Outside of the musical and art performances were interactive art installations. Calling them 'Nomadic Sculptures', artists transformed Yurts into mini art galleries - each giving participators a different atmospheric experience.
Outside of the musical and art performances were interactive art installations. Calling them 'Nomadic Sculptures', artists transformed Yurts into mini art galleries - each giving participators a different atmospheric experience.
(Bloomberg) -- Having rebounded from its worst month since 2019, China’s yuan is facing a new wave of selling pressure as hundreds of companies prepare to exchange the currency to pay dividends.Chinese firms listed in Hong Kong are expected to pay nearly $68 billion in dividends this year, which would be nearly 17% higher than 2020’s amount. That means they’ll step up swapping the yuan for the city’s dollars in coming months.This comes after the yuan rebounded about 0.4% from March’s 1.3% drop, when risk assets were sold off due to a spike in Treasury yields. The payout season, which starts to gather steam this month and is expected to peak in August, will further suppress the currency, in addition to strength in the dollar and a narrowing yield premium over the rest of the world. On top of that, uncertainty over China-U.S. tensions is continuing to hurt sentiment.“Dividend outflows add pressure on the yuan, against the background of brewing U.S.-China tensions.,” said Trang Thuy Le, Asia currency strategist at Macquarie Capital Ltd. in Hong Kong, adding that discussions on the Federal Reserve starting to taper policy could strengthen the greenback in the fourth quarter. “The dollar-yuan rate should largely mirror that path.”More than 400 companies will hand out $65 billion of dividends from April to September alone, with the payment reaching a peak in August at $21 billion, according to data compiled by Bloomberg.Firms are paying more to shareholders in part because they have excess idle cash as they refrain from expansion, and also as they hope to retain investors.To be sure, it’s unlikely the dividend season would lead to any dramatic slide in the currency. That’s because not all of the companies need to sell the yuan in the spot market for the Hong Kong dollar, which they may already own and can be used for dividend payments. Also, the People’s Bank of China won’t likely allow any sharp depreciation, as that may hinder its push to attract foreign inflows and promote the yuan’s global usage.Also, the dollar remains the biggest driver of yuan moves nowadays. Even though banks helped clients sell the currency during last year’s payout season, it gained during the summer amid drops in the greenback.A beneficiary of the move, of course, is the Hong Kong dollar. The currency, which this month fell to a one-year low, will see stronger demand in the coming months. It inched higher to 7.77 per dollar Monday while the onshore yuan fell 0.1% to 6.5256.The largest single sum of dividend payment will hit on Aug. 5, when China Construction Bank Corp. hands $12 billion to its shareholders. And on May 20, China Mobile Ltd. will give out $4.6 billion.(Adds Monday prices in 3rd, 9th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
It’s a busy week ahead, with economic data, corporate earnings, and monetary policy in focus. Geopolitics and COVID-19 news will also influence in the week.
(Bloomberg) -- The mania that drove crypto assets to records as Coinbase Global Inc. went public last week turned on itself on the weekend, sending Bitcoin tumbling the most since February.The world’s biggest cryptocurrency plunged as much as 15% on Sunday, just days after reaching a record of $64,870. It subsequently pared some of the losses and was trading at about $57,000 at around 1:25 p.m. in Tokyo Monday.Ether, the second-biggest token, dropped below $2,000 over the weekend before also paring losses. The volatility buffeted Binance Coin, XRP and Cardano too. Dogecoin -- the token started as a joke -- bucked the trend and is up 25% over 24 hours, according to CoinGecko.The weekend carnage came after a heady period for the industry that saw the value of all coins surge past $2.25 trillion amid a frenzy of demand for all things crypto in the runup to Coinbase’s direct listing on Wednesday. The largest U.S. crypto exchange ended the week valued at $68 billion, more than the owner of the New York Stock Exchange.“With hindsight it was inevitable,” Galaxy Digital founder Michael Novogratz said in a tweet Sunday. “Markets got too excited around $Coin direct listing. Basis blowing out, coins like $BSV, $XRP and $DOGE pumping. All were signs that the market got too one way.”Dogecoin, which has limited use and no fundamentals, rallied last week to be worth about $50 billion at one point before stumbling Saturday. Demand was so brisk for the token that investors trying to trade it on Robinhood crashed the site a few times Friday, the online exchange said in a blog post.There was also speculation Sunday in several online reports that the crypto plunge was related to concerns the U.S. Treasury may crack down on money laundering carried out through digital assets. The Treasury declined to comment, and its Financial Crimes Enforcement Network (FinCEN) said in an emailed response on Sunday that it “does not comment on potential investigations, including on whether or not one exists.”