FILE PHOTO: Catherine McGuinness, Chairman of the Policy and Resources Committee of the City of London Corporation, poses for a photograph in London, Britain, January 17, 2018. Picture taken January 17, 2018. REUTERS/Hannah McKay
March 21, 2019
LONDON (Reuters) – Extending Britain’s departure date from the European Union would only be a “sticking plaster” if deep-seated issues are left unresolved, City of London financial district chief Catherine McGuinness said on Thursday.
It appeared that financial services have been “thrown under a bus” in terms of Britain’s efforts to secure a divorce settlement with the bloc, she told a City & Financial conference.
UK financial services minister John Glen told the conference that the sector had every right to feel frustrated with Britain’s failure so far to secure a divorce settlement with just a week to go before Brexit Day.
(Reporting by Huw Jones; Editing by Toby Chopra)
Logos of Tencent are displayed at a news conference in Hong Kong, China March 22, 2017. REUTERS/Tyrone Siu
March 21, 2019
HONG KONG (Reuters) – Tencent Holdings said on Thursday net profit for the quarter ended December fell a sharper-than-expected 32 percent, the most on record for a quarter, as a regulatory review weighed on its gaming business.
Net profit at Asia’s second-most valuable listed company for the September-December quarter was 14.2 billion yuan ($2.12 billion), against the 18.3 billion yuan average estimate of 16 analysts, according to Refinitiv data.
Revenue in the quarter rose 28 percent to 84.9 billion yuan, slightly ahead of an average estimate of 83 billion yuan from 19 analysts. Tencent attributed that in part to strong growth in sponsorship advertising revenue.
Tencent declared a final dividend of HK$1.00 per share versus HK$0.88 in 2017.
(Reporting by Sijia Jiang; Editing by Muralikumar Anantharaman)
German Chancellor Angela Merkel checks her phone at the lower house of parliament (Bundestag), ahead of a Brussels summit for Brexit delay discussions, in Berlin, Germany March 21, 2019. REUTERS/Hannibal Hanschke
March 21, 2019
BERLIN (Reuters) – Germany will meet the obligation it has made to NATO allies to spend 1.5 percent of economic output on defense by 2024, German Chancellor Angela Merkel said on Thursday.
“The 1.5 percent target by 2024 is an obligation to NATO … I guarantee and the German government guarantees that we will meet that obligation. And that will require effort,” Merkel told the lower house of parliament.
(Reporting by Joseph Nasr; Writing by Thomas Escritt; Editing by Michelle Martin)
Britain’s Foreign Secretary Jeremy Hunt is seen outside Downing Street in London, Britain March 20, 2019. REUTERS/Hannah McKay
March 21, 2019
LONDON (Reuters) – The European Union could next week hold an emergency summit to offer a Brexit extension with potentially onerous conditions such as holding another referendum, British Foreign Secretary Jeremy Hunt said on Thursday.
“There could be and we don’t know there will be an EU emergency summit to offer us an extension,” Hunt told BBC radio.
“We don’t know what the length would be and it could have some very onerous conditions,” such as holding another referendum. He said such an option would be unlikely to be supported by the British parliament.
Hunt said the government did not yet know whether Prime Minister Theresa May’s twice-defeated Brexit deal would be brought back to parliament next week.
“Do we resolve this or have Brexit paralysis?” Hunt said. He said a no-deal exit on March 29 remained the legal default.
Hunt said if the deadlock remained next week – parliament still had the option to vote to revoke Article 50 and cancel the entire Brexit process, though it was “highly unlikely”
(Reporting by Andrew MacAskill. Editing by Guy Faulconbridge)
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 12, 2019. REUTERS/Staff
March 21, 2019
(Reuters) – European stock markets opened lower on Thursday, as the impact on banks of an accommodative policy message from the U.S. Federal Reserve outweighed any broader lift to sentiment from its abandoning of further interest rate hikes this year.
