Money‚ Markets & Macroeconomics

China can help itself with a stronger stock market

22 Oct 2024

President Xi Jinping wants companies worth some $11 trln to deliver better returns. Boosting long-term value would reassure anxious savers and help bring down government debt. Taming volatility, though, will require Beijing to cede some control.

BHP’s dam disaster dealings leave a bad taste

21 Oct 2024

The miner and partners are offering Brazilian authorities $23 bln in damages for a 2015 catastrophe, but with most of it paid over 20 years. And BHP was in hot water trying to hinder a related $47 bln lawsuit in London. Both take the argument of protecting shareholders too far.

UK’s bad tax on share trading looks hard to kill

18 Oct 2024

Britain’s stamp duty on equity transactions hampers and distorts investment. Yet abolishing it probably won’t revive the fortunes of the country’s shrinking stock market. Chancellor Rachel Reeves has little cash to spare, and cheaper ways to boost domestic share ownership.

Inflation is not dead, it’s just resting

18 Oct 2024

Annual price increases are returning to the subdued 2% level targeted by many central banks. Official interest rates are falling too. Yet there’s a long history of policymakers prematurely celebrating the end of inflation. The experience of the 1970s offers a cautionary tale.

China’s growth reprieve will be short-lived

18 Oct 2024

Third quarter output slowed to 4.6% on subdued retail sales and property investment but Beijing's target pace of "around 5%" needs sustaining to achieve developed economy status by 2035. Unless policymakers move their own goalposts, they'll have to contort themselves a lot more.

China’s smart cars will drive fast, but not far

18 Oct 2024

A Hong Kong IPO that could value Horizon Robotics at $7 bln rides the rise of assisted and autonomous driving in the world’s largest auto market. But the asking price is rich, and drivers elsewhere are slower to adopt the tech, while security concerns also hinder overseas growth.

Lagarde struggles to dispel market’s gloomy vibes

17 Oct 2024

The European Central Bank lowered its key interest rate to 3.25% but didn’t commit to further cuts. Markets fear a recession and expect borrowing costs to be below 2% in 12 months. President Christine Lagarde may be forced to loosen policy faster – and reassure investors of that.

Coldplay gives Hong Kong rush of blood to the head

17 Oct 2024

The UK band’s sold-out concert suggests the struggling economy’s affluent locals have plenty to spend. Yet city leader John Lee reckons policies like streamlining mortgages and IPOs will foster growth. He’d do better finding ways to help the less well off boost consumption.

China’s woes make Plaza Accord 2.0 less outlandish

16 Oct 2024

If Donald Trump becomes US President, he wants a weak dollar and taxes on Chinese imports. He may use the threat of tariffs to get Beijing to boost the yuan, an echo of the 1985 Plaza Accord. A strong currency hurts growth, but a trade war could be worse for President Xi Jinping.

US economy is partying, but voters are hungover

16 Oct 2024

Full employment and subdued inflation have the economy in its best shape in years. Despite a rocky Biden tenure, Kamala Harris enters the election with a chance to blunt Trump’s advantages. But bruised consumer feelings – and the overall wealth picture – are getting in the way.

Measured UK tax hike can avoid dealmakers’ Brexit

16 Oct 2024

Chancellor Rachel Reeves has to raise money in her Oct. 30 Budget and may up capital gains tax from 28% to 35%. That would require 2,000 buyout barons to pay $120,000 extra on their funds’ profits. Such a small hit would probably stave off a threatened private equity exodus.

Hyundai’s IPO is a big test for gilded markets

16 Oct 2024

The Korean carmaker's $3 bln share sale in India is off to a decent start. It will put a big floor under its parent's valuation. If the country's biggest listing goes smoothly, it also will offer a verdict on whether or not India's market is pushing unsustainable limits.

Putin’s economic resilience rests on war addiction

15 Oct 2024

Sanctions and the fall in oil prices have hit the Russian economy. But growth has outpaced expectations since the 2022 Ukraine invasion thanks to high military spending, now at more than 6% of GDP. The reliance on ongoing conflict hides President Vladimir Putin’s vulnerability.

Nobel prize brings global inequality back in focus

14 Oct 2024

Economist Daron Acemoglu and two colleagues shared the Swedish award for showing why some countries are rich and others poor. Their findings – democracy and rule of law matter – are a reminder that huge disparities in income among, and within, nations remain a festering issue.

Old theories offer new insight into global rivalry

14 Oct 2024

The geographer Halfold Mackinder in 1904 proposed that future strife would revolve around control of Eurasia. Though the modern world is very different, it’s one way to understand conflicts in Ukraine and the Middle East and the showdown between the United States and China.

Italy has more to gain from France’s pain

14 Oct 2024

Rome borrowing costs are converging with Paris. Prime Minister Giorgia Meloni’s stable government is pledging to contain its deficit and pushing through reforms, at a time when its peer is in turmoil. To press home the advantage, though, Meloni will need to take bolder action.

China stimulus aims at its greatest wall of debt

14 Oct 2024

The finance ministry pledged to tackle local government borrowings. It reveals an intent to smash systemic financial risk and, by not rushing to support consumer demand, a desire to avoid repeating past spending mistakes. Beijing's plan is welcome but still missing key details.

France heads toward aimless short-term austerity

11 Oct 2024

PM Michel Barnier’s deficit-reduction plan mostly relies on 30 billion euros of tax hikes next year. That will hit growth just as corporate investment and consumer demand are flat. Long-term spending cuts would be a better solution. But this weak government cannot provide them.

UK government can still trip over lower fiscal bar

11 Oct 2024

Chancellor Rachel Reeves needs an extra 31 bln pounds in public investment by 2029 to boost the country’s anaemic growth. Easing the spending rules is a start. But without a clear plan and return targets, the Labour administration will fall into a debt trap of its own making.

Labor is on the Fed’s side against inflation

10 Oct 2024

A three-year low for US price rises amid robust job gains reverses the usual tension between employment and inflation. New workers and high productivity are key to the balance. But as Fed boss Jay Powell eyes rate cuts, a new president or fading Covid-era boons could topple it.