|Bid||101.00 x 0|
|Ask||109.00 x 0|
|Day's range||100.60 - 106.60|
|52-week range||73.04 - 192.99|
|Beta (5Y monthly)||1.21|
|PE ratio (TTM)||8.89|
|Earnings date||29 Jul 2020|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||27 Feb 2020|
|1y target est||221.84|
(Bloomberg) -- Emerging-market stocks and currencies gained last week amid optimism progress is being made toward developing coronavirus vaccines, and as more nations roll back lockdowns. Sentiment was tempered as the week progressed by signs U.S.-China tensions increasing once again, with the Chinese foreign minister warning some in the U.S. are pushing relations into a “New Cold War” on Sunday. This followed escalating rhetoric from President Donald Trump and Senate legislation that may lead to delisting of Chinese companies from American stock exchanges following China’s announcement of plans to impose a national security law on Hong Kong, which was was rocked again by heavy protest Sunday.The following is a roundup of emerging-market news and highlights for this week through May 22:Highlights:The U.S. threw its weight behind one of the fastest-moving experimental solutions to the coronavirus pandemic, pledging as much as $1.2 billion to AstraZeneca Plc to help make the University of Oxford’s Covid vaccineAn experimental vaccine from the U.S. biotechnology company Moderna Inc. showed signs it can create an immune-system response to fend off the coronavirusRead: U.S. Raises Ante in Vaccine Race With $1.2 Billion for Astra (2)Leading Chinese vaccine developer CanSino Biologics Inc. has signed a deal to test and sell a separate Canadian vaccine candidateFederal Reserve Chairman Jerome Powell said the central bank is prepared to use its full range of tools and leave the benchmark lending rate near zero until the economy is back on track; he reiterated that more fiscal aid may be neededFed policy makers saw the coronavirus posing a severe threat to the economy when they met last month and were also concerned by the risks to financial stabilityChina has abandoned its usual practice of setting a numerical target for economic growth this year due to the turmoil caused by the coronavirus; it reiterated a pledge to implement the first phase of its trade deal with the U.S.China projected defense spending growth of 6.6% this year, the slowest increase since at least 1991; the nation is pushing ahead with major investment in new infrastructure, assigning it top importance this yearChina announced plans to rein in dissent by writing a new national security law into Hong Kong’s charter, prompting democracy advocates to call for protestsProtesters held their biggest rally in months on Sunday, with more demonstrations planned for later in the weekPresident Donald Trump escalated his rhetoric against China, suggesting that leader Xi Jinping is behind a “disinformation and propaganda attack on the United States and Europe”The U.S. Senate overwhelmingly approved legislation that could lead to Chinese companies such as Alibaba Group Holding Ltd. and Baidu Inc. being barred from listing on U.S. stock exchangesU.S. Secretary of State Michael Pompeo broke with past U.S. practice and issued a statement congratulating Taiwan President Tsai Ing-wen ahead of her inauguration. China denounced the message as “wrong and very dangerous”Tsai urged China’s Xi Jinping to “find a way to co-exist” with the island’s democratic government as she started her second termArgentina will improve the terms of its offer to restructure $65 billion of overseas bonds after sinking into default when it failed to make an interest paymentSouth Africa’s Reserve Bank cut its benchmark rate for the fourth time in four months to support an economy forecast to slump deeper into recession; Turkey’s central bank delivered a ninth straight rate cut in less than a year after measures to prop up the lira drove out foreign investors; Indonesia’s central bank unexpectedly left its benchmark unchanged to bolster the currency; Bank of Thailand cut its key rate to a record and said it was ready to use additional policy tools if neededIndia’s central bank cut interest rates in an unscheduled announcement, ramping up support for an economy it expects will contract for the first time in more than four decadesBrazil overtook the U.K. to become the world’s third most-infected nation and reported record daily deaths; government still hasn’t picked a new health minister following Nelson Teich’s resignationRussia sees its economy contracting 5% this year, according to updated forecast from Russian Economy MinistryPresident Vladimir Putin may announce a snap ballot within weeks on proposed changes to the constitution that allow him to sidestep term limits, said people familiar the matterAsia:Chinese President Xi Jinping pledged to make any coronavirus vaccine universally available once it’s developed, part of an effort to defuse criticism of his government’s response to a pandemicChina’s regulator and some lenders have discussed extending loan relief beyond a June 30 deadline for corporates hurt by the virus outbreakChina is considering targeting more Australian exports including wine and dairy, according to people familiar with the matterShanghai Stock Exchange has started a trial program to allow companies to issue short-term local bondsChina’s house-price growth accelerated in April as the central bank’s credit easing gave the property market a lift out of the coronavirus shutdownBank of Korea said it will provide 80% of a special purpose vehicle’s 10 trillion won ($8.1 billion) of funds to buy corporate debt including lower-rated bonds and commercial paperSouth Korean students are returning to their classrooms after a five-month break as government health officials declared the country may have avoided a second wave of infectionsInitial South Korea trade figures for May signaled deep global trade weakness as the coronavirus smothers global economic activity. Though the value of shipments to China fell 1.7%, this was far less than in previous monthsIndia’s coronavirus infections crossed the 100,000 mark and are escalating at the fastest pace in Asia, just as Prime Minister Narendra Modi further relaxed the country’s nationwide lockdownThe biggest cyclonic storm over the Bay of Bengal in two decades wreaked havoc along India’s east coast and in Bangladesh, flooding low-lying areas and affecting power supplyIndia’s capital market regulator has allowed some categories of debt mutual funds to invest more in government bonds and treasury billsIndia’s government said the central bank will increase support for troubled shadow lenders, to stave off defaults as record repayments come due next monthIndonesian President Joko Widodo ruled out an immediate easing of social distancing rules and ordered officials to strictly enforce a ban on travel during the busy holiday season to prevent a spike in new coronavirus casesIndonesia will extend $10 billion in financial support to a dozen state-owned companies to tide over the impact of the coronavirus, Finance Minister Sri Mulyani Indrawati saidThailand sees its economy contracting as much as 6% this year as the coronavirus outbreak cuts travel to the tourism-reliant nation and shutters commerceGovernment agreed to extend state of emergency as suggested by National Security Council, Deputy Prime Minister Somkid Jatusripitak saidThe Philippine central bank sees “no apparent and immediate” need to avail itself of the new short-term liquidity line being offered by IMF to members as part of pandemic response, according to Governor Benjamin Diokno; policy space is still sufficient, he said separatelyThe Philippines is considering downsizing lockdowns to villages from regions, as it balances further reopening its economy with stemming the virus outbreakMalaysia’s king warned lawmakers against resorting to hostility and slander, as he spoke at the country’s first parliament sitting since its chaotic change of government two-and-a-half months agoThe trial of Malaysia’s former leader Najib Razak resumed on Tuesday, as a settlement deal by his stepson spurred concern over how the new government is handling the 1MDB casesTaiwan’s unemployment rate has reached the highest level in more than 6 years, according to government data released today. The coronavirus pandemic sent April’s jobless rate to 4.1% leaving over 480,000 people unemployedEMEA:Russia sold the most debt on record in its weekly bond auctions, benefiting from low borrowing costs to fund stimulus plansRussia’s Finance Ministry placed 112 billion rubles ($1.6 billion) of bonds due in October 2027 at its first auction on Wednesday, the most ever for a single offeringTrump has decided to withdraw from the Open Skies treaty, an arms-control pact designed to promote transparency between U.S. and Russia, claiming Russian violationsTurkey secured a fresh source of foreign exchange from Qatar, leaning again on the gas-rich Gulf nation that’s consistently come to the rescue as part of an alliance born after a coup attempt against President Recep Tayyip ErdoganRomania’s surprise first-quarter economic growth may help the country avoid a credit-rating downgrade next month as investors rush to buy its debt, the finance minister saidAbu Dhabi raised more money from international debt markets just weeks after a $7 billion bond sale as it took advantage of a drop in borrowing costs to bolster its financesThe emirate sold an additional $3 billion of its three-tranche deal priced in April, according to people familiar with the matterEgypt may reduce financing in local markets over coming weeks as it tries to cut debt-service costs for one of the Middle East’s most indebted countries, the Finance Ministry saidEgypt raised $5 billion in its first sale on international bond markets since NovemberLebanese banks urged the government to sell state assets and defer maturities to avoid defaulting on its domestic debt and driving the country’s finances into an even deeper crisisSaudi Aramco became the first major global oil producer to see its stock recover to the level it traded at before the price war between Russia and Saudi ArabiaZambia is seeking to restructure its debt after years of “over-ambition” in borrowing to plug an infrastructure deficit, the Finance Minister