Asian shares slip on jitters over inflation, interest rates

Asian shares slip on jitters over inflation, interest rates
Investors remain increasingly focused on a big tick up in bond yields and how it affects stock valuations. (File/AFP)
Short Url
Updated 24 February 2021

Asian shares slip on jitters over inflation, interest rates

Asian shares slip on jitters over inflation, interest rates
  • Hong Kong led the decline, losing 2 percent to 30,015.49

BANGKOK: Shares fell Wednesday in Asia as investors weighed the possibility that inflation might prompt central banks to adjust their ultra-low interest rate policies.
Hong Kong led the decline, losing 2 percent to 30,015.49. Tokyo's Nikkei 225 shed 0.8 percent to 29,923.82, In Seoul, the Kospi edged 0.2 percent lower, to 3,065.56. Australia's S&P/ASX 200 lost 0.9 percent to 6,778.40. The Shanghai Composite index gave up 1.1 percent to 3,596.04.
Investors remain increasingly focused on a big tick up in bond yields and how it affects stock valuations.
The large amount of stimulus being pumped into economies has been a factor in pushing bond yields higher, giving some investors pause as it revives worries about inflation that have been nearly nonexistent for more than a decade.
The yield on the 10-year Treasury note, which has climbed recently, was steady at 1.34 percent on Wednesday.
When bond yields rise, stock prices tend to be negatively impacted because investors turn an increasingly larger portion of their money toward the steadier stream of income that bonds provide.
Federal Reserve Chair Jay Powell told Congress Tuesday the Fed didn’t see a need to alter its policy of keeping interest rates ultra-low, noting that the economic recovery “remains uneven and far from complete.”
The message seemed to be muted in Asia.
“Rising borrowing costs remain the prevalent issue on hand though Fed Powell’s dovish remarks had helped to arrest the fall for US equities on Tuesday," Jingyi Pan of IG said in a commentary.
However, “Despite reassuring comments on lower rates from the U.S. Federal Reserve chair Jerome Powell, Asia markets continued to look to concerns with regards to the rising bond yields," Pan said.
A late-afternoon burst of buying on Wall Street on Tuesday helped reverse most of a tech-focused sell-off, nudging the S&P 500 to its first gain after a five-day losing streak.
The benchmark index eked out a 0.1 percent gain, to 3,881.37. The Dow Jones Industrial Average also rose 0.1 percent, to 31,537.35. The Nasdaq lost 0.5 percent to 13,465.20. The indexes were at all-time highs less than two weeks ago.
Smaller company stocks fell more than the broader market. The Russell 2000 small-cap index slid 0.9 percent, to 2,231.21. The index, the biggest gainer so far this year, clawed back from a 3.6 percent slide.
The wave of selling in Big Tech stocks nearly reversed entirely as traders seized the opportunity to pick up cheaper shares in Apple, Microsoft, Amazon and other big gainers over the past year at a more attractive price. Tesla, which joined the S&P 500 at the end of last year, ended 2.2 percent lower after being down as much as 13.4 percent.
Since the pandemic began, investors consistently pushed the prices of Big Tech stocks to stratospheric heights, betting that quarantined consumers would do most of their shopping online and spend more on devices and services for entertainment.
The bet mostly paid off, as big tech companies reported big profits last year. But the pandemic may be reaching its end stages, with millions of vaccines being administered each week in the U.S. and across the globe now. It may cause consumers to return to their pre-pandemic habits.
More broadly, investors remain focused on the future of global economies badly hit by COVID-19 and the potential for more stimulus to fix them. The U.S. House of Representatives is likely to vote on President Joe Biden’s proposed stimulus package by the end of the week. It would include $1,400 checks to most Americans, additional payments for children, and billions of dollars in aid to state and local governments as well as additional aid to businesses impacted by the pandemic.
In other trading, U.S. benchmark crude oil lost 52 cents to $61.15 per barrel in electronic trading on the New York Mercantile Exchange. It lost 3 cents on Tuesday to $61.67 per barrel. Brent crude, the international standard, lost 39 cents to $64.09 per barrel.
The U.S. dollar rose to 105.44 Japanese yen from 105.24 yen late Tuesday. The euro climbed to $1.2158 from $1.2150.


