriorating bilateral relations. Vietnam has accused China of aggressive harassment of its oil-prospecting ships since late May, and has allowed anti-China demonstrations to take place. At the weekend, the Vietnamese government said it would welcome efforts by the US and other nations to help r

An initial public offering (IPO) occurs when a company first sells common shares to investors in the public. Generally, the company offers primary shares this way, although sometimes secondary shares are also sold as IPOs. This article contains: What are the eligibility criteria for a company to issue an IPO? Why companies go for IPO? Why IPOs are said to be attractive for investors? An initial public offering (IPO) occurs when a company first sells common shares to investors in the public. Generally, the company offers primary shares this way, although sometimes secondary shares are also sold as IPOs. For a company to offer IPOs, they need to hire a corporate lawyer as well as an investment banker to underwrite the offer. The actual sale of the shares is generally offered by stock exchange or by regulators. When the company starts to offer IPOs, they are usually required to reveal financial information about the company so that investors know whether the companies a good i

By Jamil Anderlini in Beijing Consumer inflation in China rose to its highest level in nearly three years in May, up 5.5 per cent from a year earlier, according to government figures released on Tuesday. The benchmark consumer price index accelerated from the 5.3 per cent year-on-year rise recorded in April, despite government efforts to rein in liquidity and slow price rises. Persistent inflationary pressure means Beijing is unlikely to let up on its current round of monetary tightening even though the overall economy appears to be cooling. Since October, China’s central bank has raised benchmark interest rates on four occasions and increased the proportion of deposits that banks must hold in reserve eight times. It has also used less orthodox tools, including loan quota restrictions for banks to slow their lending. These policies have started to take effect, with total new bank loans in China in May reaching Rmb551.6bn ($85.1bn), well below April’s Rmb740bn or Rmb639bn for the sa