Negative yields: what could go wrong?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Some central banks have cut interest rates into negative territory in an effort to eke out some economic growth, but the step could spur unintended, counterproductive outcomes.

“Negative rates could backfire,” Francesco Garzarelli, co-head of macro markets research at Goldman Sachs, said in a note Friday. “At least some segments of the population could feel poorer, and less secure,” he said. “Rather than lifting consumption and borrowing, ultra-loose monetary policy could perversely lead to an increase in precautionary savings and a slower economic recovery.”

In an effort to ward off potential deflation and bolster nearly flat-lined economic growth, some central banks — including the European Central Bank (ECB), the Swiss National Bank and central banks in Sweden and Denmark — have cut rates into negative territory.

Going negative

A big chunk of the government bond market has gone negative: JPMorgan estimated that in January, around USD 3.6 trillion worth of developed market government bonds-or 16 percent of its Global Bond Index-was at a negative yield.

That`s something that can spur new problems, Goldman said, noting concerns that pension funds and insurance companies may struggle to meet guaranteed payouts.

“Today`s very low or even negative fixed income yields often are not large enough to match future liabilities,” Goldman said, noting insurance companies are generally assuming forward rates will be positive and above current rates. If low or negative yields persist, making guaranteed products work will become increasingly difficult, it said.

In addition, if banks` profitability takes a hit from negative rates, it could actually discourage bank lending, hurting efforts to revive economic activity, Goldman said.

There`s also the risk of asset bubbles forming, Garzarelli said, adding the risk is especially high for “high duration” assets such as technology stocks and high-dividend-paying stocks, which already have “eye-watering” valuations.

Upending theory

Others also believe ZYNY, or zero-yield to negative-yield, may not follow the theoretical playbook in the real economy.

“Traditional economic theory suggests that low interest rates will encourage households to borrow more, both to acquire housing and also to favor present consumption over future consumption,” Michala Marcussen, global head of economics at Societe Generale, said in a note dated Sunday. But in practice, it may not work as households are already relatively highly indebted, labor markets remain fragile and regulations have become more demanding, she said.

“Indeed, households may even opt to save more to compensate for low yields, and all the more so in ageing populations,” Marcussen said.

Corporates also aren`t really cooperating, using low yields to borrow to buy back shares or retire older debt, steps that don`t help the real economy much, she said. Societe Generale also expects banks to use some of the proceeds of the ECB`s new quantitative easing program to pay back euro-area debt and deleverage rather than increase the credit supply there.

“Yields could fall much lower and even deeper into negative territory,” but that`s no guarantee of an economic recovery, she said.

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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It’s a big week for Australia, China

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A busy week ahead for Asia gets under way with financial markets digesting key economic data over the weekend: An interest rate cut by China`s central bank , a second consecutive month of contraction in China`s February official purchasing managers` index (PMI) and the unveiling of India`s annual 2015/2016 budget .

The People`s Bank of China on Saturday cut its benchmark interest rate by 25 basis points to 5.35 percent, and reduced the benchmark saving rate by a similar margin to 2.5 percent. The cuts came into effect on Sunday, according to the statement.

“This combination of policy rate cuts and interest rate liberalization is in line with our expectations, but comes slightly earlier than we thought. The timing leads us to believe that policymakers have deemed the recent data weakness more than merely seasonal,” Societe Generale`s analysts wrote in a note.

Key highlights this week include a batch of economic numbers, alongside a central bank decision from Australia and an annual meeting of China`s parliament – which should shed some insight into Beijing`s outlook for the economy in the coming year.

Australia

Down under, the spotlight falls on the Reserve Bank of Australia, which is expected to announce another 25-basis-point rate cut on Tuesday. The central bank cut rates to a fresh record low of 2.25 percent last month, as widely expected, spurring a 12-session winning streak in the benchmark SandP ASX 200 index.

“To ensure maximum impact from its February cut in boosting confidence, spending growth and maintaining downward pressure on the Australian dollar, the RBA should, and most likely will, cut rates again,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, write in a note.

A larger-than-expected drop in fourth-quarter business investment last week also fuelled the need for a second rate cut, AMP Capital`s Oliver added.

On tap for Wednesday is Australia`s fourth-quarter gross domestic product (GDP) data, which will likely show growth rising 2.6 percent, according to a Reuters poll, a tick below the 2.7 percent in the preceding quarter. However, on a quarterly basis, GDP advanced 0.7 percent, better than the 0.3 percent expansion in the July-September period.

