Of course, not everyone agrees that China will be growing so fast. A couple of major problems loom: China’s GDP has indeed been growing rapidly in the last 30 years, but that could be because it has a while until it reaches a high rank. Chinese GDP is still below the 100th rank in the global economy. Another factor making it difficult for China to climb to the top is the state of the current global economy, the decrease in demand for exports and the rise of unemployment.
Some experts even feel that China’s GDP will fall in the next few years. Hedging might be a great binary options and forex strategy for traders of forex and binary options for those who are cynical about the Chinese takeover of the world.
What this means for traders:
Traders might want to pay attention to the Asian currencies, in particular the yuan, the Chinese currency which the Chinese government decided earlier to peg to the dollar (see our previous post). This in turn makes Chinese exports more expensive, but imports cheaper. Be on the lookout for trades connected to rises in production expense and major companies such as Wallmart and Target, who have overseas factories. Other companies which have been cheaper alternatives to American products, such as Toyota and Honda, may also present good binary options opportunities.
What this means for trade operators:
Chinese stocks and markets are a new opportunity for traders. The Asian market will also be influenced by its #2 neighbor. Read more about online trading in the binary options market.
China has beat Japan as the second-largest economy in the world. With an average GDP growth of 10% for the last 30 years, a population of 1.4 billion, first place in the world’s and consumption and production of coal, steel and energy, and the world’s largest exporter and second-largest importer of good, the country stands a chance at becoming number one soon. (It is also ranks first-place in the world in coal production).
Other news in China is the country’s allowing foreign investors to invest in the Chinese market. A pilot program will allow foreign investors to buy bonds in the Chinese market using Chinese currency.
Shanghai is set to become a world leader in finance by 2020. As a result, they are tapping into corporate investment abroad and could allow foreign companies to sell shares in Shanghai as early as next year. Rumor persists that Shanghai may allow foreign investment in yuan-dominated private equity and venture capital funds as well in the near future.
Since the yuan ended its peg against the dollar on June 19 it has risen by .5 percent. Announcement of the end of the peg causes a 4.8 percent increase in Hong Kong yuan deposits in June. China is now making it easier for yuan transactions between banks and companies in Hong Kong as well as those transferring cash in order to buy wealth-management products.
The rise of the yuan currency combined with rising sentiment about China’s future could make it a good short-term investment for binary options and forex traders.
If you’ve seen “Love and Death,” there’s a quote there about wheat. As the story takes place in Russia, it is suitable for a country who is the world’s top exporter of grain.
Russia’s five-month drought brought a ban on wheat exports. As Russia is one of the main producers of wheat, this is has driven up the price of wheat to its highest in two years on August 5. The price of corn is related to the price of wheat, as both are used for animal feed. Traders who find that grain futures are soaring may instead choose to invest in soybeans and corn, although corn is rising along with rice.
What this means for you:
Traders might want to capitalize on this market trend for short-term binary options. Traders can place trades on wheat and hedge it with trades on soybeans and corn, perhaps more stable investments.
Operators might want to add more instances of commodities options to their sites for traders to benefit.
Major Events of the Week
US stocks decrease after Bernanke testified to Congress and reported a “unusually uncertain” economic outlook. This week Obama signed the Wall Street Reform Bill, which calls for more government regulations for loans and financial products and the creation of a new agency, the Bureau of Consumer Financial Protection.
BP announced this week the successful capping of the oil leak and that no more oil being leaked into the Gulf. Shares in BP increased after the announcement, but a brewing storm in the Caribbean might reopen the leak.
A short look at the week’s closing:
Stock Market Summary
The Dow Jones Industrial average fell by 164 points at one point and closed at 10120.53
S&P Stock Index fell by 13.89 points to close at 1069.59
The Nasdaq fell by 35.16 points to close at 2,187.33 due to the drop in technology stocks.
Commodity Market
Oil dropped to below $78 a barrel
Currencies
Dollar rose against the Euro
Yen rose against the dollar
