Global shares advance amid hopes for US-China deal

US shares drifted higher on Monday with Dow futures adding 0.3 percent to 27,931 and S&P 500 futures rising 0.2 percent to 3,119. (Reuters/File)
Updated 25 November 2019

Global shares advance amid hopes for US-China deal

  • Beijing’s new guidelines for protecting intellectual property seen as a key concern for foreign investors

TOKYO: Global shares rose on Monday amid some optimism that the US and China may be edging closer toward a deal on a trade dispute that has been rattling markets for more than a year.

Over the weekend, Beijing issued new guidelines for protecting intellectual property, a key concern for foreign investors and a sore point in the dispute with Washington over trade and technology.

Britain’s FTSE 100 rose 0.9 percent to 7,394, while France’s CAC 40 added 0.4 percent in midday trading to 5,915. Germany’s DAX gained 0.4 percent to 13,221 after a survey showed that German business confidence has increased slightly.

US shares drifted higher with Dow futures adding 0.3 percent to 27,931 and S&P 500 futures rising 0.2 percent to 3,119.

Japan’s benchmark Nikkei 225 surged 0.8 percent to finish at 23,292.81, while Australia’s S&P/ASX 200 added 0.3 percent to 6,731.40. South Korea’s Kospi gained 1.0 percent to 2,123.50. Hong Kong’s Hang Seng jumped 1.5 percent to 26,993.04, while the Shanghai Composite advanced 0.7 percent to 2,906.17.

Investors were watching the situation in Hong Kong, where pro-democracy candidates won a majority of seats in a local district council election Sunday. After nearly six months of often violent protests, it is yet another challenge for CEO Carrie Lam’s government.

“The result might not be market-friendly as it sets to challenge Carrie Lam’s leadership and bring up political uncertainties. But it could also mark a turning point in stopping the violent clashes,” said Margaret Yang, market analyst at CMC Markets in Singapore.

Markets around the world churned last week on uncertainty about whether the US and China can soon halt their trade dispute, or at least stop it from escalating.

Tariffs already put in place have hurt manufacturing around the world, and businesses have held back on spending given all the uncertainty about where the rules of global trade will end up.

New US tariffs are set to hit Dec. 15 on many Chinese-made items on holiday shopping lists, such as smartphones and laptops.

A document issued Sunday called for China to “effectively curb” violations of intellectual property rights such as trademarks and copyrights. The guidelines ordered improvements to laws for protecting such intellectual property, increased compensation for infringements and stricter enforcement of existing laws.

Theft and forced transfers of technology and inadequate protection of copyrights, patents and trademarks are perennial complaints of foreign companies operating in China and are among the key issues in the latest flareup in trade tensions.

President Donald Trump said last week that a deal is “potentially very close” after Chinese President Xi Jinping said Beijing is working to “try not to have a trade war,” but will nevertheless fight back if necessary.

In corporate news, shares in Uber fell about 6 percent in premarket after London’s transit authority refused to renew the San Francisco company’s license to operate there over passenger safety concerns. Uber vowed to appeal the decision, which it called “extraordinary and wrong.” The ride-hailing company has 21 days to file an appeal and can continue operating while the appeals process is under way.

Two blockbuster mergers got Thanksgiving week off to a rousing start Monday morning. Shares of Tiffany & Co. rose nearly 6 percent in premarket trading after Paris-based LVMH said it was acquiring the iconic New York jeweler for $16.2 billion. 

In another massive deal, Charles Schwab said it would buy rival TD Ameritrade in a $26 billion stock swap. With brokerages facing competitive pressure to make it free for customers to trade US stocks online, Schwab’s buyout combines two of the biggest players in the industry, with a combined $5 trillion in client assets. The deal could draw sharp scrutiny from antitrust regulators.


UK to allocate $17bn for new infrastructure bank

Updated 27 February 2021

UK to allocate $17bn for new infrastructure bank

  • Sunak to use budget to expand apprenticeships and extra funds for traineeships

LONDON: Britain is to launch a new infrastructure bank with £12 billion ($17 billion) in capital and £10 billion in government guarantees, the treasury said on Saturday, aimed at supporting the economy.

British Finance Minister Rishi Sunak, is expected to announce the initial funding at Wednesday’s budget and the bank will launch in spring, the ministry said.

“Britain’s businesses and the Great British public deserve world-class infrastructure and that is exactly what this new bank will help us deliver for them,” Sunak was quoted as saying.

The bank is set to finance private sector projects in the green economy, focusing on areas such as carbon capture and renewable energy.

It will also provide loans to local authorities at low interest rates to support “complex infrastructure projects.”

The Finance Ministry said the bank would unlock billions more in private finance to support a £40 billion infrastructure investment to “fire up the economy” and help reach commitments on net zero emissions and reducing regional deprivation.

The announcement comes as Britain’s economy has been hit hard by pandemic lockdowns.

Analysts expect unemployment to surge when the UK government’s furlough scheme paying the bulk of wages for millions in the private sector ends — as currently planned — at the end of April.

Sunak last week hinted he would announce further employment support in the coming months.

He first announced the planned bank in November last year, saying its headquarters would be in northern England rather than in the financial hub of London.

Apprenticeships

The minister will also announce more funding for apprenticeships in England.

Employers taking part in the Apprenticeship Initiative Scheme will from April 1 receive £3,000 for each apprentice hired, regardless of age — an increase on current grants of between £1,500 and £2,000 depending on age.

The scheme will be extended by six months until the end of September, the Finance Ministry said.

Sunak will also announce an extra £126 million for traineeships for up to 43,000 placements.

‘Enormous strains’

Sunak will use the budget next week to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support, according to an interview with the Financial Times.

Sunak told the newspaper there was an immediate need to spend more to protect jobs as the UK emerged from COVID-19, but warned that Britain’s finances were now “exposed.”

UK exposure to a rise of 1 percentage point across all interest rates was £25 billion a year to the government’s cost of servicing its debt, Sunak told FT.

Additionally, the government will also announce a new £100 million task force to crackdown on COVID-19 fraudsters exploiting government support schemes, it said.


S. Africa proposes new rules to boost economy

Updated 27 February 2021

S. Africa proposes new rules to boost economy

  • Africa’s most industrialized nation — the hardest-hit by the coronavirus disease (COVID-19) pandemic on the continent — has put public works in sectors

JOHANNESBURG: South Africa’s National Treasury is proposing changing rules governing pension funds to encourage investment in infrastructure projects.

Africa’s most industrialized nation — the hardest-hit by the coronavirus disease (COVID-19) pandemic on the continent — has put public works in sectors such as transport, energy and water at the heart of its economic recovery plans.

The treasury is proposing changes to Regulation 28 of the Pension Funds Act in draft amendments published for public comment on Friday. This rule sets the maximum percentage of a fund’s assets that can be invested in different asset classes and is aimed to shield savers from over-concentrated investments.

The proposed amendments do not introduce infrastructure as a new asset class alongside existing ones like equities, debt instruments and property but allow for infrastructure investments to be recognized within those asset classes.

They also say overall investment in infrastructure across all asset categories may not exceed 45 percent of domestic exposure and an additional 10 percent for the rest of Africa.

The changes should make it easier for retirement funds to invest in infrastructure and allow for better measurement of investment in projects, the Treasury said in a statement.

The changes are “informed by a number of calls for increased investment in infrastructure given the current low economic growth climate,” it said, stressing that the decision to invest in any asset class remained up to the board of trustees of each fund.

The public can comment on the amendments until late March.


G20 vows multilateral approach to tackle crises

Updated 27 February 2021

G20 vows multilateral approach to tackle crises

  • Finance chiefs agree to avoid premature withdrawal of fiscal support

ROME, BRUSSELS: The world’s financial leaders committed to a more multilateral approach to the twin coronavirus and economic crises.