“Business investment remains weak as the economy stutters in transitioning from mining to non-mining‐led growth. Other partial indicators of demand will confirm that weak commodity prices are also hurting Australian exports,” analysts from Moody`s Analytics wrote in a note.

Australia will also release fourth-quarter current account and January`s retail sales on Tuesday and Thursday, respectively, at 0830 SIN/HK.

China

China`s National People`s Congress – the country`s highest organ of state power – meets on Thursday and investors will be watching for comments on economic targets for 2015 and whether authorities will roll out further easing measures.

Barclays expects Beijing to lower its GDP target for the year to 7 percent, along with a reduction in consumer price index (CPI) and M2 – the mainland`s broadest measure of money supply -targets to 3 and 12 percent, respectively.

Beijing will likely strike an accommodative tone for further interest rates and reserve requirement ratio (RRR) cuts, analysts say, amid a backdrop of persistent economic slowdown. The world`s second largest economy expanded 7.4 percent last year, its slowest pace in 24 years.

“The overall macro policy framework will be `prudent` in practice, with monetary easing to neutralize capital outflows and rising real interest rates with an increase in the fiscal deficit to support social spending,” Barclays` analysts wrote in a note.

HSBC`s final reading of China`s manufacturing sector in Febuary came in at 50.7 early Monday, much higher than the flash reading of 50.1 and the official February reading announced over the weekend. The services PMI for February will be released on Wednesday at 0945 SIN/HK.

In South Korea, a raft of monthly indicators in the form of CPI and trade numbers for February, as well as industrial production and retail sales data for January, are due early in the week.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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After rate cut, what’s next from PBOC?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Chinese central bank’s second rate cut in three months will not be enough to halt a downturn in the world’s second largest economy, with more easing steps needed, say economists.

The People’s Bank of China (PBOC) cut benchmark interest rates by 25 basis points to 5.35 percent on February 28 as deteriorating economic conditions forced the central bank to shorten the time gap between policy moves. It had already delivered a lending rate cut on November 21 and a reserve requirement ratio cut (RRR) on February 5.

The rate cut, which came sooner than some analysts had expected, was announced hours before the release of the official purchasing managers index (PMI) for February, which showed the country’s manufacturing activity contracted for a second straight month.

More steps needed

“Against this backdrop, we think more easing steps will follow,” said Louis Kuijs, chief China economist at the Royal Bank of Scotland. “This is needed to ensure that GDP (gross domestic product) growth will not fall too much below 7 percent in 2015 – what we expect will be announced as this year’s target during the NPC (National People’s Congress) meeting that starts March 5. “

A further reduction in the benchmark lending rate and RRR are in the pipeline, say economists.

“The next move is likely to be a RRR cut, likely in 2Q, but a cut towards the end of 1Q cannot be ruled out (RRR cut is also a tool of liquidity management),” said Yu Song, economist at Goldman Sachs.

“Further benchmark interest rate cuts are also possible. The government is also loosening other policies such as allowing the exchange rate to depreciate modestly against the [US dollar] and stepping up infrastructure investments,” he said.

China’s yuan fell to its weakest level against the US dollar since October 2012 early Monday.

HSBC expects one more lending rate cut and RRR reduction in the second quarter.

Read More: China cuts benchmark interest rates by 25 basis points

“More easing, beyond the latest lending rate cut, has to be carried out to bring about a material fall in cost of financing within the system,” said André de Silva, Head of Asia-Pacific Rates Research at HSBC.

“Recent money market conditions still paint a tough financing picture. The 7-day interbank repo rate reached 4.99 percent as of 28 February, way above the past year average of 3.60 percent. The money market is the basic building block of financing and with such high levels, it is extremely difficult to expect companies’ cost of funding to fall,” he said.

Just the beginning

With China’s growth under continued pressure, monetary easing is poised to become a dominant theme in the mainland – a clear policy divergence from the US, where the Federal Reserve is gearing up to tighten the monetary screws.

Steve Wang, chief China economist at Reorient Financial Markets says of all the major economies, China has the most room for monetary ease.

Inflation in the mainland has fallen from 2.5 percent in January 2014 to just 0.8 percent in January 2015 and the slowdown in domestic demand means there’s scope for inflation to ease further, say economists.

