Last Week In Review: A Financial Roundup
Monday?
India signs $100bn free trade deal with four European nations
India has finalised a free-trade agreement with the European Free Trade Association (EFTA), consisting of Norway, Switzerland, Iceland and Liechtenstein.?
The deal is expected to attract $100 billion in investments into India. The agreement aims to simplify customs procedures and enhance market access for businesses in both regions. After almost 16 years of negotiations, India will lift most import tariffs on industrial goods from the EFTA countries in exchange for investments over 15 years.?
India has recently signed trade deals with Australia and the United Arab Emirates, while negotiations with the UK continue.
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Tuesday?
UK banks set to further hike dividends on strong profits, cost discipline
The UK’s largest banks are projected top increase dividends in 2024, driven by strong profits and cost management. HSBC, Barclays, Lloyds Banking Group, NatWest Group, and Standard Chartered are all expected to raise payouts, with dividends set to grow or hold steady except for HSBC.?
In 2023, total dividends and buybacks from these banks surpassed ￡27 billion, with commitments to further reward shareholders. Each bank outlined plans to enhance profitability through mid-term profit targets, cost reductions, and efficiency improvements. Capital distribution strategies vary, with Lloyds aiming to boost distributions by paying out excess capital and NatWest aiming for a 40% payout ratio.?
Barclays plan to distribute at least ￡10 billion by 2026, and Standard Chartered aims for distributions of at least ￡5 billion by the same year.?
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Wednesday?
FTSE rises on back of UK rally after short recession
The FTSE 100 increased by 0.2%, or 16 points, bolstered by news of the UK's rapid recovery from recession, with the economy growing by 0.2% in January after two consecutive quarters of contraction.?
European markets followed a surge on Wall Street, despite US inflation slightly exceeding forecasts. Susannah Streeter of Hargreaves Lansdown noted continued investor enthusiasm for big tech stocks.?
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Central banks in the UK and US are not expected to cut interest rates until at least June. Sterling remained steady against the dollar, while Glencore and Flutter led gains in the FTSE 100 after upgrades by Deutsche Bank and JP Morgan respectively.
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Thursday?
Private credit ties to banks deepen in Europe as default risk rises
European private credit funds are increasingly relying on bank borrowing, raising concerns about systemic risk. In 2023, a record 80% of new funds used “subscription lines” from banks, allowing lending before investor cash is tapped.?
Concerns have arisen regarding the interconnectedness and potential asset bubbles these practices will create. Regulators, including the Bank of England, are investigating risks posed by the loosely regulated private credit funds.?
Flexible lending tactics, including payment-in-kind facilities and debt refinancings, are on the rise among private credit funds, raising concerns about future recoveries and systemic risks. Despite constituting only a fraction of bank lending, these funds manage a significant $460 billion. Regulatory oversight of these practices has been advised to prevent potential adverse consequences.
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Friday?
FCA chief faces backlash over ‘end of free banking’ comments
The Financial Conduct Authority's (FCA) CEO stated that the regulator would not obstruct banks from charging customers for account services.?
Concerns about rising costs due to regulatory changes have led some City firms to reconsider their business models. The FCA emphasises its focus on retail protection through Consumer Duty rules but acknowledges the need for business model adjustments amidst competition and market changes.?
Responses to the FCA's stance vary, with concerns raised about potential impacts on consumers. The FCA aims for pragmatic enforcement of rules, with a focus on addressing the greatest risks of harm.?
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Accountant and Tax expert | Crypto Tax Specialist | Board Member | Co-founder of The Kapuhala Longevity Retreats
11 个月Spot on ??. Making educated selections requires keeping up with the most latest advances in the financial world.???? Adequate finance = Successful business ? What's your perspective on this Guy Middleton ?
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11 个月This is a great resource, Guy. Anyone who doesn't always have the time to watch the news or can only catch up on the headlines with little to no context...This newsletter summarises all the key stories of the week from multiple sources in less than 3 minutes...can't go wrong really!