China’s manufacturing sector returned to growth in March following three consecutive months of contraction, a private survey showed, as a series of government stimulus measures took root. The Caixin-Markit China manufacturing purchasing managers’ index rose to 50.8 in March from 49.9 in February. Readings above 50 indicate expansion. Respondents pointed to improved output and new work, while employment grew for the first time in more than five years. New export orders also nudged back into expansionary territory following a fall in February. China has introduced a series of fiscal and monetary stimulus measures to support the economy against headwinds from the US-China trade dispute. “Overall, with a more relaxed financing environment, government efforts to bail out the private sector and positive progress in Sino-U.S. trade talks, the situation across the manufacturing sector recovered in March,” said Zhengsheng Zhong, economist with CEBM Group.
Saudi Arabia's state-controlled energy giant Aramco plans to issue a $10 billion bond as early as next week, the Wall Street Journal reported Thursday, citing unnamed sources familiar with the matter. The move is designed to help raise funds for a down payment on the oil giant's $69.1 billion purchase of a majority stake in petrochemicals firm Sabic Basic Industries, the Wall Street Journal reported. It would also mark the first-ever debt issuance from the world's largest oil firm, shedding a light on the firm's financial performance. Aramco Chairman Khalid al-Falih has reportedly said the firm will release data on its financial health and oil and gas reserves as part of a bond prospectus.
Turkey’s lira sank on Thursday after new data showed a further drop in the country’s foreign currency reserves. The lira tumbled 5 per cent in volatile action to TL5.58 per dollar just before 9am in London, adding to more moderate losses during the Asian trading day. Weekly data released by the country’s central bank showed that foreign reserves dropped TL13bn in the week to March 22. That brings the total drop in the first three weeks of the month to TL45.1bn, or roughly $10bn, FT calculations show. “It was yet another sharp fall in the already low reserves,” said Piotr Matys, an emerging market currency strategist at Rabobank. “This sharp fall implies that the central bank has been intervening over the past few weeks, trying to keep the lira relatively stable ahead of crucial local elections.” Central bank governor Murat Cetinkaya sought to reassure markets by telling the state-run Anadolu news agency that net foreign-currency reserves rose in the final week on the month.
Renault aims to restart merger talks with Nissan within 12 months and then acquire another carmaker, with Fiat Chrysler among the preferred targets, according to several people familiar with the French group’s plans The planning marks a new strategy following the arrest in Tokyo of Carlos Ghosn, former chief executive of Renault and chairman of Nissan in November for financial misconduct. He denies all charges. Both the French and Japanese sides have said publicly that their focus is on making the alliance work well before rejigging the capital structure. However, the recent creation of a new alliance board led by Renault chairman Jean-Dominique Senard has improved confidence that merger plans can advance, according to people familiar with both sides’ thinking.
Germany’s benchmark bond yield fell below zero for the first time since 2016 on Friday, with investors buying up the debt as a haven amid mounting evidence of a eurozone slowdown and a more dovish outlook among global central bankers. The 10-year Bund yield, a critical rate for European fixed income markets, traded as low as minus 0.01 per cent on Friday, according to Tradeweb data. Yield on the paper had remained in positive territory since October 2016, but the darkening outlook for the bloc’s economy has stoked demand for Bunds, seen as one of the region’s safest assets, pushing yields back toward zero. It had traded with a yield above 0.2 per cent earlier in March, and 0.5 per cent last autumn. Shorter-dated German debt yields have been in negative territory for some time, but the shift to sub-zero yields for the benchmark 10-year paper is a milestone in fund managers’ journey away from risky bets. It means that investors buying the paper and holding it to maturity face a guaranteed nominal loss.
Robert Mueller, the US justice department special counsel, has concluded that Donald Trump and his presidential campaign did not collude with Russia in an attempt to influence the 2016 election result. In a letter to Congress following the end of a 22-month probe that consumed Washington, US attorney-general William Barr said Mr Mueller “did not find that the Trump campaign or anyone associated with it conspired or co-ordinated with Russia in its efforts to influence the 2016 US presidential election”. While Mr Barr said that Mr Mueller had found no evidence of collusion with Russia, however, his letter to Congress on Sunday was more ambiguous about whether Mr Trump had attempted to obstruct justice. “The special counsel states that ‘while this report does not conclude that the president committed a crime, it does not exonerate him’,” Mr Barr wrote in his four-page letter delivered on Sunday afternoon.