“We believe that additional monetary stimulus will be positive for Chinese equities,” he added.

The benchmark Shanghai Composite was flat early Monday as investors digested the weekend’s rate cut.

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Samsung unveils curved Galaxy S6 Edge, payments

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Samsung has unveiled a curved screen smartphone and mobile payment system in an attempt to lead its fightback against US rival Apple.

The South Korean electronics giant released the Galaxy S6 and curved S6 Edge at Mobile World Congress in Barcelona as it looks to turn round its fortunes after a year dominated by the iPhone 6 and 6 Plus in the premium end of the market.

Both devices have a 5.1 inch screen with a 16 megapixel rear camera and 5 megapixel front camera. But the screen on the S6 Edge curves over the sides of the smartphone.

“This phone is more powerful than every Galaxy device before. It is a new generation of design,” Jean-Daniel Ayme, deputy president of Europe for Samsung, told CNBC in an interview.

“We are very confident that this device will be hugely successful,” Ayme added when asked by CNBC how the S6 Edge would fare against the iPhone.

Both smartphones can be charged wirelessly, a feature the South Korean company teased last week in a blog post. Other features include a heart rate monitor and ability to view apps such as the time or stocks on the side screen of the S6 Edge.

Analysts said the Galaxy S6 and S6 Edge are a step up from the Galaxy S5 which was criticized for looking and feeling cheap, despite being Samsung’s flagship product.

“These products deliver a completely new level of quality and design from Samsung which was something where they made a major misstep with the all-plastic Galaxy S5,” Ben Wood, chief of research at CCS Insight, told CNBC by phone, referring to the Galaxy S5’s plastic body. The latest S6 range is made of metal.

“The products’ three clear areas of differentiation – camera, screen and design – and have simplified software. The purchase consideration for consumers are clearer than before.”

‘Not revolutionary’

Samsung faced a tough year in 2014, losing its dominant position in both China and India to high-spec low-cost smartphone makers such as Xiaomi and Micromax. And in the fourth quarter of last year, Apple tied with Samsung to become number one smartphone vendor in the world by shipments, according to Strategy Analytics.

To top it off, the South Korean titan’s cash cow mobile division reported its fifth consecutive quarter of decline in earnings in the fourth quarter of 2014.

The S6 Edge is Samsung’s reply, but analysts said it would not lead to full-blown turnaround for the company’s smartphone unit.

“I think it’s an evolutionary, not revolutionary, step for Samsung, but it is the first step in stabilizing the company,” Neil Mawston, executive director at Strategy Analytics, told CNBC by phone.

As well as the devices, Samsung unveiled its mobile payments system called Samsung Pay. This will allow customers to store their card details in a “mobile wallet” and pay using their smartphone or any other Samsung devices.

Samsung said its payment system works using near field communication (NFC) technology. But unlike Apple Pay, Samsung Pay also uses magnetic strip technology in order for users to pay for items using their mobile devices. This, Samsung claims, will allow it to work with over 90 percent of the world’s retailers.

Initially Samsung Pay will roll out in South Korea and the US in the third quarter of this year, Ayme said, but could not say when it will be available globally. Samsung has partnered with Mastercard and Visa on its payments system and said it is looking to work with other companies such as American Express.

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China’s rate cut buoys Asia stks; yuan at over two-year low

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian stocks kicked off the week at new highs, as an interest rate cut in China on Saturday offset a weaker finish on Wall Street last week and data indicating shaky growth in the world’s top two economies.

The People’s Bank of China cut the benchmark interest rate by 25 basis points to 5.35 percent and reduced the benchmark saving rate by a similar margin to 2.5 percent.

HSBC’s final reading of China’s manufacturing sector in Febuary came in at 50.7, much higher than the flash reading of 50.1 and the official February reading announced over the weekend, which showed a second straight month of contraction due to unsteady exports and slowing investment.

US equities ended lower last Friday as economic growth in the world’s biggest economy slowed more sharply than initially thought in the fourth quarter. Analysts polled by Reuters expected GDP growth of 2.1 percent, after a final reading of 5.0 percent in the third quarter.

The blue-chip Dow Jones Industrial Average and tech-heavy Nasdaq Composite shed 0.5 percent, while the S&P 500 index finished 0.3 percent lower.

