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China To Cut RRR “Within A Week” As Evergrande Braces For Imminent Default

China To Cut RRR "Within A Week" As Evergrande Braces For Imminent Default

Last Friday, just as markets were set to crater, during a meeting with IMF Managing Director Kristalina Georgieva, China’s Premier Li hinted at a potential RRR cut…

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China To Cut RRR "Within A Week" As Evergrande Braces For Imminent Default

Last Friday, just as markets were set to crater, during a meeting with IMF Managing Director Kristalina Georgieva, China's Premier Li hinted at a potential RRR cut in the near term to support the real economy. Li's comment comes amid sluggish activity growth - the economy struggled with downward pressures from property slowdown, the lingering drag from “dual controls” policy and power shortage, and multiple waves of local outbreaks of Covid-19.

Specifically, Premier Li commented that "China would maintain prudent macro policy, enhance policy effectiveness and pertinency, keep liquidity at reasonable and adequate levels, cut RRR when appropriate to increase support to the real economy and in particular SMEs".

In its take of Li's remarks, Goldman's Chinese economists said that they think PM Li’s comment implies "a targeted RRR cut is very likely in the near term," and they go on to note that "based on previous experiences, after Premier Li’s comment, PBOC usually announces the actual cut within a week." That said, the net liquidity impact may depend on whether the central bank rolls MLF in full on December 15th when RMB 950bn loans will mature. It also means that the cut will likely take place before the 15th.

Goldman also noted that despite PBOC Sun’s implicit comment on no RRR cut in mid October, the recent slump in economic growth and increased stresses in the labor market likely still concerned policymakers and in particular the State Council. Property indicators such as land sales continued to deteriorate, and despite PBOC’s guidance on accelerating credit extensions, TSF data has surprised to the downside in the recent months (on the other hand, China's credit impulse can't drop any further and is poised for a sharp bounce if only on base effects). The strict restrictive measures against Covid-19 also dragged down consumption activities and export growth might have also moderated in November.

Of course, the imminent RRR cut will hardly be a surprise as it comes one week after we reported that "Beijing Capitulates: Urges Local Govts To Unleash Debt Flood As Cities Begin Backstopping Property Developers"; as we discussed than, there have been a series of policy easing measures in recent weeks - especially in the property market - and high frequency indicators suggest incremental improvement in construction activities.

To be sure, the upcoming Politburo meeting and Central Economic Work Conference may shed more light on the policy outlook next year. Policymakers may send incremental easing signals while stating a stable overall macro policy next year.

One such signal came early on Monday, when China's Securities Daily confirmed that Beijing may cut the RRR ratio, citing Li Chao, chief economist at Zheshang Securities, who said bank would use the liquidity released from the cut to repay the 950BN yuan in medium-term policy loans coming due on Dec 15,

The reaction in the market was quick and in at the start of trading, the yield on China’s 10-year government bonds slumped the most since July, on expectations the central bank will soon reduce the the reserve-requirement ratio for lenders: China's 10-year yield was down 5bps to 2.85%, while 5-year tenor falls 6bps to 2.68%.

In other news, shares of China's insolvent property giant Evergrande Group tumbled 12% to an 11-year low on Monday after the firm said late on Friday what was patently obvious to anyone, i.e., that there was no guarantee it would have enough funds to meet debt repayments, prompting Chinese authorities to summon its chairman.

In a filing late on Friday, Evergrande, the world's most indebted developer, also said it had received a demand from creditors to pay about $260 million. That prompted the government of Guangdong province, where the company is based, to summon Evergrande Chairman Hui Ka Yan, and it later said in a statement it would send a working group to the developer at Evergrande's request to oversee risk management, strengthen internal controls and maintain normal operations.

As Bloomberg put it, "Evergrande’s statement offers its most explicit acknowledgment yet that its $300 billion of overseas and local liabilities have become unsustainable."

Evergraned's stock fell more than 12% to HK$1.98, its lowest since May 2010. The shares fell as a 30-day grace period on a coupon payment of $82.5 million due on Nov. 6 comes to an end on Monday.

Evergrande, whose default is just a matter of time, is grappling with more than $300 billion in liabilities amid a Chinese property sector that is all but dead. The upcoming collapse would send shockwaves through the country's property sector and beyond.

That's why, repeating what it did two months ago when the Evergrande turmoil first emerged, China's central bank said in a series of apparently coordinated statements late in the evening, that any risks to the broader property sector could be contained. Which is precisely what Bernanke said about subprime.

Short-term risks caused by a single real estate firm will not undermine market fundraising in the medium and long term, the People's Bank of China said, adding that housing sales, land purchases and financing "have already returned to normal in China".

