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China has halted planned cross-borde

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We start the new year with three developments out of China.
Beijing flexes its muscle: China has halted planned cross-border listings between Shanghai and the London Stock Exchange because of political tensions with the United Kingdom, according to Reuters.
The suspension of the Shanghai-London Stock Connect is the latest example of fallout related to the Hong Kong protests to hit companies that are exposed to China.
According to Reuters, politics was behind the suspension of the stock connect mechanism, which has been touted as an important step in the opening up of China’s capital markets.
The suspension comes just weeks before the United Kingdom will leave the European Union, a departure that makes the country’s relationships with big economies such as the United States and China even more important.
The episode highlights the tough choices facing Prime Minister Boris Johnson as he seeks to negotiate new trade deals that are needed to boost Britain’s stagnant economy.
HSBC targeted: Pro-democracy protesters in Hong Kong attacked HSBC (HBCYF) branches on the first day of the new year and vandalized a pair of bronze lions outside the bank’s headquarters in the city.
Protesters accuse the bank of colluding with authorities and frustrating efforts to fund the demonstrations.
Hong Kong New Year's Day march called off after bricks and petrol bombs thrown
At issue is the closure of an HSBC account held by a nonprofit group raising funds for the protests, and the subsequent arrest of four of its members on money laundering allegations.
The bank said in a statement last month that the account closure was “completely unrelated” to the arrests. On Wednesday, it condemned the “repeated” vandalism of its branches.
HSBC was established in Hong Kong in 1865, and is the biggest bank in the financial hub. But like many other global companies that use Hong Kong as a base, it does a huge amount of business in mainland China.
Other companies to come under pressure from the Hong Kong protests include Cathay Pacific (CPCAY), Disney (DIS), Prada (PRDSY) and Swatch (SWGAF).
Central bank acts: The People’s Bank of China has moved to stimulate the country’s economy, giving banks the green light to increase lending by roughly $115 billion.
The PBOC on Wednesday announced a relatively small reduction in the amount of capital banks are required to keep in reserve, freeing up additional money ahead of Chinese New Year, when demand for cash increases due to holiday gift giving.
China’s economy is growing at the slowest pace in decades, and the country’s central bank made a series of adjustments last year aimed at stabilizing growth amid the fallout from the trade war with the United States.
Economists expect the country’s central bank to continue to act. Among the possible moves: another cut to the reserve requirement ratio, or an interest rate cut.

The latest on Carlos Ghosn’s great escape

Japanese authorities have raided the house where fugitive auto executive Carlos Ghosn was staying before he escaped to Lebanon earlier this week, possibly via Turkey.
The latest:
  • Local media reported that Tokyo district prosecutors entered the property where Ghosn had been living on Thursday.
  • CNN affiliate TV Asahi said that prosecutors were working with police to access CCTV video around his home as part of their investigation.
  • Turkish state media reported that seven people have been detained on suspicion of helping Ghosn flee to Lebanon. Police have reportedly detained four pilots of a private airline, two ground staff and the director of a cargo company.
Bottom line: It is still not clear how Ghosn, who is a citizen of France, Brazil and Lebanon, was able to slip out of Japan, where he was awaiting trial on charges of financial misconduct.
It’s very unlikely that Ghosn will be returning to Japan because the country does not have an extradition treaty with Lebanon, where the former Nissan and Renault boss spent his childhood and enjoys popular support.
The implications: “No matter what [Japan does] now, it is very difficult to overcome the embarrassment of letting go one of the most high-profile suspects” of corporate scandal since World War II, said Keith Henry, the founder of Asia Strategy, a research and policy firm based in Tokyo.

Warren Buffett sticks to his guns

According to the Financial Times, Tiffany & Co. (TIF) approached Warren Buffett about making a potential bid after the US company received an offer from luxury giant LVMH (LVMHF).
But the Berkshire Hathaway boss rejected Tiffany’s advances. Why? He thought the asking price was too steep, according to the FT.
Buffett has lamented the fact that valuations for many companies have become prohibitively expensive given that the stock market keeps hitting new record highs. And he has continuously stressed that he won’t overpay for deals.
Yet Berkshire Hathaway (BRKA) is now sitting on $128 billion in cash. And Buffett wrote in the company’s annual shareholder letter in February that he hopes to make “an elephant-sized acquisition.”
There was intermittent chatter last year that Berkshire may be interested in struggling California utility PG&E, and there were rumors that Buffett may want to buy a major US airline, such as Southwest (LUV). Berkshire already owns shares in Southwest, as well as Delta (DAL), American (AAL) and United (UAL).
For now, though, it looks like Buffett will continue to resist the urge to splash out.

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BoE to step up QE if economy slows again, deputy governor says – The Times – TheChronicleHerald.ca

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(Reuters) – The Bank of England will step up on quantitative easing (QE) if the British economy slows and struggles again, Deputy Governor Dave Ramsden said in an interview published on Tuesday, adding to his previous comments that BoE has more headroom to act.

