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George Osborne will sign a deal on Monday with Hong Kong aimed at helping turn the City into an offshore trading centre for the renminbi, the FT says, in what the UK chancellor sees as a vote of confidence in London. http://ftalphaville.ft.com/thecut/2012/01/16/833491/renminbi-deal-aims-to-boost-city-trade/
Greece’s international creditors are considering an appeal to the French and German leaders to break a deadlock in negotiations over the size of the losses to be taken by banks and other bondholders as part of a €100bn deal seen as crucial to bringing the country’s debt under control, http://ftalphaville.ft.com/thecut/2012/01/16/833371/greeces-creditors-say-time-is-running-out-fast/
France’s President Nicolas Sarkozy called for “courage” and “sang-froid” in combating the financial crisis, without mentioning the loss of the country’s triple A credit rating after it was downgraded by Standard & Poor’s ratings agency on Friday. With three months to go until the presidential elections, Mr Sarkozy, who has yet to declare his candidacy, sought to keep his head above the political fray at the weekend, as the country’s downgrade became a campaign football among the political parties. http://www.ft.com/intl/cms/s/0/e960c4de-3f9a-11e1-ad6a-00144feab49a.html#axzz1jb84aooc
Nigeria’s president Goodluck Jonathan and labour unions failed in overnight talks to reach a compromise over the removal of fuel subsidies that has raised fears of a shutdown of Nigeria’s oil industry,http://ftalphaville.ft.com/thecut/2012/01/16/833911/nigerian-strike-talks-break-down/
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The fate of a compromise deal to extend stimulus measures for the US economy for two months was thrown into doubt on Sunday after John Boehner, the Republican Speaker of the House, said he was opposed to the plan, http://ftalphaville.ft.com/thecut/2011/12/19/805041/boehner-casts-doubt-on-us-stimulus-deal/
China will open more channels for foreign institutions to invest in its stock markets, a move aimed at supporting share prices and helping to counter capital outflows as the economy slows. The FT says the Chinese securities regulator announced late on Friday that renminbi held offshore could be used to buy equities within China, http://ftalphaville.ft.com/thecut/2011/12/19/805011/china-opens-door-to-foreign-investors/
Kim Jong-il, North Korea’s dictator, has died, piling pressure on his inexperienced son to ensure the stability of his impoverished, nuclear-armed state, the FT reports. A North Korean television newscasterhttp://ftalphaville.ft.com/thecut/2011/12/19/804971/kim-jong-il-dies/
British banks and insurers are pouring billions into the country’s housing stock as they look to cash in on rising rents and find wealth stores away from the turmoil rippling through the markets, reports the FT. Financial institutions ploughed £2.2bn into houses and apartments in the UK during the 12 months to April this year, http://ftalphaville.ft.com/thecut/2011/12/19/804881/insurers-and-banks-plough-2-2bn-into-housing/
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JPMorgan sold $1.25bn of 30-year bonds on Thursday, paying historically low interest rates in spite of mounting concerns about banks around the world, the FT says. The bank benefited from plummeting yields on US Treasury bonds, http://ftalphaville.ft.com/thecut/2011/12/16/803211/jpmorgan-snares-record-low-rates-in-bond-sale/
Barclays Capital is preparing for the sale of more than €1bn worth of German apartments, reports the FT, citing people familiar with the process as saying the bank has held discussions about the sale of the portfolio with private equity buyers, http://ftalphaville.ft.com/thecut/2011/12/16/803071/barcap-set-for-e1bn-sale-of-german-property/
A draft prospectus prepared for the latest eurozone bail-out instruments includes explicit warnings to investors that the euro could break apart or even cease to be a “lawful currency” entirely, says the FT,http://ftalphaville.ft.com/thecut/2011/12/16/802921/efsf-prospectus-may-warn-of-euro-break-up/
Research in Motion, the Canadian manufacturer of the BlackBerry family of smartphones and the PlayBook tablet, responded to falling profits, product problems and investor disenchantment by cutting its co-chief executives’ salaries to $1 each next year and pledging a “comprehensive review”. http://ftalphaville.ft.com/thecut/2011/12/16/803021/rim-co-chiefs-salaries-cut-to-1-each-amid-crisis/
