Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Why China’s exchange rate policy concerns us
A country’s exchange rate cannot be a concern for it alone, since it must also affect its trading partners. But this is particularly true for big economies. So, whether China likes it or not, its heavily managed exchange rate regime is a legitimate concern of its trading partners. Its exports are now larger than those of any other country. The liberty of insignificance has vanished.
Insight: John Plender – currencies have their uses
In today’s asset markets, diversification is an extraordinarily elusive quality, writes Plender. Over the past two years, most alternative asset classes that were supposedly uncorrelated with equities have gone down, then up, in line with stock markets. So what is an investor to do? An interesting answer proposed by Jonathan Ruffer of the Ruffer investment management group is to use currencies to do the portfolio diversification job.
Lex on the Greek downgrade
It wasn’t a surprise, but the downgrade of Greek sovereign debt by Fitch to triple B-plus still came as a shock. World stock markets fell, the dollar rose, as did German bunds — all the usual haven plays that rallied following last week’s debt standstill by Dubai. Greek government bonds meanwhile slumped — yields on 2-year bonds have risen by a whole percentage point in two weeks — and the stock market closed down 6 per cent, with banks particularly badly affected. Still, this remains a drama rather than a tragedy, for now.
John Kay: A reality check for the UK’s fiscal Pollyannas
British governments will need to make tough choices about taxes and public spending in the decade ahead, writes Kay. These choices are inevitably political. But they can only be well made if the information on which these choices are based is not.
In-depth: The UK’s pre-budget report
The chancellor has drawn Labour’s election battle lines with many areas facing average cuts of about 14 per cent over three years in the biggest squeeze in public spending for a generation, reports the FT. Read news, analysis and commentary ahead of Alistair Darling’s PBR presentation later on Wednesday.
Trading Room: High-frequency trading
See this in-depth report, combining news, analysis and commentary, on the lightning fast world of high-frequency equity trading – which is now being scrutinised by the SEC amid concerns that this computer-dominated scene is placing less tech-savvy investors at a disadvantage.
Energy Source: Copenhagen wrap – ‘Draftgate’, data and a new climate tax idea
Two reports dominated Tuesday’s news and are set to continue on Wednesday: new temperature data, and the controversy over a draft Copenhagen agreement being circulated. Get up to date on the issues involved ahead of the Copenhagen summit.
The Short View: US stocks over the last decade
After a decade if price falls, the cost of entering the US equity markets is less. But whether it is low enough relative to alternatives depends on an investor’s risk appetite.