Daily News Summary August 23
News Summary
US tells China to be more transparent with economic data amid slowdown
Taken from FT Wednesday, 23 August 2023
National security adviser Jake Sullivan says Beijing’s crackdown on information is not ‘responsible’
Jake Sullivan has called on China to be more transparent about the state of its economy as Beijing grapples with a slowdown that poses risks to global growth.
China’s government last week halted publication of data on its soaring youth unemployment amid concerns that it would reveal new weakness in the recovery of the world’s second-biggest economy, and has cracked down on corporate due diligence reporting in the country.
“These are not in our view responsible steps,” Sullivan told reporters in Washington on Tuesday. “For global confidence, predictability and the capacity of the rest of the world to make sound economic decisions, it’s important for China to maintain a level of transparency in the publication of its data.”
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Sullivan’s appeal to Beijing came as Gina Raimondo, the US commerce secretary, prepares to travel to China at the end of this month for talks with high-level Chinese officials, in the latest push by Washington to stabilise relations with its economic rival.
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Sullivan on Tuesday formally announced Biden would travel to India next month for the G20 leaders summit in New Delhi. The president would focus “his energy” on having the US and “like-minded” countries bring more economic support for the rest of the world, particularly in the “global south” — and mainly through the IMF and the World Bank, Sullivan said.
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Spain’s king gives conservative opposition first chance to form government
Taken from FT Wednesday, 23 August 2023
Socialist PM Pedro Sánchez says any attempt by People’s party to take office will fail because of a lack of votes in parliament
Spain’s conservative opposition has been given the first chance to try to form a government by the king after an inconclusive general election, even though the party did not have enough support at the time of the announcement on Tuesday.
The opposition People’s party, led by Alberto Nú?ez Feijóo, won the most seats in the July election, but neither it nor acting Socialist prime minister Pedro Sánchez emerged with an obvious path to a parliamentary majority.
Sánchez, who has vowed to lead another “progressive” government, says he is the only person who can achieve the 176-seat majority needed in the 350-seat parliament to take office. He wants to do so by striking pacts with five smaller regional parties — including Catalan and Basque separatists — as well as Sumar, a leftwing group that is his preferred coalition partner.
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If Feijóo does not succeed following King Felipe VI’s decision, Sánchez will be given a chance to form a government two months afterwards. If he fails, Spain will be forced to hold repeat elections, as it did in 2015-16 and 2019.
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But the royal palace signalled that Sánchez had not yet locked in the support of the smaller parties for another term in office.
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US bank stocks weigh on S&P 500 after ratings downgrades
Taken from FT Wednesday, 23 August 2023
Yield on two-year US Treasuries rise above 5% while those on 10-year note slip after reaching 16-year high on Monday
Rating agency Standard & Poor’s on Monday night lowered its ratings on five US regional banks — Associated Banc Corp, Comerica, KeyCorp, Valley National and UMB Financial — assigning “stable” outlooks to them. All but UMB ended the day down more than 4 per cent. UMB closed about 3 per cent lower.
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Pointing to “tough operating conditions”, S&P said its review had been based on factors including changes in deposits and funding costs, loan-to-deposit ratios, dependence on wholesale funding and relative exposures to commercial real estate.
The move by S&P came after fellow agency Moody’s cut the rating of 10 midsized US banks earlier in August, while placing six ratings under “review”.
Larger banks also slipped, with JPMorgan, Citibank and Bank of America all down at least 2 per cent. Goldman Sachs shed 1 per cent and Morgan Stanley fell 1.5 per cent.
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Investors were also looking ahead to this week’s economic policy conference for global central bankers in Jackson Hole, Wyoming, where a speech from Federal Reserve chair Jay Powell will be scrutinised for clues about the future path for US interest rates.
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Sunak blocked from overruling ‘nightmare’ Ulez expansion
Taken from The Telegraph Wednesday, 23 August 2023
Ministers had considered use of little-known law to thwart Greater London charge, but lawyers said move would fail in the courts
No 10 has been blocked from overruling London’s ultra-low emission zone (Ulez) expansion after government lawyers warned its bid would be rejected by the courts.
