China July HSBC flash PMI at 18-month high of 52.0

China’s factory activity expanded at its fastest pace in 18 months in July as new orders surged, a preliminary HSBC survey showed on Thursday, the latest indication that the economy is picking up as government stimulus measures kick in.

The HSBC/Markit Flash China Manufacturing Purchasing Managers’ Index rose to 52.0 in July from June’s final reading of 50.7, beating a forecast of 51.0 in a Reuters poll. It was the highest reading since January 2013, and above the 50-point level that separates growth in activity from contraction for the second consecutive month.

“Economic activity continues to improve in July, suggesting that the cumulative impact of mini-stimulus measures introduced earlier is still filtering through,” said Qu Hongbin, chief economist for China at HSBC. “We expect policy makers to maintain their accommodative stance over the next few months to consolidate the recovery.” Mainland China stocks jumped after the PMI report while shares in the rest of Asia edged higher.

The Australian dollar hit a three-week high on prospects of stronger exports to China. A breakdown of the survey showed most of 11 sub-indices that measure output, domestic and foreign demand improved substantially from June. A sub-index measuring new orders, a gauge of demand at home and abroad, hit a 18-month high of 53.7, while the sub-index for output also rose to a 16-month high in June.

The employment index also improved from May, though it was still a shade under 50, which implies that jobs are still being lost in the manufacturing sector.

Japan June Trade Deficit Expands After Exports Unexpectedly Drop

Japan’s trade deficit was larger than economists forecast after exports unexpectedly fell, dragging on an economy that has seen a stronger-than-expected slowdown after a sales-tax increase in April.

The shortfall in June was 822.2 billion yen ($8.1 billion), the finance ministry reported in Tokyo today, surpassing the 643 billion yen median estimate in a Bloomberg News survey of 32 economists. Exports shrank 2 percent from a year earlier, while imports rose 8.4 percent.

The government this week cut its growth forecast for the year ending March 2015, citing weak foreign demand and a fall in consumption after the tax rise. With fossil-fuel imports swelling the trade deficit, now at a record 24 months, a pickup in exports is needed to help Prime Minister Shinzo Abe sustain growth in the world’s third-largest economy.

“As Japanese companies have shifted production abroad, the recovery in exports will remain weak,” Hidenori Suezawa, financial market and fiscal analyst at SMBC Nikko Securities Inc. in Tokyo, said before the data. Domestic demand is likely to be robust after the impact of the tax increase drops off, he said.

Economists forecast exports would rise 1 percent in June after dropping 2.7 percent in May. Japan’s economy will grow 1.2 percent this fiscal year, the Cabinet Office said earlier this week, a cut from the previous estimate of 1.4 percent growth over the period.

23rd July’14 FII’s & DII’s Activity

Thoughts for a Day

Aircel-Maxis: CBI may chargesheet Maran

Shares of Sun TV tanked 11 percent intraday on Wednesday as promoter Kalanithi Maran is falling into the CBI net for Aircel-Maxis deal case. SpiceJet , wherein Maran holds 24.24 percent, also was down over 1 percent in early trade.

Attorney-General Mukul Rohtagi has said that there was enough evidence with the agency to file charge sheet against former Telecom Minister Dayanidhi Maran and his brother Kalanithi in the Aircel-Maxis deal case. The CBI sources said the agency is yet to receive the opinion of the Attorney-General and it will go ahead with whatever his suggestions are in the matter. Highly-placed sources in the government said that Rohtagi today dispatched his opinion saying the available material with the CBI is enough to prosecute Dayanidhi and Kalanithi in the Aircel Maxis case.

The sources said the matter was escalated to the office of the Attorney-General as there was a difference of opinion between the views of investigation team and the CBI Director Ranjit Sinha on charge sheeting Maran brothers in the case. While the team was of the view that enough evidence was available indicating role of Marans, CBI Director Ranjit Sinha differed with the view.

They said the matter remained pending with then Attorney-General Goolam Vahanvati during the last government. The CBI in 2011 had filed its FIR in the case alleging that then Telecom Minister Dayanidhi had used his influence to help Malayasian business tycoon T Ananda Krishnan acquire Aircel by coercing its owner Chinnakannan Sivasankaran.

Share India’s goal to end poverty: World Bank

The world Bank president Jim Yong Kim is all praise for India’s new government that took control of the Centre in May this year. In his second visit to India, Yong Kim met Finance Minister Arun Jaitley and preferred to call it an extremely productive meeting. Speaking to CNBC- shortly after the meeting, the World Bank President Jim Yong Kim said he finds the new government’s commitment towards fiscal consolidation — as heard in Budget 2014 — commendable and share India’s goal of ending poverty.

The 12th president of World Bank is on a three-day visit to India. In an exclusive interview to CNBC Shereen Bhan, Kim says the main goal of World Bank is to eradicate extreme poverty in the world and boost shared prosperity and since India has been its largest borrower, World Bank is in favour of further developing the partnership. Below are edited excerpts from the interview:

Q: This is your second trip to India as the World Bank’s President; we have seen a change in government here. You had the opportunity to meet with the finance minister; you both came out of that meeting saying that it’s an extremely productive meeting. What should we make of that statement and how committed is the World Bank to the India story in the light of the reform intent expressed by the government?

A: We had a great meeting with the finance minister and we been extremely encouraged by what we have been hearing in the Budget, in the remarks that the Prime Minister Modi has been making and they clearly have set goals that we share. Our purpose of being in the world is to end extreme poverty in the world and boost shared prosperity. We share those goals very strongly with the finance minister and the new administration. India has been the largest borrower in the history of the World Bank group but more importantly, if we want to end extreme poverty and boost shared prosperity, you have to have great success in India. Therefore, we look forward to developing even further our partnership with this government and with the country.