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Prospects for a rapid increase in IMF firepower to cope with the eurozone crisis have receded after the Japanese government and the Bundesbank set tough conditions before making contributions, reports the FT. On Tuesday Jun Azumi, http://ftalphaville.ft.com/thecut/2011/12/14/798511/doubts-raised-over-imf-firepower-and-uk-contributions/
Morgan Stanley has resolved its legal conflicts with bond insurer MBIA, ending a long-running dispute tied to guarantees of mortgage securities that will result in the bank recording a $1.8bn pre-tax loss,http://ftalphaville.ft.com/thecut/2011/12/14/798471/morgan-stanley-books-1-8bn-loss-to-end-mbia-dispute/
Franco-German hopes for a sweeping new treaty to bind the region’s economies more closely came under strain on Tuesday as several EU leaders warned of difficulties pushing a far-reaching pact through their national parliaments, http://ftalphaville.ft.com/thecut/2011/12/14/798121/eu-treaty-hopes-come-under-strain-2/
Opec ministers were edging towards a decision to keep oil output broadly steady at their meeting on Wednesday, the FT reports, moving to heal the profound differences between Saudi Arabia and Iran that led to the collapse of the previous meeting in June. The oil cartel painted a sanguine picture for the energy market heading into 2012, http://ftalphaville.ft.com/thecut/2011/12/14/798101/opec-nears-agreement-on-oil-output/
International banking and financial market developments-BIS
From the latest BIS report; News on the euro area sovereign debt crisis drove most developments in global financial markets between early September and the beginning of December. Amid ratings downgrades and political uncertainty, market participants demanded higher yields on Italian and Spanish government debt. Meanwhile, difficulties in meeting fiscal targets in a recessionary environment weighed on prices of Greek and Portuguese sovereign bonds.
Conditions stabilised somewhat in October on growing optimism that the end-month EU summit would propose comprehensive measures to tackle the crisis. But by November, investors were growing sceptical about the adequacy of some of these measures. Sovereign bond yields then rose across the euro area, including for higher-rated issuers.
News That Matters
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A secret report into the operations of Ireland’s National Asset Management Agency, the state agency set up to purge Irish banks of their toxic property loans, has recommended that the government should consider selling it off as a single entity http://ftalphaville.ft.com/thecut/2011/12/08/786001/dublin-urged-to-sell-toxic-loans-as-job-lot/
JPMorgan Chase has increased its lending to troubled eurozone economies, reports the FT, as US rivals retreat from the region. The bank’s loans in Spain, Italy, Greece, Portugal and Ireland have jumped 9 per cent since September 30 http://ftalphaville.ft.com/thecut/2011/12/08/785821/jpmorgan-expands-eurozone-lending/
Demand for dollar funding from the ECB has jumped sharply after a price cut agreed with the US Federal Reserve, suggesting that banks are more comfortable about tapping the ECB for help, says the FT. Thirty-four banks obtained $50.7bn in three-month loans yesterday and five took $1.6bn in one-week dollar liquidity http://ftalphaville.ft.com/thecut/2011/12/08/785721/demand-for-ecb-dollar-liquidity-surges/
Germany on Wednesday insisted that its European partners must undertake the politically fraught process of changing EU treaties, or at least accepting a binding new eurozone accord, reports the FT. On the eve of a European summit in Brussels to stem the eurozone crisis http://ftalphaville.ft.com/thecut/2011/12/08/785711/germany-insists-on-new-treaty/
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India is to throw open its $450bn retail sector to foreign supermarkets, granting access for the first time to giants such as Walmart, Carrefour and Tesco that have long sought to enter an underserved market of 1.2bn people, http://ftalphaville.ft.com/thecut/2011/11/25/763771/india-opens-doors-to-supermarket-giants/
The US, backed by Saudi Arabia, is refusing to sign off on a flagship global climate fund, the FT reports, days ahead of an important UN climate summit. The fund is one of the few measures to emerge from seven years of talks on how countries should share the burden of cutting greenhouse gas emissions, http://ftalphaville.ft.com/thecut/2011/11/25/763591/us-blocks-key-climate-fund-as-carbon-prices-plunge/