‘Price to Pay’“The crypto world is waking up with a bit of a sore head today,” said Antoni Trenchev, co-founder of crypto lender Nexo. “Dogecoin’s 100% Friday rally was ‘peak party,’ after the Bitcoin record and Coinbase listing earlier in the week. Euphoria was in the air. And usually in the crypto world, there’s a price to pay when that happens.”Besides the “unsubstantiated” report of a U.S. Treasury crackdown, Trenchev said factors for the declines may have included “excess leverage, Coinbase insiders dumping equity after the direct listing and a mass outage in China’s Xinjiang province hitting Bitcoin miners.”Growing mainstream acceptance of cryptocurrencies has spurred Bitcoin’s rally, as well as lifting other tokens to record highs. Bitcoin’s most ardent proponents see it as a modern-day store of value and inflation hedge, while others fear a speculative bubble is building.Interest in crypto went on the rise again after companies from PayPal to Square started enabling transactions in Bitcoin on their systems, and Wall Street firms like Morgan Stanley moved toward providing access to the tokens to some of the wealthiest clients.VolatilityThat’s despite lingering concerns over their volatility and usefulness as a method of payment. Moreover, governments are inspecting risks around the sector more closely as the investor base widens.Federal Reserve Chairman Jerome Powell last week said Bitcoin “is a little bit like gold” in that it’s more a vehicle for speculation than making payments. European Central Bank President Christine Lagarde in January took aim at Bitcoin’s role in facilitating criminal activity, saying the cryptocurrency has been enabling “funny business.”Turkey’s central bank banned the use of cryptocurrencies as a form of payment from April 30, saying the level of anonymity behind the digital tokens brings the risk of “non-recoverable” losses.(Updates prices in the second and third paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Auto industry executives are rattled by a global shortage of semiconductors which is hitting production in China, after hoping the world's biggest car market could spearhead global recovery in the sector. Automakers around the world have had to adjust assembly lines due to the shortages, caused by manufacturing delays that some semiconductor makers blame on a faster-than expected recovery from the coronavirus pandemic. Volkswagen AG, China's biggest foreign automaker which wants to sell over four million vehicles in the country, said the impact of the shortage remains unabated in the second quarter this year.
(Bloomberg) -- China Evergrande New Energy Vehicle Group Ltd.’s expansive pop-up showroom sits at the heart of Shanghai’s National Exhibition and Convention Center. With nine models on display, it’s hard to miss. The electric car upstart has one of the biggest booths at China’s 2021 Auto Show, which starts Monday, opposite storied German automaker BMW AG. Yet its bold presence belies an uncomfortable truth -- Evergrande hasn’t sold a single car under its own brand.China’s largest property developer has an array of investments outside of real estate, from soccer clubs to retirement villages. But it’s the recent entry into electric cars that’s captured investors’ imaginations. Shareholders have pushed Evergrande NEV’s Hong Kong-listed stock up more than 1,000% over the past 12 months, allowing it to raise billions of dollars in fresh capital. It now has a market value of $87 billion, greater than Ford Motor Co. and General Motors Co.Such exuberance over an automaker that has repeatedly pushed back forecasts for when it will mass produce a car is emblematic of the froth that has been building in EVs over the past year, with investors plowing money into a rally that briefly made Elon Musk the world’s richest person and has some concerned about a bubble. Perhaps nowhere is that more evident than in China, home to the world’s biggest market for new energy cars, where a mind-boggling 400 EV manufacturers now jostle for consumers’ attention, led by a cabal of startups valued more than established auto players but which have yet to turn a profit.Evergrande NEV was a relatively late entrant to that scene.In March 2019, Hui Ka Yan, Evergrande’s chairman and one of China’s richest men, vowed to take on Musk and become the world’s biggest maker of EVs in three to five years. Tesla Inc.’s Model Y crossover had just had its global debut. In the two years since, Tesla has gained an enviable foothold in China, establishing its first factory outside the U.S. and delivering around 35,500 cars in March. Chinese rival Nio Inc. earlier this month reached a significant milestone when its 100,000th EV rolled off the production line, prompting Musk