Perhaps sensing that Evergrande's doom is nigh and that markets will need to see central bank support to avoid widespread panic, China's securities regulator stated it would support the reasonable financing needs of developers which coupled with a report over the weekend which said that November developer loans increased for a second month, sent the beaten down sector surging.

In Hong Kong Sunac China Holdings rose as much as 7.1%, Shimao Group was up 7.3%, Country Garden Holdings jumped 6.4%, Vanke was up 5.2%, China Overseas Land +3.3%, China Resources Land +3.9%, Seazen +4.1%, Greentown China +2.9%, Kaisa Group +3.2%, Guangzhou R&F +2.9%, Zhongliang Holdings Group adds 5.1%, and so on.

 

Tyler Durden Sun, 12/05/2021 - 22:23

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Looming Global Food Crisis Requires Immediate and Coordinated Action from All Sectors

Looming Global Food Crisis Requires Immediate and Coordinated Action from All Sectors
PR Newswire
BOSTON, May 17, 2022

The War in Ukraine Exposes an Urgent Need to Rethink and Improve the Structure and Resilience of Our Food SystemsPublic, Private,…

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Looming Global Food Crisis Requires Immediate and Coordinated Action from All Sectors

PR Newswire

  • The War in Ukraine Exposes an Urgent Need to Rethink and Improve the Structure and Resilience of Our Food Systems
  • Public, Private, and Social Sectors Must Collaboratively Reshape Food Systems to React Quickly When Humanitarian Needs Are Most Pressing
  • New BCG Report Provides 30 Near- and Medium-Term Solutions to Make Global Food Systems More Resilient

BOSTON, May 17, 2022 /PRNewswire/ -- Russia's invasion of Ukraine is testing the capacity of global food systems to feed the world in times of crisis. An estimated 1.7 billion people—most of them in developing economies—could suffer severely increased food insecurity, higher energy prices, or greater debt burdens, according to the UN Task Team for the Global Crisis Response Group. Each of these individual factors adversely affects people's ability to feed themselves. At the same time, there is a critical need to address them more holistically and across all sectors in order to reshape our food systems so that we can counteract this humanitarian crisis—and future ones.

A new report from Boston Consulting Group (BCG), titled The War in Ukraine and the Rush to Feed the World, explores in detail the multiple direct and indirect impacts of the turmoil in Ukraine and provides 30 near- and medium-term solutions to help respond to the crisis and improve the resilience of global food systems. As the report notes, the looming global food crisis isn't about the world's capacity to produce enough food. Rather, it is about our food systems' inability to securely and equitably store and distribute enough food—and the inputs needed to produce it—in the face of the disruption caused by the ongoing war.

Together, Russia and Ukraine account for about 12% of the total food calories traded around the world, and both are critical exporters of key commodities such as wheat (28% of global trade) and sunflower oil (69%), according to the International Food Policy Institute. The UN's World Food Programme (WFP) buys from Ukraine half of the wheat it distributes around the world. Further, as exports from these countries tumble, some other leading exporting countries have announced export bans or licensing restrictions designed to protect their own food stockpiles.

As a result, prices are skyrocketing—not just for food, but also for essential agricultural inputs, such as fertilizer and fuel, that Russia has long been a key supplier of. About half of the world's people rely on food outputs that use fertilizer, and a drop in fertilizer supply could severely affect exposed populations for up to four years unless action is taken immediately to boost supplies. Moreover, the ripple effects of disruptions to the fertilizer supply chain will reach consumers worldwide.

The war's impact on fuel prices has been equally dramatic. Aside from the added cost to farmers of fuel they need to power their equipment, last-mile inland transportation account for as much as 40% of food costs in many developing countries. So as fuel prices go up, the total cost of food increases, creating a vicious cycle.

Making matters worse, the current crisis coincides with high debt levels in many developing economies around the world. Largely due to public spending to address the challenges presented by COVID-19, about 60% of low-income countries are currently in, or at high risk of, debt distress, compared with just 30% in 2015, according to the International Monetary Fund.

"While this crisis will impact all of us around the world in significant ways, low-income economies risk devastation and potential unrest," said Ertharin Cousin, CEO and founder of Food Systems for the Future, and a coauthor of the report. "We're not just talking about the poorest of the poor, who are already suffering from hunger. We're also talking about people who could recently afford a loaf of bread for their families and who now will literally be unable to do so."

Relieving the current crisis requires, most importantly, a coordinated and immediate emergency humanitarian response by all stakeholders—governments, development institutions and banks, NGOS, and private companies—to meet the most pressing needs for humanitarian aid. They must provide not only food and financial support, but also the seeds, inputs, tools, and technical assistance needed to support in-country sustainable intensification and other crop substitution actions. The report outlines a solution set of 30 key recommendations for all stakeholders. (See the exhibit.)