QE would accelerate if “we saw signs of (market) dysfunction,” Ramsden told The Times newspaper in an interview https://bit.ly/2DFcMlr.

“I’m confident we’ve still got significant headroom to do more QE if we saw a much weaker recovery,” Ramsen said, adding that the central bank was prepared to do more quantitative easing, beyond the 745 billion pounds ($975.58 billion) committed.

He added that he was “confident” there would be no further quarters of negative growth for UK’s economy.

“A key outcome is what happens to the labour market. Some companies are going to go under. Some jobs are going to be lost,” Ramsen said.

Last week, Britain’s central bank said it saw no immediate case to cut interest rates below zero as it warned the economy would take longer to recover from the COVID-19 slump than it previously forecast.

Unemployment is likely to almost double by the end of this year, the Bank of England said on Thursday.

The BoE cut interest rates to just 0.1% in March and expanded its bond-buying plan to almost $1 trillion.

On Thursday, its nine monetary policymakers all voted for ‘no policy changes’ as they sketched out a slow path to recovery.

(Reporting by Kanishka Singh in Bengaluru, Editing by Sherry Jacob-Phillips)

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BoE to step up QE if economy slows again, deputy governor says – The Times – The Journal Pioneer

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(Reuters) – The Bank of England will step up on quantitative easing (QE) if the British economy slows and struggles again, Deputy Governor Dave Ramsden said in an interview published on Tuesday, adding to his previous comments that BoE has more headroom to act.

QE would accelerate if “we saw signs of (market) dysfunction,” Ramsden told The Times newspaper in an interview https://bit.ly/2DFcMlr.

“I’m confident we’ve still got significant headroom to do more QE if we saw a much weaker recovery,” Ramsen said, adding that the central bank was prepared to do more quantitative easing, beyond the 745 billion pounds ($975.58 billion) committed.

He added that he was “confident” there would be no further quarters of negative growth for UK’s economy.

“A key outcome is what happens to the labour market. Some companies are going to go under. Some jobs are going to be lost,” Ramsen said.

Last week, Britain’s central bank said it saw no immediate case to cut interest rates below zero as it warned the economy would take longer to recover from the COVID-19 slump than it previously forecast.

Unemployment is likely to almost double by the end of this year, the Bank of England said on Thursday.

The BoE cut interest rates to just 0.1% in March and expanded its bond-buying plan to almost $1 trillion.

On Thursday, its nine monetary policymakers all voted for ‘no policy changes’ as they sketched out a slow path to recovery.

(Reporting by Kanishka Singh in Bengaluru, Editing by Sherry Jacob-Phillips)

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Singapore’s Economy Posts Worse Contraction in Second Quarter – Yahoo Canada Finance

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Singapore Posts Bigger GDP Contraction in Second Quarter

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(Bloomberg) — Singapore’s economy had a bigger contraction in the second quarter than previously estimated, signaling a long recovery ahead for the trade-reliant nation.

Gross domestic product plunged an annualized 42.9% in the second quarter from the previous three months, according to final estimates from the Ministry of Trade and Industry released Tuesday. That was worse than a previous estimate of a 41.2% contraction and compares with a forecast of -43% in a Bloomberg survey of economists.

The economy, which is already in a technical recession, is set to shrink 5% to 7% in 2020, compared with a previous official forecast of a 4% to 7% contraction, the ministry said. On a year-on-year basis, the economy shrank 13.2% in the second quarter, compared with an earlier estimate of -12.6%.

“The outlook for the Singapore economy has weakened slightly since May,” according to the MTI statement. “The subdued external economic environment will continue to pose a drag on several of Singapore’s outward-oriented sectors,” while the reopening of borders is likely to be slower than previously anticipated, it said.

The lockdown has pummeled retail and tourism businesses and crippled construction output, while exports have slumped because of weak global demand. Even though the economy has gradually reopened and the government has pumped in stimulus measures worth more than 19% of GDP, the recovery remains uncertain and companies are bracing for further job cuts.

The data showed sharp contractions in key industries:

Manufacturing declined an annualized 31.7% in the second quarter from the previous three monthsConstruction plunged 97.1%Services contracted 37.4%

Singapore’s dollar was little changed at S$1.3746 against the U.S. dollar after the report.

The MTI said sectors reliant on foreign workers residing in dormitories will be slow to resume activity as the process to clear them for work has taken longer than expected. Most of Singapore’s virus infections have been among migrant workers living in those dormitories, several of which have been quarantined.

In a separate report, Enterprise Singapore revised its forecast for non-oil domestic exports upwards, projecting growth of 3% to 5% compared with a decline previously. Exports performed better than expected in the second quarter, due to sector-specific trends, the agency said. Non-monetary gold and pharmaceuticals, as well as electronic exports, grew in the quarter.

Singapore’s release follows reports last week that showed uneven economic performance across the region. Indonesia’s economy contracted in the second quarter for the first time in more than two decades, while the Philippines suffered its deepest plunge on record. At the same time, Chinese exports unexpectedly jumped in July amid a rekindling in global demand.

(Updates with comments from MTI statement starting in fourth paragraph.)

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