China saw its stocks fall on Monday, showing signs of a continued slowdown. European shares edged lower following the news from China; however, promising data from France and Germany helped to slow their decline. The Euro made some modest gains against the U.S. dollar, however currency lost much of its gains after evidence of a slowing German private sector. In spite of some concerns, economic analysts seem optimistic about Asian and European growth. An alert Chinese government is expected to keep an eye on that country’s manufacturing, and offer assistance.
France has shown some promise; the country’s index surged through the 50-point threshold, to hit its highest since August 2011. The country also recorded a jump of almost 8% in the purchasing manager’s index.
A continuing concern for European and world economists is Russia’s recent maneuvers relating to Crimea and Ukraine. A concern hat has been raised by the people of Moldova and others is that Russian president Vladimir Putin may have eyes on that country after he annexes Crimea. Perhaps the most interesting aspect economically, is that despite Russia’s drop in popularity over its recent controversial military operations, the Russian ruble gained in value on the world currency market. Meanwhile Russian shares also increased by 1.3%.
The series of reports from China, the world’s second largest economy and Asia’s largest, has raised concerns. Nonetheless, while alert, European analyst Phillipe de Vandiere remained optimistic of China’s ability to resolve its issues; He stated that Chinese authorities keep plenty of tools to avoid a hard landing. He went on to comment that the country’s progress toward a free market economy focused on consumer spending will lower its growth rate at times. However, the belief is that the Chinese government can give the economy and stocks a boost.
China’s government has already been making moves in such a direction. On Friday it said it would allow some companies to issue preferred stock. China Construction Bank saw an increase in stock of 3.2% and Industrial and Commercial Bank of China gained 2.9%. Commodity companies Sinopec and Petrochina reported increases in stock after announcements of investment reduction by 5.5% and 4% respectively. Meanwhile, Hong Kong has offered some encouragement. The region’s trading saw a 1.9% increase.
Other Asian countries have performed strongly. Perpetual “Tiger,” Japan saw a rise in Tokyo’s Nikkei 225 of 1.8% after a long weekend. South Korea’s stocks increased by over 0.5% as well. A major reason for the advance by Japanese stock markets is performance by major technology companies. Sony stock increased by 3.4%, Nintendo jumped 5%, and Panasonic climbed 3.1% . Nikkei Asian Review reported that Panasonic’s operating profit for the fiscal year ending this month is expected to be 80% higher than the previous year; This performance is also well above both Panasonic’s own initial forecast.
As economic revelations in China, and political rumblings in the former Soviet Union continue to reveal themselves to the world, changes in European and Asian stocks should be expected. However, analysts, while keeping alert to relative trauma, remain optimistic. A solution to the current crisis involving Crimea, coupled with successful Chinese handling of its recent decline should result a strong rebound for international stocks.
By Ian Erickson
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