saidBank of Zambia cut its key interest rate for the first time in more than two years to counter the impact of the coronavirus on the economy, even as inflation surged to a 43-month high in AprilMoeketsi Majoro became Lesotho’s new prime minister, a day after his predecessor resigned amid an investigation into the murder of his ex-wifeZimbabwe’s supply of foreign exchange has increased by 35% since restrictions on using the U.S. dollar for domestic payments were eased, the central bank Governor saidSouth African factory output contracted for the ninth month in February even before a nationwide lockdown aimed at limiting spread of the coronavirus pandemic shuttered all non-essential activityInvestors declined to take up all of the five-year bonds on offer at an auction in Kenya this weekRwanda plans to increase budget spending for the coming fiscal year by 8%, saying it needs more money to fend off the Covid-19 pandemic, the Finance Minister saidNigeria’s early move to tap cheap loans improved its risk perception among foreign investors, leading to a decline in the country’s borrowing costsLatin America:Argentina’s economic activity slid 9.8% in March, a record biggest monthly decline, amid a nationwide lockdownA video of a controversial meeting between Brazil’s Jair Bolsonaro and members of his cabinet became public on Friday, fueling a political crisis that embroils the president just as the coronavirus pandemic grips the countryBrazil overtook Russia and is now second in number of virus cases in the world, trailing only the U.S.Health Ministry loosened protocols for the use of chloroquine, under orders of the president, who ordered the military to ramp up production of the drugThe city of Sao Paulo brought forward holidays to increase social isolation rates, which are typically higher on weekends and holidaysBolsonaro asked for state governors and congress to support his veto on an increase in public servants wagesCentral bank President Roberto Campos Neto promised to step up currency intervention if neededInvestors holding debt protection for Ecuador are in line to share compensation of about $60 million after the nation struck a deal with creditors to suspend coupon payments on its foreign debtAshmore Group Plc and BlackRock Inc. are joining together to present a united front for restructuring talks in EcuadorIDB approved a $250 million loan to Ecuador and nation is launching a $1.2 billion program to revive the economyEcuador is launching a program with $1.15 billion of funding from international partners to support workers and entrepreneurs, the Finance Minister saidChile’s economy is bracing for a contraction even after activity unexpectedly grew in the first three months of the year during the onset of the coronavirus pandemicQuarantine in capital Santiago was extended for a weekMexico’s President Andres Manuel Lopez Obrador said he is working on a new indicator to measure growth and progress as the country’s economy heads to its biggest contraction in almost a centuryMexico’s interest rates will continue to be cut, central bank board member Jonathan Heath saidInflation quickened more than expected in early May as food prices jumpedPeru’s economy contracted in the first quarter as the country entered what may be its deepest slump since the 1880s. GDP fell 3.4% from a year earlierCountry extended its nationwide quarantine for five weeks, while the reopening of the economy will enter its second phase as planned(Updates with Chinese foreign minister response and details of Hong Kong protests)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Not too long ago, BlackRock Inc. was super bullish on the prospect of exchange-traded bond funds. While it took 17 years for these passive vehicles to reach $1 trillion in assets under management, doubling that would take a fraction of the time, the investment manager predicted. These funds have become “disruptors” of the once opaque and difficult-to-access global bond market, it said. Passive funds have indeed become popular. More than 60% of institutional investors used debt ETFs last year, up from 20% in 2017. Meanwhile, emerging market bond ETFs represent the fastest growing segment, rising at an annualized rate of 38% over the last decade, to $82 billion in assets under management. As much as BlackRock’s marketing executives may tout “disruption,” instability is one thing developing markets can do without — especially now that they’re issuing debt left and right. Investors are understandably starting to ask who will pay when things go pear-shaped. If they bail, the passive funds they’ve gobbled up could well kill emerging-market investing. Take a look at BlackRock’s $13 billion iShares J.P. Morgan USD Emerging Markets Bond ETF. It’s well-liked by investors because it tracks sovereign dollar issues, which takes the problem of currency volatility off the table. But its exposure doesn't accurately reflect the gross domestic product of its constituents. China, for instance, has a weighting of just 3.8%, making it the eighth-largest component of the ETF. Meanwhile, Argentina, Turkey, South Africa, Egypt and Colombia — the new Fragile Five according to Bloomberg Intelligence — together have a 14% weight, data compiled by Bloomberg show. Add the next five in line, and about 35% of your ETF’s holdings are vested with the most vulnerable nations.(1) BlackRock is simply tracking the widely followed J.P. Morgan index, which is by no means the only one with a heavy tilt toward troubled countries. The Bloomberg Barclays EM USD Aggregate Sovereign Index, for instance, also has more than a third of its weight behind the Fragile 10. Since the collapse of Lehman Brothers Holdings Inc., quantitative easing has driven billions of dollars of capital into emerging markets. With rates near zero in the developed world, investors have eagerly taken on extra risk in the pursuit of yield. As a result, nations with current account and fiscal deficits, such as Indonesia, ended up issuing plenty of dollar bonds. Meanwhile, healthier ones, like export-oriented China and South Korea, developed their domestic government bond markets instead. After all, it’s cheaper to raise money in your own currency. Beijing only raises dollar bonds when it feels like showing off its prime rating abroad.Now, the virus is raising uncomfortable questions. Economies big and small are on lockdown, facing large shortfalls in government revenues and big fiscal spending plans. How will the most vulnerable ones meet their debt obligations?In mid-April, the Group of 20 agreed to halt repayments for the poorest countries. That won’t be enough. African economies, for instance, have the largest external funding gap among the low-income group analyzed by Moody’s Investors Service Inc. That amounts to around $40 billion to $50 billion this year, or about 4% to 5% of their combined GDP. The G-20 debt relief is worth only $10 billion.If, say, a few African countries lit up the global news headlines by walking a tad too close to default, would ETF investors sell out of their positions altogether? It wouldn’t be irrational. Thanks to passive funds’ transparency, we know at least one-third of our positions are vested with some of the most fragile emerging economies.BlackRock created retail products from an asset class once preserved for professionals. This great democratization experiment is a double-edged sword. Sure, it helps struggling nations raise money. But in times of distress, contagion becomes the word. Stock pickers — value investors, in particular — have long argued ETFs distort equity markets. That assessment isn’t far off for fixed income, either.(1) Bloomberg Intelligence has assigned a vulnerability rating based on current account balance, short-term external debt, reserve coverage, government effectiveness and deviation from inflation targets.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The Bank of England is studying how low U.K. interest rates can be cut amid the coronavirus crisis and isn’t excluding the idea of taking borrowing costs below zero, according to Governor Andrew Bailey.“Given what we’ve done in past few weeks, it should come as no surprise to learn that of course, we’re keeping the tools under active review in the current situation,” Bailey told lawmakers on Wednesday when asked about negative rates. “We do not rule things out as a matter of principle. That would be a foolish thing to do. That doesn’t mean we rule things in either.”The comments come amid a growing debate about the possibility of negative interest rates in the U.K., which intensified Wednesday after a report showed inflation slowed to the lowest level since 2016 and the nation sold debt with a sub-zero yield for the first time. Bailey said his position on going below zero had changed since entering the pandemic, but the policy had received “pretty mixed reviews” elsewhere.While officials have repeatedly emphasized such a move isn’t imminent, and would be tricky to implement in the U.K., they’ve also stressed nothing is off the table in their efforts to fight the impact of coronavirus. The fallout could push the economy into the deepest recession in three centuries.Interest-rate swaps, which are used to gauge where the benchmark may be, are just below 0% for December, and get progressively lower in 2021.Still, a full 10 basis-point cut below zero is yet to be fully priced in. That means that rather than outright bets on a negative rate, those moves might represent traders hedging against the prospect of a worsening economic situation making easier policy more likely.