Nikkei rises 0.2 percent

Japan’s Nikkei 225 index trimmed gains, but hovered near fresh 15-year highs, as the dollar-yen touched a two-and-a-half-week high of 119.9.

Among blue-chip exporter stocks, Toyota Motor tacked on 0.7 percent, while Toshiba and Canon gained 1.1 and 0.4 percent each.

Retailing giant Fast Retailing climbed 0.6 percent ahead of the release of its latest sales figures. Telecom giant NTT Communications rallied 2.8 percent on news that it is looking to acquire German data center operator e-shelter.

On the domestic data front, Japanese companies raised spending on factories and equipment in the final quarter of 2014, data from the Ministry of Finance showed early Monday, underscoring a pick-up in business investment.

Shanghai Comp up 0.5 percent

Chinese shares rebounded back to a four-week high, after wavering between gains and losses following the release of PMI data.

Robust gains among property majors provided support; China Merchants Property, Shanghai Shimao and Poly Real Estate jumped more than 2 percent each, while Gemdale and China Vanke elevated 1.6 and 1.2 percent, respectively.

Meanwhile, the yuan weakened to 6.2730 against the dollar – its lowest level since October 2012.

ASX up 0.8 percent

Australia’s S&P ASX 200 index hit its highest level since May 2008 ahead of the Reserve Bank of Australia’s (RBA) policy meeting tomorrow, where the central bank is widely expected to announce another interest rate cut.

“Those calling for a cut would say the RBA often moves in pairs. With this in mind, if the RBA doesn’t cut tomorrow, then May would almost certainly see easing of the cash rate and the markets are fully discounting this,” IG’s chief market strategist Chris Weston said.

Mining and banking heavyweights are on a roll in early trade; Rio Tinto and BHP Billiton piled on nearly 2 percent each, while Westpac led gains among the big four lenders with a rise of 1.5 percent. Australia & New Zealand Banking, National Australia Bank and Commonwealth Bank of Australia advanced more than 1 percent each.

Myer Holdings bucked the rising trend, down 12 percent, following news that the retailer named Richard Umbers as its new chief executive officer. and managing director.

Kospi adds 0.3 percent

South Korea’s Kospi index hovered near a five-month high, led higher by index heavyweights.

The heaviest weighted stock Samsung Electronics surged 3.4 percent after the electronics giant unveiled the Galaxy S6 and curved screen S6 Edge at the Mobile World Congress in Barcelona, along with a mobile payment system in an attempt to compete with US rival Apple.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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Nikkei shrugs off weak data to hit new highs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian equity markets were mixed early on Friday, following an uninspiring lead from Wall Street amid lower oil prices. However, Japanese stocks brushed off a raft of weaker-than-expected data to clinch fresh 15-year highs.

Overnight, US stocks closed narrowly mixed, with stocks near recent highs, as concerns about oil prices and a worse-than-expected initial jobless claims figure weighed on investor sentiment. The Dow Jones Industrial Average finished flat, while the S&P 500 closed down 0.2 percent. The tech-heavy Nasdaq Composite outperformed to settle 0.4 percent higher.

Global oil prices dropped on Thursday amid ample global supply and increasing US commercial inventories. US crude settled USD 2.82 lower at USD 48.17 a barrel, while benchmark Brent crude fell USD 1.60 to USD 60 a barrel.

Nikkei adds 0.2 percent

Japanese shares brushed off weaker-than-expected economic data to touch their highest level since June 2000, with the help of a weaker yen. The benchmark Nikkei 225 index has closed at new 15-year highs in four out of the past five trading sessions.

Among the raft of data released before market open, the closely-watched consumer inflation eased for a sixth straight month in January, pushing the Bank of Japan further from its 2 percent target. Stripping out the effects of a sale tax hike, the nationwide consumer price index (CPI) rose a less-than-expected 0.2 percent, down from 0.5 percent in December.

Advances in the dollar-yen buoyed exporter stocks; Sony led gains among the blue-chips, with a rise 1.1 percent. Mitsubishi Electric and Canon gained 0.2 percent each, but Toyota Motor erased losses to dip 0.2 percent.

ASX flat

Australia’s S&P ASX 200 index pared losses as its mining and banking heavyweights turned broadly positive; BHP Billiton and Fortescue Metals pared losses to resurface above the flatline.

Energy producers were hurt by lower oil prices overnight, however; Santos and Oil Search lost over 1 percent each, while Woodside Petroleum shed 0.3 percent.