Cabinet ministers were considering using a little-known legal power that allows them to reject a London mayor’s transport strategy if it is “inconsistent with national policies”.
However, The Telegraph understands the formal legal advice commissioned concluded that the move would fail if challenged.
The Ulez expansion, which means the worst-polluting cars in the whole of Greater London will incur a ￡12.50 daily charge, is still due to take effect on Aug 29 despite mounting opposition among Tory and Labour MPs.
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The Telegraph can reveal that Sadiq Khan’s deputy urged scientists to alter a Lancet study that showed London’s low emissions zone made no difference to children’s health.
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Landmark deal proves Brexit 'voices of doom are wrong' - Kemi hits back at Remainers
Taken from The Daily Express Wednesday, 23 August 2023
Kemi Badenoch slams Brexit "voices of doom" as she prepares to finalise a multi-billion pound trade deal with India. The MP praises Brexit Britain for "building an ever-stronger network of allies in every corner of the globe."
Kemi Badenoch has hit back at Brexit bores, naysayers and doom-mongers insisting: “Global Britain is thriving”.
The Business Secretary fired a broadside at sceptics talking Britain down as she prepares to thrash out a multi-billion pound trade deal with India.
If successful, it will follow a flood of similar pacts that have cemented the UK’s worldwide reputation as a lean and nimble country open for business.
And in a bullish memo to the doubters she told the Daily Express: “Those voices of doom have been proved decisively wrong. Far from turning their backs on the UK, companies are queuing up to invest here. The UK is on the up and remains a country others want to deal with. Global Britain is here and it’s thriving.”
Ms Badenoch’s upbeat assessment is a wake-up call to those who forecast a leaden future outside the closed-shop EU.
This Wednesday she will fly to Jaipur for the G20 trade ministers meeting and set about finalising a deal in time for when Prime Minister Rishi Sunak attends the G20 leaders’ summit in New Delhi on September 9.
It is hoped Mr Sunak and his Indian counterpart Narendra Modi will announce one of the biggest trade pacts in the world, in what would be a major coup for the UK and heap embarrassment on the EU.
https://www.express.co.uk/news/politics/1805025/kemi-badenoch-brexit-global-britain-india-trade-deal
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U.S. to Sanction Chinese Officials for Forcible Assimilation of Tibetans
Taken from WSJ Wednesday, 23 August 2023
State Department says Chinese boarding-school program deprives young Tibetans of their culture
The U.S. State Department on Tuesday said it was taking action to punish Chinese officials in response to what it called the forcible assimilation of young Tibetans, broadening its assault on Beijing’s treatment of ethnic minorities.
The State Department accused China of the forcible assimilation of more than one million Tibetan children in government-run boarding schools and said it would impose visa restrictions on unnamed Chinese officials. “These coercive policies seek to eliminate Tibet’s distinct linguistic, cultural, and religious traditions among younger generations of Tibetans,” Secretary of State Antony Blinken said.
China rejected the move as “smears” and urged the U.S. to avoid measures that interfere with its sovereignty, according to a spokesman for its embassy in Washington. Centralizing children in boarding schools, the spokesman said, “effectively solves the problem of ethnic minority students’ difficulty in attending school at a distance where the local people live scattered.”
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Rishi Sunak to delay cabinet reshuffle until later in year
Taken from The Times Wednesday, 23 August 2023
Prime minister to make limited changes as he looks ahead to the general election
Rishi Sunak is expected to delay a full cabinet reshuffle until the winter after deciding to make limited changes to his top team before parliament’s return next month.
The prime minister will instead carry out a limited reshuffle as he replaces Ben Wallace, who is standing down as defence secretary.
He will then carry out a larger restructure of his key ministers later in the year, in order to appoint his top team for the run-up to the general election. This move is expected to result in considerable changes to the cabinet.
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Jeremy Hunt, the chancellor, is understood to be safe, but several other senior cabinet ministers are vulnerable in what is expected to be a far-reaching reshuffle.
