Month: January 2014

The missing piece in the global growth puzzle

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Global economies struggling to kick-start their economies may be lacking one simple ingredient: demand.

“So many people – politicians, journalists, I’m afraid market analysts – sort of believe this story of an economics recovery going on around the world,” Roger Nightingale, strategist at RDN Associates, told CNBC. “This economics recovery hasn’t occurred. In fact, actually for the past 18 months people have been talking about it, the data is pretty flat. If anything, it’s getting flatter.”

Read more: ‘Anxious’ consumers are a drag on growth: IP chief

“On the American front and indeed in many parts of the world, the picture you’re getting is that sales figures are slightly disappointing and earning figures also slightly disappointing,” he said.

Other analysts offer an explanation:

“The main obstacle to stronger economic growth is lack of sufficient demand,” said Patrick Chovanec, chief strategist at Silvercrest Asset Management, which advises on USD 14.6 billion in client funds.

Read more: Jack Lew to press Germany to boost domestic demand

“The conventional response, among economists, is that the government must take action to boost domestic demand in the United States, with either monetary or fiscal stimulus, or by redistributing wealth,” he said in a note, citing the one-time status of the US as the world’s “consumer of last resort.”

But the US doesn’t appear to be able to boost global demand much, Chovanec said. The US Federal Reserve’s massive bond-buying program may have prevented a credit collapse during the financial crisis, he said, but it hasn’t done much to boost consumer spending.

“The American consumer isn’t going to re-leverage and drive global demand, and the government is in no position to replace him,” he said.

Read more: Retailers must end consumer addiction to discounts

HSBC sees a similar issue in Asia. Investment in emerging Asia has grown faster than demand for products, the bank said in a note. “Despite soaring wages, consumption isn’t strong enough to absorb all that’s being churned out by Asian factories.”

While the region’s high household savings rates are often blamed for the lackluster spending, a lower rate may not be enough to raise consumption’s share of gross domestic product (GDP), HSBC said, adding it believes the true culprit is wages.

“The share of labor in total national income – accelerating wage growth notwithstanding – is still too low, and often continues to fall. This means that wage growth isn’t even keeping up with the expansion of nominal GDP,” HSBC said.

Read more: US consumers a hard sell for traditional retail

“For consumption to absorb a greater share of output, the share of labor in national income will need to rise, which requires wages to grow faster than nominal GDP. That, in turn, hurts profits;

unless, of course, productivity rises,” it said, predicting a “hard slog” ahead for Asia.

Silvercrest’s Chovanec also points to stagnant wages as a factor damping demand in the US, but he believes it is making the country more competitive.

“Long-standing trends are starting to reverse: the US is seeing an increase in manufacturing jobs (partly due to reshoring) and significant improvement to its trade balance,” he said. “Domestic demand will grow, but mainly on the back of a production story driven by global rebalancing.”

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter@LeslieShaffer1

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Think you know what the Fed will do? Guess again

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The most recent deliberations among Federal Reserve officials point to a central bank that is at its most divided self since the financial crisis.

True, the voting among Open Markets Committee members casts the appearance of near-unanimity, a credit to outgoing Chairman Ben Bernanke’s skills at consensus building or at least the appearance thereof.

But within the minutes of the December meeting is a Fed standing at the crossroads of a post-crisis economy being guided by mid-crisis monetary policy.

Read more: Minutes show Fed cautious toward cutting QE

The FOMC session was a critical one: At the meeting, the group voted 11-1 to begin curtailing—or “tapering,” in market lingo—its monthly bond-buying program known as quantitative easing.

The central bank had been purchasing USD 45 billion a month of Treasurys and USD 40 billion of mortgage-backed securities and voted to reduce the pace of each by USD 5 billion.

At a news conference afterward, Bernanke said the FOMC at each of its subsequent meetings will conduct further USD 10 billion decreases until QE comes to an end. Most Wall Street experts took him at his word and anticipate the liquidity injections to be history once 2014 is in the books.

The minutes, though, reflect no such certainty. They indicate quite the contrary, in fact, when relating the discussion over how the Fed would proceed with tapering.

 “Among those inclined to begin to reduce the pace of asset purchases at this meeting, many favored a modest initial reduction accompanied by guidance indicating that decisions regarding future reductions would depend on economic and financial developments as well as the efficacy and costs of purchases.”

