Zurich 2 July, 2010.China´s move to loosen its currency policy last week has attracted widespread praise from analysts cited in financial media reporting. The benefits for the US dollar were cited. However, the main benefit of the move was seen to be a reduction in tension ahead of the G20 summit. Analysts were hoping that the resulting goodwill may help forge a meaningful approach to global recovery. Media Tenor´s financial sentiment tracker, which measures the sentiment of cited experts in the world´s leading financial media, has also found that Asian economies, excluding Japan, are bucking the recessionary trend, while the US real estate market has come back onto the agenda in its role as a recovery indicator.
Sentiment for the US Dollar and the Renminbi both rose significantly last week as the impact of the Chinese government´s decision to allow the Renminbi to rise was seen as a benefit to economic growth globally. Analysts were also cited on the possible impact on the G20. Media Tenor´s chief researcher, Matthias Vollbracht, sees the analyst argument as an intriguing example of the role of sentiment: “Currency movements and economic policy are a sort of everyday occurrence, yet when expectations on China and the USA are so high, a positive move such as this is amplified.”
Asia in general was also very positive throughout June with the Indian and Chinese economies both hovering around the 20% positive mark. For the smaller Asian economies sentiment is extremely positive, albeit journalists are focusing on the larger countries - making presence a challenge for the likes of Indonesia and Singapore. An important exception to the rule is Japan, whose rating deteriorated in the statements of cited analysts. “Whereas China and India are perceived as pushing full speed into the future, Japan seems stuck in a time warp base on perceptions of zero growth, deflationary risk, ageing population and governmental weakness” says Vollbracht. “With the current media coverage, it is very easy to forget that Japan is the world´s second largest economy.”
In company reporting, US technology stocks show that Apple´s iPad and iPhone sales have excited the cited analysts as much as consumers. Apple occupied 40% of the agenda with the balance of positive to negative statements around 40% positive. The main topics cited by analysts in this sector were innovation and customer relationships – two areas where Microsoft and Google have been challenged this year. “The Apple– Microsoft–Google reputation story is clearly being won by Apple at the moment. Microsoft is viewed as standing still. For Google the data protection story is a reputational bomb waiting to go off”, says Vollbracht. “But for Apple, journalists have been citing experts who support the simple story line of passing innovation onto the consumer.”
Finally, US real estate sentiment has returned to the media as a recovery indicator in June. Having had a low presence in the wake of the collapse of the real estate market and the sub-prime crisis, shaky real estate figures are adding to negative developments in consumer confidence as a signal that economic stability has not returned to the US. “The housing market may be likened to inflation - often the fear that the market is weak is enough to generate a plummet in confidence, regardless of the real effect on the real economy. The simple fact that this is being cited as an economic weakness will carry weight on the overall perception of economic weakness” says Vollbracht.
Media Tenor´s financial sentiment tracker is released weekly. Next week: FTSE, the Euro crisis and the Euro trend, Oil and Energy markets.
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