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Global Trade: World Manufacturing Hits New Lows in August; French Banks Pull Out of Asia


Plus, German exports continue an all-time high.

MINYANVILLE ORIGINAL World markets are awaiting an announcement this Thursday from the European Central Bank (ECB), which is expected to release a revised debt-purchasing program and possibly cut interest rates. Two central bank officials have said that ECB president Mario Draghi will announce unlimited sterilized bond buying in a move to ease the EU debt crisis.

Low Manufacturing Restricts Global Trade.

Markets have wavered this week in the face of tight global demand and low manufacturing numbers throughout August. The JPMorgan (JPM) Global Manufacturing PMI fell to 48.1, its lowest level since June 2009, while the new orders index fell to 46.8, its lowest since April 2009. China's official manufacturing PMI for August dipped to 49.2, a nine-month low -- HSBC's measurement was a bit more dire at 47.6, the lowest since March 2009 – while Markit's US manufacturing PMI fell from 54.0 in July to 51.5 in August, a dip that (despite being less than expected) marks the third month of contraction for US manufacturing.

Will Asian Trade Suffer Without French Financiers?

Financial malaise in the midst of the European credit crisis has led French banks to withdraw from Asia, reports the Wall Street Journal. BNP Paribas (BNP.PA), Credit Agricole (ACA.PA), and Societe Generale (GLE.PA) are all short for cash and unable to capitalize on profitable Asia trade markets. The banks are "deleveraging," shifting from an era of healthy deposits to one in which they simply have no money to lend.

The WSJ goes on to explain:

Less than two years ago, lenders in the eurozone (excluding Germany, which has fared better than most countries) were responsible for around 43% of large trade loans in Asia, according to Morgan Stanley analysts. In the first quarter of this year, they accounted for about 3%.

This deficit has been filled by international lenders like HSBC (HBC), and Japanese banks like Mitsubishi UFJ Financial Group (MTU). Mitsubishi UFJ Financial Group is Japan's largest bank with $2.5 trillion in assets, and it committed to investing $225 million in the Export-Import Bank of Korea back in June.

So it seems the European pull-out will likely have a muted effect on Asian trade financing, although one survey cited by the WSJ shows increasing worries about the emergence of stricter lending standards among Asian banks.

Germany Floats on Exports as Europe Sinks in Debt.

German exports were strong through the first half of 2012, bucking the trend of faltering demand among eurozone nations. The German Statistics Office reports exports rose 4.8% to $690.8 billion from January through June. (The CIA World Factbook estimates total German exports for 2011 were 1.408 trillion, an all-time record.)

Exports within the EU rose by a weak 0.7% when compared to exports outside the eurozone, which soared by 11.1%. European nations are still responsible for the bulk of German exports, taking in $399 billion versus $289.5 billion from non-eurozone countries. However, goods and services exported to the EU might one day be eclipsed by those exported to non-EU nations, which have risen from 39.7% to 42 % of all German exports in the past year.
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