The earnings season enters its final day in Sydney today and attention is on index heavyweight Woolworths. The grocer plunged 9.1 percent following its announcement of a change in senior leadership and warning that full-year earnings will come at the bottom end of consensus estimates. Wine firm Treasury Wine Estates recouped losses to notch up 0.4 percent after swinging back to a profit in the first half.

Kospi falls 0.14 percent

South Korea’s Kospi index drifted lower, led by index heavyweights. Steelmaker Posco slumped 1.6 percent, while the top two heaviest weighted stocks Samsung Electronics and Hyundai Motor receded 0.9 and 1.2 percent each.

Oil-related counters were among the hardest-hit; SK Innovation and S-Oil lost more than 2 percent each.
Rest of Asia

Singapore-listed commodities trader Noble Group plummeted 7.9 percent after unexpectedly reported its first quarterly loss in three years due to asset write-downs.

Elsewhere, AirAsia posted its first net loss in two years amid heavy foreign-exchange losses and higher financing and operating costs. Shares of the Malaysian budget carrier opened down 1.1 percent, while the broader FTSE Bursa Malaysia KLCI opened flat.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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Are oil producers running out of closet space?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil supply running ahead of demand hasn’t just pressured prices, it’s also filling up storage space, potentially pushing crude toward another leg down.

“We’re going to see pretty fast inventory builds over the next few weeks,” Francisco Blanch, head of commodity research at Bank of America-Merrill Lynch, told CNBC Wednesday, noting that global supply is running around 1.4 million barrels a day above demand.

“If you run out of space, prices tend to react a lot more violently to adjust that supply and demand imbalance and that’s what we expect over the next few weeks,” he said, forecasting both WTI and Brent will fall toward USD 30 a barrel. Prices settled at USD 50.99 and USD 61.97, respectively, on Wednesday.

Read More: Oil may fall again … but buy energy stocks?

He cited fresh American Petroleum Institute (API) data which showed US crude inventories climbed by a larger-than-expected 8.9 million barrels in the week ended Feb. 20, for a total of around 437 million barrels squirreled away. Around 50 million to 100 million barrels of crude oil may be gathering dust in floating storage by the end of the second quarter, compared with around 110 million barrels in April 2009, during the global financial crisis, he estimated.

The supply build isn’t helped by an oil market that’s in contango, or when the “spot” price is lower than the price of the future contract. That makes it more profitable for traders to stick their oil in storage to sell at a higher price later.

As much as 80 percent of the commercially available storage in the US may already be utilized, Premasish Das, downstream analyst at IHS Energy Insight, told CNBC last week.
“As the oversupply increases again in the second quarter, the contango structure will widen. This will further incentivize crude storage,” Das said.

Others are also concerned about how quickly space could run out. “Within around two months, [onshore storage will] be completely exhausted,” Ivan Szapakowski, a commodity strategist at Citigroup, told CNBC last week. “The only remaining storage globally will then be floating storage, tankers.”

Read More: Oil slide could trigger OPEC emergency meeting

Citigroup is forecasting oil prices to fall toward USD 20 a barrel before recovering.
Oil is already getting stashed offshore. Tanker prices and lease rates have doubled over the past 18 months, Gaurav Sodhi, a resources analyst at Intelligent Investor, told CNBC last week.

“Clearly, someone is going out there and leasing a lot of offshore storage and those lease rates are much higher. That suggests to me that there’s a massive supply of oil sitting on the ocean,” Sodhi said, noting each tanker can hold around 1 million to 2 million barrels each.

“That sort of storage is going to take a while to unwind.”

Stashing oil offshore can also create other headaches. It’s harder to move the oil to where the buyer may want it and there can be issues with pollution, potentially making it more costly, IHS’ Das noted.

But despite the difficulties, the oil hoard may only grow in the near term. Das noted that Asia is heading toward its refinery maintenance shutdown period in the second quarter.

Additionally, a strike among refinery workers in the US is now into its fourth week, affecting plants responsible for around 20 percent of the country’s production. Media reports said no talks between unions and management are scheduled for this week. If demand from the affected refineries declines further, it could be more bad news for inventory growth and prices.
—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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Nikkei hits fresh 15-year high amid mixed open in Asia

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Japanese shares outperformed the region by clinching a new multi-year high as the rest of Asia opened mixed on Thursday following a flat finish on Wall Street overnight.