After all, Bernanke is in the final two weeks of his chairmanship before Janet Yellen takes over, and he’ll have no say on what happens going forward. There seemed a strong tendency for the Fed to keep its options open.

 “Members also stressed the need to underscore that the pace of asset purchases was not on a preset course and would remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the efficacy and costs of purchases.” (Emphasis added)

For investors, the nuances over language are important.

While the link between higher stock market prices and QE is the subject of hot debate, the fact remains that the Fed’s balance sheet expanded 33 percent in 2013 and the S&P 500 rose 29 percent—a fairly close correlation.

Though stocks rose in the immediate aftermath of the December tapering announcement, 2014 has been a flat year.

There is a second, and perhaps even more consequential, leg to Fed policy that also seems to be a point of internal contention: How and when to begin raising interest rates.

Read more: Why inflation threat could lead to a ‘panic taper’

The Fed’s near-zero policy rate has been a cornerstone, keeping mortgages cheap and allowing companies a low-cost way to finance operations and in particular stock buybacks and dividends.

Fed officials have said they won’t start raising rates until unemployment falls to 6.5 percent and inflation reaches 2.5 percent. But recent developments seem to have caused the Fed to rethink its position.

Read more: What are investors to make of ugly jobs report?

While no one is calling for an outright repeal of the targets, there appears to be plenty of chatter toward amending language now that the jobless rate is only two-tenths of a percentage point away from the rates benchmark:

“A number of members thought that the forward guidance should emphasize the importance of inflation as a factor in their decisions.

“Accordingly, almost all members agreed to add language indicating the Committee’s anticipation, based on its current assessment of additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments, that it would be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6.5 percent, especially if projected inflation continues to run below the Committee’s longer-run objective.” (Emphasis added)

The latest Consumer Price Index numbers show inflation rising, but to just 1.5 percent on an annualized basis. That remains well below the Fed target and consistent with the lackluster range in the post-crisis years.

If that trend continues, the Fed is unlikely to raise rates even if unemployment falls below 6.5 percent. The falling jobless number, at any rate, is largely the result of a reduction in labor participation than it is robust employment growth, as evidenced by December’s paltry 74,000 gain that coincided with a 0.3 percentage point unemployment rate decline.

“Over time, we anticipate the Fed will increase focus on its inflation mandate, thus keeping policy easier for longer,” Ethan Harris, co-head of global economics research at Bank of America Merrill Lynch, said in a report for clients. “As a result, we expect a patient and gradual end to the current pace of accommodation.”

The Fed has yet one more worry: How the markets are reacting.

Read more: ‘Lofty’ market ripe for at least 10% drop: Goldman

Minutes note the dangers of how “the complexity and interconnectedness of large financial institutions, along with some apparent increases in investor appetite for higher-yielding assets and associated pressures on underwriting standards remained potential sources of risk to the financial system.”

Managing that risk, and conveying a clear message to the markets, will be something the Fed wrestles with long after Bernanke is gone, with the path forward likely to defy market expectations.

—By CNBC’s Jeff Cox. Follow him on Twitter @JeffCoxCNBCcom

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China economy grows 7.7% in fourth quarter

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China’s economy grew stronger-than-expected 7.7 percent in the final quarter of 2013 from the year-ago period, according to official data from the National Bureau of Statistics Monday. That’s ahead of a Reuters forecast of 7.6 percent.

Quarter on quarter, the world’s second biggest economy grew 1.8 percent, a tad weaker than the consensus 2 percent Reuters had predicted.

This brings full-year growth to 7.7 percent, compared to government’s target of 7.5 percent.

Read more: Global economy at a turning point: World Bank

According to Viktor Shvets, head of strategy research for Asia at Macquarie, the growth figures are less important than the rebalancing the economy needs to achieve.

The reform-minded new leadership, led by President Xi Jinping, has shown a tolerance for slower growth, while pledging to press ahead with efforts to revamp the economy for the longer term.

“China can deliver whatever number they want, the important thing is China trying to change. Can they restructure while keeping growth rates – not so much GDP but more personal income growth rates – at a reasonably high level, that’s the dilemma for 2014,” Shvets said.

Read more: Can China contain high government debt?

“The only way they can restructure the economy is by reducing savings. The only way they can do that is by destroying profitability for certain sectors; they need to reallocate the money,” he added.

In other data, industrial output for December came in at 9.7 percent from the year earlier, compared to a Reuters forecast of 9.8 percent.

