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July index indicates improved hope for Chinese manufacturing

HSBC's Purchasing Managers' Index for China in July took a turn for the better, indicating the smallest contraction in the country's manufacturing sector in the past five months. But the reading of 49.5, which remains below the minimum reading of above 50 to point to expansion, still shows weakness and a need "for more easing efforts to support growth and jobs," said Qu Hongbin, a Hong Kong-based economist with HSBC. 

Manufacturing index suggests eurozone recession

Adding to evidence that the eurozone may be in recession, a composite survey of purchasing managers across the 17 member nations indicated contraction in July, according to a Markit Economics initial estimate. The reading of 46.4 was unchanged from the previous month. "The purchasing managers surveys reinforce suspicion that the eurozone is headed for further clear gross domestic product contraction in the third quarter," said Howard Archer, chief European economist at IHS Global Insight. 

Germany defends economy after Moody's dims outlook

Germany defended its economy and financial situation as "very sound" after Moody's downgraded its outlook for the economies of Germany, the Netherlands and Luxembourg. "Germany will, through solid economic and financial policy, defend its 'safe haven' status and continue to responsibly maintain its anchor role in the eurozone," the German Finance Ministry said in a statement. In its change of outlook, Moody's cited not only the overall shaky status of the eurozone but also the possibility of a Greek exit. 

Greece is expected to require yet another bailout

Additional debt restructuring is probably needed for Greece if it is to remain in the eurozone, three EU officials said, noting that the country is poorly positioned to repay what it owes after two previous bailouts. The comments came as officials from the European Commission, the European Central Bank and the International Monetary Fund gathered in Athens to consider the zone's next steps. 

U.S. home values rise, but package deliveries point to slower economy

Second-quarter figures in the Zillow Home Value Index indicated a turnaround in the U.S. property market, with the average home price edging up 0.2% from a year before. But in another U.S. economic pointer, delivery service UPS forecast growth of only 1% for the remainder of 2012, based on its delivery patterns. 

JPMorgan settles credit card case

In the latest difficulty for JPMorgan Chase, the bank has agreed to a settlement of $100 million in a 3-year-old complaint by credit card customers that the bank boosted minimum payments simply as a means to produce higher fees. The cardholders maintained that the higher payments were designed to force them either to accept higher rates to keep the lower payment requirement, to make more late payments and trigger more fees or a penalty interest rate, or to close their accounts. 

Market Activities

Deepening concerns over the viability of the eurozone sent stocks tumbling in the U.S. and Europe. The euro reached a two-year low against the dollar, and U.S. Treasury yields fell as well, as investors fled from risk. The S&P 500 closed with a decline of 0.9% while the MSCI world equity index ended the day 0.7% lower. Here is a continuously updated list of global stock indexes.

Economic Trends & Outlook
India works at formulating a master plan for investment inflows

A "hassle-free environment" for free investment inflows into India is in the works by the government, said Corporate Affairs Minister Veerappa Moily. "This is to deal with clearance in foreign direct investments, mergers and acquisitions," Moily said, noting that his ministry is working together with the Finance and Commerce ministries on the master plan. 

CIER lowers 2012 Taiwan growth forecast to 2.36%

The Chung-Hua Institution for Economic Research sharply lowered its forecast for this year's economic growth in Taiwan, citing poor export markets. The new outlook is for 2.36% growth, down 1.19 points from the institute's April projection. 

Taiwan investment in China falls sharply

Taiwanese investment in China fell 26.5% in the first half of 2012 from a year before, according to figures from Taiwan's Investment Commission. The festering eurozone crisis and a slower economic pace in the U.S. and China were cited as contributing factors. 

With developers stressed, China keeps an eye on property lending

With debt ratios over 60% for about half of China's major property firms, the government is dispatching teams of inspectors to look into property-related lending and keep it in check. Developers are running short of cash amid government curbs on the market. 

China posts another month of forex sales exceeding purchases

A narrowing trade surplus, slower growth in foreign direct investment and a more tempered outlook for the yuan are among the factors behind Chinese banks' higher rate of sales of foreign currency than purchases from clients in June. It was the second month of deficit since April, reflecting greater willingness of companies and individual investors to hold foreign currencies, the State Administration of Foreign Exchange said. 

With EU and U.S. in doldrums, China explores new markets

Chinese exporters are taking advantage of sluggishness in Europe and the U.S. to explore other world markets, including the Middle East and Africa. In one example, the Zhejiang Provincial Bureau of Statistics reports exports to Africa, South America and the ASEAN countries surging as much as 20% even as exports to EU nations fell nearly 7% in the first half of the year. 

Central bank chief says Australia can cope

The head of Australia's central bank sought to allay growing fears that the country's economy might be vulnerable as China's demand for mining output slackens. Glenn Stevens said that despite signs of a housing slump and other worrisome developments, Australia remains a "lucky country." And even if "the pessimists turn out to be right on one or more counts, it doesn't follow that we would be unable to cope," Stevens said. 

Borrower delinquencies rise in South Korea

South Koreans' household debt is emerging as a cause for concern, with figures for May showing a jump in delinquent borrowers from nonbank institutions rising to 5.6% of credit card users from 4.5% in January. The new data come in the context of a 26.3% delinquency rate as of the end of last year for so-called multiple debtors who had more than three loans outstanding with savings banks and private lenders. 

Singapore sees 2012 inflation at upper end of projected range

Singapore's government now expects inflation for the full year to be near the top of its projected range of 3.5% to 4.5%. June's rate of 5.3% means that inflation amounted to 5.1% year-on-year in the first half. 

Vietnam's July inflation falls to lowest rate since 2009

Inflation pressures are easing in Vietnam, with July's year-on-year rate of 5.35% the lowest since late 2009. Slower economic growth, tighter money policy and less consumer demand have helped ease inflation from the torrid annual rate of 23% recorded last August.

Capital Markets & Financial Products
Philippines central bank sees investment-grade rating in near future

The Philippines might be in line for an investment-grade sovereign rating "sooner rather than later" after recent upgrades and affirmations by credit rating agencies, the central bank's governor said. "Consecutive rating actions on the Philippines indeed recognize the efforts towards fiscal consolidation, the continued strength of the country's external position and the strides the government has made on improving governance," Amando M. Tetangco Jr. told reporters without specifying a likely upgrade timeline. 

Industry & Regulatory Update
New rules drive rise in South Korean stock trade suspensions

Tightened market rules are blamed for a steep rise in stock trade suspensions on the South Korean market through the first half of the year. There were 15 cases in the period, up from one a year earlier, as the Korea Exchange instituted new rules designed to curb fluctuations driven by rumors. 

Ethics & Standards
U.S. investors file lawsuit against China's New Oriental

Investors in U.S.-traded shares of China's biggest provider of private education are suing the company. The suit comes after a 57% price plunge for New Oriental Education & Technology Group's American depositary receipts after it was announced last week that the U.S. Securities and Exchange Commission was launching an investigation.
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