The pan-European STOXX 600 index dipped 0.3 percent, driven by falls in Paris, Madrid and Frankfurt that contrasted with a strong reaction on Asian markets to the Fed’s statement and news conference.
Germany’s DAX led with a 0.5 percent fall, weakened by a 1 percent loss for bank stocks, which tend to suffer when expectations for future interest rates fall.
Banking shares across Europe had also risen earlier this week on signs of a merger between Deutsche Bank and Commerzbank.
A bright spot were semiconductor makers, boosted by Micron Technology’s upbeat outlook for the sector, which soothed worries about falling demand for smartphones. Infineon and STMicro were both up 2 percent.
EssilorLuxottica’s shares slumped to the bottom of the CAC 40 and the STOXX 600 on new tensions in its boardroom as the top shareholder and executive chairman accused the Franco-Italian group’s executive vice chairman of a power grab.
Investors punished HeidelbergCement, the world’s second-largest cement maker, after its results and Swedish construction group Skanska fell 3.2 percent after it said it would not reach a target for operating margins.
London’s FTSE 100 index was the only index to buck the trend, gaining 0.3 percent as miners benefited from higher copper prices on the back of a weaker dollar.
The market’s internationally-focussed blue chip stocks also tend to gain on falls for sterling, which was suffering again from Britain’s failure to find a clear route out of the European Union before a March 29 deadline.
Among its midcaps, a profit warning from British precision engineering group Renishaw Plc due to a slowdown in Asia drove its shares 14 percent lower.
(Reporting by Agamoni Ghosh and Patrick Graham; editing by Josephine Mason)
FILE PHOTO: Christian Sewing, CEO of Deutsche Bank AG, addresses the media during the bank’s annual news conference in Frankfurt, Germany, February 1, 2019. REUTERS/Kai Pfaffenbach/File Photo
March 21, 2019
FRANKFURT (Reuters) – Christian Sewing, the chief executive of Deutsche Bank, believes there is a strong case for a merger with rival Commerzbank, according to a person with direct knowledge of his thinking ahead of Thursday’s meeting of the supervisory board, setting the stage for a showdown with unions fearing massive job cuts.
Sewing sees multiple benefits of a merger, including “clear” dominance in its home market, scale, and shared technology costs, the person said.
Deutsche’s CEO also believes that a combined entity would improve the cost of funding, with “the best funding ever”, the person said. Jobs would be cut with or without a merger, the person said.
A spokesman for Deutsche Bank declined to comment.
(Reporting by Tom Sims and Andreas Framke; Editing by Riham Alkousaa)
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 11, 2019. REUTERS/Staff
March 21, 2019
By Huw Jones
LONDON (Reuters) – Stock exchanges in Europe are not harming markets or gouging customers with the fees they charge for data, an industry-commissioned report said on Thursday.
The report from consultants Oxera for the Federation of European Securities Exchanges (FESE) wants to counter accusations from investment funds that “monopoly” bourses were continually hiking fees for market data to lift profits.
Investment firms have called on the EU’s markets watchdog ESMA to review market data fees charged by exchanges, saying they keep on rising despite falling costs of computing and data storage.
Oxera’s report concludes that “economic analysis suggest that the current charging structures for market data are unlikely to have detrimental effects on market outcomes for investors.”
FESE said that while fees have been “challenged by some”, the report showed that aggregate market data revenues have risen by only 1 percent a year, from 230 million euros ($261.2 million) in 2012 to 245 million euros in 2018.
“Costs have remained stable over the last five years,” said Rainer Riess, FESE director general.
Policymakers should be very mindful that any changes do not harm how prices of shares are formed, Riess added.
Investment funds face scrutiny over their own fees charged customers and want to cut costs.
They have to buy data to help show regulators that they are obtaining the best share prices on behalf of investors in a region where many platforms trade the same stocks.