Retails sales were up an annual 13.6 percent in the month, in line with expectations.

China stocks were little changed on the data, with the Shanghai composite down 0.2 percent. The Chinese yuan hovered at 6.0535 yuan against the dollar.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Great rotation: From equities to… equities?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Investors and analysts spent a lot of 2013 talking about the “great rotation” – how floods of money would exit the fixed-income markets to the benefit of global stocks. It made for fantastic headlines, but more importantly, it seized a very elementary fact: that bonds weren’t looking as good as equities.

By the end of last year, however, it emerged that that there could, in fact, be buyers of both stocks AND bonds. And now another question has come to the fore: Will 2014 see another “great rotation”: a shift from outperforming stock markets back into the, comparatively speaking, underperforming European equities?

Let’s briefly recap. Despite the exhausting uncertainty over the global economic recovery and tapering of the US Federal Reserve’s massive bond-buying program, stocks surged in 2013. US equity markets catalogued their strongest year since 1997 with the S&P 500 putting on gains of 30 percent, the Nasdaq index was up 38 percent, and the Dow Jones gained 27 percent in its best year since 1995. The Dow and the S&P 500 both finished the year at record closing highs.

Read more: BlackRock CEO sees ‘Great Rotation’ in bonds

In Asia, the outperformer was Japan’s Nikkei 225 which added 52 percent; helped along by Prime Minister Shinzo Abe’s monetary and fiscal policy overhaul to get to grips with the country’s 20-year deflationary stagnation.

In Europe, the strongest performer of the major indexes was Germany’s Dax which rose 23 percent. In comparison, France’s CAC added 18 percent, Spain’s IBEX rose 21 percent, and the Italian MIB added ‘just’ 12 percent. In the UK, the FTSE closed out 2013 up 14 percent.

 ‘Analysts underestimating European recovery’

Bob Parker, Senior Advisor at Credit Suisse, says a main theme this year is to be long on European equities. He believes we will see more investors taking profits in the US, and that “analysts are underestimating the European recovery.”

With recent data from Spain and Italy being very strong — while France’s figures raise questions – Parker says the early year European equity out performance will continue, with periphery Europe set to outperform the core. “European stocks could easily be up 10-15 percent by the end of 2014,” states Parker.

Read more: More bang for your investing buck outside US?

On top of that, Parker thinks emerging markets will capture even more of our attention this year. At the moment, investors have lost confidence in emerging markets, with many closing their equity and currency positions. But later on in the year, Parker believes, there will be a huge opportunity to go back into emerging markets, which now are very cheap.

Apart from Europe, Parker advises to stay long Japanese stocks. Also, given the possibility of further Fed tapering, Parker says to go long the US dollar and credit risk. Industrial metals will be a good play on the strengthening global economy, but he says go short energy due to increasing supplies.

Goldman: 2014 European profits to grow 14 percent

In a note titled “Euro Vision – Equities Growing Up,” Peter Oppenheimer, Chief Global Equity Strategist at Goldman Sachs, and his team argue that “we are in a transition from a ‘hope’ or value-driven phase of the (expansion) cycle, typical of recoveries from recessions, into a slower but longer ‘growth’ phase driven by earnings growth.”

The authors of the research expect European profits to grow 14 percent in 2014 led by progress in global growth and margins. They point out the pace of growth would be slow, but there would still be enough momentum to generate a 15 percent total return through the coming year. More importantly, according to the Goldman paper, a continuing secular – investments that can gain in both good and bad times — upswing in stock markets can go on for a long time.

Read more: Goldman: How Europe outperforms in 2014

When looking at how best to invest, the average performance of a diversified Japanese fund was around 25 percent last year, underperforming the local stock market’s return of 51 percent. Similarly, the average US fund returned 25 percent, underperforming the Nasdaq index’s return of 34 percent. Hindsight is a fantastic thing, and in this case, investors would have benefitted by just investing in a “tracker” fund instead of attempting to do better than the market. If betting on Europe this year, one might want to consider a similar broader approach.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold isn’t the only precious metal in 2014

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sugar and coffee may be out of vogue (very bad for you), gold is too flash (though some of us still like it), and, thanks to the glimmers of a global industrial recovery, we’re back to basics when it comes to industrial metals.

Recent data from the US Commodity Futures Trading Commission showed net long commodity positions falling by 11 percent in the week to January 7. But while investors think we’ll see softer prices for sugar, coffee, and corn, they have become more bullish on gold, with net long positions in the shiny metal rising 18 percent.

