Market round-up: Investments in electricity edge ahead of fossil fuels
In other news, China’s faltering inflation rebound is a worry for all; Forget Korea, China risks, Asia currencies beat peers
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For the first time, investments in the electricity sector exceeded the combined spending on oil, gas and coal supply in 2016, the International Energy Agency (IEA) said in a report. Due to fewer coal power plant additions, the global electricity investment was nearly flat at $718 billion. But continued drop in upstream oil and gas investments means that the electricity sector edged ahead of the fossil fuel supply sector to become the largest recipient of energy investment. Spending on electricity networks, storage and efficiency increased. The trends, however, have to be looked at from the perspective of shrinking global energy investments. At around $1.7 trillion in 2016, the total global energy investment was 12% lower than in 2015 in real terms, says IEA. India is the third largest country by energy investments, after China and the US, with energy investments rising by 7% in 2016.
China’s faltering inflation rebound is a worry for all
China’s inflation rebound is turning into a false dawn. For the world economy, that’s sobering news. Rising factory prices in the world’s second-biggest economy had been touted as a possible circuit breaker for anaemic global inflation, which continues to defy accelerating economic growth. The thinking was that higher costs in China would drive up the price of everything from footwear to electronics, which in turn would help lift profits and wages. Yet, those hopes appear to be fading. While China’s Producer Price Index held up in June, much of the support came from higher commodity prices as companies restocked their inventories. That support is already fading as activity in the property and construction sectors remains soft and oil and raw materials prices decline, keeping factory prices lower. Bloomberg
Forget Korea, China risks, Asia currencies beat peers
Never mind the tensions with North Korea and China’s deleveraging drive, Asian currencies have emerged victorious in a Bloomberg survey of emerging market watchers. India’s rupee and the Indonesian rupiah—the region’s two highest-yielding currencies—took first and third place in the poll, in which 18 investors, traders and strategists were asked to gauge the resilience of currencies when it comes to a suite of risk factors looming in the second half. The worst performance among developing market currencies last quarter isn’t holding back the Argentine peso: it came in second. At the other end of the ledger, Turkey’s lira, Russia’s rouble and the Mexican peso were seen as the most vulnerable. Bloomberg