“In investors’ minds even a small probability of negative interest rates in the dollar and pound is a big change”, said Antoine Bouvet, rates strategist at ING Groep NV. “That the possibility remains open, even if small, and might cause some investors to pre-hedge.”Read More:U.K. Inflation Rate Drops Below 1% Amid Negative Rate Debate Negative Interest Rates Are Last on BOE List, Barclays SaysU.K.’s First Negative-Yielding Bond Sale Fuels Debate Over RatesBailey said the BOE was keen to observe the impact of its previous U.K. rate cuts, bearing in mind arguments that they become less effective the closer to zero they are. It’s also examining the experience of other central banks that have cut below zero, he said, adding the financial system in an economy is an important factor.The governor has previously expressed a stronger opposition than other policy makers to the tool, saying they would present a communications challenge and prove difficult for banks. Others have been more sanguine, with Silvana Tenreyro saying they’ve had a positive effect elsewhere and Chief Economist Andy Haldane noting they were something officials were examining among other unconventional tools.Cutting interest rates below zero is the last policy option that BOE officials would currently choose to further stimulate the economy, according to Barclays, which sees more asset purchases as the most likely next step.What Our Economists Say:“Would negative rates really be a game changer if the economy needed a lift? Probably not. The reality is the BOE is at the limits of its powers to boost spending. If demand did need a lift further down the line, we think a more potent policy mix would be for the BOE to continue with QE while fiscal policy does the heavy lifting.”\-- Dan Hanson, U.K. economistAnother side effect would be to further weaken an already beleaguered pound, making imports more expensive. While exports would typically get a boost, the impact of the pandemic on trade means that’s less likely this time.“I can’t think of an economy where negative rates are a worse idea than the U.K.,” wrote Kit Juckes, a strategist at Societe Generale. “How on earth does it make sense to even consider adding negative rates to the mix?”(Adds further comments from Bailey in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Turkey’s push for faster credit growth is inadvertently eroding returns on lira savings, a consequence of pro-growth policies that officials fear might fuel demand for dollars.The government last month set ambitious targets for banks to boost lending and mitigate the economic fallout from the coronavirus pandemic.But instead of rolling out new loans, some private lenders began aggressive cuts to interest rates on deposits after the banking regulator said they must raise a newly defined asset ratio to above 100%. Policy makers are now concerned lower rates might result in a rush for more dollars and create another source of imbalance as they try to stimulate the $750 billion economy, according to officials with direct knowledge of the matter.“Lira deposit rates follow policy rates very closely,” Barclays Plc economist Ercan Erguzel said in an emailed note. “Bigger cuts on top of current levels, without a further drop in inflation expectations and/or actual inflation, would likely affect the dollarization trend, which has been stable for a while.”Sudden changes in saving patterns can act as a destabilizer for emerging economies such as Turkey, where more than half the savings in the banking sector is already denominated in foreign currencies. Additional demand for foreign exchange could present a particular challenge at a time of declining reserves, which is putting pressure on the currency and amplifying the burden on companies holding foreign debt.Central bank data on deposits underscore officials’ growing concern. Following the new regulation, the average rate lenders offer for lira accounts dropped to 8.4%, the lowest level since November 2013, according to most recent data.The drop was driven by private lenders, where lira deposits fell 3.4% within the first 3 weeks of the new asset-ratio requirement. State banks saw their local-currency deposits rise 7.9% during the same period as they chased credit growth more aggressively.Deposit rates well below consumer inflation are only one factor among many that determine how much foreign exchange Turks might want to hold. But lower rates for a sustained period might eventually force savers to buy more dollars, according to the officials, who asked for anonymity to discuss policy makers’ concerns.Officials at the regulator and the treasury declined to comment.President Recep Tayyip Erdogan and Treasury and Finance Minister Berat Albayrak have repeatedly slammed private banks for failing to support companies even before the coronavirus outbreak paralyzed economic activity. With the economy likely falling into a recession, the focus remains on credit even at the risk of growing vulnerabilities elsewhere.(Updates with economist comment in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Britain sold bonds with an average yield below zero for the first time, intensifying a debate on negative rates hours before testimony from the head of the Bank of England.The U.K. Debt Management Office raised 3.75 billion pounds（$4.6 billion) by tapping existing bonds maturing in 2023. While the yield at minus 0.003% is little surprise to market watchers -- given that the existing bonds were already trading at roughly the same level -- what makes the auction precarious is the timing.That’s because if Governor Andrew Bailey repeats his opposition to negative interest rates when testifying before Parliament’s Treasury Select Committee Wednesday at 2:30 p.m. in London, buyers could see the value of their gilt holdings plummet.“If he was overtly hawkish, yields on short gilts would be likely to rise,” said John Wraith, head of U.K. and European rates strategy at UBS Group AG. “But I suspect whatever he says will be aimed at reassuring the market and wider public that the BOE stands ready to do anything and everything it thinks could help if the economic situation worsens.”Gilts have rallied this week after BOE policy makers Andy Haldane and Silvana Tenreyro raised the prospect of further easing, with Brexit fears and the coronavirus lockdown pushing Britain toward its worst recession in three centuries. Yet Bailey has pushed back against negative rates, saying last week that although nothing should be ruled out forever, they were not under consideration.In March, the BOE announced it would add 200 billion pounds of gilts and corporate bonds to its asset-purchasing program, expanding it by 45%. Barclays Plc, which sees negative rates as the last policy tool the BOE would choose, expects a further 100 billion pounds of quantitative easing in June.Economic WoesAdding fuel to the fire, U.K. inflation in April fell to the lowest since 2016 amid a drop in energy prices and an economic slowdown induced by the lockdown.“This morning’s release of the U.K. CPI inflation data shows that price pressures are way below where the Bank of England would like them to be,” Jane Foley, a strategist at Rabobank. “This adds interest into the debate about negative interest rates.”While the nation’s economic outlook is bleak, the sale highlights that the government’s huge spending plan to support the U.K. hasn’t spooked investors. That’s largely thanks to the BOE’s asset-purchase scheme, which has kept the cost of borrowing close to historically low levels.It’s one reason why demand outstripped the amount of bonds on offer more than two fold. Even though existing bonds due July 2023 saw their yield fall more than 60 basis points this year to 0%, Citigroup Inc. strategists including Jamie Searle say the issue looked cheap compared to peers with similar maturities.“If anything, this also shows that despite the additional gilt issuance, there is still a structural shortage,” said Antoine Bouvet, senior rates strategist at ING Groep NV.On Tuesday, investors piled into the U.K.’s syndicated bond sale, with orders for the 7-billion-pound offering exceeding 53 billion pounds.Negative RatesOvernight interest-rate swaps are pricing in sub-zero rates by December’s BOE meeting, yet are only just below 0%. The contracts fall progressively lower through 2021, reflecting caution in the market about how to interpret the BOE’s messaging, concern about the consequences of lifting the lockdown too soon and the risk of a messy divorce from the European Union.Sterling traders are also watching Bailey for clues, with the currency snapped two days of gains ahead of his testimony. The price of insuring against a swing in the pound against the dollar overnight is hovering near regular highs seen since early April, as traders position for turbulence after he speaks.“I can’t think of an economy where negative rates are a worse idea than the U.K.,” Kit Juckes, a strategist at Societe Generale, wrote in an emailed note. “How on earth does it make sense to even consider adding negative rates to the mix? The economic benefits are dubious but the power of a cocktail of negative rates and massive QE to weaken the currency seems clear.”(Adds inflation data and Rabobank comment from seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- JPMorgan Chase & Co. has hired Barclays Plc credit derivatives trader Benjamin Schaefer, according to people familiar with the matter.Schaefer will join the U.S. bank in London before later relocating to New York, said the people, who asked not to be named discussing personnel moves. At Barclays, he also held roles on both sides of the Atlantic, including head of the high-grade credit-default swaps team, the people said.A spokeswoman for Barclays and a JPMorgan spokesman declined to comment on the hire. Schaefer also declined to comment.He joins following an eventful period for JPMorgan’s credit team. Earlier this year, the bank punished more than a dozen traders for using WhatsApp at work, firing one and cutting bonus payments for the rest. Edward Koo, who was known as one of the bank’s main traders of credit-default swaps tied to individual companies, was dismissed after JPMorgan concluded he broke company rules by creating a WhatsApp group and using it to discuss market chatter with colleagues.Credit swap indexes have been particularly volatile in recent months as the measures taken to stem the coronavirus sent shockwaves through credit markets, causing a gauge of U.S. corporate credit risk to surge by the most since Lehman Brothers collapsed. The cost of credit insurance has declined in recent weeks but remains elevated compared to pre-pandemic levels.(Updates with credit trader departure in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Barclays (LON:BARC) share price has risen by 16.0% over the past month and it’s currently trading at 105.18. For investors considering whether to buy, hold...
