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IMF Staff Country Report-Japan: Selected Issues
March 30, 2023--DRIVERS OF CORPORATE CASH HOLDINGS IN JAPAN
In Japan, corporate savings have risen since 2000 in line with profits. A large share of the additional savings was kept as cash holdings (i.e., cash and short-term investments) rather than used for investment. Building on a rich literature, this paper identifies two additional drivers of corporate cash holdings using financial data of public and private Japanese firms. First, a higher share of intangible capital is associated with more cash holdings.
This indicates the presence of financial frictions as intangible capital is not easily collateralizable. Such financial friction could be alleviated by shifting towards cash flow-based lending that is prevalent in the United States (US). Second, corporate tax cuts are associated with more cash holdings while having no significant effect on investment. Given the significant fiscal cost, the efficiency of corporate tax cuts should be re-evaluated.
A. Introduction
1. In Japan, private savings have shifted from households to the corporate sector. Household net savings, defined as gross savings minus investment, had declined before the pandemic. At the same time, Japanese corporations went from net borrowers to net savers after the asset bubble burst in the 1990s. The rise of corporate savings mainly reflects higher corporate profits while investment has stagnated.
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Source: inf.org
Will China's new financial regulatory reform be enough to meet the challenges?
March 28, 2023--Executive summary
Effective financial supervision plays a crucial role in maintaining financial stability and a healthy financial system. China's leadership has made financial risk a core priority, and in reforms approved in March 2023, it reassigned regulatory responsibilities, creating a new supervisory body that will take over some responsibilities from the central bank, the banking and insurance regulator, and the securities regulator.
The aim is that a change to the financial supervisory architecture (who does what in financial supervision) will make China's system more effective and stable. In this policy brief, we argue that this incremental reform will not solve the core issues China faces in financial supervisory effectiveness.
We provide an overview of China's large and complex financial system, including its largely state-owned banks (some of which are the largest in the world by assets), securities markets and other financial intermediaries. Traditional divisions between different types of activities and institutions have been blurred by the rise of large financial conglomerates, risk-transfer techniques and internet-based finance. Reforms in 2018 to China's supervisory architecture did not eliminate perceived shortcomings, including failures to effectively regulate financial conglomerates, fintech and regional banks.
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Source: bruegel.org
JPMAM partners up to offer Indian investors access to its ETF
March 21, 2023--Bandhan Mutual Fund's vehicle will invest in a JPMorgan US debt exchange traded fund
India's Bandhan Mutual Fund has launched the country's first US debt fund of funds, leveraging one of JPMorgan Asset Management's exchange traded funds as an underlying strategy.
The Bandhan US Treasury Bond 0-1 Year Fund of Fund is an open-ended FOF scheme investing in the $2.33bn JPMorgan BetaBuilders US Treasury Bond 0-1 year Ucits ETF, a strategy that tracks the performance of US dollar-denominated fixed rate government bonds issued by the US Treasury with a maturity of less than one year.
Benchmarked against the ICE 0-1 Year US Treasury Securities Index, the Bandhan US Treasury Bond 0-1 Year FOF offering kicked off on March 10 and will close on March 23.
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Source: ft.com
IMF Staff Completes 2023 Article IV Mission to Malaysia
March 20, 2023--After a strong recovery in 2022, growth is projected to moderate in 2023 due to external headwinds, and inflation to remain elevated.
A gradual and credible fiscal consolidation strategy is needed to rebuild buffers while tightening monetary policy remains appropriate to contain inflation.
Coordinated implementation of structural reform policies set out in the Twelfth Malaysia Plan and the 2023 Budget is needed to achieve inclusive growth, enhance digitalization, reduce governance and corruption vulnerabilities, and address climate change.
An International Monetary Fund (IMF) team, led by Mr. Lamin Leigh, conducted discussions for the 2023 Article IV Consultation with Malaysian authorities and other stakeholders during March 8-20, 2023. At the conclusion of the discussions, Mr. Leigh issued the following statement:
"The Malaysian economy registered a strong recovery in 2022. Growth reached 8.7 percent driven by pent-up domestic demand following the reopening of the economy in April 2022 and resilient export performance. Staff estimates the output gap to have closed in 2022. The recovery remains uneven with agriculture, mining, and particularly construction sectors remaining below pre-pandemic levels. "
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Source: imf.org
ETFs help drive huge growth in India's investment market
March 7, 2023--Launch of new passive equity-linked savings schemes expected to further boost industry, Cerulli says
India's mutual fund industry is shifting gradually towards more passive investing, with local regulators relaxing guidelines for firms looking to offer such vehicles, according to consultancy Cerulli Associates.
