Overseas Headlines- September 18, 2019

Date: September 18, 2019

United States:

U.S. Home Starts Reach Highest Since 2007 in Broad Advance

“U.S. home construction surged in August to the fastest pace since mid-2007 on more apartment projects and single-family houses, a welcome sign for the housing sector that has struggled to gain momentum. Residential starts climbed 12.3% to a 1.36 million annualized rate after an upwardly revised 1.22 million pace in the prior month, according to government figures released Wednesday that topped all estimates in Bloomberg’s survey. Permits, a proxy for future construction, also increased to a 12-year high. Low mortgage rates and a solid labor market are helping to support sales, prompting a pickup in construction activity and permitting. The figures indicate residential construction, which hasn’t contributed to economic growth since the end of 2017, may be starting to break out of a prolonged slump. At the same time, uncertainty about the economy, a shortage of labor and lots, and higher materials costs due to tariffs represent challenges for builders and price-conscious homebuyers. The report is consistent with private data out Tuesday that showed sentiment among homebuilders rose in September to the highest in nearly a year, helped by increased optimism about the current sales environment. Single-family starts rose 4.4% to a 919,000 annualized pace, the strongest since January. Permits increased 4.5% to 866,000, the most since July 2018.”




Record Numbers Seek Debt Help With U.K. on Brink of Brexit

“A record of number of Britons sought debt advice in the first half of 2019, and charities are warning that households are vulnerable to any future economic turbulence. More than 331,000 people contacted StepChange wanting help, the charity said in a report published Wednesday. Among the almost 200,000 who received full advice, the average level of unsecured debt was 13,799 pounds ($17,100), a 6% increase from 2016. The figures almost certainly reflect years of government spending cuts, the inflationary squeeze on incomes that followed the 2016 Brexit vote and access to easy credit. While wages are now recovering, households face an uncertain economic future, with Britain and the European Union seemingly no closer to agreeing a deal weeks before the Brexit deadline. A chaotic departure from the bloc could tip the economy into a deep recession and drive up food and fuel prices. “Any future economic turbulence or sharp rises in the cost of living could spell disaster for those already living on a knife edge,” StepChange said.”




Profiting From Trade War, China Fund Jumps 54% in First Year 

“Xu Xiaoyong has returned 54% for investors during his fund’s first year by hunting for stocks that can thrive despite the challenges facing China’s economy. That means buying liquor firms supported by resilient consumers or betting that domestic tech suppliers will see more demand from larger companies as a result of the trade war, encouraging innovation, said Xu, investment director of Changan Fund Management Co. Xu started his Changan Yulong Flexible Allocation Mixed Fund in September last year, a few months before China’s equity market began recovering from a sell-off. While it’s still early days, it is beating 99% of more than 2,500 peers tracked by Bloomberg. Xu’s top 10 holdings at end-June included liquor makers Kweichow Moutai Co. and Wuliangye Yibin Co. as well as telecom equipment manufacturer ZTE Corp. and WUS Printed Circuit (Kunshan) Co., according to the fund’s quarterly report. Those four stocks have jumped more than 73% this year, compared with less than a 20% gain on the Shanghai Composite Index. “We’ve seen some sizable gains in these stocks this year, but there remains huge room for them to grow their business over a three-to-five-year horizon,” said Xu, who has been managing money for more than a decade. “These stocks are worth holding on to.” ”



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