Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: China can no longer plead poverty
Anybody who talks regularly to Chinese officials will be familiar with the mantra that “China is a developing country”. But Shanghai, which I visited last week, mocks this modest description, the FT columnist writes. With its eight-lane highways, its modern and efficient subway, its forest of neon-lit skyscrapers, giant new airport and chic hotels, China’s commercial capital is defiantly developed. But China’s insistence that it is still a “developing country” has become a shield to protect itself against vital political and economic changes.
Jerome Booth: Emerging nations: a beacon of opportunity
If you are looking for a market bubble do not look to emerging markets, Booth, head of research at Ashmore Investment Management, argues. The US and Europe remain a huge super-bubble. Emerging markets, by contrast, are safe. The developed world is shouting hard for more investment capital – the question is: are investors going to give it to them or rethink risk, rethink tired asset allocation conventionalities and think for themselves?
Jacques de Larosière: Basel rules risk punishing the wrong banks
The new Basel capital regime could have unintended consequences, writes the co-chairman of Eurofi. It could encourage a transfer of heavily taxed operations in terms of capital requirements, such as trading, to the so-called shadow banking system. But tthe second big cause for concern touches on European banks and their business model. The new Basel capital and liquidity rules would, in the medium term, lead to reduced profits and increased competition regarding the generation of deposits.
Ilene Grabel and Ha-Joon Chang: Capital controls are not all bad
Was it really just over a decade ago that the International Monetary Fund and investors howled when Malaysia imposed capital controls in response to the Asian financial crisis? We ask because suddenly those times seem so distant, write Grabel, who teaches at Denver University, and Chang, who teaches at Cambridge University. Today, the IMF is actually going so far as to promote their use. What was forgotten during the neo-liberal era is that many of these explicitly “anti-market” measures helped to promote rapid economic development by increasing financial stability.
Brian Groom: Wimps can still pack a punch
What a feeble bunch the British can appear, the FT columnist says. While the French revel in general strikes, blockades and street protests – all over a measly rise in the retirement age from 60 to 62 – the Brits have been phlegmatic about the harshest austerity package for decades. A few polite demonstrations by the Trades Union Congress, some vague threats of strikes. That is about it so far. But hang on a minute. Is this not the country that saw the Peasants’ Revolt in 1381 and beheaded its king in 1649?
Short View: Hopes for the equities binge
Since Ben Bernanke set out the options for the US Federal Reserve to ease monetary policy further, equities have been on the sort of bender that would put a hardened alcoholic to shame, the FT’s James Mackintosh writes. However, the dollar is falling fast too. As a result, international investors in US equities are doing less well than the raw S&P 500 rise suggests.
Lex on bourses for courses
It’s a refreshingly honest strategy for the combined SGX/ASX exchanges group, on course to become the world’s fourth largest by market value, notes Lex. To be a credible destination for international capital, it has to leave China to Hong Kong, and move on. Over the past 10 years, the FTSE-Straits Times index of Singapore-listed Chinese companies is down 34 per cent. Hong Kong-quoted Chinese stocks are up 685 per cent.
Economists’ Forum: Martin Wolf is wrong on expansionary fiscal adjustments
Martin Wolf in his recent column fully embraces the message of the recent IMF World Economic Outlook. He suggests that the WEO “demolished” previous research on the possibility of expansionary fiscal adjustments, writes Alberto Alesina, professor of political economy at Harvard University. While the WEO offers interesting observations, the drastic judgment of Mr Wolf is unfounded.
FT beyondbrics: Thai SET sizzles with 14-year high
Thailand’s SET Index moved above the 1,000 point mark for the first time since 1996 on Tuesday, reflecting the ebullient confidence of Asian markets. But it also underlined concerns that cheap western money could be fuelling bubbles in the region, writes the FT’s Tim Johnston.