Like many investors, have you recently followed the financial markets closely? If so, you must be acquainted with the big stories making the world headlines. Last year, for instance, the stock markets in China were doing quite well. Everyone was excited. Indeed, by June 2018, the Shanghai Composite stood at the peak of 5,178. The big boom was genuinely remarkable. It rose by a whopping 135% each year! There was a picture of optimism everywhere. Curiously, around the same time when things seemed so positive, the Chinese economic growth expectation was vague. It was running amok. The big banks had an alarming rise on Nonperforming loans. Profitability in the corporate sector was also hindered. Experts discerned that China's declining GDP growth was too dependent on the rapid credit growth. Things seemed dark and bleak.

Black Tuesday

Even though the market peaks happened in June, just the next month, in July, panic suddenly gripped investors. Things came to a head on July 7th. To date, this day is called 'the Black Tuesday'. At this time, the market lost a third of its value. The action had to be taken without delay. The regime in Beijing swung into action. The government introduced a series of measures carefully calculated to deal conclusively with the startling economic decline. In late June 2018, State intervention measures peaked. The aim was to stop the steady decline in its tracks. Unfortunately, in the fullness of time, all these steps failed to achieve the intended effect.

Fall of a Giant?

By July, there was a feeling of desperation, despondency and utter hopelessness among many investors. Meanwhile, the regulators strove to bring in new extra measures to try and steady the sinking ship. The fall of the giant world economic empire, at some point, seemed imminent. Indeed, it seemed like it was only a matter of time before the sky caved in. As the sages put it, however, behind every cloud is a silver lining. Even when everything seemed dire, it came to pass that all was not lost. On July 9th the markets experienced the much-needed respite. In just a single day, that July 9th, the markets in Shanghai closed up 5.8%. There was a sigh of relief. Things were getting better, in the end. The stock market panic gradually subsided.

Soap Opera

Things seemed to get even better the next Friday and Monday. The market experienced considerable gains. But on Tuesday the jitters returned in the market again. There was an unexpected decline of 3.0 %. Hearts throbbed still with uncertainty. There was even more drama, in soap opera fashion, in the following three days. The stock market rose dramatically, triggering widespread nervousness. The panic eventually ended when everything stabilized. The problem is that the major questions that arose in the heights of the stock market drama have never been fully addressed. Because of this lurking uncertainty, there is still a certain degree of volatility.

Pundits

Indeed, pundits think that the Chinese stock markets are still overvalued. The volatility and instability factors may still haunt the market in the future. The trends cannot be tamed. Today, there is a fierce debate touching on the economic reforms of China. In question are Beijing's capabilities and competence with regards to the cost of steering the economic adjustment. One of these costs is the volatility factor. For these reasons, the policy responses and panic remain very much in place. The big debate about the future of the Chinese economy is also quite alive.

Volatility Factor

Certainly, if the economy is rebalanced and regular state control over the various facets of the economy were withdrawn, this would greatly reduce the Beijing government's ability to manage the economy smoothly, at least in the short term.

It would especially be true with regards to the overall financial system. Interestingly, such a wide-reaching measure may still be viable, necessary, and even desirable, to forestall a dangerous long term surge in market volatility.

Volatility is, however, not the only factor in question. Regardless, who can afford to shove volatility entirely out of the equation when discussing such crucial matters? In one thought, volatility may be suppressed only by increasing control. In another school of thought, what is required is a temporary suppression soon, to forestall disruptive adjustment.

It is quite significant that, whenever the question of monetary volatility arises, the central banks can always decide on the appropriate mode of control that does not upset the economic status quo. Time will tell what finally happens in the future.

The World Health Organization (WHO) 6 Feb 2020 Situation Report showing less than 2% fatality rate out of the 28276 globally confirmed cases, so is the coronavirus panic really justified. There are many more deadly virus that don't get the media hype. With the recent coronavirus panic wiping off half a trillion dollars of stock market value, where are the fears and hype stemming from?

Back in January 2016 the Chinese stock market experienced a steep sell-off. It was not for one week, but the panic continued for many weeks even was noticed earlier also. The stock market collapse made many reflexive China Bulls cautious about misinterpreting implications. The experts of the bull market are very well aware of the plunging and misinterpretation but the suggestions are not in favour of particular happenings. Peter Doyle defined on the FT Alphaville blog about the markets continue declining situation from 2011-2012.

The refraining at stock market is not a destructive one situation in reality even surprising and there are will power and ammunition considerably left in Beijing whenever it's necessary. In a diplomatic sense, he discussed few reasons behind why; a worthy copy instead of persuasiveness can help in reforming. An op-ed in the Financial Times published on similar day content said by George Magnus, he defined that enormous people are still overlooking. The main reason behind driving tendency of the increasing balance sheets in a fragile way underlie the series disruptions interrelated to financial market and the serious initial was in June 2013.