Overnight, US stocks closed mixed after struggling to stay positive amid firming oil prices, moderate housing data and debate over Federal Reserve Chair Janet Yellen’s congressional testimony. The Dow Jones Industrial Average and S&P 500 traded up 0.1 percent, while the Nasdaq Composite broke a nine-day winning streak to finish flat.

Nikkei adds 0.4 percent

Japan’s Nikkei 225 index touched a fresh 15-year high of 18,692 as dollar-yen was jumped 0.2 percent to trade at 119.01.

Financials extended their rally on the back of news that Japan’s Financial Services Agency could give bank groups the freedom to expand into areas like e-commerce. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group drifted up 0.4 percent each.

Among index heavyweights, Softbank and Fast Retailing climbed 2 and 1.2 percent each, while robot maker Fanuc trimmed losses to 0.3 percent.

Meanwhile, Koji Ishida, member of the Policy Board of the Bank of Japan, is due to speak at a conference this afternoon. Japanese markets will also digest news that the Diet on Wednesday approved the appointment of Waseda University economics professor Yutaka Harada to the BOJ’s Policy Board. Harada, 64, is a proponent of reflationary policies and is expected to support the BOJ’s goal of achieving 2 percent inflation.

ASX slips 0.6 percent

Australia’s S&P ASX 200 index retreated further from a seven-year high attained earlier this week as its heavyweight banking and mining sectors came under pressure. National Australia Bank slipped 0.5 percent, while Australia and New Zealand Banking, Commonwealth Bank of Australia and Westpac dipped 0.4 percent each.

Fortescue Metals led losses among the big miners, down 0.4 percent, while junior miners such as BC Iron and Atlas Iron slumped nearly 3 percent, respectively.

Qantas soared 5 percent after delivering its best first-half profit in four years as its cost-cutting program took effect and lower oil prices trimmed fuel expenses. Among other firms releasing their corporate earnings, Japara Healthcare and Nine Entertainment shot up 7.3 and 9.7 percent each.

Transfield services plummeted 10 percent as its first-half earnings fell short of market consensus.

Mainland indices down

China’s stock market opened down 0.7 percent, adding to a 0.5 percent decline in the previous session. The Shanghai Composite index resumed trade on Wednesday after being shut for the week-long Lunar New Year holiday.

In Hong Kong, the Hang Seng index slipped 0.2 percent, with gaming stocks remaining in the doldrum. Melco Crown fell 3 percent, while Sands China and Galaxy Entertainment plunged 1 percent, due to news that the Macau government plans to impose a limit to the number of mainland tourists that visit the city.

Kospi dips 0.1 percent

South Korea’s Kospi index edged down modestly in early trade, failing to move off a near three-month high clinched on Wednesday.

For the day, markets are likely to focus on news that retailer Shinsegae is interesting in acquiring a majority stake in Kumho Industrial, which holds a 30.1 percent stake in the country’s second-largest flagship carrier Asiana Airlines. Shares of both firms bumped up 0.6 and 15 percent, respectively.

Rest of Asia

Across Asia, corporate earnings will be the key theme, with Singapore-listed commodities trader Noble Group and Malaysian budget carrier AirAsia taking the spotlight.

The former’s fourth-quarter results come after a negative report written by an obscure research company named Iceberg Research sent the Hong Kong-based firm’s shares into a tailspin last week. Shares of Noble Group retreated nearly 1 percent, outpacing a 0.4 percent slip in the broader Straits Times index.

Meanwhile, Reuters reported that Singapore’s first prime minister Lee Kuan Yew remains on mechanical ventilation in an intensive care unit in hospital, according to a statement from the Prime Minister’s office on Thursday. The 91-year-old, who has been widely credited with the city-state’s economic success, was admitted to hospital on February 5 with severe pneumonia.

Markets will also closely monitor AirAsia’s financial results for any impact related to the crash of Singapore-bound AirAsia flight 8501 in December. The low-cost airline erased early losses to bounce 0.4 percent, while Malaysia’s FTSE Bursa Malaysia KLCI inched down 0.1 percent.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Greece finance chief: We want to regain EU’s trust

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Greece`s new Government wants to re-establish trust with the rest of Europe, the country`s finance minister told CNBC, as Athens obtained a four-month extension of its bailout program.

