The People's Bank of China, the European Central Bank and the Bank of England all acted within one hour of one another Thursday to cut interest rates and boost liquidity as fears mounted over a staggering world economy. For the Chinese central bank, it was the second cut in less than a month and came as something of a surprise. "With the second rate cut in less than a month, the central bank fully delivered its intention of maintaining economic growth," said Guo Tianyong, a professor at Beijing's Central University of Finance and Economics. 

Europe's key interest rate gets notched down to a record low

Thursday's cut in Europe's key interest rate to 0.75% marked a record low for the European Central Bank. The move followed up on last week's meeting of European leaders, who vowed to take action to boost the continent's economies. But given already low lending rates, the ECB's move may be seen as mainly symbolic. 

Bank of England adds cash injection

The Bank of England injected an additional 50 billion pounds into the U.K. economy by raising the target for the bank's asset purchase program. However, as with the European Central Bank's rate cut, some doubted the move would have much practical meaning. "With quantitative easing bringing little effect and interest rates near rock bottom, it's likely that new tools will be devised in due course," said Tim Ohlenburg, senior economist at the Centre for Economics and Business Research. 

U.S. unemployment claims fall; private hiring climbs

Two new jobs figures for the U.S. economy show slight improvement on recent dismal numbers but still offer scant hope of an unemployment turnaround. Jobless claims dropped by 14,000 last week while a private barometer reported the private sector added 176,000 jobs in June. The key June Labor Department unemployment figure is due today. 

Agencies dim their outlooks for Barclays after Diamond's departure

Moody's and S&P lowered their outlooks for Barclays after the resignation of chief executive Bob Diamond in a Libor rate-fixing scandal. Barclays is now under pressure to perhaps reduce its investment banking operations. Such a move could prove beneficial over the long run, observed Moody's, but "the uncertainty surrounding such a change in direction is credit-negative in the short term." 

Market Activities

INTERNATIONAL MARKETS OVERVIEW

Central bank actions intended to shore up growth in Europe and China produced little excitement on stock markets in either the U.S. or Europe. Tempered remarks from European Central Bank President Mario Draghi warning of downside risk after the bank's interest rate cut sent European stocks into retreat. Later, U.S. stocks rallied a bit after earlier losses, with the S&P 500 ending the day down 0.5%. Here is a continuously updated list of global stock indices. 

Economic Trends & Outlook
South Korean economy edges ahead despite eurozone headwinds

The eurozone's extended debt struggles as well as stagnation elsewhere around the world are holding back South Korea's economy, which nonetheless continues to improve modestly for the time being, the country's Ministry of Strategy and Finance reports. Looking ahead, "we have to closely monitor trends at home and abroad while bracing for a possible long-term crisis as well as beefing up policy efforts to reinvigorate the economy," the ministry said in its monthly "green book" report. 

Malaysian central bank stays course with key interest rate

While central banks in China and Europe took quick action to support a sagging world economy, Malaysia's central bank on Thursday left its key interest rate unchanged at 3.0%, citing local economic resilience. It was the seventh such decision since May 2011. 

Taiwan may be in for a rate boost as inflation picks up

The Taiwan government's target of no more than 2% annual headline inflation may be under threat, analysts say, after a 1.77% year-on-year jump in the consumer price index in June. The country's central bank is now likely to boost its policy rates by 12.5 basis points in the fourth quarter as demand-side pressures increase, said Katrina Ell, an associate economist at Moody's Analytics. 

As Philippine inflation cools, rates appear likely to hold steady

The Philippine inflation rate of 2.8% in June is well in line with projections and down decisively from the 5.2% registered a year earlier. Analysts say the reading should allow the central bank to hold rates steady for the remainder of 2012. 

Capital Markets & Financial Products
China approves freer use of yuan in zone near Hong Kong

A $45 billion test project for freer trading in the yuan has received approval from the Chinese government. The Qianhai Bay zone of Shenzhen near Hong Kong will have six categories of activity, including finance, taxation and telecommunications, and its regulations will mirror those of Hong Kong. "After these changes, there will be -- in theory -- no holds barred in offshore and onshore yuan flow," said Wang Jianhui, chief economist with investment bank Southwest Securities. 

ANZ affirms Asian strategy despite refraining from Tianjin capital boost

ANZ says it will not participate in the capital raising of the Bank of Tianjin, a move that will end with its stake in the Chinese bank reduced from 20% to 17.6%. Nonetheless, ANZ says it has not altered its strategy of aggressively pursuing growth in Asia. 

South Korea's debt capital market was a field for big brokers in 1st half

Cash-flush securities firms dominated South Korea's debt capital market in the first half of the year, according to the Maeil Business Newspaper's RaytheM bookrunner league table. Leading the way was Korea Investment & Securities, underwriting 49 bonds worth 4.75 trillion won. Woori Investment & Securities was second with 66 bonds worth 3.54 trillion won. 

South Korea's OTC bond market sees 9-month trading high in June

With a 5.1 billion won boost in activity from foreign investors, South Korea's over-the-counter bond market saw daily trade volume at a nine-month high in June. The daily average of 25 trillion won in trading was up 3% from May. 

Temasek posts 16% lower profit, citing poor global economy

Citing a difficult investment environment, Singapore's Temasek Holdings posted a 16% decline in net profit for its fiscal year despite 2.6% growth in its portfolio to a record $198 billion Singapore. Looking ahead, Temasek said little improvement is likely given economic difficulties in Europe and the U.S. 

Asian fund houses pursue Middle East clients

Asian-based fund houses are turning their attention to Middle Eastern wealth, but strategies differ. Partnerships with local fund houses or distributors are favored by some, but others say more is needed, as suitable partners are hard to find. "You actually find that a number of the international firms do it the hard way -- having the patience to set up an office, finding the people, building the relationships," observed Shashank Srivastava, acting CEO of the Qatar Financial Centre Authority.

Industry & Regulatory Update
China considers eliminating loan-deposit limit

Responding to economists' calls for a spur to growth, China is reported weighing whether to remove the 75% cap on its loan-to-deposit ratio as part of changes in liquidity risk indicators for banks. "A slowdown in economic activity has a lot to do with financial and monetary constraints," noted Teng Tai, chief economist with Minsheng Securities.

South Korea releases new handbook for foreign financial companies

An updated English version of South Korea's procedures handbook for foreign financial companies is now available from the Financial Supervisory Service. The second edition lays out requirements for setting up a financial company or a subsidiary and obtaining approval for changes in large shareholders for banks, investment banks and insurance companies.

Ethics & Standards

China watchdog laments "dictatorship" in state financial institutions

There now exists a "dictatorship" of a few officials that produces insider trading and nepotism in state financial institutions and steps must be taken to eliminate the danger, said Ma Wen, vice secretary of the Communist Party of China's anti-graft Central Commission for Discipline Inspection. Ma called for a crackdown and urged bank managers in particular to address problems widely resented by the public.