Friday, March 24 2017 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
Updated: 2 hours 21 min ago
In this issue we will focus on: Algorithms challenge the banking industry; Does blockchain fit into current legal frameworks?; Turning the spotlight on shadow banking: pros and cons of the darkness and; The Internet of Things and digital banking
China’s 2016 Q4 GDP came out today at 6.8% y/y, marginally higher than the market expectations and the previous reading. The 2016 full year GDP turned out to be 6.7%, surpassing the authorities’ target of 6.5%. December FAI and IP decelerated marginally from their previous readings. As growth headwinds are still ahead, we expect growth to continue its downtrend this year.
As widely expected, the ECB has remained on hold and has not changed its communication. On inflation, also as expected, the ECB has put the focus on underlying inflation -that remains subdued- instead of headline, thus trying to dampen any concerns on inflation. Draghi remarked that the tapering issue was not discussed and he wanted to avoid any speculation on this issue
We continue to see resilience to the various potentially disturbing political events in 2H16. So far, confidence data allow us to be slightly more optimistic. Still more, the recovery of exports and the strength of consumption at the end of 2016 show that positive underlying signs are taking root. Our model suggests GDP to have gained momentum to 0.5%/0.6% QoQ in 4Q16.
The Supporting Factor was introduced in Basel III with the aim of avoiding a reduction in the flow of new credit to SMEs, and the CRR revision published in November 2016 even proposes enlarging its scope to exposures above €1.5bn (but with a lower parameter).
The current environment of low interest rates is expected to persist for quite some time, at least in Europe. This situation has affected Spanish households and businesses both positively and negatively. Specifically, the impact of the ECB's expansive policies has been positive for families, which have seen their borrowing costs fall by more than their income from deposits
The economic confidence indicators have clearly improved in the major regions in the last quarter of 2016, especially in the manufacturing sector, world trade seems to be recovering after its lacklustre start to the year, and consumption continues to be relatively strong.
Weekly economic update focusing on the major economic indicators to be released the week of January 16, 2017. Special topic: Review of the December jobs and retail sales reports
The CNBV published the Report on Financial Savings and Financing in Mexico with figures to June 2016. Banco de Mexico publishes its report on compliance with the Law for Transparency and Regulation of Financial Services. Update to the Bank of Mexico’s Annual Report on the Financial System
Finalisation of Basel III. New package of banking reforms in the EU. TLAC and MREL. SSM supervisory priorities and SREP methodology. A flawed EDIS proposal. Turning the spotlight on shadow banking. Geopolitics and Regulation
The Spanish economy gained traction at the end of 2016. It is estimated that quarterly GDP growth (QoQ) could have been 0.9% in 4Q16, one tenth more than estimated a month ago and two-tenths above the increase observed in 3Q16. Thus, 2016 would have closed with an annual average growth of around 3.3% and there would be a moderate upward bias over the 2017 forecast (2.5%).