“The reason why we have this four-month period is to re-establish bonds of trust between us and our European partners as well as the IMF in order to build a new contract between us and our partners so as to put an end to this debt inflationary spiral,” Yanis Varoufakis said in an interview in Athens.

On Tuesday, euro zone finance ministers accepted a list of Greek reform proposals , but warned that the reforms must be expanded in detail before new bailout funding would be released. International Monetary Fund (IMF) managing director Christine Lagarde called the proposals “sufficiently comprehensive to be a valid starting point” but said they lacked “clear assurances.”

Varoufakis said implementing new legislation concerning corruption and tax evasion is his top priority. As to whether European officials will approve each and every measure passed in parliament, he said “there is going to be a great deal of toing and froing between us and the institutions and our partners.”

The trained economist was also critical of the tense negotiation process with euro zone finance ministers, saying they were dominated by “legalisms.”

Read More: The one chart you need to see on the Greek saga

“You know what I think the main problem is, European finance ministerial meetings are seldom about finance, they`re more about process and rules…and I`m not good at that. I think that when we`re talking about macroeconomics, when we`re talking about Greece`s recovery, I don`t think we have the moral right to talk as if this is applying rules.”

Leftist political party Syrzia rose to power during elections last year on promises to abolish austerity measures, but its principal task of reducing Greece`s $366 billion debt has been flatly rejected. Several Greeks, noticeably senior politician Manolis Glezos, claim the party has bent too much to European creditors, making it no different from the previous administration.

But Varoufakis rejected the notion that Syrzia has been unfaithful to Greeks: “We got elected to renegotiate Greece`s deal with our partners. What is a negotiation; it`s an attempt to find a compromise. The fact that we comprised is not a U-turn. A U-turn would have been to have led this negotiation to an impasse, and we didn`t do that because we`re interested in a mutually beneficial agreement.”

The 53-year old maintains he will continue pushing for debt restructuring despite a Eurogroup statement proclaiming that “Greek authorities reiterate their unequivocal commitment to honor their financial obligations to all their creditors fully and timely.”

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“Even though we are a government of the radical left, we come to the table with a mentality of a bankruptcy lawyer from the city of London who simply says if we have a problem with debt, you need to restructure it.”

“We are again going to offer and propose a menu of swaps. The Greek debt comprises many different slices so a swap per slice so as to maximize the net present value for our creditors as well as making possible for us to repay our debts to grow and to end this process,” Varoufakis said.

While it remains unclear how the cash-strapped nation will fund itself in the near-term, especially when it faces a March deadline to repay an IMF loan, Varoufakis urged investors to look at the bigger picture.

“My message to market people is very simple. They understand that when there is a cash flow problem, which is effectively a spike for a short space of time, but the long term seems quite good, they can be confident that Europe is going to find a way of dealing with the cash flow problem.”

As to how Greece will eventually return to financial markets, it all hinges on solving “a system of three equations and three unknowns,” according to Varoufakis.

“The three unknowns are – the debt level and its flows, secondly investment levels and means of cranking it up, and thirdly primary surplus…I have no doubt that Europe in the end is going to solve this system of equations and unknowns.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India seizes record 60kg of gold in smuggling bust

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indian Police confiscated 60 kilograms of Gold worth an estimated 165 million rupees (USD 2.65 million) at the Ahmadabad Airport on Tuesday in the country’s single biggest seizure of Smuggled bullion, According to a local media report.

The Gold, in the form of bars, was allegedly flown from Dubai to the city located in Gujarat on an Emirates Flight, the Media reported, citing a statement from the Special Operations Group of the city crime branch.

Six people were arrested in connection with the smuggling – three were on the flight and three had come to collect the contraband gold.

Gold smuggling is a long running issue in India, which reclaimed the top spot as the world’s largest Gold consumer last year.

But the problem has become more acute in recent years due to government measures implemented to restrict imports of the yellow metal.

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The Government has made it more expensive to Import Gold through a series of tax hikes since 2012, fueling imports through illegal channels. Gold is currently subject to a 10 percent import duty.

The World Gold Council estimates that 175 tonnes of gold were smuggled into the country last year, according to Reuters.

Indian smugglers have been known to go to great lengths to traffic Gold, including hiding gold biscuits in the rectum, microwaves, cups and saucers, belt buckles, and even mixing gold dust with coffee powder.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow