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China establishes mortgage rate adjustment mechanism for some home buyers By Reuters

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© Reuters. FILE PHOTO: Surveillance cameras near apartment buildings under construction in Shanghai, China, July 20, 2022. REUTERS/Ali Song

BEIJING (Reuters) – China’s central bank and the banking and insurance regulator have put in place a dynamic adjustment mechanism for mortgage rates for first-time home buyers, in a bid to further support the real estate sector, the People’s Bank of China said on Thursday.

For cities where new home sales prices have fallen on a monthly basis and on an annual basis for three consecutive months, minimum mortgage rates for first-time home buyers could be lowered or eliminated in stages, according to a statement from the People’s Bank of China (PBOC).

In late September, the central bank allowed localities to take similar measures until the end of 2022.

The move is more flexible than the September policy, said Chen Wenjing, an analyst with China Index Academy, one of China’s largest real estate research firms, adding, “It will lower the cost of buying a home and better help support stagnant and improving housing demand.”

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The crisis in China’s real estate market, once a pillar of the world’s second-largest economy, worsened last summer as housing prices, sales and investment fell sharply.

In recent weeks, policymakers have ramped up support for the industry to ease a long-running liquidity squeeze that has hit developers and delayed completion of many housing projects, scaring away buyers.

According to analysts’ calculations, 38 cities qualify for an adjustable minimum mortgage rate, including some second-tier cities such as Wuhan and Zhengzhou, and more than 20 smaller cities.

Analysts said the move showed the government’s growing intent to boost demand in vulnerable cities, but added that the impact could be limited.

“Lowering mortgage rates has not been able to increase sales. We believe homebuyer confidence is a more important factor than affordability,” JPMorgan analysts said in a research note.

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Ni Hong, chairman of China’s housing regulator, has pledged strong support for first-time home buyers by allowing smaller down payments and lowering mortgage interest rates where appropriate, according to state broadcaster CCTV on Thursday.

Ni said “reasonable” support should be given to second home buyers despite not buying three or more homes, and expressed confidence that the real estate market will stabilize and recover in 2023.

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India’s central bank governor warns of debt crisis in South Asia

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India’s central bank governor has expressed concern about the growing debt crisis among regional trading partners and said he is alert to potential risks to his country’s economy from a global slowdown.

Shaktikanta Das He said in an interview with the Financial Times that he is optimistic about it IndiaGrowth and financial stability despite the deteriorating global economic outlook. The International Monetary Fund recently said it expects the recession to affect a third of the global economy this year.

Analysts expect India to be a bright spot but the RBI governor said there was “no room for complacency”.

“Netnet, India is in a much better position than almost all other countries,” he said. However, he added, “global challenges are piling up,” saying that “they will have their repercussions and they will have their impact on India.”

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Of India’s regional neighbours, Das said, “We are very concerned about the debt crisis in all of these countries because we have a lot of trade relations with these countries. It is an issue that we look at with great interest.”

Das declined to say which countries he was targeting, but last year Sri Lanka became the first country in Asia to default in decades. Meanwhile, the reserves of Pakistan, India’s nuclear-armed western neighbor and traditional enemy, have fallen to $5.6 billion in foreign exchange reserves, the equivalent of about one month’s imports.

Bangladesh’s export-led economy has been hit by slowing demand, high fuel prices and power outages, prompting its government last year to seek help from the International Monetary Fund.

A regional powerhouse, by contrast, India has been one of the world’s fastest growing large economies over the past year.

Das attributed India’s resilience partly to the Narendra Modi government’s “calibrated and prudent” fiscal response to the Covid-19 pandemic and partly to the RBI’s monetary policy response, which was time-limited and targeted at specific sectors. He said India’s large foreign exchange reserves had boosted the confidence of international investors.

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Das said India’s relatively conservative approach to Covid-19 stimulus spending has helped curb inflation. Although the RBI expects India’s inflation for the current fiscal year to be 6.7 per cent – above the RBI’s 4-6 per cent range – it is lower than in many other leading economies.

Many economists expect New Delhi to increase spending in the annual budget for next month, ahead of the general election in 2024. But Das said he had “no reason to doubt” the government’s commitment to curbing its fiscal deficit.

India’s foreign currency reserves, which peaked at $642 billion in 2021, fell. About $563 billion After spending the rupee stabilized and revalued due to the appreciation of the dollar.

Das called this a “very comfortable level”, equivalent to nine months of India’s expected imports and 92 percent of its external debt.

He rejected the idea that India “burned” reserves during 2022.

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“You buy an umbrella to use when it rains,” he said. “You can’t keep your umbrella inside the closet and say it’s going to spoil.”

Das denied that the central bank’s currency interventions were to defend the rupee, arguing that it was aimed at an orderly devaluation. “We don’t have a specific exchange rate in mind,” he said.

Since Russia’s invasion of Ukraine, India has felt pressure from rising food and energy prices, prompting it to move away from traditional oil suppliers and toward discounted Russian crude, as well as accelerating New Delhi’s campaign to promote the rupee in international trade.