The Alternative Investment Management Association, Managed Funds Association, Britain’s Investment Association and two German funds bodies BVI and BAI, asked ESMA in December to enforce an EU securities law that requires market data to be sold on a “reasonable commercial basis”.
The bloc’s competition officials are also facing pressure to intervene.
In the United States the Securities and Exchange Commission repealed two data price changes last May for public feeds for Nasdaq and New York Stock Exchange listed securities for the first time after complaints from asset managers.
The battle across the Atlantic has led to market participants like Fidelity Investments and hedge fund Citadel to back a new, low cost Members Exchange bourse to compete with NYSE.
FESE said the real issue was not prices but the “often very low quality” of data from off-exchange or “dark” trading platforms.
There has been talk for many years of a “consolidated tape” or a single pipe for gathering share prices from different platforms, like in the United States.
FESE said data intermediaries or vendors were already offering a de facto tape for prices on the bulk of so-called “lit” exchanges, where prices and trades are instantly visible.
(Reporting by Huw Jones, Editing by William Maclean)
FILE PHOTO: The logo of Indonesia’s central bank, Bank Indonesia, is seen on a window in the bank’s lobby in Jakarta, Indonesia, September 22, 2016. REUTERS/Iqro Rinaldi
March 21, 2019
By Gayatri Suroyo and Maikel Jefriando
JAKARTA (Reuters) – Indonesia’s central bank, welcoming the Federal Reserve’s forecast of no U.S. rate hikes this year, on Thursday kept its benchmark on hold to maintain financial stability while tweaking some rules to try to encourage more lending.
Bank Indonesia (BI) held its 7-day reverse repurchase rate steady at 6.00 percent, where it has been since November, as expected by all 20 analysts in a Reuters poll.
The decision came hours after the Fed abandoned projections for any rate hikes this year, sending the rupiah up 0.4 percent on Thursday.
Governor Perry Warjiyo told reporters after the meeting that global developments, including the Fed’s latest statement, “will be more positive for capital inflows to emerging markets, including Indonesia.”
BI was one of Asia’s most aggressive central banks last year, raising the benchmark rate six times by 175 basis points to respond to the Fed’s four rate hikes and to counter outflows that kept the rupiah under pressure for most of 2018.
This year, the rupiah has been generally appreciating due to inflows to Indonesia’s equity and bond markets as major central banks around the world turned dovish.
BI still expected one more rate hike by the Fed through 2020, but sees the rupiah being stable this year, Warjiyo said.
“This is a ‘dovish hold’, said Satria Sambijantoro, an economist at Bahana Sekuritas in Jakarta. “BI signaled its readiness to support credit expansion, with tweaks on some macroprudential policy measures to support liquidity in the banking system.”
BI will raise the guidance for where it wants banks to maintain its financing-to-funding ratio to a 84-94 percent range, from 80-92 percent range, effective July 1.
Warjiyo said the measure, which allows banks to manage a slightly higher liquidity ratio without being penalized, was aimed at getting banks to lend more.
Meanwhile, he said BI had also been adding liquidity to the financial system since December through open market operations, estimating the cash injected so far at 459 trillion rupiah ($32.51 billion).
While banks on aggregate had “more than enough” liquidity, he said smaller banks were facing difficulties to expand lending due to funding constraints.
Warjiyo said the new moves would help accelerate lending growth to the upper end of the 10-12 percent outlook in 2019, without hurting stability.
Even so, BI still sees economic growth this year remaining in a range of 5.0-5.4 percent.
The latest measures announced by BI indicated it “was in little hurry to change interest rates,” Capital Economics said, predicting no change in the benchmark rate this year.
In February, the annual inflation rate cooled to 2.57 percent, the slowest in nearly a decade and just above the lower end of BI’s 2.5-4.5 target range for 2019. Warjiyo said inflation will remain within target until the end of the year.
The Philippine central bank, the second Southeast Asian one holding a policy meeting right after the Fed’s, also kept its benchmark rate on hold, as expected.
