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Daily Agenda: China Moves to Address Growth Fears

China announced increased government spending at G-20 meeting; mergers surface in U.S. and Europe; Europe revises growth upwards.

Trade data released by the National Bureau of Statistics overnight revealed that Chinese imports and exports for August were weaker than anticipated. On a year-over-year basis, imports fell by 13.8 percent, stoking fears of further demand contraction in the world’s second-largest economy while shipments abroad were nearly 6 percent lower than in August 2014. Commodity-centric economies felt the worst of slackening of order flows with imports from Australia off by 30 percent versus the same month last year as demand for iron ore and other base metals declined sharply. Seasonal distortions, the victory holiday and other factors likely affected the data but analysts note that trade flows continue to paint a picture of slowing activity that calls Beijing’s gross domestic product targets for the year into question. At this weekend’s G-20 meeting in Turkey, Chinese Finance Minister Lou Jiwei addressed these concerns by announcing a 10 percent increase in central government spending for full-year 2015, rather than the 7 percent targeted in January.

Merger mania. Richmond, Virginia-based based Media General announced an agreement to acquire publisher Meredith Corp. on Tuesday in a cash and stock transaction that will create the third-largest U.S. operator of network affiliate television stations. Meanwhile, in the latest signal of consolidation in online gaming, Irish gambling company Paddy Power agreed to final terms of an acquisition of Betfair Group in a deal valued at $2.9 billion that marks the largest merger in the industry to date.

Euro zone GDP improves. Growth data released Tuesday by Eurostat indicated that second-quarter GDP for the common currency region was better than initially estimated. The headline figure was raised to an annualized 1.5 percent from the initially reported 1.2 percent on increased consumer spending and external demand.

Regulators to approve General Electric’s European acquisition. Media reports on Tuesday indicate that regulators for the European Union will bless the acquisition of Alstom’s electrical power division by Fairfield, Connecticut-based conglomerate GE after over a year of deliberation. French politicians unsuccessfully sought a European buyer for the company after G.E. announced its intentions.

Abe runs unopposed. On Tuesday Japanese Prime Minister Shinzo Abe was reelected as president of the ruling Liberal Democratic Party leaving him unopposed within the group. If a general election is not held until required in 2018, Abe will be the longest serving prime minister of Japan in modern history.

Chinese stocks stage another late-day rally. The Shanghai Composite Index closed on Monday up nearly 3 percent after trading fell by 1 percent earlier in the session. Heavy buying in the final portion of the session was responsible for the advance, with many analysts ascribing the bullish push to government controlled entities. Separately, on Monday, Chinese authorities announced that taxes on dividends would be cut in half for long-term shareholders.

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