The timing is yet to be confirmed but it will be after Conservative Party conference at the beginning of October and most likely after the King’s Speech in November.
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New Zealand Retail Sales Slump Further as Higher Rates Bite Hard
Taken from MarketWatch Wednesday, 23 August 2023
New Zealand retail sales remained weak in the second quarter, which is consistent with the economy being in recession as consumers struggle under the weight of soaring interest rates.
The total volume of retail sales fell 1.0% in the second quarter from the first, according to Stats NZ. The retreat in sales comes after falls of 1.6% in the first quarter and 1.1% the fourth quarter of last year.
Eleven of the 15 retail industries had lower sales volumes in the second quarter compared with the first quarter, the data showed.
The largest contributors to the fall were food and beverage services, which dropped 4.4% from the first quarter, and hardware, building, and garden supplies, which fell 4.8%.
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Stock Exchange of Thailand plans reform for post-election market
Taken from Nikkei Asian Review Wednesday, 23 August 2023
Bangkok bourse rushes to restore investor confidence after volatile year
The Stock Exchange of Thailand is preparing listing and reporting reforms to coincide with an expected year-end pickup in economic activity and improved investor confidence once a new government is in place in the Southeast Asian nation.
The Bangkok bourse plans to finalize by the end of 2023 new listing and reporting requirements that will set equal standards for initial public offerings and backdoor listings, followed by a new free-float weighted index to be launched in 2024.
The reforms come amid a turbulent year in which Thailand has become Asia's worst performing market. Fluctuations from global economic headwinds and aggressive rate hikes by central banks including the Bank of Thailand were compounded by the runaway highs of Delta Electronics and the lows of an accounting scandal at wiremaker Stark Corp.
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Goldman Sachs investors don’t care staff are angry at the CEO
Taken from AFR Wednesday, 23 August 2023
David Solomon’s robotic personal style is making him unpopular at the US investment bank. But he retains the backing of directors and some top shareholders.
The unstable situation at Goldman Sachs Group, from about 1999 until maybe 2021, is that its partners thought it was a private partnership run for their amusement, while its shareholders thought it was a public corporation run for their enrichment.
This was a productive tension. Goldman’s partners arguably worked harder and were more loyal and thought more about the firm’s long-term interests than managing directors at other investment banks, because they were partners in the firm. And junior people were motivated by the possibility of a partnership to work harder and be more loyal too. Having good motivated employees is a good way to make a lot of money and, thus, make the shareholders rich.
But ultimately the difference between a partnership and a public company is that if the managing partner of a partnership gets great economic results but is rude to the other partners, they can fire him, but if the chief executive officer of a public company gets great results but is rude to the managing directors, they can’t fire him. Only the board can fire him, and the board is responsible to the shareholders, and if the shareholders are happy and the managing directors are sad, then the CEO stays.
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New Thai govt forms, but at what cost?
Taken from Bangkok Post Wednesday, 23 August 2023
Thai politics is entering a new chapter as the colour-coded political divide which has polarised the country for several years is expected to end after Pheu Thai's prime ministerial candidate Srettha Thavisin won parliament's endorsement to become the country's 30th prime minister on Tuesday.
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Wanwichit Boonprong, a political science lecturer at Rangsit University, told the Bangkok Post that ex-premier Thaksin Shinawatra's homecoming and the alliance between Pheu Thai and the UTN and the PPRP had sent a message to political quarters that the two opposing blocs will now unite against the MFP which they perceive as their common threat.
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He went on to say that the power of the "three brothers in arms" will now diminish, and they will have to step aside and work behind the scenes.
The trio -- also known as the "Three Por" generals -- refers to Gen Prayut, Gen Prawit and Interior Minister Anupong Paojinda, along with their influence over Thai politics.
Mr Wanwichit noted that most senators who voted for Mr Srettha are close to Gen Prayut and that the cabinet seats allocated to the UTN are expected to be top-grade.
"Today's political situation is a little victory for Thaksin. But it comes with a price as Pheu Thai now has to grapple with a crisis of faith," Mr Wanwichit said.