The debt has risen inexorably and analysts are wasting the time without any use of the excess credit problem. The few words Magnus shared in the article were like this, Importance of economic reformation of real economy and state monopoly have stalled, or succumbed to push back and inertia. The policies are not enough to tackle the long run problems. The poor productivity with chronic overcapacity has made condition complicated as it's the fourth consecutive year where producer price deflation has taken place. The relentless accumulation of debt considered as China's most serious problem because it receives the most passive attention.

The biggest problem of China is accumulated debt and analysts say it will continue to deteriorate until the Beijing's direct addressing of debt. It will not be an issue if China shows a growth rate vary from 6% to 8%. China's long-term outlook will be worse due to its debt-ridden condition. The credit growth decelerates and there are few indications of betterment in the Chinese market. One time also came when the authorities turned turtle and went against the bulls; some critics took it as a good option for the people and economy of China. There are few views provided by analysts in which the consideration put on Beijing's misleading stock market situation of recent years. The surge in capital outflow made all far worried as RMB seen a rapid decline and misinterpretation.

The few contrary mutterings declare that Beijing's competitive devaluation plan is put in a process to strengthen the goods sector indulged in trading. The PBoC will stop interrupting in the process to allow RMB put a fundamental form of equilibrium which has not been seen till now. Beijing's authorities and analysts considered that the decline was seen due to lack of investment in domestic infrastructure and real estate business. The exports of Beijing are not weak as usually considered. The production facilities has to be put on a halt and investment is needed in grooming sectors for making a stable aspect of the bull's market. The stability of bull's market will provide a specific growth to country's GDP.

The Beijing government is putting all efforts to make the country's economy a reliable one by boosting domestic market. The authorities have generated liquidity to boost up domestic demand. The weak point noticed in this process is that liquidity inclined to expand and capital outflow but a destructing effect few economists think will occur. The destruction can be very bad for the currency value in the market. The risk is not only for China, it's a risk for the whole global economy.

The few assumptions done by analysts define that 2016 will be another bad year for the global stock market even it can turn into a worst one if not tamed on time. The preambles are unlimited; where a mass coverage of recent market update defined China has generated intractable arithmetic about demand imbalance at the global level. The main content to be discussed in the above-described views is just self- reinforcement to tackle increasing debt, capital growth and put few general reforms into implementation. The situation could be untangled and addressed but still there is a lot to reform.

Every year, the famous G20 Summit is held in one of the world's leading capitals. The summit broadly focusses on many critical issues dealing with world economy. It also discusses the global finance and economic matters. In 2019, the first ever G20 summit was set to be hosted on Japanese soil. The major world conference would be held in Osaka City.The Osaka meeting was planned for 28–29 June 2019. The G20 Summit is always a perfect opportunity for all kinds of people worldwide to see and experience a newly revitalized and transformed world .This time, the focus would be on Japan and the larger Asian continent, including the world economic giant, China. Thanks to Japan and Asia's thriving inbound investment and booming corporate profits, the summit would be a major showpiece and a great learning experience for world economic enthusiasts.

The inbound investment is attributed to Asia's many economic stimulus policies and her bold regulatory reforms in particular. There is always a wildly celebrated wide-ranging appeal for regions that host these highly consequential discussions. Even this time, it is no exception. Truly speaking, it is time for Japan, Asia and economic giants like China to call the shots courtesy of the 2019 Osaka summit. There are thrills and excitements lurking here, in these kinds of global events with a huge impact on the international economy.

China, Japan Leading

Without a doubt, during its presidency and leadership of the G20 Summit, the Japanese government would determinedly demonstrate strong leadership, and advance discussions geared toward solving the myriad issues facing the international community. Interestingly, all the nine cities that have had the privilege of hosting the G20 Summit and its ministerial meetings in the past, have their own unique appeal. All of them boast of having a fascinating history, cuisine, and culture. Japan and China are certainly some of the leading countries that have a major say in this kind of global economic and cultural fiesta.

In retrospect, with a hindsight knowledge of similar previous meetings, a consensus had already been reached by all the finance ministers of the G-20. This consensus carried a stinging message: It spoke strongly against the devaluation of the major competitive currencies of the world. For instance, Haruhiko Kuroda, who is the current governor of the Bank of Japan, was quite upbeat. The governor enthusiastically shared the same sentiment that had been warmly ratified by many nations of the world, aside from the powerhouse G-20 countries.

