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China’s economy heats up, Bitcoin drops below $10,000, and it’s decision day for the Bank of Korea and Bank Indonesia. Here are some of the things people in markets are talking about.
China’s Economy Is Heating Up
China’s economy is poised for its first full-year acceleration since 2010, the year its gross domestic product surpassed Japan’s to become the world’s second-largest. Data due Thursday at 3 p.m. in Beijing will show the economy expanded by 6.8 percent in 2017 from a year earlier, according to a Bloomberg survey. Economists, whose growth estimates weren’t optimistic enough before three of the last four quarterly releases, may be in store for yet another surprise, according to hints from one high-level source. Premier Li Keqiang said earlier this month that the 2017 expansion was about 6.9 percent, citing better-than-expected exports, fiscal revenue, household income and corporate profits.
Bitcoin Below $10,000
Bitcoin tumbled below $10,000 Wednesday, extending its loss to more than 50 percent from a record set only a month ago, as increased scrutiny from regulators around the world weighs on the digital-coin craze. The largest cryptocurrency dropped to a low of $9,186 in morning trading in New York, its first foray below $10,000 since Dec. 1, before stagging a rally to trade at $10,780 as of 3:44 p.m., according to consolidated pricing data collated by Bloomberg. The most recent signs of a regulatory clampdown have come out of Asia, a hotbed of Bitcoin trading. In South Korea, regulators warned they may shut down cryptocurrency exchanges, while China is said to have intensified its curbs on trading of the digital coins. In the U.S., the Securities and Exchange Commission asked at least 15 funds to pull applications this month for Bitcoin-related exchange-traded funds. Also, a Treasury official told a Senate committee on Wednesday that the agency is examining 100 registered digital currency providers, exchangers and those not registered. Sigal Mandelker said in prepared remarks that she sees virtual currency as an "evolving threat" and that Treasury will “aggressively pursue” virtual currency exchangers who don’t take compliance seriously.
North and South Korea will march jointly under one unified flag during the opening ceremony of the Winter Olympics, the biggest sign yet of a detente after months of tensions over Kim Jong Un’s nuclear program. The statement, made on Wednesday following the third round of talks in just over a week, said the two Koreas will form a joint women’s ice hockey team. They will also conduct some activities in North Korea, including a joint cultural event at Mount Geumgang and training for skiers from both countries at the Masikryong ski resort on the east coast. North Korea’s athletes will come to South Korea on Feb. 1, with the rest of the delegation arriving on Feb. 7, according to South Korea. The sides have yet to decide who will represent Kim at the Games to be held in the ski resort of Pyeongchang from Feb. 9. Last week, they agreed to allow a 140-member North Korean orchestra to perform concerts in Seoul and Gangneung, a vacation city near Pyeongchang.
Beijing’s Conglomerate Crackdown
China’s banking regulator vowed to take action against those who built large financial conglomerates through complex ownership structures and fraudulent capital injections, signaling last year’s government crackdown on such entities is poised to continue. Such operations have become major obstacles to the nation’s efforts to deepen financial reform and safeguard banking stability, Guo Shuqing, chairman of the China Banking Regulatory Commission, said in an interview published by the official People’s Daily on Wednesday. Some shareholders used banks as their “ATM machines” and “recklessly conducted unfair connected transactions to line their own pockets,” he was quoted as saying. Guo, almost one year into the job, has launched a campaign to root out malpractice and strengthen controls over the banking industry amid surging risks from poor corporate governance, violations of lending policies, and cross-holdings of financial products. He didn’t specify in the interview which entities might be targeted.
Decision Day in Korea, Indonesia
With the Bank of Korea widely expected to keep interest rates unchanged on Thursday, the focus will be on inflation and economic growth forecasts, which may determine the timing of the next hike in borrowing costs. The policy decision will be the first since the central bank raised its benchmark rate to 1.5 percent in November, when it signaled that any future moves are likely to be gradual. All 17 economists surveyed by Bloomberg forecast no change. It’s a similar story in Indonesia, where all 24 economists surveyed by Bloomberg expect Bank Indonesia to keep the benchmark interest rate unchanged at 4.25 percent. After an aggressive bout of easing that’s seen eight interest rate cuts over the past two years, Southeast Asia’s biggest economy is still struggling to fire. A recent pick up in food inflation means there’s limited room for further easing, but at the same time, Governor Agus Martowardojo and his board are in no rush to follow global peers in raising rates on Thursday.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- First-time buyers return to Australia's housing market.
- Which central bank is the most accurate forecaster?
- Davos elites' biggest fears? Cyberattacks and war.
- Goldman Sachs is now worth less than Morgan Stanley.
- There may be more unwanted oil coming from China.
- The world's most valuable distiller is running out of liquor.
- How to plan an off-the-grid trip to Japan.
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