(Bloomberg) -- India’s rupee declined the most in two weeks, and equities sank as investors were unimpressed by the government’s economic stimulus package.The rupee fell 0.4% to 75.9150 per dollar at the close in the third day of declines. The S&P BSE Sensex and the NSE Nifty 50 Index of shares tumbled 3.4% each in Mumbai. Both measures capped their second-week of losses Friday and ended the day at their lowest levels since early April.“People are more concerned about short-term challenges and not the benefit of these measures in the long run,” said Ajit Mishra, vice president of research at Religare Broking Ltd. in Mumbai. “How these reforms will help improve demand in the near term is what everyone’s worried about.”Read: Goldman Sees Worst India Recession With 45% Second Quarter SlumpIndia extended its lockdown to May 31, while easing restrictions on some businesses after unveiling a rescue package equivalent to 10% of the economy since February. Barclays Plc estimates the actual fiscal impact of stimulus will be only about 0.8% of gross domestic product, while equity strategists and economists are concerned the measures will fall short of tackling the near-term challenges posed by the pandemic, including boosting demand in an already fragile economy.“Markets are factoring in a painful period for the economy that will see corporate earnings falling and bankruptcies rising for small companies and individuals,” said Anindya Banerjee, a currency analyst at Kotak Securities Ltd. in Mumbai.The contagion is accelerating in the South Asian nation of 1.3 billion people, with 96,169 infections and 3,029 deaths, according to data from John Hopkins University.As the earnings season for the quarter through March continues, Bharti Airtel Ltd. is scheduled to report results today. Just five of the 18 Nifty 50 companies that have reported so far have beaten analyst estimates.The NumbersAll except one of 19 sector sub-indexes compiled by BSE Ltd. slipped, led by a gauge of banks.The Bankex Index slumped 6.7% to the lowest level since April 3. Analysts say the government’s rescue package, which focuses on credit to small firms, leans heavily on banks and financial institutions with very little extra budget spending.HDFC Bank Ltd. dropped 5.8% and contributed the most to the index decline, while IndusInd Bank Ltd.’s 10% plunge was the largest. Infosys Ltd. was the biggest boost and had the steepest gain with a 2.1% advance.Related StoriesIndia’s Lockdown Mints More Than a Million New Stock TradersIndia Seen Spending More on Economy After Extending LockdownFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Goodbye, high-yield savings accounts. We hardly knew you.For years, the oxymoronic products were a resounding success for both consumers and financial institutions alike. After getting almost zero interest from big U.S. banks, individuals who parked their excess cash with the likes of Ally Financial Inc., Barclays Plc, Goldman Sachs Group Inc.’s consumer bank, Marcus, or HSBC Holdings Plc’s HSBC Direct were suddenly bringing in a comparatively bountiful 2% or more around this time last year. At that point, the Federal Reserve had raised its short-term interest rate for what would be the final time this cycle in December 2018. The rest is history. First, the Fed felt compelled to lower interest rates three times from July through October to offset the economic impacts from the Trump administration’s trade wars. That, as I noted in an October column, brought prevailing high-yield savings rates dangerously close to the fed funds rate. And yet, in early 2020, Marcus users could still lock in that 2% magic number by opting for a no-penalty certificate of deposit.Then the coronavirus happened. This chart says it all: As it’s plain to see, there’s now a chasm between the fed funds rate and the going rates on some top high-yield savings accounts. The banks have so far moved lower gradually, likely to avoid sticker shock that would cause their customers to take their deposits elsewhere. But even with online banking’s cost-saving advantages over more typical brick-and-mortar institutions, they can’t defy gravity forever. Eventually, rates will have to head closer to the zero lower bound. These savings accounts will still hang around but will hardly seem to fit the moniker of “high yield.”Marcus announced the cut to its savings rate on May 8 with this message:“Effective today, the rate on our Marcus high-yield Online Savings Account has been adjusted down to 1.30% from 1.55% APY. We understand that this isn’t welcome news. During this unprecedented time, please know that the rate on our Marcus Online Savings Account remains highly competitive with an APY that’s still 4X the national average. You can rest assured that we continue our commitment to providing value and helping your money grow.”“For a guaranteed return, consider adding a fixed-rate No-Penalty CD. You’ll earn a high-yield rate with the flexibility to withdraw you balance beginning 7 days after funding. Our 7-month No-Penalty CD currently earns 1.55%.”The marketing is top-notch. First, it’s transparent about being bad news, but then quickly pivots to play up that Marcus still provides comparatively more interest than accounts at Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. The announcement also wastes no time suggesting a no-penalty CD to make up for the lost interest (and, in a benefit to Goldman, create a “stickier” deposit). Marcus is a relatively new venture for Goldman, and it seems reasonable to assume the investment bank will operate it with Chief Executive Officer David Solomon’s “evolutionary path” in mind. Goldman is looking to diversify away from historically volatile trading revenue, much like its Wall Street rival Morgan Stanley. If it means running Marcus with tight margins to keep customers in the fold, so be it.A bank like Ally, on the other hand, may have less flexibility. Heading into this year, it was fresh off of an upgrade by S&P Global Ratings to BBB-, one step above junk. That upswing didn’t last long; it was one of 13 banks that S&P put on negative outlook earlier this month. Analysts said it “could be more sensitive to the economic fallout from the Covid-19 pandemic than the average U.S. bank. We attribute this sensitivity to Ally's sizable concentration in auto lending that may face heightened risk of financial distress in the current economic environment.” Also a risk: “Ultra-low interest rates will weigh on net interest income,” which accounts for more than 70% of Ally’s net revenue.Ally, for its part, also knows how to sell itself. “People don’t want to hear messages that are depressing and that add to their anxiety,” Andrea Brimmer, chief marketing officer at Ally, told the Financial Brand in an article published last week. “They want to hear optimism and they want to hear about purposeful ideas that make them feel like the world is going to kind of get back to normal.” The theme of a campaign promoting its savings options: “Is your money not sure what to do with itself?”Whether Ally, Barclays, Marcus or HSBC are the answer to that is an open question. As it stands, these interest rates barely cover the market-implied inflation rate over the next 10 years. That’s somewhat by design, of course — the Fed cuts rates in part to encourage borrowing and purchases of riskier assets, both of which boost the economy more than parking cash in a high-yield savings account. Stocks, however, seem increasingly detached from the current economic reality. In that sense, Ally’s focus on being unsure might resonate with individual investors.Future interest rates on high-yield savings accounts are on equally shaky ground. While there’s not much in the way of precedent, it’s safe to say they’ll continue to offer more than the rock-bottom rates on money-market funds. Banks will probably do whatever they can to delay going below 1%, a round number that could be the last straw for some individuals. Other than those parameters, though, anything is possible; such is life at the zero lower bound.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Consumer spending dropped 36% year-on-year in April but food and drink retailers saw a surge in custom as Brits supported local shops during lockdown.
Plans to bring back thousands of workers to Canary Wharf include one way routes, lift restrictions and removing soft furnishings.
