Asia FX By Cornelius Luca - Mon 13 Aug 2012 16:50:14 CT (Source:CME/www.lucafxta.com)
The appetite for risk was mixed on Monday amid ongoing concern about the global slowdown. The euro and franc benefited from a decent auction of Italian debt, but the other foreign currencies were hurt by worries about the slowdown of the Chinese and Japanese economies. The US stock indexes, oil and gold slipped. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short only the yen. Good luck!
Asian Stocks Advance on BOJ Minutes, Before U.S. Data (Source:Bloomberg)
Asian stocks rose as Bank of Japan minutes showed policy makers weren’t ruling out any options to boost the economy, and before U.S. retail sales data expected to signal recovering demand in the world’s largest economy. Honda Motor Co. (7267), which depends on North America for more than 40 percent of its sales, climbed 0.7 percent in Tokyo. MTR Corp. may be active today in Hong Kong after the subway operator said first-half profit fell on lower earnings from its real estate business. Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, may drop after it missed earnings estimates. The MSCI Asia Pacific Index (MXAP) rose 0.2 percent to 120.41 as of 9:45 a.m. in Tokyo. Almost three stocks climbed for each that fell before the open of markets in Hong Kong, Singapore and China.
Asia’s benchmark gauge fell 6.9 percent from this year’s high on Feb. 29 through yesterday amid concern earnings would be hurt by Europe’s debt crisis and slower growth in China. The index traded at 12.4 times estimated earnings compared with 13.6 times for the Standard & Poor’s 500 Index and 11.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japanese Stocks Advance on U.S. Retail Expectations, BOJ (Source:Bloomberg)
Japanese stocks rose, with the Nikkei 225 Stock Average (NKY) rising the first time in three days, as minutes from the Bank of Japan showed policymakers weren’t ruling out any options to boost the economy and on expectations U.S. retail sales rose in July. Makita Corp. (6586), a maker of power tools that gets more than 40 percent of its sales in Europe, climbed 1.5 percent after the yen weakened. Nissan Motor Co. (7201), a carmaker that gets almost a third of its revenue from North America, rose 1 percent. Nippon Yusen K.K., Japan’s largest shipping line by sales, slid 1.7 percent after a key gauge of cargo rates fell to the lowest since March 1. The Nikkei 225 Stock Average rose 0.9 percent to 8,964.38 as of 10:09 a.m. in Tokyo. Volume was 20 percent below the 30- day average with many companies closed for the O-bon holiday this week. The broader Topix (TPX) Index added 0.8 percent to 752.52 today, with about three times as many shares advancing as falling.
“Situations overseas and currency movements are calming down, fueling confidence to buy shares,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo. “Trading is light during the O-bon holiday and investors are searching for companies that have catalysts to buy shares.” The Topix has fallen 14 percent from this year’s peak on March 27 as growth slows in the U.S. and China and on concern Europe’s debt crisis is spreading. The decline has cut the price of shares on the gauge to 0.9 times book value, compared with 2.2 times for the Standard & Poor’s 500 Index and 1.5 times for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than value of their assets.
European Stocks Fall as Japanese Growth Wanes; Baer Drops (Source:Bloomberg)
European stocks retreated, after 10 weeks of gains for the Stoxx Europe 600 Index, as slowing economic growth in Japan offset increased demand at an Italian debt auction. Julius Baer Group Ltd. lost 7.4 percent after agreeing to buy Bank of America Corp.’s Merrill Lynch wealth management business outside the U.S. Petrofac (PFC) Ltd. fell 5.2 percent as the oil and gas engineer said profit growth will slow. Unicredit SpA and Intesa (ISP) Sanpaolo SpA advanced after Italy sold 8 billion euros ($9.9 billion) of debt. The Stoxx 600 fell 0.4 percent to 268.72 at the close of trade after climbing as much as 0.1 percent earlier. The volume of shares changing hands in companies listed on the gauge was 40 percent below the average of the last 30 days, data compiled by Bloomberg show.
“We remain cautious on European equities in the short term,” Yu-chieh Chiang and Edmund Shing, strategists at Barclays Plc in London, wrote in a report to clients. “The rally needs something more to extend. Macro lead indicators have not turned around decisively.” National benchmark indexes fell in 14 of the 18 western European markets today. The U.K.’s FTSE 100 dropped 0.3 percent, while Germany’s DAX declined 0.5 percent and France’s CAC 40 retreated 0.3 percent. Italy’s FTSE MIB Index reversed earlier gains, losing 0.1 percent.