Electrified cars hit almost a fifth of EU Q3 vehicle sales

Electrified cars hit almost a fifth of EU Q3 vehicle sales
Updated 7 sec ago

Electrified cars hit almost a fifth of EU Q3 vehicle sales

Electrified cars hit almost a fifth of EU Q3 vehicle sales
LONDON: Nearly one in five vehicles sold in the European Union in the third quarter was an electrified model as sales continued to soar while fossil-fuel cars slumped, according to sales data released on Friday by a trade organization.
The European Automobile Manufacturers’ Association, or ACEA, which represents major European car, truck, van and bus makers, said that battery electric and plug-in hybrid model sales across the European Union made up just under 19 percent of all sales.
Battery electric vehicle sales jumped nearly 57 percent to more than 212,000 units, while plug-in hybrid models rose nearly 43 percent to more than 197,000 units.
This is a slower pace of growth than in 2020 when sales almost trebled from a low base.
But it compares with a 35 percent drop in sales for petrol cars — which still are the biggest sellers and account for nearly 40 percent of overall sales — and a more than 50 percent drop for diesel cars during the quarter.
Less than a decade ago, diesel cars made up more than 50 percent of sale in the EU, but accounted for under 18 percent of all cars sold in the third quarter.
As well as having to meet stringent new EU carbon emissions targets, car makers and consumers have benefited from government subsidies for electric vehicles.
The European Commission has also proposed an effective ban on fossil-fuel vehicles from 2035, aiming to speed up the switch to zero-emission electric vehicles as part of a broad package of measures to combat global warming.

China Evergrande lines up funds for interest payment to avert default — source

China Evergrande lines up funds for interest payment to avert default — source
Updated 4 min 7 sec ago

China Evergrande lines up funds for interest payment to avert default — source

China Evergrande lines up funds for interest payment to avert default — source
  • Company faced end of 30-day grace period for payment on Oct. 23
  • Next 30-day grace period expires Oct. 29 for Sept. 29 payment

HONG KONG/SHANGHAI: China Evergrande Group has supplied funds to pay interest on a US dollar bond, a person with direct knowledge of the matter told Reuters on Friday, days before a deadline that would have seen the developer plunge into formal default.
The person said Evergrande remitted $83.5 million to a trustee account at Citibank on Thursday — as earlier reported on Friday by state-backed Securities Times — allowing it to pay all bondholders before the payment grace period ends on Oct. 23.
News of the remittance will likely bring relief to investors and regulators worried about a default’s wider fallout in global financial markets, adding to reassurance from Chinese officials who have said creditors’ interests would be protected.
Still, the developer, saddled with $300 billion in liabilities, will need to make payments on a string of other bonds, with the next major deadline to avoid default only a week away and little known about whether it is in a position to pay those debts.
“They seem to be avoiding short-term default and it’s a bit of a relief that they have managed to find liquidity,” said a Hong Kong-based debt restructuring lawyer representing some bondholders, who did not want to be identified.
“But still, Evergrande does need to restructure its debt. This payment might be a way for them to get some sort of buy-in with stakeholders before the heavy work needed on the restructuring.”
It was not immediately clear how cash-strapped Evergrande was able to raise funds for paying the bondholders or whether any bondholders have already received the money.
Evergrande did not respond to Reuters’ request for comment. Citibank declined to comment. The person with knowledge of the matter was not authorized to speak with media and so declined to be identified.
News of the remittance comes a day after financial information provider REDD said Evergrande had secured more time to pay a defaulted bond it guaranteed, issued by Jumbo Fortune Enterprises. “This is a positive surprise,” said James Wong, portfolio manager at GaoTeng Global Asset Management, who had expected a default.
The news would boost bondholders’ confidence, he said, as “there are many coupon payments due ahead. If Evergrande pays this time, I don’t see why it won’t pay the next time.”
Evergrande missed coupon payments totalling nearly $280 million on its dollar bonds on Sept. 23, Sept. 29 and Oct. 11, beginning 30-day grace periods for each.
Subsequent non-payment would result in formal default and trigger cross-default provisions for its other dollar bonds.
Evergrande’s next payment deadline is Oct. 29 with the expiration of the 30-day grace period on its Sept. 29 coupon.