to tweet his congratulations.Despite his lofty ambitions and Evergrande NEV’s rich valuation, Hui has repeatedly pushed back car-production targets. The tycoon’s coterie of rich friends, among others, have stumped up billions, but making cars -- electric or otherwise -- is hard, and hugely capital intensive. Nio’s gross margins only flipped into positive territory in mid-2020, after years of heavy losses and a lifeline from a municipal government.Speaking on an earnings call in late March after Evergrande NEV’s full-year loss for 2020 widened by a yawning 67%, Hui said the company planned to begin trial production at the end of this year, delayed from an original timeline of last September. Deliveries aren’t expected to start until some time in 2022. Expectations for annual production capacity of 500,000 to 1 million EVs by March 2022 were also pushed back until 2025. Still, the company issued a buoyant new forecast: 5 million cars a year by 2035. For comparison, global giant Volkswagen AG delivered 3.85 million units in China in 2020.It’s not just Evergrande’s delayed production schedule that’s raising eyebrows. A closer look under the company’s hood reveals practices that have industry veterans scratching their heads: from making selling apartments part of car executives’ KPIs, to attempting a model lineup that would be ambitious for even the most established automaker.‘Weird Company’“It’s a weird company,” said Bill Russo, the founder and chief executive officer of advisory firm Automobility Ltd. in Shanghai. “They’ve poured a lot of money in that hasn’t really returned anything, plus they’re entering an industry in which they have very limited understanding. And I’m not sure they’ve got the technological edge of Nio or Xpeng,” he said, referring to the New York-listed Chinese EV makers already deploying intelligent features in their cars, like laser-based navigation.A closer look at Evergrande NEV’s operations reveals the extent of its unorthodox approach. While it’s established three production bases -- in Guangzhou, Tianjin in China’s north, and Shanghai -- the company doesn’t have a general car assembly line up and running. Equipment and machinery is still being adjusted, according to people who have seen inside the factories but don’t want to be identified discussing confidential matters.In a response to questions from Bloomberg, Evergrande NEV said it was preparing machinery for trial production, and would be able to make “one car a minute” once full production is reached.The company is targeting mass production and delivery next year of four models -- the Hengchi 5 and 6; the luxe Hengchi 1 (which will go up against Tesla’s Model S); and the Hengchi 3, according to people familiar with the matter. The company has told investors it aims to deliver 100,000 cars in 2022, one of the people said, roughly the number of units Nio, Xpeng Inc. and Li Auto Inc., the other U.S.-listed Chinese EV contender, delivered last year, combined.Its workers are also being asked to help sell real estate, the backbone of the Evergrande empire.New hires are required to undergo internal training and attend seminars that drill them on the company’s property history and have nothing to do with car making. In addition, employees from all departments, from production-line workers to back-office staff, are encouraged to promote the sale of apartments, whether through posting ads on social media or bringing relatives and friends along to sale centers to make them appear busy. Managerial-level staff even have their performance bonuses tied to such endeavors, people familiar with the measure said.Meanwhile, the ambitious targets have Evergrande NEV turning to outsourcing and skipping procedures seen as normal practice in the industry, people with knowledge of the situation say.While it’s hiring aggressively and recently scored Daniel Kirchert, a former BMW executive who co-founded EV startup Byton Ltd., the firm has contracted most of the design and R&D of its cars to overseas suppliers, some of the people said. Contracting out the majority of design and engineering work is an unusual approach for a company wanting to achieve such scale.14 Models At OnceOne of those companies is Canada’s Magna International Inc., which is leading the development of the Hengchi 1 and 3, one of the people said. Evergrande NEV has also teamed with Chinese tech giants Tencent Holdings Ltd. and Baidu Inc. to co-develop a software system for the Hengchi range. It will allow drivers to use a mobile app to instruct the car to drive via autopilot to a certain location and use artificial intelligence to switch on appliances at home while on the road, according to a statement last month.A spokesperson for Evergrande said it was working with international partners including Magna, EDAG Engineering Group AG and Austrian parts maker AVL List GmbH in developing “14 models simultaneously.” Representatives from Magna declined to comment. A Baidu spokesperson said the company had no further details to share, while a representative for Tencent said the software venture is with a related firm called Beijing Tinnove Technology Co. that operates independently. Tinnove didn’t respond to requests for comment.Rather than staggering model releases, Evergrande NEV appears to be rolling out every type of car all at once under its Hengchi brand, which sports a roaring gold lion on the badge and translates loosely to ‘unstoppable gallop.’ The nine models being launched span almost all major passenger vehicle segments from sedans to SUVS and multi-purpose vehicles. Prices will range from about 80,000 yuan ($12,000) to 600,000 yuan, although the final costs could change, a person familiar said.That’s a completely different product development strategy to EV pioneers like Tesla, which only has four models on offer. Nio and Xpeng have also chosen to focus on just a handful of marques, and even then are struggling to break into the black.“The market has proved the effectiveness of the ‘one product in vogue at one time’ strategy,” said Zhang Xiang, an automobile industry researcher at the North China University of Technology. “Evergrande is offering many products and expects a win. There’s a question mark over whether this will work.”Without any long-term carmaking nous, Evergrande has issued uncompromising directives to meet its latest production targets, according to the people. Two models, including the Hengchi 5, a compact SUV that rivals Xpeng’s G3, are targeting mass production in a little over 20 months. To hit that timing, certain industry procedures, like making mule cars, or testbed vehicles equipped with prototype components that require evaluation, may be skipped, people familiar with the situation said. Evergrande told Bloomberg it has entered a “sprint stage toward mass production.”As it is, Bloomberg could only find one instance where the Hengchi 5 has been showcased in public, in photos and grainy footage released by Evergrande in February as the cars drove around a snow-covered field in Inner Mongolia. The company’s shares surged to a record.Glossing over those steps is unusual, said Zhong Shi, a former automotive project manager turned independent analyst.“There’s a standard engineering process of product development, validation and verification, which includes several laboratory and road tests” in China and everywhere else, Zhong said. “It’s hard to compress that to shorter than three years.”While there’s no suggestion Evergrande’s approach violates any regulations, its stock-market run could be in for a reality check. After similarly hefty market gains, some EV startups in the U.S. that have yet to prove their viability as revenue-generating, profitable entities have lost their shine over the past few months amid concern about valuations and as established carmakers like VW move faster into EV fray.Read more: The End of Tesla’s Dominance May Be Closer Than It AppearsThe industry’s multi-billion dollar surge also hasn’t escaped Beijing’s attention. Evergrande NEV shares dipped lower last month after an editorial from the state-run Xinhua news agency highlighted concerns about how the EV sector is evolving. Of particular worry are companies that are shirking their responsibility to build quality cars, a blind race by local governments to attract EV projects, and high valuations by companies that have yet to deliver a single mass-produced car, according to the missive, which named Evergrande specifically in that regard. “The huge gap between production capacity and market value shows there is hype in the NEV market,” it said.Still, Evergrande NEV’s stock has gained 18% since then, buoyed by the outlook for China’s electric-car market. EVs currently account for about 5% of China’s annual car sales, BloombergNEF data show, with demand forecast to soar as the market matures and electric-car prices fall. EV sales in China may climb more than 50% this year alone, research firm Canalys said in a February report.With competition also on the rise, some outside Evergrande NEV’s loyal shareholder base remain skeptical.“The market is getting crowded but unless you have a preferred lane, there’s not much chance to win,” Automobility’s Russo said. “Maybe there’s some synergy with the property businesses but right now it’s an EV story, and a pretty expensive one.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Ant Group is exploring options for founder Jack Ma to divest his stake in the financial technology giant and give up control, as meetings with Chinese regulators signalled to the company that the move could help draw a line under Beijing's scrutiny of its business, according to a source familiar with regulators' thinking and two people with close ties to the company. Reuters is for the first time reporting details of the latest round of meetings and the discussions about the future of Ma's control of Ant, exercised through a complicated structure of investment vehicles. The Wall Street Journal previously reported that Ma had offered in a November meeting with regulators to hand over parts of Ant to the Chinese government.