Emerging Stocks Fall Most in Week on China, Europe Woes (Source:Bloomberg)
Emerging-market stocks dropped the most since Aug. 2 after Bank of America Corp. cut its forecast for Chinese economic growth. The MSCI Emerging Markets Index (VXEEM) sank for a second day, losing 0.7 percent to 972.59. Brazil’s Bovespa stock index dropped with mining company MMX Mineracao e Metalicos SA and homebuilder Cyrela Brazil Realty SA Empreendimentos e Participacoes (CYRE3) among the worst performers. The Shanghai Composite Index lost 1.5 percent, the most in four weeks. Israel’s shekel fell to a two-week low amid concern the nation is considering a strike against Iran. Bank of America joined Deutsche Bank AG and Barclays Plc in cutting growth forecasts for China, the biggest developing economy, on weaker exports. Israel’s Home Front Command this week will test its nationwide text-message system to alert the public of danger, the military said yesterday, as concerns rise about a confrontation with Iran, the third-largest producer in the Organization of Petroleum Exporting Countries.
“At a time like this when trading levels are generally low, the markets are a lot more volatile when a headline number emerges,” Robert Abad, who helps oversee $41 billion in emerging-market assets at Western Asset Management Co., said in a phone interview from Pasadena, California. “The GDP forecast cut doesn’t necessarily mean a hard landing for markets as emerging markets have a lot more ammunition in terms of stimulus measures.”
S&P 500 Snaps Six-Day Winning Streak as Growth Slows (Source:Bloomberg)
The Standard & Poor’s 500 Index fell for the first time in seven days, ending the longest streak of gains in 20 months, as slower-than-forecast economic growth in Japan added to investor concern of a global slowdown. Commodity shares led declines among 10 groups in the S&P 500 as Bank of America Corp. cut its outlook for Chinese growth. Alcoa Inc. and Cisco Systems Inc. fell the most in the Dow Jones Industrial Average as investors sold stocks most tied to the economy. TripAdvisor Inc. (TRIP) lost 4.5 percent after Google Inc. agreed to acquire all of John Wiley & Sons Inc.’s travel assets.
The S&P 500 slid 0.1 percent to 1,404.11 at 4 p.m. in New York. The Dow lost 0.3 percent to 13,169.43. Trading volume for exchange-listed stocks in the U.S. was about 4.5 billion shares, the lowest level since July 3 when the market closed at 1 p.m. and about 31 percent lower than the three-month average, according to data compiled by Bloomberg. The Chicago Board Options Exchange Volatility Index, known as the VIX, fell 7.1 percent to 13.70, the lowest level since 2007. “There are some worries that while we’re all focused on Europe, China could actually be one of the reasons why GDP disappoints and that is a negative,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which oversees $350 billion, said in a telephone interview. “The GDP data from Japan reminds us of a risk of a hard landing in China.”
Convertibles Redeemed as Dollar Costs at Year Low: India Credit (Source:Bloomberg)
The lowest Indian dollar borrowing costs in a year will help as companies from Tata Steel Ltd. (TATA) to Jaiprakash Associates Ltd. (JPA) refinance $1.2 billion of convertible debt due this quarter. The extra yield investors demand to buy dollar-denominated Indian bonds over U.S. Treasuries fell to 448 basis points on Aug. 10, the lowest since August 2011, HSBC Holdings Plc indexes show. That’s higher than the 335 basis points for Chinese notes and 289 for Indonesian issuers. Suzlon Energy Ltd. (SUEL), JSW Steel Ltd. (JSTL) and Rolta India Ltd. (RLTA) all used bank loans to redeem $887 million of debt in the past six weeks. Indian companies sold $1.75 billion of dollar bonds this quarter, almost 13 times the preceding three months’ issuance, as global central banks ensure ample cash supply to counter slowing economic growth.
Companies defaulted on $315 million of debt this year after the 22 percent slump in the benchmark Sensitive Index from its peak in November 2010 pushed shares below levels at which the notes could be converted to equity. “It’s a better environment for companies to borrow overseas because global rates are at record lows and there’s comfortable liquidity around the world,” Raj Kothari, a London- based fixed-income trader at Sun Global Investment Ltd. said in an Aug. 10 telephone interview. “Refinancing is the only option for companies to repay this convertible debt.”