Das said the bank has now approved accounts in rupees for six to seven countries, which it declined to name, which would allow it to settle transactions in India’s local currency instead of dollars, the usual international currency of exchange.

“They will be able to save dollars – countries in South Asia in particular – as well as outside South Asia, for which dollar foreign exchange reserves are a source of concern,” Das said.

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The RBI governor has been critical of cryptocurrencies, arguing that the RBI has helped protect investors from the recent collapse in the sector by advising the government against regulating – and thus legalizing – digital assets.

“That’s exactly what we said: that this will collapse sooner or later because it has no fundamental value whatsoever,” Das said.

“It’s a purely speculative product,” he added. “Someone should also tell us what is in the public interest.”

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Japan’s Kishida pledges to discuss government and Bank of Japan roles with new central bank chief By Reuters

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© Reuters. Japanese Prime Minister Fumio Kishida speaks during a press conference at the official residence of the Prime Minister in Tokyo, Japan, October 14, 2021. Eugene Hoshiko/Pool via Reuters

by Leika Kihara

TOKYO (Reuters) – Japanese Prime Minister Fumio Kishida said on Sunday that the government and the central bank should discuss their relationship with each other in guiding economic policy, when the Bank of Japan’s new governor is chosen in April.

Asked what kind of person he would choose to be the next Bank of Japan governor, Kishida said he would be the “best fit for the job” when the term of incumbent Haruhiko Kuroda ends in April.

“The government and the Bank of Japan must work closely together, but each plays its own role” in achieving price stability and higher wage growth, Kishida said on a television program.

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“Under the new BoJ ruler, we should discuss the relationship between the government and the BoJ,” said Kishida, who has the power to choose the next central bank president.

Markets are awash with speculation that the Bank of Japan could move further to phase out Kuroda’s massive stimulus by adjusting its yield control policy under the new central bank governor.

“In guiding monetary policy, policy makers must have a view on the future of the economy. There must be careful communication and dialogue with the markets,” Kishida said when asked if the BoJ needs to adjust its ultra-loose policy.

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Europe leads the LNG import package as global competition for the fuel heats up

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Europe was the biggest customer in the global LNG market in 2022, with the region importing far more than rival buyers as it seeks to replace dwindling Russian gas supplies.

In previous years, the EU lagged behind Japan and China in LNG imports, but Russia’s energy weaponization since its invasion of Ukraine has forced the bloc to look for alternative fuel supplies.

With Europe needing to import larger volumes to fill storage facilities in 2023, the global LNG market is It is set to remain tightwhich could lead to higher prices for gas users around the world.

When the price goes up in Europe, Asia has to [increase the amount it pays] Accordingly, to be competitive to attract LNG shipments,” said Olumide Ajayi, Senior LNG Analyst at Refinitiv. “Europe has become the premium market.”

Bar chart for 2022 (million tons) showing the EU outperforming its competitors in LNG imports

Data from Refinitiv showed that European Union countries imported 101 million tons of LNG in 2022, up 58 percent from the previous year. The bloc accounted for 24 percent of global LNG imports during this period.

Namit Sharma, global co-president of oil and gas at consultancy McKinsey, said Europe’s push was underpinned by lower demand in China. Beijing’s strict non-covid policy will lead to a slowdown in the economy and lower energy demand in 2022. “If China had bought more LNG, it would have been difficult for Europe to get this gas already,” Sharma said.

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China’s total imports of LNG in 2022 amounted to 64.5 million tons; In 2021, it was the world’s largest importer at 79 million tons. The country also re-exported some of its surplus LNG to Europe this year, helping to increase gas stocks in the bloc.

The EU’s LNG imports last year were equivalent to 137 billion cubic meters worth of natural gas, which is roughly the 140 billion cm of pipeline gas it received from Russia in 2021. However, analysts warn that Europe will need Importing more LNG in 2023 starts the year largely devoid of Russian pipelines, as Moscow has moved to halt supplies.

Meanwhile, China has also abandoned its no-Covid rules, which analysts predict will revive LNG demand — though not to the level of 2021, as Beijing has deployed massive amounts of renewable energy and is building up its domestic gas supplies. .

Bar graph of the percentage of total LNG imports by percentage of global volumes

LNG now makes up about 35 percent of Europe’s gas supply, up from 20 percent last year, according to data from think-tank Bruegel.

The International Energy Agency warned in December that the European Union could face a potential gas supply-demand gap of 27 billion cm2 in 2023 in a scenario in which gas shipments through Russian pipelines drop to zero and China’s LNG imports rebound to 2021 levels.

The IEA said improvements in energy efficiency and the rapid development of renewable energy would help bridge the gap. These shifts will be necessary “to meet the conditions for refilling gas storage levels to 95 percent and to maintain the security of gas supplies until spring 2024 without undue pressure on European markets and consumers.”

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