Tuesday, 26 January 2021

The Indian Ocean has made its mark on the global news cycle this year. In March, tropical cyclone Idai made headlines as one of the most severe storms to have made landfall in Mozambique. Current estimates indicate that more than 1,000 people died.

This makes it the most deadly tropical cyclone ever to have made landfall on the southern African subcontinent.

Until Idai, tropical cyclone Eline, which struck in 2000, was the most devastating tropical cyclone to make landfall in Mozambique.

After Idai, Eline was the strongest – though not the deadliest – cyclone to have hit the southern east African cost. This ranking as the strongest was soon after challenged by tropical cyclone Kenneth, a category 4 tropical cyclone that made landfall over the border of Mozambique and Tanzania six weeks after Idai.

Kenneth, in many regards, took the region by surprise. The storm was the northernmost tropical cyclone to make landfall on Mozambique, and the first to make landfall on Tanzania. It occurred very late in the season. Most cyclones in the region occur from January to March. It was also unusual for the Mozambique Channel to experience two severe tropical cyclones that made landfall within one season.

The third major cyclone to emerge out of the Indian Ocean came a few weeks after Kenneth, when cyclone Fani, a tropical cyclone on the border of Category 5 intensity wind speeds, hit the east coast of India. Category 5 tropical cyclones were only first recorded in the North Indian Ocean from 1989 so, again, this storm is unusually severe in the context of the longer historical records.

These high intensity storms have been tied to the very warm sea surface temperatures in the Indian Ocean. Temperatures of 30°C are occurring more often and over longer periods of time. This is a result of gradual warming on a global scale, which has resulted in a net increase in ocean temperatures.

Warmer ocean temperatures allow stronger storms to form. These conditions are exacerbated by global forcing mechanisms including El Niño and the Indian Ocean Dipole, which concentrates warm ocean waters in smaller geographic areas.

High intensity storms have been a frequent feature along the coast of the US throughout recorded history. Their increased frequency in the Indian Ocean should be raising alarm bells because countries like the US are much better equipped to help people prepare ahead of time, and to handle the fallout.

Measuring intensity

Tropical cyclone intensity is classified according to the Saffir Simpson scale. Categories are measured on the basis of the sustained wind speed and the storm’s central pressure. Each category is accompanied by estimates of the likely severity of damage and possible storm surge height.

Tropical cyclones form and intensify due to a combination of seven primary climatological conditions. Among other things, these include warm sea surface temperatures, high humidity levels and atmospheric instability.

For a storm to intensify, these conditions have to be maximised while the storm remains over the ocean.

Tropical cyclones require a sea surface temperature of 26.5°C to form, while the highest intensity storms require much warmer sea surface temperatures of 28-29°C. This is important because it’s one of the reasons why southern Africa is experiencing more intense tropical cyclones.

The South Indian Ocean is warming rapidly. This means that regions that previously experienced the temperatures of 26.5°C that facilitated tropical cyclone formation are now experiencing temperatures as warm as 30-32°C.

Simultaneously, regions further from the equator which didn’t previously have sufficiently warm water for tropical cyclone formation, with sea surface temperatures of 24-26°C are more regularly experiencing the threshold temperature. This increases the range in which these storms occur, making storms like tropical cyclone Dineo, which made landfall in February 2017 in southern Mozambique, more common.

These very warm sea surface temperatures are not a factor of global scale warming alone. They’re further influenced by a range of global and local forcing mechanisms. These include El Niño Southern Oscillation, the Indian Ocean Dipole and the Southern Annular Mode. For this particular cyclone season, scientists are seeing the strongest impact from the [Madden-Julian Oscillation].

This is a band of moisture in the tropical regions which moves eastward over a 30 to 90 day period. The strong Madden-Julian Oscillation is also affecting tropical cyclones in Australia.

Comparing storms

Ranking storms on the basis of their Saffir Simpson classification is not always the most valuable measure. That’s because it can’t take the characteristics of the location of landfall into consideration.

This results in two key shortcomings. First, it doesn’t take the flooding potential into account. This is difficult to identify for a particular storm, because it’s not only a function of how much rain is experienced and over what period – or even the height of storm surge – but also the nature of the region of landfall.

Lower-lying, relatively flat areas are more prone to flooding than higher elevation regions or those with rugged topography. This is part of the reason that Idai caused such severe flooding. Some regions will have better suited storm water infrastructure. And when flooding does occur, some regions are better able to warn and evacuate people to prevent or minimise the loss of life.

Another factor which determines the devastation resulting from a tropical cyclone is the population density of the area of landfall. The higher the population density, the more people who are at threat of losing their life, their homes and livelihoods.