Yen Drops on BOJ Stimulus Signs, Asian Stock Gains (Source:Bloomberg)
The yen weakened versus all 16 major counterparts as Asian shares rallied and minutes of the Bank of Japan (8301)’s last meeting signaled policy members are considering ways to expand stimulus. Japan’s currency remained lower against the dollar and euro as stock gains curbed demand for haven assets. The euro halted its biggest gain in more than a week versus the greenback before reports forecast to show the euro-area economy contracted in the second quarter as French gross domestic product shrank and Germany’s expansion slowed. New Zealand’s dollar strengthened after a government report showed retail sales increased more than economists forecast.
“There’s going to be no change to the BOJ’s stance so long as they’re short of their inflation goal,” Sacha Tihanyi, a Hong Kong-based senior currency strategist at Scotiabank, a unit of Bank of Nova Scotia (BNS), said in reference to the central bank’s 1 percent target. Sentiment today “is looking a little bit better, so I think that’s pretty much consistent with a little bit of softening in the yen.” The yen lost 0.1 percent to 78.38 per dollar as of 9:53 a.m. in Tokyo. It fell 0.1 percent to 96.70 per euro. The 17- nation currency was at $1.2340 after rising 0.4 percent yesterday, the most since Aug. 3. The New Zealand dollar gained 0.2 percent to 81.06 U.S. cents.
FOREX-Euro steady but vulnerable to selling on rallies
LONDON, Aug 13 (Reuters) - The euro held steady, helped by the prospect of European Central Bank action to tackle the debt crisis, though it was seen vulnerable to selling on rallies and signs of disagreement among euro zone politicians.
"There is no coherent message between politicians and policymakers," said Jeremy Stretch, head of currency strategy at CIBC, adding that the euro's failure to break above $1.2450 would leave traders inclined to sell it on rallies.
Currency Flows Reversing China to Colombia as Trade Slows (Source:Bloomberg)
Just three months after the biggest developing economies sold dollars to support their currencies, policy makers from Colombia to China are moving to weaken exchange rates and revive exports as the International Monetary Fund forecasts the slowest trade growth in three years. Colombian Finance Minister Juan Carlos Echeverry urged the central bank on Aug. 3 to boost minimum dollar purchases from $20 million a day, saying the country needs “more ammunition” to drive down the peso in the global “currency war.” The Philippines banned foreign funds from deposit accounts and unexpectedly cut interest rates in July as the peso hit a four- year high. In China, authorities lowered the yuan reference rate to the weakest since November, which according to Citigroup Inc. will create “headwinds” for other Asian currencies.
After spending more than $59 billion in foreign reserves in May and June to stem currency depreciation, developing nations are reversing policies as the European debt crisis outweighs the risk of faster inflation. South Korea and Chile may weaken exchange rates to make their exports cheaper, according to UBS AG. The IMF estimates global trade will expand at the slowest pace since 2009. “Policy makers will become more aggressive,” said Bhanu Baweja, a London-based strategist at UBS. “The currency strengthening is in contrast with the state of the economy. That argues for much weaker foreign-exchange rates.”
Hedge Funds Capitulate on European Shorts (Source:Bloomberg)
Hedge funds that base investment decisions on economic trends are unwinding bets against European stocks (SXXP) at the fastest pace in three years, speculating policy makers will step up the fight against the debt crisis. The degree by which macro funds are trailing the Euro Stoxx 50 Index (SX5E) is narrowing at the fastest rate since 2009, a sign managers are covering short sales by buying shares, according to data compiled by Bloomberg and JPMorgan Chase & Co. The proportion of shares on loan in the Stoxx Europe 600 Index, an indication of short interest, has fallen to 2.9 percent from 3.4 percent in May, data from London-based Markit show. Bulls say professional investors buying back shares that were borrowed and sold short are fueling a rally led by European Central Bank President Mario Draghi’s pledge to defend the euro. The Euro Stoxx 50 is up more than 12 percent in three weeks, twice the gain of the MSCI All-Country World Index (MXWD), even as the euro-area economy is forecast to slide into recession.