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G20 poured more than $1tn on fossil fuel subsidies despite Cop26 pledges – report
Taken from The Guardian Wednesday, 23 August 2023
Public money still flowing into industry despite agreement to phase out ‘inefficient’ subsidies, thinktank says
The G20 poured record levels of public money into fossil fuels last year despite having promised to reduce some of it, a report has found.
The amount of public money flowing into coal, oil and gas in 20 of the world’s biggest economies reached a record $1.4tn(￡1.1tn) in 2022, according to the International Institute for Sustainable Development (IISD) thinktank, even though world leaders agreed to phase out “inefficient” fossil fuel subsidies at the Cop26 climate summit in Glasgow two years ago.
The report comes ahead of a meeting of G20 countries in Delhi next month that could set the tone for the next big climate conference, which takes place in the United Arab Emirates in November.
It is crucial that leaders put fossil fuel subsidies on the agenda, said Tara Laan, a senior associate with the IISD and lead author of the study. “These figures are a stark reminder of the massive amounts of public money G20 governments continue to pour into fossil fuels – despite the increasingly devastating impacts of climate change.”
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Arm's China relationship complicates IPO
Taken from Reuters News Wednesday, 23 August 2023
The upcoming listing of semiconductor technology firm Arm Holdings Ltd is supposed to be strong medicine for what has been ailing the U.S. IPO market, as well as provide a shot in the arm for Arm owner Softbank Group Corp (9984.T).
There is one complication, however. Almost a quarter of Arm's revenue comes from an entity it does not control but nonetheless relies on to access China's massive smartphone market.
Scattered throughout the hundreds of pages of Arm's prospectus are details of the company's labyrinthine relationship with China, its second-largest market. Sales in China contributed 24.5% of its $2.68 billion revenue in fiscal 2023, according to filings published on Monday ahead of its initial public offering.
Virtually all of that revenue comes from Arm China, an independent entity that has the exclusive rights to distribute Arm's technology in the country. That makes Arm China, not better-known names like Apple (AAPL.O) or Qualcomm (QCOM.O), Arm's largest customer. And this customer has a history of late payments and presents "significant risks" to Arm's business, according to its filing.
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Lithium buyers eye cheaper early-stage deals in Australia
Taken from Reuters News Wednesday, 23 August 2023
Emerging Australian lithium companies are witnessing a surge in buyouts as their lower valuations and cash needs attract some of the world's top producers of the battery material and other suitors who are racing to secure supplies.
Driven by receding prices of lithium and by major producer Chile nationalising the industry earlier this year, companies such as Albemarle Corp (ALB.N), the world's biggest lithium producer, have been sniffing around for buys in Australia, which makes the most lithium in the world and has more than 80 lithium-related companies listed on its main stock exchange.
However, they are reluctant to pay up for listed producers whose market valuations have sky-rocketed on the back of booming prices, while offers have been rebuffed on the promise of soaring demand to come from sales of electric vehicles and the lithium-loaded batteries that power them.
That is forcing acquirers to shift their hunt to earlier stage lithium developers, including some who are drilling to quantify reserves, according to bankers, lawyers and mining analysts. Many of these firms are less pricey and are hungry for funds as they ramp up their activities.
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UK pay deals cool for first time in 2023, easing pressure on BoE: XpertHR
Taken from Reuters News Wednesday, 23 August 2023
Pay deals awarded by British employers cooled for the first time this year in the quarter to July, which may calm the worries of Bank of England officials who fear wage growth is feeding inflation, a survey showed on Wednesday.
Median basic pay deals in the three months to the end of July fell to 5.7% following six consecutive quarters at a record 6%, human resources publication and data provider XpertHR said.
Pay awards remained below the rate of inflation. British consumer price inflation cooled to 6.8% in July from 7.9% in June.
The BoE, which hiked interest rates to 5.25% in August to tame stubborn inflation, is closely monitoring wage growth in the private sector and has said it will keep raising Bank Rate if inflationary pressure persists.
Sheila Attwood, senior content manager at XpertHR, said pay awards had likely hit their peak and expects the gap between pay deals and inflation to narrow.