Prime Global Partners Hold Firm on Emerging Markets

Online, July 19, 2012 (Newswire.com) - This news from Prime Global Partners came shortly after data showing a surge in new U.S. housing starts improved the outlook for Asian exporters.
It is the opinion of the Prime Global Partners' Analyst Team that China's Premier Wen Jiabao will probably decide to reduce banks' reserve requirements and encourage corporate lending as the cabinet meets to discuss efforts to revive economic growth, the swap market indicates. Elsewhere, the U.S. Commerce Department reported housing starts jumped 6.9 percent last month, the fastest annual pace since October 2008.
"Investors haven't given up that China will do everything to ensure its own economic recovery," said one Prime Global Partners insider. "The housing data is a promising sign that U.S. economic activity is picking up and supports the outlook that the U.S. economy is in a slow phase and not in a fragile state."
Bond yields in emerging markets are falling to record lows as inflation tumbles compared with benchmark interest rates, providing policy makers with more opportunities to lower borrowing costs.
Asian economies may need to ease monetary and fiscal policies further as Europe's debt turmoil crimps global growth, according to data from the Asian Development Bank, cited by the Prime Global Partners analysts in their statement. "A prolonged period of weak growth and financial fragility in advanced economies highlight the urgent need for internationally coordinated policy responses and greater levels of regional cooperation," the PGP team said in the report.
The cost to lock in the three-month Shanghai interbank offered rate for a year was near a two-year low according to data compiled by Bloomberg, signaling a further cut in banks' reserve requirements may be imminent.
The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong jumped 2.1 percent, the most since June 29, leading gains among emerging-market gauges. South Korea's Kospi index gained 1.6 percent and Taiwan's Taiex Index climbed 1.4 percent.