HSBC Joins Firms Exiting Argentina Amid Milei Economic Makeover | Canada News Media
Connect with us

Economy

HSBC Joins Firms Exiting Argentina Amid Milei Economic Makeover

Published

 on

Argentine President Javier Milei is trying to draw foreign investment to help stabilize a faltering economy. Some big international companies are abandoning the country instead.

HSBC Holdings PLC announced on Monday plans to sell its business in Argentina to Grupo Financiero Galicia for $550 million, along with a $1 billion pretax loss. Clorox has ended operations there, while Exxon Mobil Corp. may also pull out. This comes after Banco Itau pulled up stakes last year while Walmart Inc., Falabella SA and LatAm Airlines Group SA departed during the pandemic.

HSBC’s unit in Argentina, “generates substantial earnings volatility for the Group,” Chief Executive Officer Noel Quinn said in a statement Tuesday, adding its business there has “limited connectivity to the rest of our international network.”

The decisions to leave come amid Argentina’s worst economic crisis in more than two decades . Analysts expect its economy to contract for a second straight year. To help combat inflation and shrink the fiscal deficit, Milei has devalued the peso by more than 50% and slashed government spending. While monthly inflation has slowed — albeit still at crisis levels — analysts surveyed by Bloomberg expect prices reached nearly 300% annually in March.

“There is a lot of interest in Argentina abroad, but foreign investors are expecting fiscal discipline and sustainable changes,” said Fabian Kon, the CEO of Galicia, adding the need for strong institutions.

Read More: HSBC to Book $1 Billion Pretax Loss on Argentina Unit Sale (2)

As some multinationals leave, Milei’s cuts to public spending and monetary supply have sparked a rally largely fueled by hedge funds and local Argentine investors: The stock market is up 35% in dollars and sovereign bonds maturing in 2029 have risen 47% so far this year. With that rally as a backdrop, traders in Buenos Aires believe that foreign investment has yet to flow into capital markets or the real economy.

Eduardo Constantini, the CEO of Consultatio, a financial firm in Argentina that bought local broker TPCG this week, expects medium-term investors are likely keeping a close eye on political developments before making a bet on the country.

Constantini is waiting to see if Milei can negotiate an agreement with congress on his package of reforms after lawmakers rejected the first version of the bill earlier this year.

“It’s very early and reasonable to think that foreign investors aren’t making direct investments only three or four months into this government,” Constantini said in an interview. “The reality is the federal government has to shrink. We’ll have to see if politicians reach a deal.”

Beyond HSBC, Exxon Mobil Corp. is mulling bids for its Argentine shale assets as it looks to unwind its bet on the South American nation’s oil and gas riches. Clorox sold two production plants and brand rights to Apex Capital and revised its full year forecast.

Galicia’s Kon sees reason for optimism.

“Argentina is going in the right macro direction — it needs fiscal balance, a single exchange rate, lifting of currency controls and a stable regulatory framework,” Kon said. “If this happens, inflation will come down and Argentina will start to grow.”

Adblock test (Why?)

Source link

Continue Reading

Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

Published

 on

 

OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

Published

 on

 

The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

Trump’s victory sparks concerns over ripple effect on Canadian economy

Published

 on

 

As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending

Exit mobile version