Bears point to a drop in earnings estimates after profit fell about 10 percent last quarter as a sign stocks in Europe may fall. “Macro hedge funds missed collectively the policy news of June, and with the prospect of central bank interventions they are now capitulating,” Nikolaos Panigirtzoglou, head of global asset allocation at JPMorgan in London, said in an Aug. 7 phone interview. JPMorgan has $2.3 trillion under management. “For positions to unwind, a trigger is needed. And the trigger was all this policy news.”
Faber Pessimistic on China, Favors European Stocks: Tom Keene (Source:Bloomberg)
China’s economy will slow “considerably,” said Marc Faber, the publisher of the Gloom Boom & Doom report, who is buying European stocks. “The growth rate we had in the last 10 years, which was around 10 percent annually, is going to slow down considerably,” Faber told Tom Keene and Ken Prewitt in a “Bloomberg Surveillance” radio interview today. “I would rather wait to buy Chinese stocks until we see the result of the stimulus packages.” The Shanghai Composite Index has tumbled 13 percent from this year’s high reached March 2 on concern the economic slowdown is deepening. The gauge fell 1.5 percent today after Bank of America Corp. joined Deutsche Bank AG and Barclays Plc in cutting growth forecasts for China on weaker exports. Faber is buying European stocks as declines related to concern the euro may break up create opportunities for investors. “For the first time in my life, I’ve started to buy some European stocks, and I will buy more over time,” Faber said. “Equities have become inexpensive.”
Homebuilder Stocks Surge With New Sales 50% Below Average (Source:Bloomberg)
U.S. homebuilder shares are appreciating at a record rate this year, reflecting confidence the housing rebound from a six-year slump can accelerate with new-home sales still 50 percent below the 40-year average. The Standard & Poor’s Supercomposite Homebuilder Index of 11 companies has climbed 53 percent this year through Aug. 10, compared with a 12 percent gain for the broader S&P 500 Index. (SPX) Builders, including PulteGroup Inc. (PHM) and D.R. Horton Inc. (DHI), are raising prices in markets with limited inventory and targeting move-up buyers with more money for down payments and better access to credit than first-time purchasers. “We’re getting more activity, more traffic and even pricing has begun to improve,” said Jason Benowitz, portfolio manager for Roosevelt Investments in New York, which holds an almost 2 percent stake in Lennar Corp. (LEN) “If the economy can muddle along, then we think housing will continue to be a bright spot. And the homebuilder stocks have room to run from here.”
Shares rallied as new homes sold at a seasonally adjusted annual rate of 350,000 in June, about half the 40-year average, according to Commerce Department data. That’s still an improvement over 304,000 in June 2011 -- enough to help engender a big rebound for homebuilders, which underperformed the S&P 500 from 2005 through 2011.
Refinance Rebuilds U.S. Savings as Growth Delayed: Economy (Source:Bloomberg)
Americans’ drive to rebuild savings and pay down debt may mean the gains from the current mini boom in mortgage refinancing will accrue over years rather than have a more immediate effect on the U.S. economy. Aided by record-low interest rates and an expansion of government programs, the value of home loans refinanced this year will rise to $932 billion from $858 billion in 2011, according to projections from the Mortgage Bankers Association. The group’s gauge tracking the volume of credit being reworked climbed at the end of July to the highest level in three years. The typical borrower redoing a $200,000 mortgage last quarter will save about $2,900 in interest over the next year, according to figures from Freddie Mac. Nonetheless, the extra cash may not be spent soon as households continue to focus on repairing finances.
“The initial benefit is not as significant as the large dollar-savings figures would seem to indicate,” said Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a subsidiary of the largest U.S. mortgage lender. “It does provide a benefit to the economy, but that benefit actually grows over time.”
Japan’s Executives Swelter in Solidarity to Save Power (Source:Bloomberg)
The 32-degree Celsius (90-degree Fahrenheit) heat outside Honda Motor Co. (7267)’s office prompts health warnings from the national weather agency. Inside in an executive meeting room, it’s only four degrees cooler as President Takanobu Ito swelters. “We are already used to being in this warm office,” Ito said, gesturing with his short-sleeved arms as a spokesman stirs the air with a paper fan. “We hope visitors understand the heat is part of our effort to save energy.” The 28 degree Celsius atmosphere in Honda’s 17-story Tokyo tower is now standard in offices participating in the government-led “Cool Biz” campaign to cut air-conditioning power use. Executive suites including Ito’s are no exception in a practice that has also become an expression of solidarity after last year’s nuclear power-plant disaster cost the country nearly its entire supply of atomic energy.