Fees on US equity funds fell to a new record low last year, as relentless pressure from cheaper index-tracking rivals forced asset managers to slash costs in a bid to staunch heavy outflows. The average “expense ratio” of a US equity mutual fund dipped to 0.55 per cent in 2018, down from 0.59 per cent the year before and almost half the cost charged by asset managers at the turn of the millennium, according to data from the Investment Company Institute. Expense ratios track the percentage of assets deducted each year for costs associated with management, record-keeping and other administration. In addition to pruning fees on active strategies, many asset managers have launched competing passive funds at rock-bottom prices to gain market share. The ferocious price war has intensified this year, with investment groups such as BlackRock and JPMorgan Asset Management cutting fees to stay competitive.
Theresa May on Wednesday night pleaded with Labour leader Jeremy Corbyn to help save her Brexit deal, as EU leaders prepared to issue a stark ultimatum to MPs: back the prime minister next week or risk Britain crashing out of the EU on March 29. Mrs May travels to Brussels on Thursday with her Conservative party divided against itself and facing warnings from European Council president Donald Tusk the EU could only guarantee the short delay to Brexit she seeks if MPs rapidly approve her divorce deal. The prime minister is expected to make a third attempt to pass her Brexit agreement on Tuesday or Wednesday, but failure would leave Britain facing a potential cliff-edge exit next Friday and would put her own job on the line. Mrs May on Wednesday wrote to Mr Tusk confirming Britain would not be ready to leave the EU next week and seeking a short extension of the Article 50 exit process until June 30, having previously weighed the idea of a longer delay.
Steve Jobs told his biographer in 2011 that Apple had “finally cracked” a winning formula for television. But eight years later, his successor Tim Cook is still trying to win a place in his customers’ living rooms. For more than a decade, Apple has toyed with the idea of making its own television sets and pitched cable companies on various kinds of software integrations and bundled services. Now, after several false starts, Apple is ready to unveil its latest vision for TV, with an event at its Cupertino headquarters next week titled “It’s show time”. Mr Cook’s latest bet is that an acceleration in cord-cutting and the proliferation of streaming services has created a new role for Apple as aggregator. Apple wants to reinvent the TV guide with a personalised slate of programming drawn from a wide range of sources, including a few shows of its own. Even getting as far as launching a new service is something of an achievement for Apple. Unlike the music and telecoms industries, which have been forced to cede control to Apple through the iPod and iPhone eras, pay-TV operators have proven able to cling on to their direct relationship with customers.
Cboe Global Markets, the first big US derivatives exchange to offer bitcoin futures, has announced it will pull the plug on the fledgling market a little over a year after its debut. The Chicago-based group said on Friday it was “assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading” and will not list new bitcoin futures contracts, which means the product will disappear when the last open contracts are settled in June. The decision comes after retail investors’ once red-hot demand for cryptocurrencies faded along with its price. The Cboe product was selling for $3,890 per bitcoin on Friday, down from a peak of $20,500 soon after its launch in December 2017. Cboe’s entry, followed by crosstown rival CME Group less than a week later, was interpreted as a sign that the wild, unregulated bitcoin market had been embraced by US financial markets. But Cboe quickly lost ground to CME. Open interest in Cboe’s market was less than 3,000 bitcoin equivalent this week, compared to more than 17,000 at CME. CME notched a record volume day in February when the equivalent of 92,000 bitcoin, worth $360m, changed hands. Fidelity National Information Services has unveiled plans to buy Worldpay in a $43bn deal to make the US financial technology company one of the largest providers of financial infrastructure that underlies the bank payments system. The deal by FIS, an acquisitive Florida-based company, is the latest in a string of mergers and acquisitions by payments providers, spurred by the sector’s rapid growth in recent years as customers shift from using cash to paying with cards or online. In the UK, where Worldpay is the leading processor of payments, more than two-thirds of payments are now made digitally compared with less than 40 per cent in 2007, according to figures from UK Finance. The growth in online and card payments has triggered a wave of dealmaking as companies seek to consolidate the fragmented industry. Most recently, US payments processor Fiserv agreed to purchase rival First Data in a $39bn deal in January. French president Emmanuel Macron has come under renewed pressure after another weekend of anti-government protests erupted into violence, with looters smashing scores of shops and setting fire to a restaurant in central Paris. Mr Macron was forced to cut short a skiing holiday and return to the capital as an 18th consecutive Saturday of demonstrations by the gilets jaunes or yellow vests turned into a riot on the Champs-Elysées. After violent protests threatened to derail his reform drive late last year, the president regained the political initiative with increases in pensions and in-work benefits and a nationwide debate on tax and public services. Saturday’s events have once again put him on the defensive, suggesting the debate has failed to defuse public anger and with opposition leaders decrying a breakdown in law and order. Italy is considering borrowing from China’s Asian Infrastructure Investment Bank as part of plans to become the first G7 country to endorse Beijing’s contentious “Belt and Road” global investment programme. The two countries are planning to “explore all opportunities for co-operation” in Italy and “third countries”, according to the five-page draft accord obtained by the Financial Times. The wide-ranging agreement would span areas including politics, transport, logistics and infrastructure projects. In a departure from previous Belt and Road Initiative accords, the two countries would “work together with the Asian Infrastructure Investment Bank (AIIB)”, according to the working document. The draft shows that Italy is in advanced talks with China and resisting pressure from Washington and Brussels to drop those discussions at a time of rising concerns over Beijing’s ambitions and potential security threat. Theresa May issued a final ultimatum to Eurosceptic MPs on Wednesday night, telling them to back her EU divorce deal with Brussels next week or face a months-long Brexit delay that would force Britain to hold elections to the European Parliament. The prime minister’s challenge came after she suffered another humiliating defeat in parliament, with a majority of MPs defying her wishes by voting to take a no-deal exit off the table permanently. Mrs May had backed a more equivocal stance towards leaving the EU without an agreement. Mrs May’s decision to hold a third vote on her Brexit plan next week, just days before she is due to attend an EU summit in Brussels, is a calculated gamble that she can finally bring the escalating Brexit drama to a head before formally seeking to delay Britain’s departure date from March 29 to June 30. The prime minister said that if a deal was not agreed by MPs before the March 21 EU summit, she would be forced to seek “a much longer extension” of the exit process, requiring Britain to take part in May’s European Parliament elections. Theresa May has won House of Commons backing for her “third time lucky” plan to push through her Brexit deal next week, amid signs that Eurosceptic opposition is starting to crumble under the threat of a long delay to Britain’s exit from the EU. After a series of chaotic Brexit defeats earlier in the week, Mrs May restored some semblance of control on Thursday when MPs backed her cobbled-together plan to put pressure on Brexiters by seeking a delay to Britain’s scheduled March 29 exit date. The Commons backed by 412-202 Mrs May’s strategy to apply to the EU next week for a short delay in Brexit until June 30, if MPs finally endorse her exit deal at the third time of asking next Tuesday. Mrs May’s successful motion also said that if MPs threw out the deal again next week there could be a longer extension beyond June 30, requiring Britain to take part in European Parliament elections in May. Brexit vote: MPs reject no-deal exit – as it happened MPs have voted against no-deal Brexit, but last minute changes to the motion that toughened up the definition meant that it became a defeat for the government MPs voted to reject leaving the EU without a deal after backing Spelman amendment by 312 to 308 Amended no-deal motion backed by MPs 321 to 278 despite government opposition Sterling surges to near 2-year high vs euro after the result Government will bring its deal back to parliament next week If defeated again, May will seek long extension of Article 50 Boeing shares continued their retreat on Tuesday as more countries grounded the company’s 737 Max 8 jets following an Ethiopian Airlines flight that crashed on Sunday. The stock declined 4.6 per cent to $381.40 after the opening bell. Boeing, which saw losses of up to 12 per cent on Monday, closed the session down 6 per cent. The sell-off knocked roughly $12.7bn off Boeing’s market capitalisation to $226bn. Airlines also declined on Tuesday morning, with Norwegian Air Shuttle dropping 4.8 per cent in Europe. Southwest Airlines, the largest operator of 737 Max 8s among US carriers, was down 2.6 per cent. Theresa May lost control of Brexit after her revamped exit deal was overwhelmingly rejected by 149 votes in the House of Commons on Tuesday evening, leaving her authority in shreds. Mrs May was forced to admit that Britain’s departure from the EU could be delayed beyond the scheduled date of March 29, hinting that parliament could force her to lead the UK towards a “softer Brexit” — including a customs union with the bloc and membership of its single market — if MPs continued to block her own deal. Some 75 Tory MPs joined with Labour and other opposition parties to reject Mrs May’s deal for the second time; the only slim comfort for Number 10 was that the margin of defeat was smaller than the historic 230 deficit in January’s vote. Sterling slid by about 0.6 per cent against the dollar over the day to below $1.31, and fell 1.1 per cent against the euro. Theresa May has agreed a revised Brexit deal in last-ditch talks with European Commission president Jean-Claude Juncker, as she seeks to avoid a crushing Commons defeat. The prime minister hopes the new attempts at legal assurances that Britain cannot be “trapped” in a customs union with the EU will win over her critics when MPs have vote for a second time on the divorce deal on Tuesday evening. Mrs May agreed what she claimed were three important changes to the withdrawal deal after hastily-arranged talks with Mr Juncker at the European Parliament in Strasbourg on Monday night. Mr Juncker said this was the last chance for MPs to support the Brexit deal. “There will be no further interpretations of interpretations or reassurances on reassurances,” he said after agreeing the new measures with Mrs May. “It’s this deal or Brexit may not happen at all.” Deutsche Bank’s chief executive Christian Sewing has dropped his opposition to exploring a multibillion euro merger with German rival Commerzbank after persistently low interest rates and investor pressure over its grim performance forced him to consider other options. “We still prefer our plan A and would love to do our own homework, and look at our strategic options later,” said a person familiar with the bank’s internal discussions, adding that executives were concerned that “some interested parties” were deliberately building up pressure to arm-twist management into acting now. Cerberus, the US private equity group that is one of the biggest investors in both Deutsche Bank and Commerzbank, is actively pushing for a tie-up which the German finance ministry would welcome as a way to create a national champion in banking. Action from the European Central Bank to boost growth and to push back expectations on the timing of interest rate rises sparked a rally for eurozone debt and hit the euro. The region’s stocks also bounced up off their lows after the moves were more dovish than expected, with a fresh round of cheap lending for eurozone banks due to start in September. It also signalled that interest rates would not rise in 2019, having previously pointed to summer as the earliest time for policy tightening. Eurozone bonds rallied, sending their yields lower. Demand for Italy’s shorter-dated debt sent the yield on its two-year paper to its lowest level since May 2018, down 14 basis points to 0.128 per cent. The German 10-year Bund yield fell 3bp to 0.10 per cent. The shared currency slipped by as much as 0.7 per cent to a session low of $1.1230, a level last touched in mid-November. The US trade deficit soared to $621bn last year, its highest level in a decade, dealing a blow to President Donald Trump’s ambitions to reduce an imbalance he has depicted as the primary threat to the American economy. According to the US Census Bureau, the nation’s trade gap rose by 18.8 per cent in December, to $59.8bn — more than expected by economists — as exports fell by 1.9 per cent and imports rose by 2.1 per cent. Over the whole of last year, the deficit rose by 12.5 per cent after the 6.3 per cent expansion in US exports was outpaced by a 7.5 per cent boost to imports. The overall deficit of $621bn was the largest since 2008, when it hit $709bn. The US goods deficit was $891bn, the largest on record. China, which has borne the brunt of Mr Trump’s protectionist trade policies, accounted for nearly half that total, increasing $43.6bn to $419.2bn last year. China has lowered its target for economic growth this year, blaming in a rare admission the slowdown on the impact of the trade war with the US. China’s premier Li Keqiang said on Tuesday the country was aiming for economic growth in 2019 in a range of 6-6.5 per cent, down from a hard target of 6.5 per cent over the past two years. The ministry also announced a cut of 3 percentage points to the highest bracket of value added tax, and a cut of 1 percentage point to a lower bracket, a move aimed at helping manufacturers. Robin Xing, an economist at Morgan Stanley, said the cut was worth about Rmb700bn-Rmb800bn, and that it was “above market expectations and should boost corporate earnings”. The world’s leading equity index provider, MSCI, took its biggest step yet to integrate China’s domestic stock markets with international capital on Friday in a move that could see an estimated $125bn flowing into the country’s equities this year. China’s weighting in MSCI’s flagship emerging markets index, an influential benchmark tracked by $1.9tn of funds, will rise to 3.3 per cent by November from the current level of 0.71 per cent, the New York-based company said. Funds which measure their performance against the index are obliged to buy the underlying stocks, triggering inflows to China. The decision helped drive Chinese stocks higher, with the benchmark CSI 300 rising 2.2 per cent. That takes its gain for the year to 25 per cent, trouncing the performance of every other stock market. |
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March 2021
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