"There is a lot of talk about the individual components of the crisis, but it is critical that we look at things holistically and recognize the interdependence of factors ranging from rising costs of food, fertilizer, and fuel, to maxed-out debt, climate-related issues, ongoing conflicts elsewhere in the world, and COVID-19. There are multiple prongs of failure at risk of being tipped over by Russia's invasion of Ukraine," said Shalini Unnikrishnan, a managing director and partner at BCG, the global leader for Food and Nature in the firm's Social Impact practice, and a coauthor of the report.

"Just as critically, we need a coordinated effort across all sectors to rethink and repair our food systems, making them more equitable, more resilient, and more responsive in times of great need," Unnikrishnan continued. "Avoiding more such crises will require diversifying food production across diets, supply chains, and markets, and addressing the indebtedness, economic inequities, and market distortions that have contributed to the current crisis."

Download the publication here: https://www.bcg.com/publications/2022/how-the-war-in-ukraine-is-affecting-global-food-systems

For media queries, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About Boston Consulting Group
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.

Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.

About Food Systems for the Future
Food Systems for the Future (FSF) was founded to catalyze, enable, and scale market-driven agtech, foodtech, and innovative businesses across the value chain to improve nutrition outcomes in underserved and low-income communities. Through wraparound support to enterprises and broader ecosystem building, FSF addresses barriers to affordability, availability, and awareness of healthy, nutrient dense foods through our core services: financing, business acceleration, public policy & education, partnerships & community engagement, and nutrition expertise. FSF currently operates in the United States and Sub-Saharan Africa. To find out more, visit fsfinstitute.net.

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SOURCE Boston Consulting Group (BCG)

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Morgan Stanley: SPX could return to its pre-pandemic 3,400 level

The S&P 500 index could return to its pre-pandemic 3,400 level in the coming months that translates to another 15% downside from here, warned a Morgan…

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The S&P 500 index could return to its pre-pandemic 3,400 level in the coming months that translates to another 15% downside from here, warned a Morgan Stanley analyst on Monday.

Don’t be fooled by the bear market rally

Michael Wilson dubs the recent bounce (about 4.0%) in U.S. equities a “bear market rally” and says investors should brace for more pain ahead as inflation and supply constraints remain a significant headwind. In his note, the analyst said:

With valuations now more attractive, equity markets so oversold an rates potentially stabilizing below 3.0%, stocks appear to have begun another material bear market rally. After that, we remain confident that lower prices are still ahead.

Last week, the U.S. Bureau of Labour Statistics said inflation stood at 8.30% in April – a marginal decline versus the prior month but still ahead of the Dow Jones estimate.

How to navigate the current environment?

Wilson continues to see a recession as unlikely, but agrees that the risk of such an economic downturn has certainly gone up. The U.S. economy unexpectedly shrank 1.40% in the first quarter of 2022.

That is just another reason why equity risk premium is too low, and stocks are still overpriced. The bear market won’t be over until valuations fall to levels (14 – 15x) that discount the kind of earnings cuts we envision, or earnings estimates get cut.

He recommends increasing exposure to real estate, health care, and utilities stocks to navigate the current environment, while tech and consumer discretionary stocks remain a big “no” for him.

The post Morgan Stanley: SPX could return to its pre-pandemic 3,400 level appeared first on Invezz.

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Jelenew becomes the only sports brand as the Signature Sponsor of amfAR Gala during the 75th Festival de Cannes

Jelenew becomes the only sports brand as the Signature Sponsor of amfAR Gala during the 75th Festival de Cannes
PR Newswire
WILMINGTON, Del., May 16, 2022

Jelenew x Stéphane cycling-pants dress will be auctioned off to support the fight against AID…

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Jelenew becomes the only sports brand as the Signature Sponsor of amfAR Gala during the 75th Festival de Cannes

PR Newswire

Jelenew x Stéphane cycling-pants dress will be auctioned off to support the fight against AIDS and COVID-19

WILMINGTON, Del., May 16, 2022 /PRNewswire/ -- AmfAR announced on April 26 that Jelenew would be an amfAR Signature sponsor during the 75th Cannes Film Festival. It is reported that Jelenew is the only athletic brand among them. And Jelenew will jointly create a cycling-pants dress newlook with Stéphane Rolland, and one of the cycling-pants dresses will auction at the dinner. This helps amfAR raise funds for the American AIDS Research Foundation to contribute to the global fight against AIDS (AIDS) and COVID-19.

As a pioneer challenger in the professional cycling apparel industry, Jelenew has always adhered to the brand concept of "born for women." It focuses on solving clothing and equipment problems in professional cycling for women. It is committed to providing women with cycling products that perfectly integrate "sport functionalism, comfort, and 3D structural aesthetics". The earliest motivation for Jelenew to develop "1+1 model" detachable outer padded cycling pants (1 pair of tight-fitting leggings + 1 pair of detachable outer padded cycling shorts) came from Jelenew's social responsibility and industry mission.

In tracing the evolution history of cycling pants, the Jelenew R&D team found that although there are significant structural differences and needs between men and women. In the past 100 years, male and female riders have worn the same built-in pad cycling pants structure. They know that the "cycling pad" significantly impacts cyclists; it is the core element that affects cycling pants' comfort, sports performance, and health and hygiene index. Unscientific structure and design will obliterate women's health, comfort, and beauty. The women's cycling apparel industry urgently needs a cycling brand that is "truly made for women," which can solve the pain points of female consumers from a female perspective. So those female cyclists can enjoy the same healthy riding as male cyclists.

Jelenew's creative director Di Liu, a former Chanel Haute Couture designer, established Jelenew's research team and product development team in Paris, France. According to the different physiological structures of men and women and the differentiated needs in the riding process, he took the lead in introducing the moulage technique into the design of professional cycling pants. He led the development of the first professional cycling pants for women, the Jelenew 1+1 model: detachable outer padded cycling pants. These cycling pants subvert the built-in pad structure of traditional cycling pants. They are the first professional cycling pants truly created for women globally. 

As the world's top charity dinner, amfAR has become one of the most anticipated events during the Cannes Film Festival. Each session has attracted many international celebrities to show up to help out. As a high-profile event, amfAR is also cautious in selecting cooperative brands. The list of official partners used to be Chopard, Bvlgari,Harry Winston and Louis Vuitton, the top brands loved by celebrities. This year, in the official invitation letter of amfAR, the cutting-edge brand Jelenew is listed, and it is the only signature sponsor other than Chopard.

Di Liu said: "Jelenew is honored to be the amfAR signature sponsor during the 75th Cannes Film Festival. Over the years, this good foundation has been dedicated to advocating the impact of AIDS and HIV, providing financial support to HIV/AIDS researchers worldwide, and seeking to translate their research findings into effective policy, prevention, and a therapeutic education program that benefits the world. Each of us has the power to drive transformation. As an individual, the power may not be that great. However, when we come together, we become world game-changers. Jelenew is proud to be a part of it. "

It is understood that the cycling-pants dress newlook of Jelenew x Stéphane Rolland, which will be auctioned at the charity dinner this time, draws inspiration from the golden age of Spain in the 17th century and is a "dark cycling bride" dress look with a sense of the times. Stéphane Rolland designs the black dress on the upper body according to the paintings of Goya and Velasquez and the large black tunic with more stripes. And sleeves are embroidered with Art Deco crystals. Jelenew is based on the first professional outer padded cycling pants. It is inspired by the "Goddess of Victory" in the Louvre Museum. It draws inspiration from the Spanish 17th-century noble knight pants to create a pair of cycling pants with feminine avant-garde. This is the first cross-field cooperation between Sports Technology and Haute Couture, a milestone in the fashion field. 

It is reported that all proceeds from the cycling-pants dress newlook auction will be donated to the "amfAR AIDS Research Fund."

About JELENEW 

Jelenew is an American avant-garde cycling brand born for women. It creates the first cycling pants truly made for women in the world. It brings the groundbreaking combination of "Haute Couture and Sportswear" and carefully designs each product with "luxury moulage technique" to provide a more refined sports experience and promote a healthy lifestyle for cyclists to enjoy elegant and stylish suburban cycling.

About amfAR and amfAR Gala 

amfAR, The Foundation for AIDS Research, is one of the world's leading nonprofit organizations dedicated to the support of AIDS research, HIV prevention, treatment education, and advocacy. Since 1985, amfAR has invested nearly $617 million in its programs and has awarded more than 3,500 grants to research teams worldwide.

Celebrities frequently donate items to be auctioned off for the foundation. Past donors have included Uma Thurman, Karlie Kloss, and Milla Jovovich. The 25th annual gala embraced the #MeToo movement. 25 prominent women chaired it on stage and screen, namely: Alessandra Ambrosio, Poppy Delevigne, Linda Evangelista, Sylvia Fendi, Aileen Getty, Kate Hudson, Scarlett Johansson, Milla Jovovich, Heidi Klum, Daphna Krim (daughter of Mathilde Krim), Karolina Kurkova, Sienna Miller, Angela Missoni, Mary Parent, Katy Perry, Natasha Poly, Aishwarya Rai, Vanessa Redgrave, Joely Richardson, Carine Roitfeld, Caroline Scheufele, Irina Shayk, Lara Stone, Donatella Versace, and Michelle Yeoh. Past items auctioned have included numerous photographs by Andy Warhol, Annie Leibovitz portrait sessions, stays in fashion moguls and celebrity houses, and 53-karat diamond jewelry. Heidi Klum notably donated her Bentley S3 convertible to garner one of the highest bids at €200,000.

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SOURCE Jelenew

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