This also means more people who would need to be evacuated in a short period, and more people who need shelter until the storm’s immediate effects have subsided. This is why Idai and Eline resulted in far greater losses and fatalities than the stronger intensity Kenneth, and why the total damage from Fani is projected to be particularly devastating. We need to start measuring storm destructiveness in addition to climatological metrics.The Conversation

 

Jennifer Fitchett, Senior Lecturer in Physical Geography, University of the Witwatersrand

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Opinion & Analysis

Global investor interest in Chinese bonds soared to new heights in 2020. According to the research data analyzed and published by Stock Apps, foreign holdings of Chinese interbank bonds stood at 3.25 trillion yuan ($502 billion) at the end of December 2020.

The figure marked a net increase of 1.07 trillion yuan from 2019, translating to a growth of 48.8% year-over-year (YoY). It is the first time that the holdings have crossed the $500 billion threshold.

China Bond Oversea Investment

At the end of 2017, they stood at 1.15 trillion yuan and represented a 1.55% share of the country’s bond market. Compared to the current total, the figure has nearly tripled in that duration.

Notably, foreign holdings of Chinese interbank bonds only account for 2.7% of the total Chinese bond market. Based on a report by China’s central bank, the total market had a value of 115.7 trillion yuan ($17.9 trillion) at the end of November 2020.

Overseas investments in Chinese government bonds (CGBs) reached a record 1.88 trillion yuan ($290 billion) at the end of December 2020. It marked a 44% growth YoY.

Moreover, quasi-sovereign policy bank bond holdings by foreigners skyrocketed 84.4% from 2019. They reached a record high of 919.18 billion yuan ($142 billion). Their popularity stems from the fact that they are easier to trade and offer higher returns than CGBs.

China’s Bonds Yield Recovers to 3% vs. 1% for US Treasuries

Among the factors making Chinese bonds appealing on an international scale are their relatively high yields.

Based on a study by Refinitiv, the spread of the 10-year CGB yield above 10-year US Treasuries soared to a high of almost 260 basis points by July 2020. As of January 7, 2021, they were still above 200 basis points.

While China’s 10-year bonds have a yield of over 3%, the 10-year US Treasuries yield slightly more than 1%.

US Treasury yield is above 1% due to expectations of stronger stimulus as well as the US Federal Reserve’s possible tapering of bond purchases. It fell from 1.9% at the end of December 2019 to a low of 0.54% in March 2020 at the height of the pandemic. By the end of December 2020 though, it had rebounded to the current level.

In contrast, China’s 10-year CGB had a yield of 3.2% at the end of December 2019, slumping to a low of 2.48% in April 2020. By the end of 2020, it stood at 3.15%.

Another factor behind the increased interest is the opening up of the market by regulators, which has made it easier to trade. In September 2020, China’s central bank together with other regulators unveiled new proposals aimed at simplifying the application process for foreign bond investors.

Additionally, three major index providers, JP Morgan, Bloomberg and FTSE Russell, added CGBs to their flagship indexes.

China’s Economy to Grow by 8% in 2021 against 3.5% for US

For foreign investors, China’s rapid economic recovery following the pandemic has also boosted confidence.

According to the World Bank, China’s GDP is projected to grow by 7.9% in 2021 compared to 2% in 2020. A Nikkei Asia report shows similar optimism, forecasting an expansion of 8.2%, the highest growth in almost a decade. In contrast, the global economy is set to grow at 4% in 2021 following a 4.3% contraction in 2020. On the other hand, US GDP is expected to grow at 3.5% in 2021 after a contraction of 3.6% in 2020.

Based on a report by Fidelity International, the aforementioned factors will continue to spur the growing interest in Chinese bonds by foreign investors.

CMSC analysts offer a slightly different outlook, forecasting foreign holdings of 900 billion yuan in Chinese bonds in 2021. Their projection is based on a narrowing yield spread, which is expected to make the bonds less appealing.

The increase in investments tied to the yuan has pushed the Chinese currency to its highest level in over two years. As of January 22, 2021, the US dollar was equivalent to 6.48 yuan. Comparatively, it was worth 7.16 yuan in May 2020. According to data from SWIFT, the Chinese yuan was the fifth most used currency for global payments. It accounted for about 2% of all transactions globally in 2020. For some perspective, the yuan only got 35th spot globally in 2010 when SWIFT started currency tracking.

Lastly, Morgan Stanely predicts that by 2030, the yuan will have a 5% to 10% share of global foreign exchange reserve assets, up from 2% in 2020. That would place it behind the US dollar and the euro, overtaking the Japanese yen and British pound.

Published in World
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