TEMPORARY RELIEF
Evergrande’s dollar bond prices surged on Friday, with its April 2022 and 2023 notes jumping more than 10 percent, data from Duration Finance showed, though they still traded at deeply distressed levels of around a quarter of their face value.
Its shares rose as much as 7.8 percent, a day after trade resumed following a more than two-week halt pending the announcement of a stake sale in its property management unit, which was scrapped this week.
Evergrande’s woes have reverberated across the $5 trillion Chinese property sector, which accounts for a quarter of the economy by some metrics, with a string of default announcements, rating downgrades and slumping corporate bonds.
In the latest such move, Fitch Ratings on Thursday cut Sinic Holdings (Group) Co. Ltd’s long-term foreign currency issuer default rating to “restricted default” from “C” as the developer failed to repay its $250 million notes due Oct. 18.
Still, the Evergrande news helped the Hang Seng mainland properties index surge more than 4 percent versus a gain of 0.25 percent in the broader Hang Seng index.
It also helped Evergrande’s smaller peer Kaisa Group Holdings Ltd, whose dollar bonds surged in price.
Kaisa was the first Chinese developer to default back in 2015 and the Evergrande crisis has put it back in the spotlight.
In mainland markets, the CSI300 Real Estate index jumped as much as 6.5 percent, and an index tracking the broader property sector was eyeing its biggest gain in nearly two months.
When asked whether it will step in to help its rival to ease its liquidity crisis, Chairman Yu Liang of the nation’s third-biggest developer, China Vanke Co. Ltd, said developers needed to ensure their own safety first.
“Everyone feels the chill as ‘winter’ arrives for the sector... Whether we can pass this winter safely is still unknown,” Yu told a company forum on Friday.

FREEWHEELING
Evergrande’s woes had been snowballing for months. Dwindling resources set against more than $300 billion of liabilities had wiped out 80 percent of its value.
Founded in Guangzhou in 1996, the developer epitomised a freewheeling era of borrowing and building. But that business model has been scuttled by hundreds of new rules designed to curb developers’ debt frenzy and promote affordable housing.
Analysts said any prospect of demise would raise questions over what would happen to the more than 1,300 real estate projects Evergrande has ongoing in over 280 cities, and any impact the wider property sector.
Bank exposure to developers is also extensive. A leaked 2020 document, branded a fake by Evergrande but taken seriously by analysts, showed the company’s liabilities extending to more than 128 banks and over 121 non-banking institutions.
“Given that we have little clarity on how bank financing is going for stalled real estate projects, but we know that project pre-sales are down a lot, the onshore business is unlikely to be supplying cash to Evergrande near-term,” said analyst Travis Lundy at Quiddity Advisers in Hong Kong.


Renewable energy employed up to 12 million people worldwide in 2020

Renewable energy employed up to 12 million people worldwide in 2020
Updated 11 min 26 sec ago

Renewable energy employed up to 12 million people worldwide in 2020

Renewable energy employed up to 12 million people worldwide in 2020
  • Sector created 500,000 jobs last year

RIYADH: The renewable energy industry created half a million jobs in 2020 so that 12 million people were employed in the sector at the end of the year, according to the International Renewable Energy Agency (IRENA) and the International Labor Organization (ILO).

Solar energy jobs led the way in renewables employment, accounting for 33 percent of jobs, IRENA and the ILO said in a report titled World Energy Transitions Outlook. Liquid biofuels had a 20 percent share of jobs.