(Additional reporting by Fransiska Nangoy, Nilufar Rizki and Tabita Diela; Editing by Richard Borsuk and Ed Davies)
FILE PHOTO: A worker walks past coal piles at a coal coking plant in Yuncheng, Shanxi province, China January 31, 2018. Picture taken January 31, 2018. REUTERS/William Hong/File Photo
March 21, 2019
By David Stanway and Andrew Galbraith
SHANGHAI (Reuters) – Chinese regulators are close to releasing new “green bond” standards that would exclude polluting fossil fuel projects from corporate financing channels designed to lift environmental standards, people familiar with the matter told Reuters.
Beijing has in recent years promoted new green financing methods to help industry pay for its transition to cleaner modes of growth.
But China’s inclusion of “clean coal” in a 2015 central bank list of technologies eligible for green bonds has put the country at odds with global standards, a point of contention for some international investors and many environmental groups.
Two sources with direct knowledge of the situation say China’s central bank, which regulates financial institution debt issuance and whose 2015 guidelines were adopted by other market regulators, has already revised the eligibility list. One of the people said the list is due to be published later this month. The People’s Bank of China did not immediately respond to Reuters’ request for comment.
“If confirmed, ending the policy of financing coal with green bonds would be a much-needed step in the right direction,” said Liu Jinyan, senior campaigner with environmental group Greenpeace in Beijing.
“With no new coal projects taking money from the green bonds market, those funds can actually accelerate China’s energy transition and green development,” she said.
Of the $42.8 billion worth of green bonds issued in China last year, only $31.2 billion would have met global criteria, according to a report published at the end of February by the Climate Bonds Initiative (CBI), a non-profit group backing green bond standards.
The share of what CBI calls “internationally aligned” green bonds has been steadily increasing as China’s institutions move to align themselves more with global markets.
The PBOC’s revised criteria, however, would not apply to green “enterprise bonds”, which are regulated by the National Development and Reform Commission (NDRC), the state planner, and are primarily issued by state-owned enterprises and unlisted companies.
In its “green industry” catalog of approved environmental sectors, the NDRC in February still included the production and utilization of “clean coal”, allowing coal companies to issue “green enterprise bonds” to finance the installation of low-emission technology.
The NDRC did not immediately respond to request for comment.
Green bonds have already financed a number of big coal projects in China. Tianjin SDIC Jinneng Electric Power Co Ltd issued 200 million yuan ($29.81 million) in commercial paper on the interbank market in mid-2017 to finance a low-emissions coal-fired power plant.
Coal-to-chemical plants have also received billions of yuan in financing through green bonds, despite criticism from environmental groups.
Industry experts say the two-tiered regulatory framework – one under the PBOC and one under the NDRC – means some coal-related projects could still issue green bonds, although access to the most active green finance markets would be restricted.
“Many of the international investors and financiers have publicly announced plans to reduce their coal portfolio,” said Herry Cho, head of sustainable finance for Asia Pacific at ING.
She said the NDRC catalog is already “largely aligned” with international standards, and even includes some categories, such as equipment related to renewable energy and resource recycling, that are not yet included in global guidelines.
Shengzhe Wang, counsel at Hogan Lovells in Shanghai, who has worked on green bonds in the U.K.-China Green Finance Taskforce, said it was unrealistic to expect the sudden exclusion of coal from all green financing in China.
“For the time being perhaps we have to put up with, make a compromise with clean coal,” she said.
While that compromise may limit foreign involvement in the market, Peter Corne, managing partner at legal firm Dorsey & Whitney in Shanghai said green financing was still required to help clean up China’s coal sector.
“I don’t think it necessarily means there will be more coal projects because of it, because there has already been a moratorium for quite some time,” said Corne, who follows China’s environmental policies.
“Coal’s not going to go away, and it will greatly accelerate our progress towards achieving emission goals if we do clean up the coal sector.”
(Reporting by Andrew Galbraith and David Stanway; Editing by Sam Holmes)