(Bloomberg) -- Emerging-market stocks and currencies fell for a second week amid an escalation in U.S.-China tensions, a dire economic warning from Federal Reserve Chair Jerome Powell and deteriorating global growth data. On the positive side, central banks kept boosting stimulus to combat the impact of the coronavirus pandemic, while a number of countries made progress in easing lockdowns.The following is a roundup of emerging-market news and highlights for this week through May 17:Click here our emerging-market weekly preview, and listen here to our weekly podcast.Highlights:The U.S. economy faces unprecedented risks from the coronavirus if fiscal and monetary policy makers don’t rise to the challenge, Fed Chair Jerome Powell said while pushing back against the notion of deploying negative interest ratesThe Fed bought $305 million of exchange-traded funds on the first day of its historic intervention into U.S. corporate debt marketsStock and other asset prices could suffer “significant declines” should the coronavirus pandemic deepen, the Fed said FridayPresident Donald Trump said he doesn’t want to talk to China’s leader Xi Jinping right now and mused about eliminating the largest trading relationship in the world, with tensions high over the coronavirus outbreakTrump said he’s “looking at” Chinese companies that trade on the NYSE and Nasdaq exchanges but do not follow U.S. accounting rulesThe Trump administration moved to block investments in Chinese stocks by a government retirement savings fundTrump extended his effort to curb Huawei Technologies’s access to the U.S. market and American suppliersThe Trump administration stepped up its campaign of blaming China for the deadly coronavirus pandemic, with a top aide suggesting Beijing sent airline passengers to spread the infection worldwideHackers working for the Chinese government are trying to steal research on coronavirus vaccines and treatments from U.S. health care, pharmaceutical and research organizations, the FBI and the Department of Homeland Security saidAn army of bot accounts linked to an alleged Chinese government-backed propaganda campaign is spreading disinformation on social media about coronavirus and other topics, according to a London-based researcherThe cost of the coronavirus pandemic could reach as much as $8.8 trillion, or almost 10% of global gross domestic product, depending on how long the outbreak continues and the strength of government responses, according to the Asian Development BankMexico’s central bank cut the benchmark interest rate to its lowest level in three-and-a-half years as the country falls into a recession that economists say will be the worst in decadesSaudi Arabia announced a surprise move to cut oil output as it tries to spur the recovery from an energy crisis that has devastated its financesThe Paris Club is confident China will take part in a global drive to pause debt payments for poor countries that urgently need funds to battle the coronavirus pandemicEgypt kept interest rates unchanged as authorities guard against an emerging-market sell-off and focus on bridging a financing gap spurred by the coronavirus pandemicPakistan’s central bank cut its key interest rate for a fourth successive meeting to support an economy set for its first contraction in 68 yearsLebanon’s financial prosecutor ordered the detention of a director at Banque Du Liban for alleged currency manipulation, the first such move against a central bank that’s been under heavy scrutiny since the start of the country’s financial crisisAsia:China and the U.S. should continue to develop ties as it’s a core interest of both countries, Ministry of Foreign Affairs spokesman Zhao Lijian said in BeijingChina’s industrial output increased in April for the first time since the coronavirus outbreak, adding to signs of a recovery that economists cautioned would be slow and challengingAn adviser to China’s central bank dismissed the idea of direct monetary financing to aid government bond sales, suggesting instead policy makers cut the amount of money commercial lenders hold as reserves to smooth the issuanceChina’s factory deflation deepened in April and consumer price gains slowed as its recovery from the virus outbreak lost momentumChina’s credit growth in April was stronger than the same period in recent years, signaling the central bank’s easing policy is helping revive domestic demandChina injected $14 billion into the financial system as it seeks to help banks handle higher demand for fundsMillions of Chinese people are being thrown out of work by the collapse in global demand and a slow restart of the domestic economyChina has suspended meat imports from four Australian abattoirs, fueling concern that escalating tensions are damaging the two nations’ trading relationshipA Hong Kong-listed oil explorer became the first casualty in China’s offshore bond market of the oil price slumpThe coronavirus pandemic will hammer South Korea’s exports more than the financial crisis did, prompting a major rethink of global supply chains, according to the country’s top trade officialThe nation’s economy suffered its biggest month of job losses in more than two decades as businesses slashed hiring to brace for the impact of the coronavirusSouth Korea’s bonds have emerged as a bright spot for global funds investing in emerging markets, with their holdings of the nation’s debt surging to a record in AprilIndian Prime Minister Narendra Modi said his government will spend 20 trillion rupees ($265 billion) to help the economy weather the fallout of the coronavirusIndia’s government has extended its nationwide lockdown until May 31, while further easing restrictions in certain sectors to boost economic activity as coronavirus cases escalate across the countryFinance Minister Nirmala Sitharaman offered $62 billion in credit lines to small firms and the shadow banks that fund them, and another $10 billion to electricity distributorsIndia unveiled a 2.4 trillion rupee program to provide credit to farmers and workers in the informal sector, who are bearing the brunt of the fallout from the coronavirus crisisIndian companies are getting downgraded at the fastest pace ever, adding to challenges for policy makers trying to keep credit markets from seizing up amid the Covid-19 pandemicIndonesian officials are becoming increasingly worried about the stability of the financial system amid an exodus in capital caused by the Covid-19 pandemicBank Indonesia will allow the rupiah to strengthen more than 15,000 per dollar, said Nanang Hendarsah, executive director for monetary management at central bankIndonesia’s central bank can cut interest rates if the financial market stabilizes, according to Governor Perry WarjiyoIndonesia’s central bank should buy sovereign bonds at yields lower than it can get at auctions to share the burden of rescuing the economy, a member of parliament’s finance commission saidIndonesia’s parliament approved sweeping changes to the nation’s mining law, allowing it to hand out longer contracts to companies pledging to invest billions of dollars to develop the industryIndonesian borrowers are selling a record amount of dollar bonds as the country’s strong fiscal track record in recent years fuels optimism on its ability to weather the Covid-19 crisisMalaysia’s economy unexpectedly expanded in the first three months of the year but is forecast to contract in the second quarter amid the coronavirus pandemicThailand’s billionaires have been told it’s their duty to combat the impact of the Covid-19 crisis, which threatens to exacerbate rising poverty levelsThailand’s tourist-dependent economy is slowly re-opening but the dent from the coronavirus outbreak is so large that weaker borrowers are facing a tough time in the credit marketThailand will allow shopping centers and retail businesses to resume operations in the country’s next stage of lockdown-easing starting from May 17, according to Taweesilp Witsanuyotin, a spokesman for the Covid-19 centerThe Philippines will keep the capital region under a lockdown but will allow some businesses to reopen in the area as it eases curbs in many parts of the countryThe Philippines expects 45,000 overseas workers to return home in May and June, adding to the 26,700 that have already been repatriated after losing their jobs due to the pandemicThe Philippine economy could face its deepest contraction in more than three decades, with the government now projecting it to shrink by 2% to 3.4% this yearThe Philippines’ House of Representatives initially approved a shorter franchise of until end-October for shuttered broadcaster ABS-CBN Corp., instead of renewing its 25-year permitThe country expects unemployment rate to shoot up to double-digit levels this year as the global pandemic shut most economic activities, according to Acting Economic Planning Secretary Karl ChuaThe U.S. Senate unanimously approved a bill seeking the restoration of Taiwan’s observer status with the World Health Organization, escalating a campaign to push back against Chinese efforts to isolate the islandTaiwan’s central bank will take the actions of other monetary authorities around the world and the coronavirus outbreak into consideration when deciding its benchmark interest rate, Governor Yang Chin-long saidEMEA:Poland’s central bank bought debt of state-run lender BGK and state development fund PFR at an auction, showing the flexibility of its program which to date has been focused largely on government issuancePoland’s lawmakers approved a mixed way of voting in the delayed presidential election, backtracking from a plan to hold the ballot only by mail for the first timeInvestors rushed to take part in Russia’s biggest bond sale in a year as talk of interest rates turning negative in the U.S. and U.K. increased demand for risk assetsRussia’s borrowing costs fell to a record as investors bet an economic slump will convince the central bank to keep cutting ratesIf the situation stays as it is now, Bank of Russia will consider a 100-basis-point reduction as well as other options, central bank Governor Elvira Nabiullina saidTurkey’s current-account balance sank into its deepest deficit in almost two years, extending a period in the red to four monthsTurkey posted one of its widest budget deficits on record, as measures to contain the coronavirus outbreak paralyzed economic activity while spending jumped and tax deferrals chipped away at government revenueEgypt is seeking more than $5 billion from the International Monetary Fund under a stand-by arrangement and $4 billion from other institutions, an official saidSaudi Arabia increased taxes and cut spending, potentially worsening its economic crisisSaudi Arabia will trim oil shipments to the prized Asian market in June and cut exports even more aggressively to Europe and the U.S., in a possible sop to President Trump and American shale producersOman will cut public spending by an additional 5% to mitigate the effects of low oil prices and narrow its budget deficitThe United Arab Emirates rolled out a two-phase plan to reopen the economy amid efforts to contain the coronavirusSouth Africa announced plans to further ease a nationwide lockdown as the fallout from shuttering much of the economy threatens to outweigh the damage wrought by the coronavirusA 21-day lockdown of Ghana’s biggest cities became financially unbearable for most of the population, a concern that gave the government little choice when it lifted the restrictions last month, Finance Minister Ken Ofori-Atta saidGhana’s central bank purchased 5.5 billion cedis ($942 million) in bonds to help finance the nation’s budget as weak oil prices and the impact of the coronavirus pandemic are eroding government revenueGhana’s annual inflation rate surged to the highest level in more than two years in April as food-price growth surged during a lockdown of the country’s biggest cities, limiting room for the central bank to stimulate the economyMozambique’s Constitutional Court nullified $1.4 billion of loans that had been previously undisclosedThe IMF raised Kenya’s risk of debt distress to high from moderate due to the impact of the Covid-19 shockThe government of Nigeria, whose revenue could be slashed by more than half this year due to the oil-price slump, finalized plans for a revised budget that keeps spending almost intact, and that will mean more borrowingKenya has abandoned plans to sell commercial debt such as Eurobonds next fiscal year as African countries hold talks with private and institutional creditors about debt-repayment breaks during the coronavirus crisis.Latin America:Argentina’s largest creditors sent Alberto Fernandez’s government new counteroffers in an effort to reach a $65 billion restructuring deal in the coming weekArgentina extended a deadline for bondholders to consider a $65 billion restructuring offer to May 22Argentines have been, on net, withdrawing dollars from their bank accountsThe largest province, Buenos Aires, is on the brink of default after a delayed debt payment came dueArgentina’s monthly inflation rate dropped to a 29-month low as economic activity ground to a haltBrazil local media reported that a video of a cabinet meeting showed President Jair Bolsonaro demanding changes to the leadership of the federal police in order to shield his family from criminal investigations; Bolsonaro has denied the allegationsBolsonaro lost his second health minister in under a month as the president’s reopen-at-all-costs stance alienates the medical community and deepens a political clash with state governorsA rescue package for airlines in Brazil, including Azul SA, Gol Linhas Aereas Inteligentes SA and Latam Airlines Group SA, will total about 4 billion reais ($688 million), according to people familiarBolsonaro is weighing compromise proposals on public-sector pay aimed at keeping his economy minister on board without alienating key votersThe Economy Ministry cut its 2020 growth forecast for the third time this yearRetail sales fell less than economists forecast as a surge in purchases at supermarkets at the onset of the coronavirus pandemic stood out amid broad-based declinesMexico’s policy makers are taking care not to jeopardize financial stability as they cut interest rates to soften the impact of the coronavirus, the nation’s top central banker saidIndustrial production in Mexico fell by 5% from a year earlierProposals by Mexico’s government to favor state-owned power utilities over new renewable generators stalled at the last minuteMexico’s auto, construction and mining sectors were cleared to restart operations beginning May 18Currency depreciation stoked by the virus has caused Mexico’s debt-to-GDP ratio to rise to 48%Chile’s central bank is looking to set up a lending facility with the IMF for the first time in three decadesBefore the coronavirus pandemic hit, Colombia was forecast to be Latin America’s top-performing major economy for the second year running. Now it appears headed for its deepest slump since records began in 1905Colombia said it was increasing its military presence along the border with Brazil amid a jump in virus casesPeru’s economy contracted for the first time in more than a decade in MarchThe latest steps by the government increased economic stimulus to 17% of GDP, Finance Minister Maria Antonieta Alva saidThe International Monetary Fund approved $520 million in emergency funding for Jamaica’s Covid-19 responseFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Bankers, lawyers, and accountants will have to follow one way systems and strictly limit the number of people in elevators, among other precautions.
