MSCI’s China index inclusion risks liquid headache 12 Jun 2017 The index provider will decide this month whether to add yuan-denominated shares to key benchmarks. Scandals and trading halts at Hong Kong-listed mainland firms have made passive fund managers' jobs difficult already. Bringing in onshore tickers could complicate things further.
Macron’s reform mandate is shakier than it looks 11 Jun 2017 French President Emmanuel Macron's year-old party is on track to secure a big parliamentary majority after topping the first round of voting. He can present the stunning achievement as a ringing endorsement of his economic reform proposals. Low turnout suggests otherwise.
Competing Dodd-Frank visions make rollback uncertain 9 Jun 2017 The U.S. House voted to undo post-crisis financial rules. The Senate has a tamer view that rejects gutting the consumer protection agency and resolution powers, and overhauling capital standards. A deal requires compromise. That’s not a forte of bill sponsor Jeb Hensarling.
Trump officially becomes Indian IT business risk 9 Jun 2017 The $21 bln outsourcer Wipro named the U.S. president high up in a list of risk factors for investors. It's the first strong warning in print, and it hammers home the particular vulnerability of Wipro's industry to Western protectionism – and the shortage of options to counter it.
Snapchat populism is new political battleground 9 Jun 2017 Millennial-friendly Labour leader Jeremy Corbyn hit the party’s highest vote share since 2001. It may be partly an anti-Brexit backlash from a pro-EU age group. Yet what looks like a swerve away from populism may just be the beginning of a new kind of grievance pandering.
Europe risks overindulging in Brexit schadenfreude 9 Jun 2017 The election leaves Brussels without a stable partner in Brexit talks. Yet EU leaders should be pleased that voters did not reward Theresa May’s immigration views, or unite behind a hard exit. Sticking to a tight timeframe and big bill could squander chances of a compromise.
Sterling post-election blues will be slow to lift 9 Jun 2017 A hung parliament has hit the currency hardest of all UK assets. The saving grace is that a brutal exit from the European Union and a second Scottish independence referendum may now be a little less likely. But neither is a good enough reason to stock up on pounds anytime soon.
Qatar’s weak link in Saudi stand-off: people 9 Jun 2017 The sheikhdom has the money and resources required to withstand a cold war with its neighbours. Its economy depends on foreign expatriates, though, who account for more than three-quarters of the population. Preventing a demographic drain is the best reason to agree to a truce.
Theresa May falls victim to anti-incumbent wave 9 Jun 2017 The Prime Minister’s Conservative Party has lost its majority in Britain’s general election. Even if it hangs on, the gamble of seeking a big mandate has failed. The lack of a clear result shows Britain’s political landscape – and its relationship with the EU – remains fluid.
Comey callout of Trump lies hurts dealmaking hopes 8 Jun 2017 The former FBI director said the U.S. president lied on several occasions. He also illustrated Trump’s knack for self-sabotage. Markets were cheered that the testimony didn’t produce a knockout blow, but the credibility hit will further hobble the administration’s economic plans.
Spanish bank rescue poses several big questions 8 Jun 2017 Seizing Banco Popular and selling it to Santander averted a panic without a bailout. But it’s not clear how regulators calculated the hole on the lender’s balance sheet, or why they previously deemed it solvent. Investors need answers to have faith in Europe’s resolution regime.
Macron has chance to make France a better investor 8 Jun 2017 President Emmanuel Macron wants to use some of the shares the state owns to finance an innovation fund. That’s tinkering at the margin. The Republic is too activist a shareholder in some cases, too passive in others. Better to fix clearer goals for a totally revamped portfolio.
Hong Kong draws short straw at hedge-fund jamboree 8 Jun 2017 Hedgies floated ideas from Sony to Indian DIY at the Sohn Hong Kong fundraiser. But when it came to the host city, two of the three pitches were short-selling takedowns. Dozens of HK shares sold off beforehand, on fears they could be targets. That is an indictment of the market.
Crude price drop is symptom of rising U.S. clout 7 Jun 2017 U.S. oil fell 5 pct to under $46 a barrel after the nation's stocks unexpectedly increased. Back in the day, an attack in Iran and tension between OPEC members Saudi Arabia and Qatar might have dominated. Demand was soft, too, but America's shale is changing the balance of power.
Kansas GOP to D.C. GOP: trickle down ain’t coming 7 Jun 2017 Lawmakers scrapped the 2013 tax cuts pushed by the state's governor, who believed they would spur hiring and spending. Instead Kansas got budget deficits and failing schools. Donald Trump also hopes slashing federal taxes will boost growth. Congress may yet disagree.
U.S. stocks and bonds are in economic tug-of-war 7 Jun 2017 Bullish equity investors have pushed the S&P 500 to new highs despite soft data and fading hopes for business friendly policies. With yields tumbling even as a new rate hike looms, fixed income is more attuned to a possible downturn. When the stories converge, it won't be pretty.
Popular wipeout leaves CoCo bonds on drawing board 7 Jun 2017 The Spanish bank’s failure did not provide the expected test for bonds which convert into equity under stress. The securities were wiped out before they could be triggered. The good news is that losses did not trigger contagion. But it’s still unclear whether CoCo bonds work.
Hadas: Misbehaving wages keep economists baffled 7 Jun 2017 Conventional economic theory says wages start to rise when labour markets tighten. It isn’t happening in the U.S., Britain, Japan or Germany. Many semi-plausible excuses and partial explanations have not solved the mystery. That leaves central bankers in a quandary.
Tax windfall charges up RWE, E.ON recovery 7 Jun 2017 Germany’s battered utilities can get back more than 6 bln euros in past tax payments, the country’s top court decided. It’s the final stage in the sector’s rehabilitation, following big restructurings and settlements on nuclear liabilities – and sets the scene for M&A.
British election offers business only bad choices 7 Jun 2017 If the Labour party wins on June 8, companies face higher taxes and wage bills. If the ruling Conservatives retain power, expect more meddling and talent shortages. On balance, companies may prefer the incumbents – if only because they are less likely to carry out their promises.