Hong Kong’s reputation as a global business hub was dealt a fresh blow Monday after Moody’s downgraded a key rating, blaming a lack of government response to months of popular protests and China’s increased influence over the city’s institutions.
The rating downgrade is a major blow to Hong Kong’s pro-Beijing leader Carrie Lam, who has struggled to end more than seven months of huge and often violent pro-democracy protests.
It also reflects growing concern within the business community that the institutional features that give Hong Kong more political and economic autonomy are weakening under pressure from the authoritarian mainland.
In a statement explaining its decision to downgrade the long-term issuer and senior unsecured ratings one notch to Aa3, Moody’s delivered a blunt assessment of the government’s response to the protests.
“The absence of tangible plans to address either the political or economic and social concerns of the Hong Kong population that have come to the fore in the past nine months may reflect weaker inherent institutional capacity than Moody’s had previously assessed,” the New York-based credit rating agency said.
It described the government’s response to demands for greater political freedoms — and sky-high living costs — as “notably slow, tentative and inconclusive”.
“It may also point to more significant constraints on the autonomy of Hong Kong’s institutions than previously thought,” the agency added, in a nod to pressure from Beijing.
Months of political unrest has upended Hong Kong’s reputation for stability while the protests present the most severe challenge to Beijing’s rule since the former British colony’s 1997 handover to China.
Millions of pro-democracy supporters have taken to Hong Kong’s streets with clashes between hardcore protesters and police frequently breaking out.
Combined with the fallout of the US-China trade war, the protests have slammed the tourist and retail sectors and helped tip Hong Kong into a recession.
The protests were initially sparked by a proposed law allowing extraditions to the authoritarian mainland where the opaque judicial system answers to the Communist Party.
Opponents saw it as the latest move by Beijing to chip away at the city’s unique freedoms, such as its independent judicial system.
But as Beijing and Lam dug in, the movement morphed into a broader campaign calling for democratic reforms and police accountability.
The extradition law was eventually abandoned, but Beijing has refused further concessions and thrown its full support behind Lam.
Among the key demands of the movement are an inquiry into the police, an amnesty for the thousands arrested and fully free elections.
Moody’s decision comes four months after Fitch downgraded the city’s sovereign rating, citing ongoing protests and uncertainty caused by closer integration with the Chinese mainland.
It was the first time the agency had downgraded Hong Kong since 1995 when fears about the city’s future following its handover to China were at their peak.
Moody’s changed Hong Kong’s outlook from stable to negative in September after Fitch’s move but did not follow suit on a ratings downgrade.
It the statement announcing Monday’s downgrade, Moody’s moved Hong Kong’s outlook back to stable, noting the city’s large fiscal reserves, minimal debt burden and ample foreign exchange reserves.
But it warned “closer institutional integration between Hong Kong and China” could contribute to further downgrades in the future.
Buffett spends record US$2.2B buying up Berkshire shares – BNNBloomberg.ca
Warren Buffett kicked his stock-buyback program into high gear, spending US$2.2 billion on repurchases in the last three months of 2019, the most ever in a single quarter — and he’s looking to buy even more.
Buffett’s Berkshire Hathaway Inc., which loosened its repurchase policy almost two years ago after being stymied on the dealmaking front, has since taken a cautious approach to buybacks, acquiring only US$6.3 billion of stock. In the fourth quarter, Buffett bought shares every month, and has no plans to slow down, if the price is right.
“Shareholders having at least US$20 million in value of A or B shares and an inclination to sell shares to Berkshire may wish to have their broker contact Berkshire’s Mark Millard,” Buffett said in his annual letter to shareholders Saturday. “We request that you phone Mark between 8:00-8:30 a.m. or 3:00-3:30 p.m. Central Time, calling only if you are ready to sell.”
Even as Buffett ramped up his repurchases, Berkshire’s massive pile of cash hovered close to a record, totaling $128 billion at the end of 2019. Buffett, Berkshire’s chairman and chief executive officer, has sought to redeploy those funds into higher-returning deals or stock purchases, but has been stymied by what he’s said are “sky-high” prices for good businesses.
Buffett spent a portion of his annual letter reassuring shareholders about the future of the company once it’s no longer run by the billionaire investor and his business partner, Charlie Munger, who turned 96 this year.
“Berkshire shareholders need not worry: Your company is 100% prepared for our departure,” Buffett said.
At Berkshire’s annual meeting in May, shareholders will be able to submit questions to be answered by lieutenants Ajit Jain or Greg Abel, Berkshire vice chairmen who are considered top contenders to someday replace Buffett. They answered a few investors questions at last year’s meeting.
