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The Dying Engine Of World Growth Explained

 1 min read / 

China_exports,_year-on-year_change_China_year-over-year_export_change,_%__TMMChart.png

Trader’s remarks: China often referred to as “the engine of global growth” as it exports heavily to the rest of the world. However, as global demand slows down, China is selling less to the world as reflected in the chart. This year Chinese exports have seen their sharpest drop in almost seven years, adding to concerns over the health of the world’s second largest economy. Falling exports have raised new fears over China struggling to maintain economic growth while implementing reforms and trying to shift towards more services and domestic spending.

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Asia

Japan Is Behind Bitcoin’s Rise

Japan Bitcoin

Deutsche Bank released a research note saying that Japanese investors account for bitcoin’s meteoric rise.

Deutsche Bank analysts have said they believe that individual Japanese foreign-exchange (FX) traders are instead moving towards leveraged cryptocurrency trading in the search for astronomical returns. Already, Japan makes up 50% of the world’s leveraged FX trading and Nikkei recently said that 40% of cryptocurrency trading was denominated in yen throughout October and November. Evidently, the Japanese are growing tired of years of ultra-low interest rates and are turning to the blockchain to boost their savings.

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Asia

Japanese Startup Ispace Raises $90m

Ispace

Ispace Inc raised $90m from Japan’s largest corporates in a bid to reach orbit by 2019. 

Ispace is backed by Japan Airlines, Tokyo Broadcasting System Holdings and also government-backed Innovation Network Corp. of Japan. The company plans to sell advertising space on its spacecraft, which will then feature prominently in distributed images. However, Ispace also envisages the use of rovers that will offer a “projection mapping service”, which will essentially produce a tiny billboard on the surface of the moon. This is the latest announcement in what is rapidly shaping up to be a wider commercialisation of space exploration. Elsewhere, SpaceX and Blue Origin are developing reusable rockets, while Planetary Resources intends to mine asteroids.

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Asia

China’s Central Bank Reacts to Federal Reserve Rate Rise

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China Interest Rate Rise

The Story

China’s central bank increased rates on short terms lending instruments within hours of the Federal Reserve raising their base rate from 1.25% to 1.5% on Wednesday. In doing so, the Chinese government aims to put a stop to potentially destabilising capital outflows.

Chinese reverse repurchase agreements increased by five basis points for 7-day and 28-day reverse repurchase by 5 basis points to 3.5% ad 3.85% respectively.

Why It’s Important


source: tradingeconomics.com

The move signals a departure from ultra-low interest rates, which have become the norm since the global financial crisis.

China said their response was a “normal market reaction.” However, the Chinese rate rise was too small to have had a significant effect on capital flows, says Chen Ji, a Bank of Communications analyst. Whether this response will shield China from capital outflows is questionable.

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