WORLDWIDE: HEADLINES
China, Pakistan share concern about sanctions on Russia, China says
China and Pakistan share the concern about “spill-over effects of unilateral sanctions” on Russia over its war against Ukraine and called for a ceasefire and diplomatic resolution of the crisis, the Chinese foreign ministry said on Tuesday.
Old allies China and Pakistan have refrained from condemning Russia over its Feb. 24 invasion of Ukraine, unlike Western countries that have imposed unprecedented financial and corporate sanctions in response to what Russian President Vladimir Putin calls a “special military operation”.
“Both expressed concerns about the spill-over effects of unilateral sanctions,” the Chinese foreign ministry said in a statement following a meeting on Monday in Pakistan between the neighbours’ foreign ministers.
“Both called for a ceasefire through diplomatic dialogue and hope that based on the principle of indivisible security, a fundamental solution to the Ukraine problem can be found,” the Chinese ministry said.
Pakistan’s foreign ministry also issued a statement on the talks in Islamabad, echoing the call for a ceasefire, but it did not mention concern about sanctions.
Full coverage: REUTERS
Egypt devalues currency 14% after Ukraine war prompts dollar flight
Egypt devalued its pound by 14% on Monday after Russia’s invasion of Ukraine prompted foreign investors to pull billions of dollars out of Egyptian treasury markets, putting pressure on the currency.
The pound dropped to 18.17-18.27 against the dollar, Refinitiv data showed, after having traded at around 15.7 pounds to the dollar since November 2020.
The central bank also hiked overnight interest rates by 100 basis points in a surprise monetary policy meeting.
Egypt’s central bank governor, Tarek Amer, told a press conference the pound had undergone a “correction” that reflected world and local developments. The correction would make exports competitive and help preserve foreign currency liquidity.
Egypt has been in discussions with the International Monetary Fund about possible assistance, people close to the negotiations have said, but it has not announced any formal request.
“This is a good move to make as the devaluation of the pound moves it roughly in line with its fair value and it could pave the way for a new IMF deal,” said James Swanston of Capital Economics.
“However, it will be key whether policymakers now allow the pound to float more freely or continue to manage it and allow external imbalances to build up once more, possibly resulting in future step devaluations like today’s,” Swanston said.
The IMF in Cairo was not immediately available for comments.
Abu Dhabi Crown Prince Mohammed bin Zayed al-Nahyan arrived in Egypt on Monday to meet President Abdel Fattah al-Sisi. The UAE, along with Saudi Arabia, has been a strong financial backer of Egypt. Sisi flew to Riyadh to meet Saudi leaders on March 8.
Monday’s weakening of the pound could catalyse inflows of foreign currency, while investors who already had money in Egyptian treasuries would be unlikely to sell now, said Farouk Soussa, senior economist at Goldman Sachs.
“The move is designed to trap liquidity in the market and bring in investors who might be sitting on the sidelines waiting for the pound to bottom out,” he said.
But it will also likely add to inflation and possible local dollarisation.
“The big question is whether this is enough, or if more might be needed to entice portfolio investors,” Soussa said.
Full coverage: REUTERS
WORLDWIDE: FINANCE/BUSINESS
More than a million people in England could be borrowing from a loan shark – report
As many as 1.08 million people in England could be borrowing from a loan shark, more than three times the government’s most recent estimate, according to a report by a think-tank published on Monday.
The Centre for Social Justice (CSJ), while noting the difficulties of measuring illegal borrowing, said its estimate was based on a poll of about 4,000 people and an analysis of evidence provided by 1,200 known victims.
The last official report on illegal lending from the government in 2010 estimated the number of people borrowing from illegal lenders at 310,000 across the United Kingdom.
The CSJ said over a fifth of victims took more than five years to repay an illegal lender.
“We can expect this to get worse. The emergent cost-of-living crisis casts a looming shadow of financial anxiety,” it said in a report.
Finance minister Rishi Sunak is expected to address Britain’s worsening cost-of-living squeeze in a budget update on Wednesday, with inflation on track to top 8% after Russia’s invasion of Ukraine. read more
Britain’s lowest-paid workers have seen the biggest squeeze on their pay over the past 12 months. read more
The CSJ said illegal lenders were increasingly operating online, using social media to lure new borrowers, and that the vast majority of lenders ensure payment through psychological manipulation, coercion and by pestering borrowers.
The report said a small but significant minority use intimidation and violence. In many cases, illegal lenders had demanded a borrower deliver drugs or refer new clients to them, it added. Some had even asked for sex in return for the money owed.