The Biden administration’s plan for a global minimum corporate tax risks backfiring on the US and West as the rise of consumers in India and China shifts sales to Asia, tax experts have warned. The US has proposed a minimum tax based on local sales, but the President has been cautioned that the shrinking influence of the West will mean revenues become concentrated in the developing giants in Asia within decades. Marvin Rust, head of European tax at Alvarez & Marsal, said: “Over time, as the Indians and the Chinese become more wealthy and middle class and their consumption rises, the effect of the policy would be a shift to tax revenues being collected in China and India. “You can see that the Chinese and Indians are not going to want this reversed once their populations become more prosperous… from a Western world perspective, there needs to be a bit of care about this.” The White House is attempting to win support for its plan that will seek to level the playing field in tax and clamp down on avoidance. Many European leaders have also backed the proposals for a global minimum tax on the biggest firms after seeking to clamp down on US tech giants in recent years. Matt Kilcoyne, deputy director of the Adam Smith Institute, said: “The concern is absolutely right, and it highlights well that Yellen is attempting to uphold a world that is rapidly ceasing to exist. Rising non-western states are not going to automatically accept the hegemony of the USA.” He added: “Demanding tax harmonisation risks pushing our old friends and countries we currently have issue with into the arms of one another while diminishing the West.” Economists expect tectonic shifts in the global economy to occur in the next few decades, with developing countries becoming far more powerful and wealthy. China and India’s economies are expected to catch up with the US in size, with Indonesia, Brazil, Mexico and Nigeria also climbing the rankings. The US wants to ramp up taxes on businesses to help pay for a jump in spending with Joe Biden eyeing an infrastructure investment boost. However, its plan may struggle to win the backing of countries that benefit from low business taxes. Bank of America estimates that 60pc of US multinationals’ income was booked in just seven tax havens in 2019, including Ireland, Switzerland and the Netherlands. That has risen sharply from 30pc in 2000.
Bloomberg cited a screenshot of Keith Gill's portfolio showing that he exercised 500 GameStop call options expiring Friday, when the stock closed at $154.69. The screenshots were posted on Reddit by Gill, and his mother confirmed the posts to Bloomberg. His total investment in GameStop is now worth more than $30 million, giving him a profit of nearly $20 million, Bloomberg said.
Asian shares hit a one-month high on Monday helped by expectations monetary policy will remain accommodative the world over, while COVID-19 vaccine rollouts help ease fears of another dangerous wave of coronavirus infections. MSCI's broadest index of Asia-Pacific shares outside Japan went as high as 699.70, a level not seen since March 18. "The extremely supportive monetary and fiscal policy setting continues to provide a fertile environment for risk assets," said Rodrigo Catril, senior forex strategist at National Australia Bank.
(Bloomberg) -- Pakistan’s markets regulator is considering a proposal to allow direct listing of local companies on the stock exchange, a route that’s easier than meeting rules required for initial public offerings.The Securities and Exchange Commission of Pakistan is discussing the plan, the regulator’s Chairman Aamir Khan who proposed the idea said in an interview on April 13 at his office in Islamabad. If the proposal is approved it will help companies, especially state-owned ones, looking to sell existing shares as they will not even need approvals from the regulator for the transaction in most instances.“Direct listing is a concept which is there in developed markets already,” said Khan. “It’s something on our internal drawing board right now.”Just like in most other global markets, companies in the South Asian nation are rushing to tap capital markets for funds, riding on strong investor sentiment. Pakistan’s benchmark KSE-100 Index’s 45% gain in the past year has encouraged new listings on the bourse.The regulator has allowed a slew of new products and changes in the past few years including market halts, exchange-traded funds, and digital on boarding of stock market investors. It has also introduced a regulatory sandbox that allows startups to operate in areas that are not regulated.Pakistan’s SEC is now working on making Real Estate Investment Trust launches easier. The need for a mandatory building completion certificate, seen by many investors as a hurdle, has been removed, Khan said. Pakistan has not seen any REITs after its debut in 2015. An increase in taxes stymied plans of about eight REITs.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Japanese companies think the country will suffer a fourth round of coronavirus infections, with many bracing for a further blow to business, a Reuters monthly poll showed. Japan has so far seen far fewer COVID-19 cases than many Western countries, but concerns about a new wave of infections are rising fast. A delay in vaccinations versus other Group of Seven advanced countries and a lacking sense of crisis among the public will trigger a new wave of infections, some firms wrote in the poll.
The cost of renewable energy is plunging, but there are still sound reasons to encourage its adoption through subsidies.
Advocates and lawmakers say the crisis isn't over, and neither is the need for relief.