Cool Biz and conservation steps including a switch to light-emitting diode lamps have helped Japan cut energy use more than three times faster than the Organization for Economic Co- operation and Development country average. In the six years since the campaign began, primary energy use has dropped 9.4 percent in Japan, compared with the 2.5 percent average decline for OECD countries, according to Bloomberg calculations using data from the BP Statistical Review of World Energy.
Japan Post-Quake Rebound Wanes as Spending Nears Stall: Economy (Source:Bloomberg)
Japan’s reconstruction-fueled rebound waned in the second quarter as consumer spending growth almost stalled and export gains diminished, increasing the chance for monetary and fiscal stimulus. Gross domestic product advanced an annualized 1.4 percent in the three months through June, less than the median estimate of 2.3 percent in a Bloomberg News survey of economists and down from 5.5 percent the previous quarter, a Cabinet Office report showed in Tokyo today. Unadjusted for prices, GDP contracted at a 0.6 percent annual pace. Consumption rose the least since households cut spending in the immediate aftermath of the March 2011 earthquake, signaling a fading boost from government incentives that have supported domestic demand. With yen strength and Europe’s crisis curbing exports, today’s report escalates pressure on policy makers to head off a deeper slowdown in the world’s third-largest economy.
“Drafting a supplementary budget is already a done deal, as the Japanese economy can anticipate little support from overseas demand and the government has no other choice but to mobilize fiscal spending,” said Hiroshi Watanabe, a senior economist at SMBC Nikko Securities Inc. in Tokyo. “Political pressure on the Bank of Japan (8301) will probably intensify as deflation is expected to remain entrenched, just as today’s GDP deflator indicates.”
Philippines Agency Plans to Sell Mining Assets: Southeast Asia (Source:Bloomberg)
The Philippines will sell stakes in mining holdings as President Benigno Aquino seeks to nudge forward efforts to boost investment after two years in office. The government will auction stakes in four nickel, copper and gold mines, as well as shares in Semirara Mining Corp. (SCC), said Karen Singson, executive director of the Privatization and Management Office, one of several state agencies managing asset sales. She declined to give the potential value of the disposals. “We’re lining up the projects we plan to privatize in the near- and medium-term,” Singson, 33, said in an interview in her office in Manila yesterday. “There are more foreign investors talking to us because of improvements in governance and transparency.”
Aquino has struggled to accelerate asset sales and bidding of infrastructure projects, with the government awarding just one project under its private-partnership program since he took office in 2010. The momentum may be aided by rising investor confidence after credit rating upgrades from Standard & Poor’s and Fitch Ratings, as the nation takes steps to reduce corruption and contain the budget deficit.
Indonesian Bonds Go From Region’s Worst to Best: Southeast Asia (Source:Bloomberg)
Indonesian bonds have gone from the worst to best performers in Asia this quarter as a more stable rupiah lured funds such as HSBC Global Asset Management and Pioneer Investments to Southeast Asia’s highest yields. Local-currency notes have gained 4.1 percent since June 30 after being the only debt from the 10 major Asian emerging markets to post a negative return in the second quarter, according to an HSBC Holdings Plc index. Their average yield of 6.2 percent is the highest in Southeast Asia and compares with 5.2 percent in the Philippines and 3.5 percent in Malaysia. The rupiah weakened 2.8 percent against the dollar in the second quarter as Indonesia posted trade deficits in each of the three months, the first shortfall since July 2010. Since then, the currency has lost just 0.8 percent and foreign funds have added 13.7 trillion rupiah ($1.4 billion) to their debt holdings, finance ministry data show.
The more stable rupiah is helping to revive interest in the country’s notes, said Gordon Rodrigues, investment director at HSBC Global in Hong Kong. “We are cautiously positive on Indonesia,” Rodrigues, who helps oversee $32 billion of Asian fixed-income assets, said in an interview on Aug. 7. “In a more stable environment for bonds, being underweight for a long period of time on Indonesia, which is a relatively high-yielding country, tends to hurt you.”