Read more: The case for ditching stocks and buying gold in 2014

 While gold prices have risen steadily since December 20 from USD 1,200 per ounce to a current level of around USD 1,250, they have nonetheless moved off from a very low base. In 2013, the precious metal’s price dropped 28 percent in 2013, bringing a halt to 12 consecutive years of gains.

Gold to struggle longer term

But not everyone is that optimistic. Analysts at Barclays think gold will struggle to maintain even its current gains, and favor selling it into rallies in the coming year.

Read more: Gold to tank in 2014: Goldman Sachs

Gayle Berry, Head of Base Metals Research from Barclays, thinks there will continue to be strong downside risks to gold given expectations of a stronger dollar once the US Federal Reserve reins in its bond-buying program. In a Barclays research entitled “Buy industrial metals on dips and sell gold rallies in 2014” published January 13, Berry also thinks 2014 will hold more modest global growth.

The note highlights a further structural shift in market dynamics would need to happen for gold to continue higher, like proof of inflation, postponed interest rate hikes, or considerably stronger-than-expected Chinese demand. The analysts anticipate gold prices to average USD 1,205 an ounce in 2014 compared to their 2013 expectations of USD 1,410 an ounce.

More upside for base metals

On the other hand, industrial metals could be another story. Supply growth will start to slow this year while demand is improving. Leading indicators from manufacturers and industrial production figures from around the world have been strengthening, and a steady improvement in global growth is still anticipated.

All this’ll mean more demand for base metals as they’re used up by stainless steel, the auto industry, electrical components, building and packaging to name a few. Also, investors have become more optimistic on Chinese demand.

In her note Berry says industrial metal prices will strengthen through 2014 helped by an increase in demand and what she forecasts as the end to one of the strongest periods ever for base metals supply growth. In some cases, such as aluminium, this will be due to production cuts (prices are very low, and producers outside China have been making big cuts). In other cases, like Nikkel, the Indonesian iron ore export ban will lead to production cutbacks.

Watch: What the F-150 says about the aluminum industry

According to Barclays research, both copper and zinc supply growth is due to peak this year and then slow, causing the bank to revise up its 2015 forecasts for both metals. Berry adds that, while we saw selling of base metals on rallies last year, 2014 will see buying on dips.

Berry explains that the metals markets are at an important turning point: moving from rising stocks, strong supply and surpluses, to an environment of inventory draw downs, slowing supply growth, and deficits. Overall, Barclays’ message is clear: more upside to come for base metals..

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Can China contain its high government debt?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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It`s hard for China to get on top of its high local-government debt problem because it doesn`t really know the full extent of debt levels, the president of China Beige Book International said on Wednesday.

China`s state auditor said in late December that local governments had total outstanding debt of almost $3 trillion at the end of June last year. The results showed that debt incurred by local government was up 67 percent from the last audit in 2011.

Even with that assessment, it`s not easy to assess the extent of debt levels, said Leland Miller, president of the China Beige Book (CBB), a survey on national, regional and sectoral economic conditions in the world`s second biggest economy.

“I don`t think they [the government] have any clue about how much debt is out there. I don`t think there`s any way to track this,” he said, replying to a question on CNBC Asia`s ” Squawk Box ” about whether Beijing was on top of the problem.

“The audit was meant to come out in September, it came out months later. I think the number is a wild guess… The biggest problem with understanding the Chinese economy is that there`s not enough data that investors can see,” he added. 

The large pile of local government debt is seen as one of the biggest threats facing China`s economy. There are also concerns that a large part of the debt cannot be repaid as most of the money borrowed was used to fund non-profitable projects.

The prospect of defaults meanwhile has stoked concerns that Chinese banks will be left with a bad debt pile that threatens financial stability.

China last week unveiled new guidelines to strengthen the regulation of risky off-balance sheet lending in a bid to address the growing financial risks associated with a sharp rise in debt.

Challenges

Augmented government debt at a local level rose to around 45 percent of gross domestic product (GDP) in 2012, staff at the International Monetary Fund (IMF) said in a paper published on Tuesday.

They said that this was around double general government debt but fell within “sustainability thresholds.”

The paper highlighted some of the challenges Beijing faces in reining in higher debt such as putting in place a “better framework to manage and monitor local government borrowing.”

“We think higher interest rates are an element of the reforms of local government finances,” Tim Condon, head of research for Asia at ING Financial Markets said in a note.

