Early Headlines: China Vows to Support Market, ISIS-Free Zone, Manufacturing Moving to Mexico, Bolivia Subway in Sky, VW Now Top Auto Maker and More

Early Bird Headlines 28 July 2015

Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.

Global

• VW Passes Toyota to Lead Global Sales in First Half of 2015 (Bloomberg) Volkswagen AG surpassed Toyota Motor Corp. to become the biggest automaker by deliveries in the first half, putting the company on track to capture the worldwide sales crown three years ahead of its target. Toyota on Tuesday said it sold 5.02 million vehicles in the six months through June, trailing the 5.04 million that Volkswagen reported earlier this month.

U.S.

• Report: Obama admin. drafting new strategy to close Gitmo (Fox News) Fox News says the argument is now that keeping the prison open costs too much.
  

Syria

• Turkey, U.S. aim for zone cleared of Islamic State in northern Syria (Reuters) Turkey and the United States are working on plans to provide air cover for Syrian rebels and jointly sweep Islamic State fighters from a strip of land along the Turkish border, bolstering the NATO member’s security and possibly providing a safe haven for civilians. Long a reluctant member of the U.S.-led coalition against Islamic State, Turkey last week made a dramatic turnaround by granting the alliance access to its air bases and bombarding targets in Syria linked to the jihadist movement.

India

• No FDI in multibrand retail under trade pact: India to EU (Business Standard) India has categorically informed the European Union (EU) that it will not allow European multibrand retail firms to open stores. India and EU are negotiating towards concluding the long-pending Bilateral Trade and Investment Agreement (BTIA). While the negotiations for a BTIA, or a free trade agreement (FTA) as it is better known, started in 2007, it has missed two deadlines since then. The banning of foreign retail chains is a political decision even though they are allowed under India’s foreign direct investment (FDI) policy.
  

Japan

• Japan’s Economy Shrank Last Quarter, Top Forecaster Says (Bloomberg) The Japanese economy likely contracted last quarter, dragged down by weak consumer spending and a slump in exports, according to a top forecaster. The world’s third-biggest economy may have shrank as much as an annualized 2.5%, said Yoshiki Shinke, at Dai-ichi Life Research Institute. The median estimate of 25 economists surveyed July 9-22 by Bloomberg is for 0.8% growth after the 3.9% expansion in the first quarter.

South Korea

• S. Korea’s GDP may slip for first time since 2009 (Yonhap News Agency) Slumping demand for South Korea’s exports and weakening domestic consumer demand will pressure South Korea’s GDP, according to analysts in that country. Falling consumer sentiment was cited as a negative factor, driven lower by the Sewol ferry disaster and the MERS (Middle East Respiratory Syndrome) outbreak.

China

• Chinese regulator vows share support after markets tumble 8.5 percent in a day (Reuters) China said on Monday it was prepared to buy shares to stabilize the stock market and avert “systemic risks“, after major indices plunged more than 8% in the biggest one-day fall since 2007. The securities regulator also said market authorities would deal severely with anyone engaged in the “malicious shorting of stocks“, in Beijing’s latest attempt to stave off a full-blown market crash. Econintersect: Now China has a “whatever it takes moment“?
• China Urging Stock Purchases to Aid Market Is Boon for Banks (Bloomberg) China’s urging of stock purchases to support companies’ share prices is proving a boon for banks — because of the opportunity to finance the deals. Lenders are diving in to what they see a low-risk opportunity for making money, according to Huatai Securities Co. Banks and their brokerage units are providing structured products — asset management plans — for funding major shareholders’ purchases of stock. Banks view this as “an almost no risk” way of making a 7% – 8% return. Econintersect: What could ever go wrong with a sure thing?
• End of the Affair? China’s Love of Stock Leverage Is Waning (Bloomberg) Econintersect: Well, duh!!!
• China Stocks Continue Lower (Investing.com) As this is written (early 2 pm Tuesday, Shanghai time), the Shanghai Composite continues its sharp decline, down about 2%. It is higher than early this morning, however, when the market was down 4%.

Click for latest chart at Investing.com.

Bolivia

• Bolivia is tripling the size of its subway in the sky (Reuters) Bolivia already has the largest urban cable car system in the world. Now the booming country is tripling the size of the network and will soon have nine lines whizzing above the administrative capital of La Paz. President Evo Morales’ leftist government has built a cable car system it sees as the cornerstone of a modern transport network: a subway in the sky.

Mexico

• China’s Labor Arbitrage May Now Be Turning With a Vengeance (Bloomberg) The Mexican peso has depreciated 50% against China’s yuan renmenbi over the past decade and now Mexico is becoming the preferred target for new manufacturing facilities that formerly went to China. With the added advantage of more convenient logistics between Mexico and the U.S., Mexico appears poised for a period of rapid manufacturing growth.

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