Merkel Handed Sub-Zero Yields as ECB Plan Gains Traction (Source:Bloomberg)
Stuart Thomson knew what to do last month as Spanish yields rose to records: Sell German bunds. “There is no way that Germany will not be affected by this,” Thomson, who helps oversee $109 billion as a money manager at Ignis Asset Management in Glasgow, Scotland, said in an Aug. 3 interview. “Spain won’t be able to survive without external help. The bailout will add more burdens on Germany.” Chancellor Angela Merkel’s softening stance toward European Central Bank President Mario Draghi’s rescue plan for Spain and Italy is repelling investors who bought bunds because of her fiscal vigilance. Investors seeking a haven from tumbling bond markets were willing to accept yields below zero for German bunds due in as long as three years because they were confident in her pledge that she wouldn’t add to the nation’s debt to expand bailout programs for weaker neighbors.
Funds managing more than $4 trillion are turning against bunds on concern Germany’s costs to bail out the euro zone’s most indebted nations will rise. The total may reach 500 billion euros ($614 billion), research firm Graham Fisher & Co. estimates. That amounts to about 45 percent of Germany’s current debt outstanding, according to data compiled by Bloomberg.
IMF Says Bailouts Iceland-Style Hold Lessons in Crisis Times (Source:Bloomberg)
Iceland holds some key lessons for nations trying to survive bailouts after the island’s approach to its rescue led to a “surprisingly” strong recovery, the International Monetary Fund’s mission chief to the country said. Iceland’s commitment to its program, a decision to push losses on to bondholders instead of taxpayers and the safeguarding of a welfare system that shielded the unemployed from penury helped propel the nation from collapse toward recovery, according to the Washington-based fund. “Iceland has made significant achievements since the crisis,” Daria V. Zakharova, IMF mission chief to the island, said in an interview. “We have a very positive outlook on growth, especially for this year and next year because it appears to us that the growth is broad based.”
Iceland refused to protect creditors in its banks, which failed in 2008 after their debts bloated to 10 times the size of the economy. The island’s subsequent decision to shield itself from a capital outflow by restricting currency movements allowed the government to ward off a speculative attack, cauterizing the economy’s hemorrhaging. That helped the authorities focus on supporting households and businesses. “The fact that Iceland managed to preserve the social welfare system in the face of a very sizeable fiscal consolidation is one of the major achievements under the program and of the Icelandic government,” Zakharova said. The program benefited from “strong implementation, reflecting ownership on the part of the authorities,” she said.
Greek Recession Making Bailout Targets Harder to Meet: Economy (Source:Bloomberg)
Greece’s economy contracted for a ninth straight quarter, making it harder for the government to meet the budget-reduction targets required under the country’s international bailouts. Gross domestic product declined 6.2 percent in the second quarter from the same period last year after dropping 6.5 percent in the first, the Athens-based Hellenic Statistical Authority said in an e-mailed statement today. The median estimate of three economists in a Bloomberg News survey was for a contraction of 7 percent. The authority doesn’t publish seasonally adjusted data or quarter-on-quarter rates. Greece’s economic slump, now in its fifth year, has been exacerbated by austerity measures imposed by creditors to reduce the nation’s budget deficit. Without further rescue loans, Greece may default on its debts, which could precipitate its departure from Europe’s monetary union.
“We keep on pushing more austerity simply because we have to meet conditionalities, and there is very little done really in terms of growth,” Elena Panaritis, a former member of parliament for the socialist Pasok party, said in a Bloomberg Television interview today.
King Says European Debt Crisis Has ‘No Obvious End in Sight’ (Source:Bloomberg)
Bank of England Governor Mervyn King said the U.K. must press on with reforms to the banking industry and repeated his gloomy outlook for the euro-area debt crisis, which is impeding Britain’s economy. “If the rest of the world were growing normally, the rebalancing and recovery of our economy would be much easier,” King wrote in an article in the Mail on Sunday newspaper. “But it isn’t. Even the rapidly expanding emerging-market economies are slowing, and the problems of the euro area continue with no obvious end in sight.” King’s comments came days after the Bank of England cut its growth forecasts and said the outlook is “unusually uncertain.” A sports fan who attends the Wimbledon tennis tournament every year, he pointed to London’s Olympic Games and said achievements such as winning a gold medal take “years of hard work.” The same applies to the economy, he said.
Britain’s long-term economic performance will depend on measures such as “reforming our banking system so that banks focus less on making money in the short term, and more on building businesses to serve their customers,” King said.