“Between the appreciation of the yuan and the rise in market interest rates monetary conditions tightened in 2013, which we think subjects the consensus forecast for 2014 GDP growth of 7.5 percent to asymmetric downside risk.”

According to Miller at CBB, a slowdown in economic growth seen last year was likely to continue into 2014.

“We talk to thousands of firms on the ground and what they`re telling us right now is that there was a bump up in growth from Q3 to Q4, which is not what the consensus is,” he said.

“But the more important story was that there was a deceleration over the course of the year. Every one of our sectors decelerated over the course of 2013 from the first quarter to the fourth quarter, except manufacturing,” he added.

– By CNBC.Com`s Dhara Ranasinghe; Follow her on Twitter @DharaCNBC 

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China’s massive wealth fund has eye on infrastructure

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China Investment Corp. (CIC), the mainland`s USD 575 billion sovereign wealth fund, is shifting its focus away from the energy sector towards investments in infrastructure in both developed and emerging markets, said Chairman and CEO Ding Xuedong.

“I am interested in investment opportunities in infrastructure around the world. In the next 5-10 years, infrastructure investment will be a big theme for both emerging and developed markets. So, we want to increase our investment to get better returns,” Ding told CNBC on Tuesday.

CIC is also eyeing potential investment opportunities in agriculture and real estate, he added.

“In the past, CIC has had an overweight position on energy because of strategic importance. But since the global financial crisis, especially in the last two years, the returns from energy investments have not been great. Going forward, we may continue to invest in the sector but we will be extra careful,” Ding, who took the helm of the massive state investment vehicle around six months ago, said.

Half of the CIC`s assets are currently in developed countries corresponding with the “strong” economic rebound in the US and recovery in Europe, said Ding, adding that the fund plans to maintain an overweight position in developed economies.Following CIC President Gao Xiqing`s remarks last year on the fund`s treatment in the US – including that it is “singled out of as a different investor” by the country`s regulators – Ding said CIC does face regulatory constraints in “certain countries, sectors and projects.”

“I do not rule out the fact that some officials have double standards or discriminatory acts. In those kinds of situations, we will appeal to local regulators and explain our investment purposes so as to gain equal treatment. The situation is improving, but we need to keep up the work,” he said.

However, Ding singled out one country for its open and friendly approach to foreign investors: the U.K.

“Therefore, we have a wide range of investments in the U.K. and we are growing fast there,” he said.

CIC autonomy in question

CIC, which is responsible for managing part of China`s vast foreign exchange reserves, is “completely independent” as sovereign wealth fund and long-term investor, said Ding.

“We don`t take directions from the central government or have to meet certain targets by government ministries. We are completely independent in deal making and investment management. We are accountable to our investment returns,” he said.

“Our goal is to diversify our foreign currency reserves, and use our trade surplus to invest overseas and achieve good financial returns. CIC makes decisions on its own when it comes to big and important investment projects,” he added.

-By CNBC`s Ansuya Harjani. Follow her on Twitter: @Ansuya_H

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ultra-rich the driving force in mega property deals

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ultra-wealthy individuals are becoming an increasingly influential force in the world of real estate, acting as a critical source of capital for big-ticket deals in the sector, according to a new report by real estate services firm Savills and wealth intelligence provider Wealth-X.

“Global real estate is mostly residential and held by occupiers, but private owners are becoming more important in the world of traded investable property,” said Yolande Barnes, director, World Research at Savills.

“Since the `North Atlantic debt crisis` of 2008, sovereign wealth funds, wealth management companies, private banks and family offices have stepped into the property deals that corporate bankers have deserted,” she added.

In the world`s leading cities, the willingness of private wealth to take the place of debt finance or to take a higher-risk development position often determines whether a deal goes through or is mothballed, Barnes said.

Of the USD 250 trillion global real estate industry – 72 percent or USD 180 trillion is owner-occupied residential property, while the remaining 28 percent is investable and regularly traded.

The most regularly traded are commercial properties – retail, office and industrial – which are increasingly being bought by private vehicles and funds acting for high-net-worth individuals, family or consortia.

Thirty-five percent or 6,200 of global deals above USD 10 million in 2012 were only possible because of private funding, according to Savills.