Shanghai, China Declaration

What is not in question is that many other countries would also reap the benefits of this unanimous consensus by the world's leading countries. Mr. Kuroda made this announcement at a recent meeting held in Shanghai, China. The conference discussed the negative world interest rates and the remedial steps scheduled to be taken by the Bank of Japan. Such a step would materialize, regardless of a lack of space for opposing countries to maneuver. To achieve the Bank of Japan's target of a two percent rate of inflation, the institution planned to further lessen its rates. This would be done after an assessment of what impact the policy was likely to have on the prevailing situation.

China-Friendly G20 Policies

It is interesting to ponder what factors impacted on the G20 economic forum's overall assessment. First of all, the global economy was figured out as a whole unit, including the volatility elements touching on the capital flow reversal, finances, and the steep decline of the world commodity prices. As a rule, the global growth policies are usually implemented quite consistently by the G-20 countries. This is usually prioritized, aside from conducting a tactical reformation of structural integrity. Such a policy is geared towards the sustainment of an overall, balanced growth. The items of this policy include the fiscal, monetary, structural, individual, and collective factors. All these were used by the G-20 countries to achieve the envisaged communique in its entirety. With this kind of strategy employed by the G20 powerhouse nations, success was always lurking around the corner. The Osaka summit would be a perfect platform to implement these noble strategies.

No Devaluation Jitters in Asia

As a direct impact of the scheduled Osaka Summit, are there fears of devaluation of the major currieries of the Asian countries, including those of Japan and China? Not quite. But that is a subject for another day. In brief, in order to increase commercial competition, boosting exports and other similar aspects, the G-20 countries resolved not to encourage the trend to devalue currencies, be it the Chinese, Japanese or any other major world currency.

Vale SA, being a global iron ore & nickel producer, wants to have a bigger responsibility in China's initiatives to cut down carbon emissions by providing higher quality supply of iron ore, according to its CEO Murilo. Murilo Ferreira discussed the company's strategies with a local daily and also shared some of the recent projects as well as cost reduction effort in a volatile market and unstable political environment. He wants politicians to increase effort in increasing prosperity instead of going into arguments. Ferreira is all for the Chinese government's new plan for bringing change to steel mills in the country. Plants that have issues with credit could be consolidated and modernized using modern technologies. Modernization will take some time. According to Ferreira, credit easing had caused iron ore prices to rebound sharply. There is huge credit improvement in China. Loose financing measure gave people access on new housing launches. New properties are being launched and increasing in number. Steel mill efficiency is increasing and much better compared to 2015. China demand for using iron ore has picked up. However, the quality is lacking compared to Brazilian iron ore as there is 67% iron content compared to Chinese iron ore at 25% iron content. It is better for the environment as well.

Consolidation must be done to reduce the overcapacity situation in China. Depletion of iron ore will naturally reduce the overcapacity. Currently about 40 million iron ore tons are being depleted every year. Existing mines must be replaced. Vale has been investing heavily on new mining projects. We had some cost reduction in project budget from $19.5billion to $14billion due to exchange rate fluctuation. Vale intends to stay committed to China and maintaining its position as the largest supplier. Vale hopes to increase the supply from 180 millionto 250 million (tons).The purpose for executing a memorandum together with FMG (Fortescue Metals) is to mix the iron ore materials at China port infrastructure. There is no firm contract now. Vale is in need of good iron ore and is exploring all avenues.

Vale's credit rating was downgraded due to issues in reducing debt. Vale is actually aggressive in cost control. Iron ore cost has been reduced to US$32 from US$90. S&P and Fitch had reaffirmed our investment grade rating but Moody's is deliberating on the bleak long term prospect of iron ore cost of US$35. Vale divested a huge non-core operations amounting to US$12 billion. Another transaction will be announced soon to sooth creditors' concerns. Vale will work hard to prove Moody's views and assumptions. Vale believes that iron ore price will be between US$65 and US$80 in the long run. Brazil's politician should focus and unite on creating wealth to the nation instead of squabbling over petty issues. Economic growth should be the main priority in the current slowdown climate.

Vale has always been the biggest nickel producer globally. There is potential demand for nickel with rise of electric cars, aerospace as well as high-tech industries. Our best nickel product comes from Canada. The future for nickel is bright. Vale is in the top 10 copper supplier list. Vale is preparing to launch production for metallurgical coal located in Mozambique. Railways and port facility are all ready for operation. Vale is the third largest producer for grains and fertilizer. Vale aims to be number one in the near future.

Mining industry has always been a cyclical industry. Central bank monetary policies are very different for China, Japan, EU and US. Vale will navigate the cycles by considering the long term prospect for its projects which take about 8 to 10 years. There is big concern on politics globally and these need to be solved real soon. Brexit issue has been the main political headline and world leaders need to resolve them.