France is pushing for a European oil embargo on Iran, breaking a diplomatic taboo that could have significant ramifications for the energy market and global economic growth, the FT reports. Paris has made the proposal to European Union members preparing a new round of sanctions following the release of a UN nuclear agency report this month. http://ftalphaville.ft.com/thecut/2011/11/24/763511/france-pushes-for-iranian-oil-embargo/
The Chinese government has launched a crackdown on hundreds of unregulated electronic equity and futures exchanges that have sprung up in recent years to trade everything from fine art and commodities to insurance products, http://ftalphaville.ft.com/thecut/2011/11/24/763481/china-cracks-down-on-rogue-exchanges/
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New York police arrested a suspected bomber on Saturday who was charged with plotting to set off explosives in cars, police stations and post offices, the FT reports. Authorities said Jose Pimentel, a 27-year-old who lives in the Washington Heights neighbourhood of upper Manhattan, http://ftalphaville.ft.com/thecut/2011/11/21/755031/ny-police-foil-alleged-%e2%80%98lone-wolf%e2%80%99-bomb-plot/
David Cameron will on Monday unveil a new strategy to boost Britain’s housing market as the prime minister attempts to bolster the ailing housebuilding industry and demonstrate to business that his coalition government is putting together a credible growth plan, http://ftalphaville.ft.com/thecut/2011/11/21/755011/cameron-to-launch-housing-market-initiative/
Mariano Rajoy led Spain’s centre-right Popular party to the biggest election victory in its history on Sunday, consigning the incumbent Socialists to the political wilderness and making them the latest casualties of the eurozone’s deepening sovereign debt crisis, http://ftalphaville.ft.com/thecut/2011/11/21/754981/rajoy-sweeps-to-record-victory-in-spain/
The special panel of lawmakers charged with slashing America’s budget deficits was on the verge of failing, inflicting further damage to confidence in the ability of Congress to correct the country’s long-term fiscal problems, http://ftalphaville.ft.com/thecut/2011/11/21/754951/hopes-fade-for-%e2%80%98supercommittee%e2%80%99-deal/
News That Matters
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US stocks turned sharply lower in late-day trading after a report warned of eurozone risks to US banks, with European Central Bank attempts to prop up the Spanish and Italian bond markets failing to stem investor fears over sovereign debts, http://ftalphaville.ft.com/thecut/2011/11/16/750921/bank-fears-hit-us-financial-stocks/
The exiled chief abbot of a monastery that has become the flashpoint of sustained Tibetan unrest has appealed to the Chinese government to end a repression campaign seen as the source of an unprecedented string of self-immolations by monks from the area, http://ftalphaville.ft.com/thecut/2011/11/16/750881/abbot-urges-china-to-help-stop-self-immolations/
Mario Monti will serve as both prime minister and finance minister in Italy’s caretaker government of technocrats that was sworn in on Wednesday, the FT reports. The new cabinet also includes Corrado Passera, http://ftalphaville.ft.com/thecut/2011/11/16/750841/italy-forms-cabinet-of-technocrats/
News That Matters
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The Chinese financial system faces “a steady build-up in vulnerabilities” that require the government to relax its grip on banks, the exchange rate and interest rates, the International Monetary Fund said in its inaugural evaluation of China’s financial sector, http://ftalphaville.ft.com/thecut/2011/11/15/746671/imf-warns-on-chinese-financial-system/
UniCredit, Italy’s largest bank by assets and one of the more weakly capitalised of Europe’s big banks, has announced plans to boost its capital with a €7.5bn rights issue, while scaling back its investment banking business and slashing 6,200 staff, http://ftalphaville.ft.com/thecut/2011/11/15/746651/unicredit-announces-e7-5bn-cash-call/
Angela Merkel, the German chancellor, called on Monday for Europe to build a “political union” to underpin the euro and help the continent emerge from its “toughest hour since the second world war”,http://ftalphaville.ft.com/thecut/2011/11/15/746601/merkel-urges-stronger-union-to-back-euro/
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