Full coverage: REUTERS
Alibaba increases share buyback size to record $25 billion
Alibaba raised its share buyback programme to $25 billion on Tuesday, the largest ever repurchase plan by the e-commerce giant, to prop up its battered shares as it fights off regulatory scrutiny and concerns about slowing growth.
The plan comes amid a tech stock rally in the past few days after Chinese Vice Premier Liu He said that Beijing will roll out more measures to boost the economy as well as favourable policy steps for capital markets.
This is the second time Alibaba Group Holding Ltd has expanded its buyback programme in a year. It had hiked the programme from $10 billion to $15 billion last August.
Shares of the company (9988.HK) have cratered more than 50% in the past year.
“The upsized share buyback underscores our confidence in Alibaba’s long-term, sustainable growth potential and value creation,” Deputy Chief Financial Officer Toby Xu said.
“Alibaba’s stock price does not fairly reflect the company’s value given our robust financial health and expansion plans.”
Alibaba’s shares rose 4.8% in Hong Kong after the news. In the United States, its shares closed down 4.3% on Monday.
Alibaba’s buyback decision makes sense given how Beijing’s measures against monopolistic behaviour and the “disorderly expansion of capital” will limit its opportunities for new investments, said Rukim Kuang, founder of Beijing-based Lens Company Research.
“Internet giants will start to re-focus on their main business in the future. As a result, it’s not necessary for companies like Alibaba to keep such large amounts of cash on their books,” he added.
Alibaba said it had $75 billion in cash, cash equivalent and short-term investments as of end-December.
The company has been under pressure since late 2020 when its billionaire founder, Jack Ma, publicly criticized China’s regulatory system.
Authorities subsequently halted the planned blockbuster IPO of its financial arm Ant Group and slapped Alibaba with a record $2.8 billion fine for anti-competitive behaviour, triggering a long slide in its shares.
Growing competition from rivals, slowing consumption, and a maturing e-commerce market have also hit its performance.
In its last earnings release, Alibaba posted a 10% year-on-year revenue growth, its slowest quarter since going public in 2014 and the first-time growth fell below 20%.
The company is currently preparing to lay off tens of thousands of staffers, Reuters reported in March.
Alibaba said it had re-purchased about $9.2 billion of its U.S.-listed shares as of March 18 under its previously announced programme, which was slated to last until the end of this year.
The current $25 billion programme will be effective for a two-year period through March 2024.
Alibaba named Weijian Shan, the executive chairman of investment group PAG, as an independent director to its board, and said Borje Ekholm, the CEO of Ericsson (ERICb.ST), will retire from Alibaba’s board on March 31.
Full coverage: REUTERS
Oil extends rally as EU members weigh Russian ban, Houthis target Saudi
Oil prices extended gains on Tuesday as some European Union members discussed a potential oil embargo on Russia and attacks by Yemen’s Iran-aligned Houthi group on Saudi energy and water desalination facilities sent jitters through the market.
Front-month West Texas Intermediate futures rose $2.28, or 2.03%, to $114.4 a barrel on NYMEX and Brent futures gained $2.89, or 2.5%, to $118.51 a barrel on the Intercontinental Exchange at 0713 GMT.
Both contracts had settled up more than 7% on Monday as the potential for more supply disruptions weighed on the market.
European Union foreign ministers are split on whether to join the United States in sanctioning Russian oil, with some countries including Germany arguing that the bloc is too dependent on Russia’s fossil fuels.
“It seems energy traders are growing more confident that supply shortages are just around the corner,” Edward Moya, analyst at OANDA, said in a note.
Prices are rallying in response to geopolitical concerns both in Ukraine and over attacks at Saudi Aramco sites, Moya added.
“Right now it seems the risks are growing and that could push crude prices higher.”
Saudi Arabia has warned it would not bear responsibility for disruptions to global supply following escalating attacks on its facilities by Yemen’s Houthi movement.
The comments came after the group fired missiles and drones at facilities of the Saudi state oil firm over the weekend, causing a temporary drop in refinery output.
Analysts said that there are additional concerns over OPEC+ output that could exacerbate supply concerns.
“We estimate that the difference between OPEC+ production targets and actual production stood slightly above 800,000 barrels per day (bpd) last month and will rise to a whopping 1.15 million bpd in March,” consultancy JBC Energy said in a note.
Meanwhile, U.S. crude oil inventories were likely unchanged last week, a preliminary Reuters poll showed on Monday.
Analysts estimated stockpiles of gasoline (USOILG=ECI) fell about 2.1 million barrels last week, while distillate inventories, which include diesel and heating oil, were expected to have decreased by 1.6 million barrels.
The poll was conducted ahead of reports from the American Petroleum Institute, an industry group, at 4:30 p.m. EST (2130 GMT) on Tuesday.
Full coverage: REUTERS