Barclays (LON:BARC) analyst Eric Beaumont maintained a Hold rating on Brookfield Infrastructure (NYSE:BIPC) on Tuesday, setting a price target of C$64, which is approximately 51.34% above the present share price of $42.29.
(Bloomberg Opinion) -- Andrew Bailey, the Bank of England’s new governor, tried out a little bit of “whatever it takes” central banker language last week by opening up the possibility of negative interest rates in the U.K. “I don’t want to say we’re nearer” to that eventuality, he said “but we’re not ruling anything out.”For now the BOE’s focus is still on buying more bonds through its quantitative easing programs to manage the Covid-19 economic crisis, and rightly so. Negative rates would open up a dangerous pathway for Britain. They should only be used if nothing else manages to stimulate the economy. The official bank rate has been lowered twice this year already to its current 0.1%.With Prime Minister Boris Johnson’s post-lockdown plan only just published, we need to see whether it gives an adequate boost to consumer spending, which constitutes about one-third of the U.K.’s gross domestic product and is the driver of the country’s economy. There’s certainly a lot of room for improvement. Barclays Plc reported that credit card spending fell 53% in the last week of March versus the prior year comparison. And, during normal times at least, Brits don’t need much encouragement to start spending: The U.K. household savings rate is about 6%, significantly lower than the 10.5% European average.One possible advantage of a gradual and staggered reopening would be if people took their summer holidays in the U.K., providing a desperately needed leg-up to the domestic hospitality and leisure industries. Cutting deposit rates to zero or below wouldn’t make those who can afford to spend feel any more emboldened.The experience of negative rates thus far in Europe doesn’t really show that they stop citizens from saving and get them to spend more (the euro area’s household savings rate has remained elevated in recent years). They could indeed do the opposite by making savers worry about their dwindling nest eggs, leading in turn to increased hoarding. From a pure markets perspective, there’s also the peril of investors getting into riskier products to try to find yields. The European Central Bank, which has had negative rates for several years, hasn’t cut official rates during this crisis after realizing that such a move wouldn’t do much. Much of the euro area appeared to be heading into recession before the coronavirus struck and lending has been anemic at best. Sweden has reversed its negative rates back to zero.Bailey will also be mindful of not crippling those lenders who have offered their customers variable-rate mortgages — particularly less well-capitalized building societies. More than a quarter of Britain’s 1.5 trillion pounds ($1.85 billion) of home mortgages are subject to variable rates. If the BOE’s rate went sub-zero, that wouldn’t be healthy for the profit margins of lending institutions, which have been struggling for a while in a world of rock-bottom interest rates. Moody’s Investors Service downgraded the debt of the country’s largest savings deposit taker, Nationwide Building Society, at the end of April and it maintains a negative outlook on the U.K. banking system. And it’s not as though the extra savings for those mortgage customers would really change the situation. Some 73% of U.K. residential mortgages are on fixed rates anyway. Those wealthy enough to have mortgages (you have to be rich to be able to afford to borrow) often end up saving the proceeds from lower interest rates rather than spending.One reason for pushing official rates below zero is to shame lenders into passing the cuts onto their customers. But that won’t force banks to lend more, particularly as they’re having to offer mortgage payment holidays because of the Covid-19 lockdowns. The BOE is already encouraging bank lending via super-cheap loans to the industry.There are better regulatory methods for kick-starting the transmission of monetary policy, such as telling banks that they won’t be able to restart dividend payments or generous bonuses unless they start pumping money into the economy via lending. Bailey and his institution need to try to make sure banks are in a position to lend and have the right incentives. Maybe that’s an impossible task given the natural fears about bad loans. Negative rates aren’t any kind of solution.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
British retail spending plunged by nearly a fifth in April as the government's coronavirus lockdown hammered the sector, and a broader measure of consumer spending tumbled by more than a third, surveys showed on Wednesday. The British Retail Consortium said its members reported a 19.1% drop in total sales last month compared with April last year, the biggest fall since it began its monthly index in 1995. Barclaycard, part of Barclays Bank, said credit and debit card spending plunged by 36.5% compared with a year earlier as spending on travel, pubs and restaurants collapsed.
Investments banks cut jobs at the fastest pace in six years during a first quarter in 2020 even though the coronavirus pandemic triggered a surge in volatility and boosted revenues to a five-year high, data published on Wednesday by research firm Coalition showed. While investment banks have benefited from the short-term increase in trading, they are expected to be hit hard by a global recession triggered by the COVID-19 crisis and have already imposed hiring freezes. Coalition's data showed that the banks' revenues from fixed income, currencies, and commodities had their strongest first quarter since 2015, surging 20% to 22.7 billion dollars, as the financial turmoil from the coronavirus crisis prompted a spike in trading.
Many of the City of London's bankers and traders will be working from their kitchens or bedrooms for at least a year under some scenarios being planned by finance companies in Britain. Banks, insurance companies and asset managers have had to work remotely since the country locked down in March to fight the coronavirus pandemic. The radical shift from trading floors to people's homes has been deemed a big success in coping with record breaking volatility across financial markets.
A few companies are already giving the public a glimpse of life after stringent coronavirus restrictions wind down in earnest.
