Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Australian retail sales is the only event on the Asian and Pacific economic calendar on Monday, but whatever the reading, it will be the quiet before the storm in what looks like a huge and potentially volatile week for world and Asian markets.Monetary policy decisions from Japan and Malaysia, purchasing managers index reports from all over Asia, inflation data from South Korea, Indonesia and Vietnam, and GDP growth figures from Taiwan and Hong Kong are the regional highlights of the week. China’s embattled property developer Evergrande will be under the spotlight again following media reports last week that it has held talks with creditors who opposed its restructuring plan. Asian markets on Monday will also give their initial reaction to news over the weekend of an expected U.S.-Sino summit between presidents Joe Biden and Xi Jinping next month. Tech and chip stocks could be particularly sensitive. On top of that, the U.S. earnings season rolls on, Japan’s corporate reporting floodgates open, and month-end flows across all asset classes could be powerful. Oh, and there is the Federal Reserve’s interest rate decision on Wednesday too.Investors in Asia wade into that sea of event risk in slightly better shape than might immediately appear to be the case, having been hit hard by the surge in U.S. bond yields and widespread tightening of tightening of financial conditions. But the MSCI emerging market index and Asia ex-Japan index’s falls of around 0.6% last week were notably shallower than the MSCI Work index’s 2% slide. Their falls in October are both on track to be around 3.5%, not quite as bad as the MSCI World’s and S&P 500’s respective declines of 4.2% and 5.4%. Perhaps a period of relative outperformance for Asian and emerging market assets lies ahead?China’s recent economic and market signals, at least, are brightening a little.China’s economic surprises index is its highest in over five months – rising from a very low base, admittedly – while the CSI300 index of blue chip stocks rose on Friday and on the week.The benchmark index is up four days in a row, its best run since June, and its 1.5% rise last week was its biggest in seven weeks.Japan’s bonds and currency remain under intense scrutiny ahead of Tuesday’s Bank of Japan decision and guidance. The yen rebounded around 0.5% against the dollar on Friday for its best day in three weeks, and the 10-year Japanese Government Bond yield eased a couple of basis points.But the yen and JGBs go into the meeting very much on the weak side. The BOJ is inching closer to ending negative interest rates and phasing out ultra-accommodative monetary policy, but probably not this week, even though inflation in the capital Tokyo unexpectedly accelerated in October.Here are key developments that could provide more direction to markets on Monday:- Australia retail sales (September)- Bank of Japan two-day policy meeting starts- Germany GDP (Q3) (By Jamie McGeever; Editing by Diane Craft) More

SYDNEY (Reuters) – Australia’s red-hot rental housing market, supercharged by record migration and a chronic supply shortage, could be reaching a breaking point for affordability as tenants grapple with rising costs of living.Nationwide vacancies are at all-time lows and prices are up 30% over three years, forcing renters like Sydney office worker Lara Weeks into unenviable situations.With no way to afford stratospheric inner-city prices when her landlord decided to sell the apartment she lived in for 18 years, Weeks and her cat recently downsized from a two-bedroom to a one-bedroom farther from the city centre that costs 22% more.”I find it sad that I can’t stay in the area for similar money,” she said.Rent is now one of the country’s biggest drivers of inflation, which at an annual rate of 5.4% in the September quarter is well above the central banks’ targeted band of 2% to 3% and could lead to further interest rate hikes as early as next week. That in turn would push up the variable rate mortgages held by most Australian landlords who are typically private investors with one or a few properties rather than large corporations, pressuring them to lift rents further and forcing tenants to make tough decisions.”We’re already seeing people that are in houses move to units and then the next logical step is if a unit gets too expensive, you go into a share house,” said Cameron Kusher, chief economist at PropTrack under REA Group. NEARING THE PEAKMany tenants, particularly in the most expensive city Sydney, have already been priced out of houses. PropTrack data showing house rents nationally were unchanged at A$550 per week, or about A$2,380 ($1,508) per month, in the September quarter. Apartment rents nationally jumped 4% during the quarter, double the June quarter rate of increase, to an average of A$520 per week, making them almost as costly.Prices across Australia’s entire rental stock rose 7.6% in the third quarter from a year ago, the largest increase since 2009, according to official data, and similar to gains seen in the U.S. where rental costs have also surged. Rent inflation is expected to peak at an annual rate of 10% in the next few quarters before easing, Reserve Bank of Australia Governor Michele Bullock said at a Senate hearing on Thursday. Real estate agents say there are initial signs of cooling in some areas.     “Compared with the beginning of the year, it’s way quieter now,” said Christian Postiglione, an agent in Sydney’s expensive eastern suburbs, which include Bondi Beach. “We would have 40 to 50 groups per inspection around January and February… the volume is very kind of low now.” AFFORDABILITY CEILING The increase in rents has more than made up for the fall at the start of the COVID-19 pandemic when Australia shut its borders and there was a net outflow of people. By the year ended in June, net migration rebounded to a record 500,000 people. The housing supply is lagging far behind as the home building industry is being squeezed by high borrowing costs, a labour shortage and elevated raw material prices. Domain, a property website, estimates up to 70,000 new rentals are needed to balance out the market.Nationwide, the portion of income required to service new rentals rose to a record 31.4% in the June quarter, according to an ANZ CoreLogic Housing Affordability Report released in September. For low-income households, it was 52% as of April, its most recent published data, at a time when wage rises are lagging well behind rent increases.Tim Beattie, a 62-year-old former soldier, said he was priced out of the rental market in Western Australia and had to leave his job in community services. He now lives with his daughter in Adelaide and is looking for a room in a shared house that will cost him no more than A$200 a week.     “There used to be a such thing as a middle class, but now that’s gone,” Beattie said.($1 = 1.5780 Australian dollars) More

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The Securities and Exchange Commission (SEC) is examining the matter, Sunday’s WSJ report added, citing sources. The SEC declined to comment on the WSJ report when approached by Reuters. Two Sigma did not immediately respond to requests for a response. More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.“The UK has some of the highest regional inequalities of any advanced country. Today, these are larger than those between east and west Germany and north and south Italy. New technologies, global competition, the loss of old industries — and the failure to support new ones — have all driven that divide.”This is the opening of a report, “Why hasn’t UK regional policy worked?”, out last week. Co-authored by Ed Balls, former Labour shadow chancellor, this is the second in a series. The earlier one, published in March, examined the failures of UK regional policy. This one asks leading policymakers, including three prime ministers (John Major, Tony Blair and Gordon Brown), what lessons they draw from them.These are the main conclusions: first, widening regional divisions are not inevitable but correcting them is hard; second, “past policies to grow the UK’s regional economies were geographically biased and insufficiently ambitious”; third, the government has relied too heavily on centralised approaches to delivering more balanced regional growth in England; fourth, policy instability has led to short-termism and damaged outcomes; fifth, sustained top-level political will and leadership are necessary to overcome Whitehall’s centralising tendencies and empower local government; and sixth, today’s cross-party support for the “combined authority” model, in which local governments work together within city-regions, might produce a workable consensus.Yet some big points of disagreement remain. What, for example, should be the main levers for growth in English regions and what is the right level of decision-making? How far should Whitehall itself drive through a comprehensive reform of local government? Last, but perhaps most important, how is regional revival to be funded? How, in particular, does one balance the self-evident case for greater local fiscal autonomy and accountability with the need to redistribute resources from the rich regions — namely, London and the South East — towards the less productive rest?What is most striking about these conclusions is how precisely they reveal the core weaknesses of governance and the economy in the UK.This is hardly surprising. As I have argued in earlier columns on this topic, the extreme regional divergences in productivity are the consequence of both potent economic forces, particularly deindustrialisation and the rise of London as a global financial hub, and failures in policy and politics. The latter in turn reflect a combination of over-centralisation, addiction to policy gimmicks, all too familiar myopia, and hope that the economy, left largely to itself, will solve the problems on its own.It turns out, alas, that it cannot. The great deindustrialisation of the Thatcher era did not lead to the blooming of thousands of new economic flowers across the country. It led instead to overconcentration on one economic activity (finance) in one part of the country. Worse, that once-verdant tree is no longer what it was. London is rich. But it is no longer as dynamic as before.Properly understood, therefore, what this report identifies is something bigger than regional economic problems, important though they are. It identifies fundamental and pervasive weaknesses in the UK’s economy, governance and politics. This is particularly important right now, because, whatever these regrets of past policymakers, the thrust of contemporary politics, in the aftermath of Brexit’s fraudulent diversion, is towards changing as little as possible. It is towards a consensus on conservatism.Given that, it is hard to believe that the deep-seated failures identified in this report and others, notably the government’s own levelling up white paper, will be dealt with by any government. Some even argue that it is impossible to do so: the regional divergence is ineluctable. Instead, we should be even more ruthlessly laissez-faire and encourage people to migrate to the south.Since London and the South East still make up only 27 per cent of the population, that is evidently impossible. In sum, greater prosperity is needed across the entire country. Regional policy should therefore be seen not as something apart, but as the heart of any sensible growth strategy, which must be simultaneously national and regional. This then has become a core — arguable the core — political, institutional and economic challenge.Yet what I take from these depressing regrets over past failures is how difficult, perhaps impossible, the task will be. Is the UK able to remedy the failures that have led to huge regional inequalities and low growth? Alas, I doubt [email protected] Follow Martin Wolf with myFT and on Twitter More