(Bloomberg) -- China sought to allay fears it wants to topple the dollar as the world’s main reserve currency as Beijing makes bigger strides in creating its own digital yuan.People’s Bank of China Deputy Governor Li Bo said the goal for internationalizing its currency is not to replace the dollar, and the efforts to create a digital yuan are aimed at domestic use.“For the internationalization of the renminbi, we have said many times that it’s a natural process, and our goal is not to replace the U.S. dollar or other international currencies,” Li said on a panel at the Boao forum Sunday. “I think our goal is to allow the market to choose, to facilitate international trade and investment.”China’s central bank is currently testing the use of a “digital yuan” in various pilot programs across the country. A report earlier this week showed the Biden administration is increasing its scrutiny of China’s progress toward the digital yuan amid concern it could kick off a long-term bid to displace the dollar.The PBOC has been working on a digital currency since 2014 and its moves have heightened interest among central banks and policy makers, while the spread of cryptocurrencies has added to a sense that competitors to regular cash could change how the financial sector operates. The PBOC has moved closer to becoming the first major central bank to launch a virtual currency, rolling out a trial for consumers and businesses in 11 cities across the country.“The motivation for the e-yuan, for now at least, is focusing primarily on domestic use,” Li said. International “interoperability is a very complex issue and we are not in a hurry to reach any particular solution yet,” although there could be cross-border use “in the long term,” Li said.China’s Digital Yuan Won’t Topple Dollar, BOJ Official SaysThe central bank is planning to test the cross-border use of the digital yuan at the 2022 Beijing Winter Olympics, where it could be used by both domestic users as well as athletes and visitors from overseas, Li said.Agustin Carstens, general manager of Bank for International Settlements, said on the same panel there was huge potential in the cross-border use of digital currencies as they could make foreign exchange transaction and payment settlement extremely efficient. He said countries can explore various ways to achieve international interoperability, including making different systems compatible and creating connectivity links among the systems.Bahamas Tops China in Ranking of Central Bank Digital CurrenciesWhile the digitization of the yuan could benefit its use in cross-border transactions, the key factor in determining the currency’s global role is whether China will relax its capital controls, said Shen Jianguang, chief economist at JD.com Inc. “If you want to have a global reserve currency, you need to allow foreigners to hold it, to use it.”China will also need to allow its citizens to buy more foreign assets, further develop its financial markets and allow greater exchange rate flexibility in order to push for the internationalization of yuan, Shen said in an interview at the forum.China has seen a flood of capital flows into its financial markets since last year, boosting the amount of yuan traded globally. Yet, in the context of its vast markets, foreign ownership of local stocks and bonds remains relatively low at around 5% and 3% respectively. The yuan’s share of global payments and central bank reserves is still only about 2%.“The digital yuan is a means to help monetary policy efficiency and cross-border usage with partners that tend to trade with China in goods and services, less so the major economies like the U.S.,” said Stephen Chiu, Asia FX and rates strategist at Bloomberg Intelligence. “Digital or not, it’s not so easy to move the dollar’s dominance, be it as a trade settlement or reserve currency.”Crypto Goes Up and Down, But Is It Getting Anywhere?: QuickTakeThe initial plans for a digital currency weren’t motivated by considerations of cross-border use, according to former People’s Bank of China Governor Zhou Xiaochuan, who noted that there are many issues with using a digital currency across national borders. International use could affect monetary policy independence, and it’s important it isn’t used for crime, he said on the same panel in Boao.(Updates with comments from BIS, details on yuan trade.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Rates have dropped, but experts warn that the downward trend isn't likely to last.
Declining rates are providing new refi opportunities, but you have to shop around.
AMSTERDAM (Reuters) -Dutch bank ABN Amro on Monday said it had reached a 480-million-euro ($574 million) settlement with prosecutors in the Netherlands over money laundering allegations, which will impact its first-quarter results. ABN Amro said in a statement it had agreed to pay a fine of 300 million euros and 180 million euros as disgorgement reflecting "the seriousness, scope and duration of the identified shortcomings" in combating money laundering. The prosecution service said in a statement its investigation was ongoing and that three former board members, who it did not name, had been identified as suspects said to be "effectively responsible for violation" of the anti-money laundering act.
A policy shift by China's government is ratcheting up pressure on automakers to hasten development of green vehicles or pay rivals such as Tesla Inc and Chinese startups for green credits. Regulators are putting more teeth on a system of tradable green car credits to wean the industry off a decade-long policy of subsidies which has helped create some of the biggest companies in the industry. The system gives automakers credits for selling electric or fuel-efficient vehicles that can offset penalties on their more carbon-intensive models.