(Bloomberg) -- Citigroup Inc. poached Fater Belbachir from Barclays Plc to spearhead its global equities trading operation, less than a year after he joined the British bank for the same role, according to people with knowledge of the matter.The U.S. lender is seeking to boost its standing in equities trading, where it’s lagged behind peers and struggled to boost revenue in recent years. Belbachir joined Barclays last June after the ouster of investment bank chief Tim Throsby. Stephen Dainton was promoted to global head of markets after Throsby left the bank, and Belbachir took Dainton’s old role.Belbachir’s departure is a setback for Barclays at a time when Chief Executive Officer Jes Staley has been pushing ahead with changes at the closely watched investment bank, a key part of his strategy to drive growth. The CEO has linked his reputation to the success of the trading unit, which was criticized as inefficient by the activist investor Edward Bramson last year.Staley has been investing in the bank’s equities business, including additions to electronic-trading platforms and a series of expensive hires from his old U.S. employer, JPMorgan Chase & Co.Belbachir joined Barclays after more than a decade at JPMorgan amid a management shakeup set off by Throsby’s exit. Earlier this year, Staley tapped another JPMorgan veteran, Paul Leech, to lead the European equities business for Barclays. Barclays reported strong results from its corporate and investment bank in the first quarter, with revenue from equities trading increasing 21%.A Barclays representative declined to comment on Belbachir’s departure.Citi TradingFor Citigroup, adding Belbachir marks a renewed focus on putting its equities business on stronger footing. In 2016, the firm set out to increase its equities market share, hoping that could help add $1 billion in revenue. While Citigroup made a small jump in standings, finishing last year with a sixth-place ranking in equities trading globally, the extra revenue hasn’t materialized.In his new role as global head of equities, Belbachir will oversee the bank’s equity cash, equity derivatives, prime finance and multi-asset group units. He will work alongside Okan Pekin, who was named global head of securities services, which includes custody and fund services and foreign exchange prime brokerage.“We have decided to organize our equities and securities services business under two leaders,” Carey Lathrop and Andy Morton, co-heads of Citigroup’s markets and securities services division, said in a memo to employees on Monday, saying that the move will “allow for greater focus and accountability.”Dan Keegan, who had previously been global co-head of equities and securities services, will continue to help oversee Citigroup’s entire North American markets and securities services division. As part of this role, Keegan will help craft the bank’s plans for returning workers to Citigroup offices as the coronavirus outbreak begins to ebb.Dan’s leadership “will be particularly integral going forward as we carefully plan our strategy and operations post-pandemic,” Lathrop and Morton said in the memo.(Updates with details of Citi reorganization in last two paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Benchmark sovereign bonds in India tumbled by the most in more than three years after Prime Minister Narendra Modi’s government increased borrowing by more than half to cover revenue lost due to the virus-induced slowdown.The yield on 10-year bonds climbed 20 basis points to close at 6.17% after surging by as much as 27 basis points, the most since February 2017. The administration late Friday said it will borrow 12 trillion rupees ($159 billion) for the fiscal year started April 1, up from the budgeted 7.8 trillion rupees. The nation’s stocks climbed as the ramped-up borrowing plan stoked bets of the government announcing a bigger fiscal stimulus.The surge in borrowings is renewing calls for the Reserve Bank of India to step up support for the debt market, which has seen global funds flee as the government contends with its first economic contraction in more than four decades. There’s also a risk that corporate borrowers will get crowded out or have to pay higher financing costs.“It won’t be an exaggeration to say that the government’s revised borrowing program has come as a rude shock to the bond market,” said A. Prasanna, chief economist at according to ICICI Securities Primary Dealership Ltd. The RBI will have to step up open-market purchases or implement more of the Operation Twist program, he said.‘Explicit Support’The central bank has bought a net 910 billion rupees of debt in the secondary market over four weeks, and recently revived the so-called Operation Twist program, where it sold bills and bought bonds. It hasn’t announced any large scale bond-purchase plans.“If we do not hear from the RBI what kind of explicit support they are going to provide to the borrowings, the selloff in bonds will deepen further,” said Vijay Sharma, executive vice president for fixed-income at PNB Gilts Ltd. “They would have to take almost all of the extra supply.”Market participants, including a former RBI governor, have said the central bank should consider buying sovereign bonds at auctions. Although the practice, known as monetizing debt, has been banned by law since 2006, the government can use an escape clause if the fiscal deficit is expected to be 0.5 percentage points above the targeted shortfall for the year.Read: ‘Stealth’ RBI Support May Turn to Large Scale India Bond BuyThe fiscal gap is likely to be around 5.5% of GDP for the year to March 2021, a finance ministry official with knowledge of the matter said Monday. There’s no plan by the RBI to buy debt directly and the government may end up borrowing less than the revised target of 12 trillion rupees, the official said, asking not to be identified citing rules on speaking to the media.The yield on top-rated 10-year corporate notes rose as much as 20 basis points, traders said. That would be the biggest jump since April 16, Bloomberg-compiled data show. The yield on new 10-year sovereign bond, which began trading at a coupon rate of 5.79% on Friday, climbed 18 basis points to 5.89%.Here’s what other analysts are saying:Barclays Plc (Ashish Agrawal, FX and EM macro strategist)Expect the “government bond curve to bear steepen and IGBs to underperform OIS on unwinding of short-term positions as market participants reduce duration risk. This could extend if there’s no sign of RBI buying”Still, “it is premature to turn bearish as RBI purchases could offset this pressure. The RBI could offset bulk of the pressure if it extends duration by 2-3 trillion rupees in FY 21”Nomura Holdings Inc. (Dushyant Padmanabhan, Singapore-based rates strategist)Expect imminent operations from RBI to bring down the bond yieldsRemains long on 10-year govt bonds and sees several supportive factors like increased demand from banks flush with liquidity, expectations of further rate cuts and safe-haven demand from investorsStandard Chartered Plc (Nagaraj Kulkarni, rates strategist in Singapore)“We expect the short end of the IGB curve to remain well-anchored to money-market rates, while the long end may remain elevated due to supply pressure. We expect the IGB curve to trade with a steepening bias.”“Notwithstanding these drivers, we believe the RBI’s market-supportive actions will determine the range of IGB yields and the steepness of the curve”(Adds comments after final paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Emerging-market stocks and currencies resumed their downward slide last week as optimism waned that the coronavirus is being contained and U.S.-China tensions heated up again after several quiet months. Central banks across developing-markets cut interest rates further as data showed the drastic economic impact of the pandemic.The following is a roundup of emerging-market news and highlights for this week through May 10:Click here our emerging-market weekly preview, and listen here to our weekly podcast.Highlights:Trade negotiators from China and the U.S. pledged to create favorable conditions for the implementation of the phase one trade deal and cooperate on the economy and public healthChina fired back at U.S. Secretary of State Michael Pompeo, saying he has no evidence to back up claims that Covid-19 escaped from a lab in the city of Wuhan. Chinese state media called him “evil” and a liarChina’s ambassador to Washington called for an end to the “blame game” over the coronavirus in the country’s most high-profile response since U.S. President Donald Trump escalated his criticism of BeijingTrump said he’s struggling with Beijing, casting doubt on the future of the phase one dealPresident Trump launched headlong into his push to reopen the country, saying Americans should begin returning to their everyday lives even if it leads to more sickness and death from the pandemicU.S. employers cut a record 20.5 million jobs in April, tripling the unemployment rate to 14.7%Traders are pricing in the possibility the Fed will cut its policy rate below zeroThe European Central Bank responded to a German court ruling criticizing its bond-buying program by pledging to continue doing everything necessary to revive inflationPrivate creditors have articulated the problems that will have to be overcome if a plan to ease the debt burden of the world’s poorest nations is to get their supportAfrican finance ministers will meet Thursday to discuss debt-relief proposals, according to a United Nations officialTurkey’s lira fell to a record despite efforts by authorities to keep a lid on depreciationBahrain became the lowest-rated country to issue dollar bonds since the market hiatus triggered by the Covid-19 pandemic subsided in late MarchThe Saudi Arabian Monetary Authority said it has enough foreign reserves to meet all foreign obligations and reaffirmed its commitment to maintaining a currency peg to the dollarArgentina may consider easing capital controls once it finishes negotiations with bondholders to restructure its debt, and after the coronavirus uncertainty clears, Economy Minister Martin Guzman saidLebanon plans to shift to a flexible exchange rate once it secures external funding for an economic overhaul, and will need $28 billion in the next five years to overcome its worst financial crisis in decadesBank of America said Lebanon is probably targeting a 75% haircut on its Eurobonds as part of its debt restructuringBrazil cut rates by 75 basis points to a record 3%, boosting the pace of monetary easing and sending the currency to an all-time lowMalaysia cut its benchmark rate by 50 basis points, the most since early 2009, as it seeks to bolster its newly reopened economyThe Czech Republic lowered borrowing costs more than expected, extending the European Union’s steepest rate cuts to ease the pain for an economy heading into a record contractionThe U.S. has removed two of its four Patriot antimissile batteries from Saudi Arabia and another two in the Mideast partly because tensions with Iran have eased, according to a U.S. officialAsia:Factory output across several Asian countries slumped to record lows in April, signaling a deeper contraction in the world’s manufacturing hub even as China begins restarting some operationsThe People’s Bank of China said the country faces unprecedented economic challenges from the coronavirus pandemic and it will resort to “more powerful” policies to counter the hit to growthChina’s exports unexpectedly rose in April aided by stronger shipments to South East Asia, though with the coronavirus pandemic damaging global demand that increase may be temporaryCurrent account posted the first deficit in almost two years in the first quarterThe U.S. delayed an annual report to Congress assessing Hong Kong’s autonomy, Pompeo said, amid signs China’s top agency in the city may take a more hands-on roleBank of Korea will halt auctions for dollar loans to banks using the currency swap line with the Fed for the time being as FX funding condition continues to look favorable, the central bank saidSouth Korea’s inflation slowed in April as the coronavirus and the oil slump weighed on the cost of some goods and servicesIndia will increase its borrowings by the most since 2009 to cushion the impact of the coronavirus pandemic, abandoning plans to curb the budget gap and potentially raising the risk of a ratings downgradeIndia’s budget deficit has touched 4.4% of gross domestic product, breaching the target set in February as an economic slowdown reduced tax collections, people with knowledge of the matter saidThe world’s biggest lockdown forced 122 million people out of jobs in India last month, according to estimates from a private sector think tankIndia’s dominant services industries slumped in April, signaling a massive contraction in the economy due to stay-at-home restrictionsIndia increased a special tax on gasoline and diesel as pressure builds on Prime Minister Narendra Modi’s government to restrain a ballooning budget deficitIndia will deploy commercial jets, military transport planes and naval warships to bring back hundreds of thousands of citizens stranded across the world, in what’s set to be the biggest-ever peacetime repatriation exerciseIndia is developing a land pool nearly double the size of Luxembourg to lure businesses moving out of China, according to people with the knowledge of the matterThe Asian Infrastructure Investment Bank approved a $500 million loan to support India’s efforts to prevent, detect and respond to the threat posed by Covid-19Indonesia’s economic growth slowed in the first quarter of the year amid expectations the coronavirus will take an even heavier toll on the economy in the months aheadIndonesian officials have begun discussions about reopening the economy in phases starting from June, as job losses accelerate and businesses struggle to survive amid strict social-distancing rulesBorrowers from Indonesia are taking advantage of reduced volatility in global credit markets to raise funds in dollars as economic pressures from the coronavirus outbreak mountBank Indonesia sees GDP growth below its forecast of 2.3% this year as the impact of coronavirus takes its toll on the economy, Governor Perry Warjiyo saidMalaysia will extend its relaxed lockdown by four weeks, allowing nearly all economic activities to continue while keeping its borders shut and schools closedThailand’s consumer prices fell the most in more than a decade, posting a near 3% drop in April from a year ago that exceeded all estimatesThe Thai government will deliberate on May 14 whether to begin the next stage of reopening, which may be slated for May 17Investors in Thailand’s bond funds will have to notify asset managers in advance if they want to make big redemptions under new rules being crafted by regulatorsThe Philippine economy contracted in the first three months of 2020 as restrictions to stem the coronavirus outbreak shut businesses and sapped consumption, a trend seen worsening in the current quarterBangko Sentral ng Pilipinas’s reductions in the policy rate and lenders’ reserve requirement ratio this year have provided sufficient buffers for the economy, Governor Benjamin Diokno saidPresident Rodrigo Duterte may relax lockdown measures in some cities in the Philippine capital region after May 15, his spokesman Harry Roque saidThe Philippines’ largest media company, often a target of criticism from the nation’s president, had trading in its shares halted, a day after the government shuttered its television and radio stationsPresident Rodrigo Duterte has offered an olive branch to tycoons he attacked months ago, thanking them for helping government in its virus responsePhilippine economic performance will probably be worse than the zero growth to 0.8% contraction initially estimated for 2020 after the lockdown was extended over Metro Manila and nearby areas, Finance Secretary Carlos Dominguez saidTaiwan urged the World Health Organization to allow it to rejoin a key global health assembly this month despite objections from China, as Taipei pushes for more inclusion in international bodiesCompanies that suspended operations due to safety concerns can resume business after undergoing evaluations from local governments, according to Taiwan Centers for Disease ControlA jump in Taiwan’s exports to China wasn’t enough to keep the island’s shipments from declining for a second month in AprilEMEA:Russian President Vladimir Putin’s approval rating has fallen to a record low amid economic damage from the coronavirus and the slump in oil prices, an opinion poll showedPutin told regional governors not to rush to ease the coronavirus lockdown even as top government ministers said pressure on the economy is intensifyingPolicy makers in central and eastern Europe are racing to shield their economies from the impact of the coronavirus, with a growing number of countries deploying developed-market toolsPoland will delay its presidential election by several months, seeking to quell concerns that holding it during the brunt of the pandemic through a mail-in ballot system may not be free or fairPoland’s economy may avoid falling into a recession in 2020 and it should continue growing next year, Deputy Prime Minister Jadwiga Emilewicz saidHungary’s central bank kicked off its quantitative-easing program by buying government bonds at an auctionHungary may post growth this year as its economy is set to rebound from a second-quarter slump, central bank Governor Gyorgy Matolcsy saidTurkey’s banking regulator expanded the definition of manipulative trades in financial markets as the country’s currency fell to new lowsTurkey signaled it may reverse a ban on trading liras with BNP Paribas SA, Citigroup Inc. and UBS Group AG, potentially stepping back from measures imposed after the currency’s slide to a record lowSlovakia’s long-term foreign currency debt rating was downgraded by Fitch Ratings to A from A+Egypt expects to secure final approval to borrow $2.7 billion from the International Monetary Fund via a rapid financing facility this week, an official said, one of many African nations turning to the Washington-based lender as the coronavirus hits economiesQatar’s sovereign wealth fund is pledging some of its most high-profile European equity investments to raise a 7 billion euro ($7.6 billion) loan that will help the top liquefied natural gas exporter bolster its cash reserves amid plunging energy pricesBusiness conditions in the Arab world’s three largest economies deteriorated further last month amid shutdowns from the coronavirus and a plunge in commodity pricesNon-oil private-sector activity collapsed at an unprecedented pace in Egypt and suffered another record setback in the United Arab Emirates, according to Purchasing Managers’ Index surveys compiled by IHS MarkitSaudi Arabia moved to prop up a nascent recovery in energy markets by raising crude prices for its customers worldwide, triggering a rally in oil futuresA currency devaluation would be too costly for Saudi Arabia and the better option is to adapt to the oil shock through fiscal changes, according to Goldman Sachs Group Inc.Fitch lowered Jordan’s credit outlook to negative from stableThe first commerce under an Africa-wide free-trade pact will provide new stimulus to countries on the continent to overcome the economic damage of the coronavirus, even if it could be delayed for around six months, according to a senior officialIn a month when lockdowns to slow the spread of the coronavirus halted output in many African economies, business activity in Kenya managed to not drop as far as the restAfrican countries require a two-year debt standstill to provide governments with the fiscal space to fight the coronavirus pandemic, according to South African President Cyril RamaphosaSouth African inflation that’s “under control” gives policy makers room to help support the economy during the coronavirus shock, Reserve Bank Governor Lesetja Kganyago saidZambia has closed a tender process to select a financial advisor to manage its debtload and is creating a shortlistLatin America:Brazil’s rating outlook was revised to negative by Fitch as political tensions hinder the reform agendaCongress approved two stimulus bills that will provide financial help to states and municipalities, set aside money for the economic recovery from the pandemic and allowed the central bank to buy corporate bondsPolitical turmoil continued as Economy Minister Paulo Guedes was said to have signaled his future in the government isn’t certain anymore; President Jair Bolsonaro came to Guedes’ defense, saying he will follow his advice and veto a change to a bill that had been proposed by congressFormer Justice Minister Sergio Moro made new accusations against Bolsonaro in a testimony to federal prosecutors, while the president nominated another ally to head the federal police and participated in protests against congressIndustrial production plunged more in March than economists forecast and consumer prices tumbled in AprilTalks about easing social distancing measures are being overshadowed by new coronavirus hotspots emerging in the north; Sao Paulo extended the quarantine until May 31Argentina’s President Alberto Fernandez is waiting on counteroffers from the nation’s creditors. Speaking in an interview with Futurock radio, the president said all parties are seeking to avoid default, and he expects counter-proposals in coming days after the nation blew past Friday’s deadline for bondholders to accept a $65 billion restructuring offerEarly last week, the three biggest bondholder groups said they can’t support the initial proposal because it forces them to “bear disproportionate losses”The Inter-American Development Bank will disburse $1.8 billion to Argentina this year to help mitigate the health, social and economic consequences of the coronavirusArgentina made a $320 million quarterly interest payment to the IMFRemittances to Mexico climbed to a record in March as workers in the U.S. rushed to send savings back homeThe chief economist of Mexico’s Finance Ministry, Alejandro Gaytan, is said to be leaving his post to become the nation’s representative at the Inter-American Development BankChile’s central bank held its policy rate close to zero as the nation braces for its worst economic crisis in nearly four decadesChile sold an additional 500 million euros of bonds due in 2025 to help fund the fight against the pandemicPeru kept borrowing costs at an all-time low after slashing rates in the last two months and issuing cheap loans to support businessesColombia secured $2.5 billion in new loans from multilateral banksThe World Bank approved a $506 million loan to Ecuador to address its Covid-19 crisisFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.