“The potential for renewable energy to generate decent work is a clear indication that we do not have to choose between environmental sustainability on the one hand, and employment creation on the other,” ILO Director-General Guy Ryder said in the report. “The two can go hand-in-hand.”

China held the bulk of renewable energy jobs, with 39 percent, followed by Brazil and India, at 10 percent and 6 percent, respectively. Other countries rapidly generating employment in the sector include Vietnam, Malaysia and Indonesia.

The transition to renewable energy will more than offset job losses in traditional energy, the report predicted, with 24-25 million jobs created by 2030 compared with 6-7 million roles lost by the transition.

The report also expects that 43 million people will be working in the renewable energy sector by 2050.


Trump deal delivers $420 million windfall for wondering dealmaker

Trump deal delivers $420 million windfall for wondering dealmaker
Updated 22 October 2021

Trump deal delivers $420 million windfall for wondering dealmaker

Trump deal delivers $420 million windfall for wondering dealmaker
  • Digital World shares ended trading on Wednesday up 357 percent after the deal was announced, giving the firm a market value of close to $1.5 billion

A merger with former US President Donald Trump’s new social media venture has delivered a potential windfall of $420 million for a former finance executive who has been trying for a decade to reinvent himself as a serial dealmaker.
Benessere Capital CEO Patrick Orlando’s stake in Digital World Acquisition Corp, the Miami-based blank-check acquisition firm he is leading, was worth $423 million on Thursday after his deal to merge Trump Media and Technology Group was announced, according to a regulatory filing and Reuters calculations.
Orlando invested only $3 million in Digital World, and is set to receive the windfall because the deal entitles him to additional compensation in shares as sponsor of the firm, the filing shows. Digital World shares ended trading on Wednesday up 357 percent after the deal was announced, giving the firm a market value of close to $1.5 billion.
To be sure, these gains are on paper. The terms of the SPAC do not allow Orlando to cash out until six months after the merger has been completed.
It is nonetheless a remarkable reversal of fortune for the former Deutsche Bank AG derivatives banker who worked in Peru’s biofuel industry and for a US sugar trading company before trying his hand at special purpose acquisition companies (SPACs).
He launched Benessere in 2012 to advise other companies on their deals but it was not until last year that he launched four SPACs with the help of Shanghai-based investment bank ARC Capital.
He struggled to gain traction. One of his SPACs, which was based in Wuhan, China, failed last month to complete a merger with Giga Energy Inc. that would have valued the transportation solutions provider at $7.3 billion, because it could not deliver the cash required, according to regulatory filings.
Orlando did not respond to requests for comment.
Trump Media said it would receive $293 million in cash that Digital World had in a trust if no shareholder of the acquisition firm chose to cash in their shares.
The company said it planned a trial version of its social media app next month and a full roll-out in the first quarter of 2022.


John Kerry to attend Middle East Green Initiative Summit in Saudi Arabia

John Kerry to attend Middle East Green Initiative Summit in Saudi Arabia
Updated 21 October 2021

John Kerry to attend Middle East Green Initiative Summit in Saudi Arabia

John Kerry to attend Middle East Green Initiative Summit in Saudi Arabia
  • Kerry will “engage with government counterparts and private sector leaders on climate crisis

LONDON: US climate envoy John Kerry will travel to Saudi Arabia on Sunday to take part in the Middle East Green Initiative Summit.

During his two-day visit to the Kingdom, Kerry will “engage with government counterparts and private sector leaders on efforts to address the climate crisis,” the State Department said.

Kerry’s meetings will “bolster the United States’ bilateral and multilateral climate diplomacy” ahead of the COP26 climate summit in Glasgow that starts on Oct. 31.

Saudi Arabia will host the inaugural Saudi Green Initiative Forum and Middle East Green Initiative Summit in Riyadh on Oct. 23-25.

The environmental initiatives were launched in March by Crown Prince Mohammed bin Salman. Together they aim to plant 50 billion trees in the region and reduce Middle East carbon emissions by 60 percent.