“In recent years there has been a tendency for ultra-high net worth individuals [UHNWIs] to focus on `safe haven`, trophy properties for capital growth and wealth preservation. In future, we anticipate that some will begin to seek more productive, long-term income-producing positions,” Barnes said, noting that the best income returns are often found outside prime areas and in lower grade premises.

 “UHNWIs will be competing more directly with institutional investors in future but, being more opportunistic and less constrained by formal criteria, are more likely to become pathfinders and pioneers than corporate investors are,” she said.

For a pension fund or investment manager, the decision to invest in a property is often based on formal valuation methods that tend to look at annual performance and conventional measures of risk, which a private individual may eschew in favor of a longer-term view.

According to Savills, offices continue to dominate the large deals followed by retail property – except in the Americas where residential apartments in purpose built blocks designed for letting are favored ahead of retail real estate. Industrial units and hotels, meanwhile, represent small asset allocations.

-By CNBC`s Ansuya Harjani. Follow her on Twitter: @Ansuya_H
Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global economy at a turning point: World Bank

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Global growth is set to accelerate in 2014 as advanced economies turn a corner five years after the global financial crisis, said the World Bank.

Growth is projected to strengthen to 3.2 percent this year, 3.4 percent in 2015, and 3.6 percent in 2016 – up from 2.4 percent in 2013.

“Most of the acceleration is expected to come from high-income countries, as the drag on growth from fiscal consolidation and policy uncertainty eases and private sector recoveries gain firmer footing,” the World Bank wrote in its newly-released Global Economic Prospects report on Wednesday.

Stronger growth and increased demand from developed nations will be an important tailwind for developing countries and should help compensate for the impending tightening of financial conditions, the Washington-based development bank said.

Growth in high-income countries is forecast to quicken to 2.2 percent this year from 1.3 percent in 2013. Meanwhile, growth in developing countries is estimated to pick up modestly to 5.3 percent from 4.8 percent.

The bank says the withdrawal of quantitative easing and corresponding increase in global interest rates is expected to weigh only modestly on investment and growth in developing countries as capital costs rise and capital flows moderate in line with a global portfolio rebalancing.

However, if a tapering of the Federal Reserve`s asset purchase program is met with an abrupt market adjustment, capital flows could decline sharply, placing renewed stress on vulnerable developing economies, it warned. “In a scenario where long-term interest rates rise rapidly by 100 basis points, capital inflows could decline by as much as 50 percent for several quarters,” it said.

While major tail-risks have subsided, fiscal policy uncertainty in the United States, a protracted recovery in the euro zone, and possible set-backs in China`s restructuring continue to pose risks to global outlook.

A successful rebalancing of the Chinese economy from investment-led to consumption-driven presents a “formidable challenge.”

An involuntary and abrupt decline in investment rates could have a significant impact on growth in the world`s number two economy, and knock-on effects in the region and among economies with close trading linkages including commodity producers, the World Bank said.

Nevertheless, it expects growth of 7.7 percent for the mainland economy in 2014, steady from an expected 7.7 percent last year.

-By CNBC`s Ansuya Harjani. Follow her on Twitter: @Ansuya_H

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Apple-China Mobile deal a ‘watershed’ moment: Tim Cook

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A deal to sell iPhones on China Mobile`s vast network is a “watershed moment,” Apple CEO Tim Cook told CNBC on Wednesday.

China Mobile will start selling iPhones in China this Friday. The premium 5S model 16G will be priced at 5,288 yuan, or about USD 874, said the world`s largest mobile company.

Apple and China Mobile announced a long-awaited deal last month, with access to China Mobile`s network of an estimated 760 million subscribers seen as a crucial next step for Apple.

“This is a watershed moment,” said Cook, who is in Beijing for Friday`s launch. He referred to China Mobile as a great cellphone firm with a “very fast network.”

China Mobile said it did not have exact sales estimates. The firm said as of January 13, it had received 1.2 million pre-orders or 60,000 per day since December 25.

The mobile phone carrier said it was not releasing details of subsidies, which will be released with its annual results in March.

The deal with China Mobile means that the iPhone will now be available through all state-run telecom carriers in China, home to the world`s biggest population and a growing class of consumers.

The two latest iPhones have been sold by rivals China Unicom and China Telecom since they were launched last year. Both firms have trimmed contract prices for the iPhone to keep existing customers and tempt new ones away from China Mobile, according to media reports.

While Apple gets access to China`s Mobile`s vast network of customers, the tech firm also faces stiff competition from the like of Samsung and Lenovo.

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Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow