Aurelia Butler

SYDNEY (Reuters) – Asian share markets were mostly softer on Monday ahead of a slew of Chinese economic news, while political uncertainty in Europe soured risk appetites and kept the euro on the defensive.Analysts expect annual growth in China’s retail sales picked up to 3.0% in May, from 2.3%, with some upside risk thanks to holidays that month. Industrial output is seen slowing a little to 6.0%, from 6.7%, with growth in urban investment steady.There was also talk the People’s Bank of China (PBOC) could cut a key lending rate by 10 basis points, in part due to surprisingly weak bank lending data released on Friday. That made for a cautious start, and MSCI’s broadest index of Asia-Pacific shares outside Japan was a fraction softer.Japan’s Nikkei slipped 1.7%, with investors now facing a six-week wait to hear details of the Bank of Japan’s next tightening steps.S&P 500 futures were flat, while Nasdaq futures edged up 0.1% after a run of record finishes.Analysts at Goldman Sachs have raised their year-end target for the S&P 500 to 5,600, from 5,200 and the current 5,431.”Our 2024 and 2025 earnings estimates remain unchanged but stellar earnings growth by five mega-cap tech stocks have offset the typical pattern of negative revisions to consensus EPS estimates,” they wrote in a note.The main U.S. data of the week will be retail sales for May on Tuesday, where a 0.4% bounce is expected after a 0.3% drop in April, while markets have a holiday on Wednesday.At least 10 policy makers from the Federal Reserve are due to speak this week and will no doubt address the market’s wagers for two rate cuts this year. While the Fed itself sounded a hawkish note last week, a trio of soft inflation numbers led futures price in a 76% chance of a cut as early as September and 50 basis points of easing for the year.EYES ON SNBCentral banks in Australia, Norway and the UK are all expected to hold rates steady at meetings this week, though the Swiss National Bank (SNB) might well ease given the recent strength of the Swiss franc.Markets have boosted the probability of a cut to 75% as political uncertainty in France drove the euro to a four-month trough at 0.9505 francs on Friday.French markets endured a brutal sell-off last week ahead of a snap election that might give a majority to the far right, with risks to the country’s fiscal position and the stability of the euro zone. European Central Bank policymakers told Reuters they had no plans to launch emergency purchases of French bonds to stabilise the market after yield spreads over German bunds widened dramatically amid a flight to safety.”A French challenge to the region’s fiscal arrangements would be problematic and have far-reaching implications,” warned analysts at JPMorgan. “At this stage, the situation in the run-up to the first round of voting is still very fluid.”That left the euro pinned at $1.0706, after shedding 0.9% last week to touch a six-week low of $1.06678. The dollar was a shade firmer on the yen at 157.54, after briefly spiking above 158.00 on Friday when the BOJ said it would start tapering bond buying a little later than many had wagered on.In commodity markets, gold held at $2,326 an ounce, after bouncing 1.7% last week. [GOL/]Oil prices eased a touch after rallying 4% last week amid hopes for stronger demand from the U.S. driving season. [O/R]Brent dipped 17 cents to $82.45 a barrel, while U.S. crude also fell 17 cents to $78.28 per barrel. More

HONG KONG (Reuters) – Hong Kong investment products such as insurance and high-yield time deposits are seeing resurgent demand from wealthy Chinese who are aiming to shield returns from a domestic economic and property sector downturn and also a weaker currency.The trend became evident last year but has accelerated in recent months after China relaxed investment rules for the ‘wealth connect’ programme in February, Hong Kong wealth managers said.It is sparking a scramble among financial firms in Hong Kong to seize the opportunity and should help the city burnish its status as a wealth hub that has been hit in recent years by pro-democracy protests, Beijing’s tighter control, and geopolitical tensions.Those factors had pushed clients and wealth managers to foray into or expand in rival Singapore. “There are about 45 million affluent individuals in China, and increasingly they want more international exposure, education, and protection,” said Maggie Ng, HSBC’s Hong Kong head of wealth and personal banking.”There is an increasing demand to manage wealth outside of China.”Launched in late 2021, ‘wealth connect’ allows residents of nine cities in the southern province of Guangdong, which borders Hong Kong, to buy investment products sold by banks in Hong Kong and Macau, while allowing residents of the two offshore centres to do the same in the world’s second-largest economy.Under the programme, investments by mainland investors into Hong Kong and Macau hit a record monthly high of 13 billion yuan ($1.8 billion) in March, up nearly eight times from February, data from the Chinese central bank showed.Inflows in April grew 70.5% from the preceding month to 22.3 billion yuan, the data showed, while northbound investments in April by Hong Kong and Macau residents were just 14 million yuan, largely unchanged since the programme was launched.HSBC, a leading wealth manager in Hong Kong, saw new account openings in the city rise by more than three times in 2023 from the pre-COVID level in 2019, driven mainly by Chinese mainland retail wealth clients, said Ng. The strong momentum has continued in the first quarter of this year, she said, declining to give details.Apart from the mass affluent who are utilising the cross-border investment channels, ultra rich people from China and Southeast Asia are also exploring their options in Hong Kong, according to executives at global wealth managers. “If we look at the inquires (from potential family office clients) that we got last year versus the previous year, we’re talking about an 85% increase,” said L.H. Koh, head of global family and institutional wealth APAC, at UBS. More than 60% of the inquiries are about setting up family office type entities in Hong Kong by mainly Chinese clients, he said, adding that the trend has continued this year.’SITTING ON CASH’ While there are still tight capital controls in China, with an individual allowed to remit a maximum $50,000 per year, the tripling of the investment cap to 3 million yuan under the ‘wealth connect’ programme in February has bolstered outflows.China presumably is less worried about outflows under the programme because the investments are eventually required to be remitted back to the country. Wealth managers in Hong Kong are pushing the authorities to further relax the investment scheme to meet the demand of richer clients to move larger sums to Hong Kong, industry executives said.The Hong Kong Monetary Authority would “continue to explore further enhancement measures in due course, taking into account the industry’s feedback as appropriate”, the city’s de-facto central bank said in a statement to Reuters.To capitalise on the momentum, some banks in Hong Kong have started offering as much as 10% a year interest rates on short-duration term deposits as part of the wealth link programme compared to about 2% offered by the banks in the mainland. Besides banks, Hong Kong-based insurers have also seen a surge in demand from mainland customers since border controls previously installed to curb the spread of COVID were lifted in early 2023.Horace Yep, Citigroup’s private banking head of Hong Kong and Greater Bay Area, said the bank saw record new account openings in Hong Kong in 2023, and the momentum remained strong this year, thanks to the demand from mainland Chinese clients.The surge in demand comes against the backdrop of Chinese mainland investors facing limited options to park their cash at home, as yields of long-dated bonds have dropped to record lows. China’s currency is hovering around its weakest since 2008. And stocks and property have seen returns plunging.”Many mainland people are now sitting on cash,” said 51-year-old Ms. Wang, owner of an internet firm in Shenzhen whose bets on opaque investment products at home soured after the collapse of a leading shadow bank late last year.Wang said she has since parked her money in a current account in the mainland, and is studying the ‘wealth connect’ programme now.($1 = 7.2552 Chinese yuan renminbi) More

(Reuters) – Global concerns about the use of AI in news production and misinformation are growing, a report published by the Reuters Institute for the Study of Journalism found, posing fresh challenges to newsrooms already struggling to engage audiences.The institute’s annual Digital News Report published on Monday, which this year is based on surveys of nearly 100,000 people across 47 countries, offers a picture of the hurdles news media faces in lifting revenue and sustaining business.Newsrooms globally are working to address a new challenge with generative artificial intelligence, as tech giants and startups like Google (NASDAQ:GOOGL) and OpenAI build tools that can offer summaries of information and siphon traffic from news websites.But the report found that consumers are suspicious about the use of AI to create news content, particularly for sensitive subjects such as politics.According to the survey, 52% of U.S. respondents and 63% of UK respondents said they would be uncomfortable with news produced mostly with AI. The report surveyed 2,000 people in each country, noting that respondents were more comfortable with behind-the-scenes uses of AI to make journalists’ work more efficient.”It was surprising to see the level of suspicion,” said Nic Newman, senior research associate at the Reuters Institute and lead author of the Digital News Report. “People broadly had fears about what might happen to content reliability and trust.”Concerns about false news content online rose by three percentage points from last year, with 59% of survey respondents saying they were worried. This figure was higher in South Africa and the U.S. at 81% and 72%, respectively, as both countries hold elections this year, the report said.Another challenge facing news organizations is the general unwillingness of audiences to pay for news subscriptions. Following some growth during the pandemic, 17% of respondents across 20 countries said they paid for online news, a figure that has been unchanged for the past three years, the report said.A significant proportion of news subscribers in the U.S. were also likely to be paying discounted rates due to trials or promotions, with 46% paying less than the full price for their subscriptions.TURNING TO ALTERNATIVESNews influencers are playing a bigger role than mainstream media organizations in delivering the news to users of popular online platforms like TikTok.In a survey of more than 5,600 TikTok users who said they used the app for news, 57% said they mostly paid attention to individual personalities, versus 34% who said they mainly followed journalists or news brands.The findings show that newsrooms need to build a direct relationship with their audiences while also “strategically using the platforms to connect with people who are trickier to reach, like younger audiences,” Newman said. “We see that these influencers have a bigger role on the platforms.”Vitus “V” Spehar, a TikTok creator with 3.1 million followers, was one news personality cited by some of the survey respondents. Spehar has become known for their unique style of delivering the top headlines of the day while laying on the floor under their desk, which they previously told Reuters is intended to offer a more gentle perspective on current events and contrast with a traditional news anchor who sits at a desk.The Digital News Report surveyed people in the U.S., UK, France, Argentina and Brazil, asking them to name up to three mainstream or alternative accounts they follow for the news.The top 10 individuals cited by respondents in the U.S. are most known for offering political commentary rather than original newsgathering, the report noted. These personalities included Tucker Carlson, a former Fox News anchor, Joe Rogan, who hosts the top podcast on Spotify (NYSE:SPOT) and David Pakman, a progressive talk radio host.The Reuters Institute for the Study of Journalism is funded by the Thomson Reuters (NYSE:TRI) Foundation, the philanthropic arm of Thomson Reuters. More

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(Reuters) – A look at the day ahead in Asian markets.The monthly Chinese ‘data dump’ kicks off the global trading week on Monday, with the slew of top-tier indicators likely to give investors a measure of how much the world’s second largest economy is struggling to gain momentum. Producer and consumer prices last week confirmed that the threat of deflation still hangs over China, and retail sales, business investment, industrial production, and house price figures on Monday will give a clearer picture of economic activity.China’s central bank is widely expected to leave a key policy rate unchanged when rolling over maturing medium-term loans on Monday, with worsening interest margins and a weakening currency hampering authorities’ ability to ease policy.In a Reuters poll of 31 market watchers, 30 expect the rate on the one-year medium-term lending facility loan to be left at 2.50%. The lone outlier projected a marginal cut of 5 basis points.This comes amid a generally upbeat global market environment with hopes of a U.S. ‘soft landing’, a relaxed Fed, subdued volatility, and continued optimism in tech pushing Wall Street and world stocks to record highs. Disinflation in the United States appears to be broadening out across consumer and producer prices, and the impact on market rates is clear to see – the 10-year Treasury yield on Friday hit a two and a half-month low below 4.20%, and rates traders are fully pricing in two quarter-point cuts this year.That’s a dovish stance relative to the Fed’s revised projections of one cut this year, a position Minneapolis Fed President Neel Kashkari reiterated on Sunday.Falling U.S. yields may benefit Asian and emerging markets, but a strengthening dollar could counteract this. The dollar closed last week at a six-week high, and CFTC positioning data on Friday showed that funds increased their long dollar positions for the first time in seven weeks. The U.S. currency starts the week on the front foot, especially against the yen, after the Bank of Japan’s cautious stance on Friday on raising interest rates and reducing its balance sheet dragged the yen and Japanese bond yields lower.This could lend support to Japanese stocks on Monday.Chinese stocks, however, remain under pressure. As the yuan fell to a seven-month low on Friday, stocks hit their lowest in nearly two months. Beijing appears to be getting nervous. China’s securities regulator on Sunday said it will step up curbs on short-selling activities, and will tighten supervision of illegal share reductions by listed companies’ major shareholders.In South Korea, meanwhile, a senior presidential official said this weekend that stabilizing prices are laying the conditions for the central bank to cut interest rates. And in corporate news, Hyundai Motor (OTC:HYMTF) India on Saturday sought regulatory approval to list on the Mumbai stock market in what could be India’s biggest IPO ever.Here are key developments that could provide more direction to markets on Monday:- China ‘data dump’ (May)- Japan machinery orders (April)- South Korea trade (May, revised) More

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FRANKFURT (Reuters) – European Central Bank policymakers have no plan to discuss emergency purchases of French bonds and still think it is for French politicians to reassure investors spooked by the prospect of a far-right government, five sources told Reuters.French financial markets endured a brutal sell-off late last week as investors cut their positions ahead of a snap election that might give a majority to the far right, leading some analysts to speculate about an ECB intervention.But five ECB policymakers, speaking on condition of anonymity given the sensitivity of the situation, said they hadn’t discussed activating an emergency bond-buying scheme to support French debt, nor do they currently plan to do so.The sources expressed varying degrees of concern about the magnitude of the selloff in French government bonds, which saw their risk premium over safer German paper rise by the most since the 2011 euro zone debt crisis. But they generally agreed it was for French politicians to convince investors that they would run a sensible economic policy. Two sources even suggested the ECB should not intervene before a new French government is formed and fiscal plans announced.An ECB spokesperson declined to comment.The ECB’s Transmission Protection Instrument (TPI) allows it to buy unlimited amounts of bonds from a country that finds itself under market pressure, but only for as long as it complies with parameters including the European Union’s fiscal rules.Still, some governors were unnerved by the notion of financial turmoil brewing in France, which was until recently regarded as the euro zone’s second pillar of stability after Germany but is now having its own fiscal woes.French Finance Minister Bruno Le Maire has warned that the euro zone’s second-biggest economy was at risk of a financial crisis if the far right wins in the June 30 and July 7 elections.Marine Le Pen’s eurosceptic National Rally (RN), which is leading in opinion polls, is calling for a cut in the state pension age, reductions in energy prices, increased public spending and a protectionist “France first” economic policy.ITALIAN PRECEDENTSome governors likened France’s situation to that faced by Italy in the summer of 2022, when Giorgia Meloni’s centre-right coalition appeared poised to win general elections.After her election win, Meloni toned down her bellicose approach towards European institutions and the ECB governors hoped Le Pen and her party would do the same. Italy and France are both running a higher deficit than EU rules allow, meaning they will be forced to tighten their purse strings via a so called “excessive deficit procedure” from the European Union. ECB President Christine Lagarde, herself a Frenchwoman, appeared to play down the importance of that rule earlier this year, saying it was just “an alternative condition” to determine TPI eligibility.Asked about the notion of using TPI for France on Friday, Lagarde merely said it was “the duty of the European Central Bank to … keep inflation under control and back to target”.Investors were demanding an 80 basis-point premium for lending to AA-rated France over triple-A Germany for 10 years as of the market’s close on Friday.The spread between BBB-rated Italy and Germany, which also widened in recent days, was 157 basis points on Friday – still a far cry from the 250 points touched in 2022. More