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Tiny Slovakia roils markets

Tiny Slovakia roils markets
October 12, 2011 (Chinavestor) Investors have enough on their plate without Slovakia complicating European rescue efforts. First of all, U.S. economic recovery remains frail due to high unemployment and mounting government debt. Europe got a debt crisis where Greece has been unable to make good on bond payments had it not been for rescue packages. And when finally Europe set it right, a tiny country within the eurozone blocks it.

The good news is that most likely Slovakia will pass the rescue package, all yesterday's vote was a Slovakian domestic political showdown. Mrs. Radicova, head of Slovakia's ruling coalition, offered her cabinet's resignation should the vote not pass parliament. That was the best news opposition parties could hope for to boot the current coalition government. And that's what they did, blocked the vote.

Chances are that members of the Parliament will quickly pass the Euro rescue fund vote without a majority government. Going forward, it can be either a new coalition government that will do it or a new election will be held.

Nevertheless the case represents the problem Europe faces when dealing with 17 different countries. Europe is not federalist and thus any significant decision has to be approved by each and every member of the block. This makes Greek rescue efforts even more difficult - though Europe has the means to solve it!

ECB has tools to avert Greek default

For now, investors will have to live with elevated market volatility. Thank you Slovakia and like-minded politicians.

 
Knowledge base

ECB has tools to avert Greek default

ECB has tools to avert Greek default

October 4, 2011 (Chinavestor) It may seem absurd for China stock investors to spend a whole lot of energy analyzing Greece's debt problems for the first sight. Remember, Greece's DGP amount to $310 billion, nothing compared to $10,090 billion for China. Yet this small country has a real impact on equity markets around the world.

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This is why Greece is a big deal

This is why Greece is a big deal

October 3, 2011 (Chinavestor) Investors in the U.S. and as a matter of fact all around the globe are confused about what impact Greece can have on the global economy. Greece's GDP is a $318 billion, just a small fraction of that of greater Europe. Yet European stocks are hostage of Greece's debt problems and have fallen over 70% since 2010.

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Knowledge base

Dollar shines more than gold

Dollar shines more than gold

September 23, 2011 (Chinavestor) Zijin Mining Group Co. Ltd. (HKG:2899), the largest Chinese gold miner, was among the worst components of the Shanghai Composite Index (SHA:000001) as well as the Hang Seng Index (INDEXHANGSENG:.HSI) on Friday. Hong Kong listed H-shares of the company fell 7.78% on Friday capping a week of steep losses. The stock is trading at HK$2.49 at new 52 week lows thanks to a 25% plunge this week alone! The stock is off 33.6% for the month as well.

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Knowledge base

Why BAC trims stake in golden egg?

Why BAC trims stake in golden egg?

August 31, 2011 (Chinavestor) When news that Bank of America (NYSE:BAC) trimmed its stake to just 5% in China Construction Bank (HKG:0939) broke out, investors cheered in the U.S. The nation's largest commercial bank by number of branches and clients netted in $8.3 billion on top of Warren Buffet's $5 billion investment a few days earlier. But that's the end of the good news. And here is the other side of the coin.

Chinese financial institutions have been increasingly profitable since they went public, a trend that is about to continue. Commercial and Industrial Bank of China (HKG:1398), the largest Chinese financial institution, reported a net profit of $8.4 billion just for the second quarter! China Construction Bank (HKG:0939), the second largest lender, made $7.3 billion while Bank of China (HKG:3988) reported a net profit of $5.2 billion for 2011 Q2. So selling a stake in a golden venture raises a lot of questions.

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