(Bloomberg) -- After two weeks of relentless losses, China Huarong Asset Management Co. bondholders are finally finding reasons for optimism.Huarong bonds jumped after China’s financial regulator said on Friday that the bad-debt manager was operating normally and had ample liquidity, its first official comments since the company jolted Asian credit markets by missing a deadline to report earnings on March 31. While the regulator’s statement was hardly a full-throated pledge of government support, it was enough to cement a rally in Huarong bonds from record lows and ease fears of contagion. The gains continued on Monday.One of the state-owned company’s dollar bonds -- a 3.375% note maturing in May 2022 -- climbed to about 85 cents after trading at 65 cents on Wednesday, according to prices compiled by Bloomberg.The rebound suggests investors have become less concerned about extreme scenarios like bankruptcy. Yet questions remain about the extent of Beijing’s support as Huarong tries to overhaul its business.The company, controlled by China’s Ministry of Finance, has been mired in scandal since its former chairman Lai Xiaomin was accused of bribery in 2018 and executed earlier this year. Under Lai, Huarong moved beyond its original mandate of helping banks dispose of bad debt, raising billions of dollars from offshore bondholders and expanding into everything from trust companies to securities trading and illiquid investments.If China decides to impose losses on Huarong bondholders in a debt restructuring, it would be the nation’s most consequential credit event since the late 1990s and the clearest sign yet that Beijing is serious about reducing moral hazard in its $54 trillion financial industry. But if Huarong continues to meet its obligations, the company’s bonds could end up delivering a windfall to investors who bought after prices plunged this month.“The fact that a regulator finally said something should give the market some confidence,” said David Loevinger, a former China specialist at the U.S. Treasury and now a managing director at TCW Group Inc. in Los Angeles. “The amazing thing is like many investors, if you asked me a month ago, what is the risk of Huarong restructuring its debt, I would have said close to zero. Even though I still think it’s unlikely, the risk is no longer zero.”In a statement late Friday, Huarong said it will accelerate disposal of existing risks and keep focusing on its main business of non-performing loans. Huarong said it’s working on its full-year earnings report with its auditor and will disclose it at an appropriate time.Investors will be keeping a close eye on the company’s near-term debt payments for any signs of stress.Huarong’s onshore securities unit has wired funds to repay a local bond due April 18, people familiar with the matter said on Friday. Reports that Huarong has prepared funds to pay a S$600 million ($450 million) bond due April 27 helped trigger the rally in its offshore debt from record lows on Thursday.The comments from China’s regulator on Friday suggest the worst of the Huarong crisis is likely over, according to Yong Zhu, who manages about $6 billion at DuPont Capital Management in Wilmington, Delaware.“The statement from the China Banking and Insurance Regulatory Commission is a clear indication that the policy of the Chinese government is to support Huarong and avoid near term default,” said Zhu, who doesn’t own the bonds.Credit-default swaps on China Huarong International Holdings Ltd., an offshore unit of Huarong, tumbled to 956 basis points on Friday from a record 1,466 basis points, according to ICE Data Services.What Bloomberg Intelligence says“The Chinese government still operates in an opaque manner. So until something is officially announced, things are still in play. It’s either a bailout or a big haircut. People are sensitive to any news.”-- Dan Wang, credit analyst a Bloomberg Intelligence.If Huarong were to restructure with offshore bondholders taking a hit, investors would reassess the credit risk of other Chinese companies that use a similar funding mechanism, said Nick Smallwood, an emerging-market debt strategist at M&G Investments. That would make future borrowing more costly and difficult to come by, Smallwood said.“I think there is an expectation that Huarong will not default and that it is a structurally important credit, resulting in a higher likelihood of government support,” said Steven Oh, head of fixed income at Pinebridge Investments.Chinese policy makers will have to weigh the broader market implications as they decide how to proceed, according to TCW’s Loevinger.“Clearly, the direction of the policy is they want to send a signal that creditors have to pay more attention to credit risks and they have to stop expecting bailouts,” Loevinger said. “They want to kill the chicken to scare monkeys. But having Huarong default would be killing the tiger. Obviously, it’s a much bigger systemic risk.”(Updates with Monday trading from second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
SYDNEY (Reuters) -Oaktree Capital Group has proposed funding a A$3 billion ($2.3 billion) buyback by Australia's Crown Resorts Ltd of its founder's stake, setting up a clash with rival Blackstone Group for the troubled casino firm's future. Private equity giant Oaktree's offer of a "structured instrument" to help Crown buy back James Packer's 37% stake comes just a month after Blackstone lobbed an A$8 billion full takeover offer. Crown did not specify what Oaktree would receive under its proposal, which it said it was considering, along with Blackstone's offer.