Net new flows to India-domiciled funds in December jumped to $1.4bn from $500mn during the previous month.
And it was ETFs and index funds that collectively led annual net flows in the market in 2022, pulling in Rs832.4bn ($10.1bn) and Rs793.6bn respectively.
view more/a> Global Times: China sets GDP target at around 5% for 2023, eyes quality growth
Many economists said that the world's second-largest economy will likely outperform the target despite facing a series of external risks and challenges, pointing to the country's accelerating recovery and solid economic fundamentals, as well as sufficient policy tools to tackle those risks and challenges.
view more BlackRock ramps up price war in Australia as it slashes fees view more
World Bank-Pacific Economic Update
The outlook is detailed in the World Bank's inaugural Pacific Economic Update, a comprehensive assessment and forward-projection of 11 Pacific Island country economies, launched today in Suva, Fiji.
view more Asia's Easing Economic Headwinds Make Way for Stronger Recovery
The region's emerging and developing economies, poised to expand by 5.3 percent this year, drive this dynamism. These economies are hitting their stride as pandemic supply-chain disruptions fade and the service sector booms. China and India alone are expected to contribute more than half of global growth this year, with the rest of Asia contributing an additional quarter. Cambodia, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam are all back to their robust pre-pandemic growth. view more Hong Kong Plans to Let Retail Sector Trade Larger Crypto Tokens Like Bitcoin view more If you are looking for a particuliar article and can not find it, please feel free to contact us
Source: ft.com
March 6, 2023--China has set its annual GDP growth target at around 5 percent for 2023, as the country embarked on a rapid economic recovery after a decisive victory against COVID-19, while putting emphasis on ensuring economic stability and high-quality growth, sustainable development amid global economic volatility and geopolitical uncertainty.
While the growth target is reportedly the lowest in dozens of years, it still means China will continue to be one of the world's fastest-growing major economies, as the global economy is widely expected to further slow down this year, analysts noted.
Source: Global Times
February 27, 2023--Challenge to its two main rivals provokes immediate response from BetaShares
BlackRock has aggressively cut fees on two of its exchange traded funds in Australia, just a month after it lost its position as the second-largest ETF provider in the country.
The move provoked an immediate response from BetaShares which responded a day later by cutting the annual management fee for the BetaShares Australia 200 ETF by 3 basis points from 0.07 per cent to 0.04 per cent.
Source: ft.com
February 28, 2023 – As growth returns to the Pacific, debt and inflation remain concerns
New World Bank report series provides economic deep dive into Pacific economies
After nearly three years of economic contraction, Pacific economies can anticipate a return to growth this calendar year despite ongoing challenges, according to the World Bank.
While the recovery is expected to continue, fiscal balances, debt sustainability, and inflation will remain a concern. Pacific nations will need to consider reforms and policies to boost equitable growth and sustainable investments, while striking a careful balance between supporting livelihoods and reducing future public debt risks.
Source: worldbank.org
February 20, 2023--The outlook has brightened, but important longer-term challenges remain-including for China's economy, the region's largest.
The economic headwinds that faced Asia and the Pacific last year have started to fade. Global financial conditions have eased, food and oil-prices are down, and China's economy is rebounding.
These developments are helping improve prospects across the region, with growth set to accelerate to 4.7 percent this year from 3.8 percent in 2022. This will make it by far the most dynamic of the world's major regions and a bright spot in a slowing global economy.
Source: imf.org
February 20, 2023--City pushes ahead toward a goal of becoming a crypto hub
Securities regulator issues a consultation paper on the planHong Kong outlined a plan to let retail investors trade digital tokens like Bitcoin and Ether, taking a major step toward its goal of becoming a crypto hub in a policy shift that contrasts with a crackdown in the US.
Individual investors would be allowed to trade larger coins on exchanges licensed by the Securities and Futures Commission, providing safeguards such as knowledge tests, risk profiles and reasonable limits on exposure are put in place, the regulator said in a consultation paper on Monday.
Source: ft.com