Berkshire’s operating earnings fell to US$4.42 billion in the fourth quarter, down 23 per cent from a year earlier, driven by underwriting losses at its namesake reinsurance group, which was hurt by typhoons in Japan, wildfires in California and Australia, and widening losses at its business writing retroactive reinsurance contracts.
Berkshire’s Class A shares last year underperformed the S&P 500 Index by the widest margin since 2009. The stock has gained just 1.1% this year.
Also in Berkshire’s 2019 annual report, released alongside Buffett’s letter Saturday:
- Kraft Heinz Co., which counts Berkshire as its largest shareholder, had a tumultuous 2019, with writedowns, management shakeups and downgrades to junk. Buffett’s company carries its Kraft Heinz investment on its balance sheet at US$13.8 billion, a figure unchanged since 2018’s fourth quarter, even as the market price of the stake dropped to US$10.5 billion at the end of last year.
- Berkshire’s BNSF railroad posted a 3.8 per cent gain in profit in the fourth quarter, just shy of record earnings in the previous three months, as a decline in expenses helped counter falling revenue across shipments of products such as coal, consumer items and agricultural goods. BNSF posted a regulatory filing Friday night, on the eve of the release of Buffett’s annual letter, giving investors a sneak peek of results.
No winning ticket for Friday night's $65 million Lotto Max jackpot – CTV News
No winning ticket was sold for the $65 million jackpot in Friday night’s Lotto Max draw.
However, six of the Maxmillion prizes of $1 million each were won.
They will be shared by eight ticket holders.
The jackpot for the next Lotto Max draw on Feb. 25 will now grow to an eye-popping $70 million, and there will be 20 Maxmillion prizes up for grabs.
Superior takes measures to move propane by truck, U.S. trains amid rail blockades – The Globe and Mail
Fears of a looming propane crisis caused by rail blockades have been partly alleviated by U.S. supplies, unseasonably warm weather and selective deliveries, says the head of Superior Propane.
But unless freight-train service resumes in Eastern Canada, rationing and shortages of the home-heating fuel are likely, said Greg McCamus, president of Superior Propane, whose main Ontario depot in Sarnia is supplied by trains and a pipeline.
Superior has brought in trucks from Western Canada and moved propane to Atlantic Canada by train from the United States, Mr. McCamus said. Customers that operate barbecue refilling stations are getting limited deliveries, in order to allow Superior to prioritize residents, hospitals and nursing homes.
“We’ve also been a bit fortunate that the weather in Ontario has been a bit warmer than normal for this time of year. So that’s all helping us to keep the supply moving.”
Mr. McCamus said the measures have helped ensure Superior can maintain a supply that would last about a week to 10 days. Normally, there is about two weeks’ supply. He said it is hard to pin down a date by which the supplies will run out, given the new steps the company has taken, and the variables of weather and demand.
“We hope that if the rail lines start running again, we can move through it without that kind of a crisis happening. But there is no question it’s an issue for the industry. And if we don’t get a resolution, it’s going to get [worse],” he said by phone.
The blockades are in support of the Wet’suwet’en hereditary chiefs, who oppose the Coastal GasLink natural gas pipeline on their traditional territory in northern British Columbia. The $6-billion project by Calgary-based TC Energy Corp. would pipe natural gas from northeastern B.C. to Kitimat on the coast for export.
The protests have raised concerns about shortages of critical supplies of everything from propane to water-treatment chemicals, and put pressure on the federal government to find a solution to limit economic damage.
Canadian National Railway Co., whose line east of Toronto has been blocked for two weeks, has halted freight service on its eastern Canadian network. Passenger rail company Via Rail, which leases track space from CN, has suspended most of its trains.
The blockades have also stopped or slowed rail service at Canada’s four main ports, Vancouver, Prince Rupert, B.C., Montreal and Halifax, forcing ships to idle at anchor or divert to U.S. destinations.
In Halifax and Montreal, off-loaded containers of consumer goods and industrial components are stacked on the docks, with no CN trains to take them away to markets outside the province. “The CN network blockade greatly complicates the logistics of transporting goods or completely blocks the movement of goods for CN users,” said Mélanie Nadeau, a spokeswoman for the Port of Montreal.
An executive with German container ship owner Hapag-Lloyd AG said the company is considering skipping calls at Halifax, but has been less affected at Vancouver and Montreal, where it uses Canadian Pacific Railway trains.
In an open letter to Mr. Trudeau, CP chief executive officer Keith Creel called on the Prime Minister to hold talks with the Wet’suwet’en hereditary chiefs. Mr. Creel said the railway is “severely impacted” by the disputes, including a Thursday protest on a CP line near Chase, B.C., that stopped trains headed to the Port of Vancouver and a 12-day blockade south of Montreal that has cut off U.S. access.
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