“We agreed that any premature withdrawal of fiscal and monetary support should be avoided,” Daniele Franco, Italy’s finance minister, told a news conference after an online meeting held by the G20 finance ministers and central bankers on Friday.

The financial chiefs agreed to maintain expansionary policies to help economies survive the effects of coronavirus disease (COVID-19). 

The Italian presidency of the G20 group of the world’s top economies said the gathering of finance chiefs had pledged to work more closely to accelerate a still fragile and uneven recovery.

The G20 is “committed to scaling up international coordination to tackle current global challenges by adopting a stronger multilateral approach and focusing on a set of core priorities,” the Italian presidency said in a statement.

US Treasury Secretary Janet Yellen told the G20 Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, raising hopes for an agreement by summer.

The move was hailed as a major breakthrough by Germany’s Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire.

Scholz said Yellen told the G20 officials that Washington also planned to reform US minimum tax regulations in line with an Organization for Economic Co-operation Development (OECD) proposal for a global effective minimum tax.

“This is a giant step forward,” Scholz said.

 Franco said the new US stance should pave the way to an overarching deal on taxation of multinationals at a G20 meeting of finance chiefs in Venice in July.

The G20 also discussed how to help the world’s poorest countries, whose economies are being disproportionately hit by the crisis.

On this front there was broad support for boosting the capital of the International Monetary Fund (IMF) to help it provide more loans, but no concrete numbers were proposed.

To give itself more firepower, the IMF proposed last year to increase its war chest by $500 billion in its own currency called the Special Drawing Rights (SDR), but the idea was blocked by former US President Donald Trump.

“There was no discussion on specific amounts of SDRs,” Franco said, adding that the issue would be looked at again on the basis of a proposal prepared by the IMF for April.


Deal signed to stimulate Saudi private sector

Updated 27 February 2021

Deal signed to stimulate Saudi private sector

The Saudi Center for International Strategic Partnerships (SCISP) signed a memorandum of cooperation with the Council of Saudi Chambers (CSC) to boost the private sector’s role in international partnerships.

The move aims to stimulate the private sector’s participation and sustainability by providing all necessary support to achieve the objectives of the Kingdom’s international strategic partnerships.

SCISP CEO Faisal Al-Sugair said the agreement is part of the measures aimed at involving all relevant actors in the Kingdom’s economic system to achieve the strategic goals of Vision 2030.

The memorandum includes exchange of information, data and necessary reports that support the two parties’ work, Al-Sugair said.

Established in 2017, the SCISP is a government entity linked to the Council of Economic and Development Affairs.


Nigeria seeks asset managers for $2.6bn infrastructure firm

Updated 27 February 2021

Nigeria seeks asset managers for $2.6bn infrastructure firm

  • Nigeria emerged out of economic recession in the fourth quarter of 2020, despite a contraction in the year as a whole

ABUJA: Nigeria’s central bank is seeking asset managers for a new $2.6 billion infrastructure investment company set up to develop the country’s crumbling transport networks and boost economic growth.

The asset managers will originate and manage infrastructure projects, generating return from investments, the bank said on Saturday. The deadline for submission of proposals is March 16.

Nigeria emerged out of economic recession in the fourth quarter of 2020, despite a contraction in the year as a whole. But growth is fragile, as poor infrastructure has stymied the economy for decades, holding back the distribution of wealth in Africa’s biggest economy.

President Muhammadu Buhari approved the creation of Infrastructure Corporation of Nigeria (InfraCorp.) in February to focus on infrastructure development, with a seed capital of 1 trillion naira ($2.6 billion).

Initial capital will come from the central bank, the Nigerian Sovereign Investment Authority (NSIA), and the Africa Finance Corporation, the central bank has said.

Economists say the poor state of Nigeria’s infrastructure has put at risk the Buhari government’s ambitions for turning the country into a manufacturing hub and growing the agriculture sector.

In 2017, the government set up the Development Bank of Nigeria to boost credit to small-scale businesses that make up almost of half of the economy.

Now the government wants to fix its crumbling roads and rail network that have made it hard to move agricultural and finished goods to markets.