Aurelia Butler

WASHINGTON (Reuters) – U.S. banking regulators are set to adopt new rules to modernize fair lending standards for banks, requiring them to take into account more than their physical presence to ensure they are adequately servicing communities.The Federal Reserve unveiled the final rules, which update rules enforcing the 1977 Community Reinvestment Act. Under the new standard, banks will be graded on how well they service areas with significant lending, and also provide greater clarity on the grading process. More

JERUSALEM (Reuters) – A depleted workforce. Constant rocket sirens. The lingering shock of an unexpected attack. The cost to Israel’s economy of its war with Hamas militants will be unlike anything it has experienced in decades.The cranes that dot Tel Aviv’s ever-growing skyline stood still for days after the city closed construction sites. They reopened this week under stricter safety guidelines but inactivity in this sector alone costs the economy an estimated 150 million shekels ($37 million) a day, an industry report said.”This is not a hit for contractors or industrialists alone,” said Raul Sarugo, president of the Israel Builders’ Association. “This is a hit for every household in Israel.”Israel was blindsided on Oct. 7 by Hamas gunmen from Gaza who rampaged through border towns in the deadliest attack on civilians in its history. In the two weeks since, its military has carried out a devastating bombardment in Gaza.Israel’s almost $500 billion economy, the most developed in the Middle East with strengths in technology and tourism, was healthy for most of 2023. Growth was on track to reach 3% this year with low unemployment.But with a ground invasion of Gaza likely imminent and the war threatening to spiral into a regional conflict, Israelis are hunkering down and spending much less on everything except food. Ratings agencies have already warned they could downgrade their assessment of the country’s creditworthiness.Hundreds of thousands of army reservists have been called up, leaving a gaping hole in manpower and disrupting supply chains from seaports to supermarkets, while retailers are furloughing employees. The shekel has slumped.The conflict has also halted the movement of thousands of Palestinian labourers from Gaza to Israel and curtailed the flow from the occupied West Bank.The escalators and walkways of Jerusalem’s main shopping mall were empty for the first two weeks of the war, though slowly patrons are venturing back.”There has been a drastic decline in traffic,” said Netanel Shraga, manager of the Columbia sportswear shop.HIGH-TECHSome of Shraga’s staff have been called up to army service, he said. Others are too afraid to come to work.Hotels are half-filled with Israeli evacuees from border areas, the rest of the rooms are mostly empty. Factories continue to operate, even those near Gaza, but there are not always enough truck drivers to make regular deliveries.Credit card purchases were down 12% in the last week from the same period a year ago, with sharp drops in nearly all categories except for a spike in shopping at supermarkets.The high-tech industry, which flourished during the COVID pandemic, is struggling. Usually it accounts for 18% of Israel’s GDP and half of all exports.”Productivity goes down significantly, because it’s hard to focus on day-to-day work when you have existential concerns,” said Barak Klein, chief financial officer at fintech firm ThetaRay.Twelve of their 80 Israel-based employees were drafted into the reserves. Others have children home from school. And there is still the constant fear of rocket fire.ThetaRay set up a day care center for employees who need to bring in children and has been relying on their offices abroad to take some of the workload.Erel Margalit, whose JVP venture capital fund is one of the country’s most active, said he has been jumping between board meetings, hearing about different business continuity plans.”Investors need to be assured,” he said.An estimated 10-15% of the high-tech work force has been called up for reserve duty, said Dror Bin, CEO of the state-funded Israel Innovation Authority.”We’ve been in touch with hundreds of tech companies, especially early stage ventures,” Bin said, adding that many were in the middle of a funding round and are running out of money.To help, his authority set up a 100 million shekel ($25 million) fund to help 100 tech startups weather the storm.The Economy Ministry created a war room and put out a call for help. Its database has so far matched at least 8,550 people with struggling businesses. When a logistics center of a major supermarket chain was strained, 38 people were sent to fill an overnight shift.”EMOTIONAL CRISIS”The government has promised “no limit” in spending to finance the war and to compensate households and businesses affected, meaning a bigger budget deficit and more debt.Past conflicts may not be a good guide to the economy’s path. Gross domestic product fell as much as 0.5% in a 34-day war with Iran-backed Lebanese group Hezbollah in 2006 as exports dropped and manufacturing slowed, but a recovery followed quickly.What’s happening today is different, officials say.There is an “emotional crisis” among the Israeli public and it is already taking a toll, said Leo Leiderman, chief economic adviser to Bank Hapoalim, one of the country’s biggest banks.”People will minimize their consumption spending, because of the uncertainty and the mood,” he said.With consumer spending accounting for more than half of economic activity, the damage to the economy may be significant.”Israel was able to recover remarkably well from all the recent events of fighting,” a senior Israeli Finance Ministry official told Reuters. “This seems to be a more dramatic event, even if it is really very early to know.”The Bank of Israel on Monday trimmed its economic growth estimate for 2023 to 2.3% from 3% and to 2.8% from 3.0% for 2024 assuming the war is contained to Gaza. Governor Amir Yaron – who is opposed to rate cuts for now – expects a rebound. “We have known how to recover from difficult periods in the past and to return rapidly to prosperity,” Yaron said. “I have no doubt that it will do so this time as well.”($1 = 4.0586 shekels) More

The government has announced a raft of measures, including a giving every person over 16 years of age 10,000 baht ($276.5) via a “digital wallet” that it hopes will kickstart a sluggish economy.The rollout of the 560 billion baht digital wallet policy has been delayed to sometime in the first quarter of 2024 from the original Feb. 1 start amid criticism that it may strain state finances.The economy grew just 1.8% in the April-June quarter from a year earlier, much slower than the previous quarter, as weak exports and investment undercut strength in tourism. The central bank, which has urged fiscal discipline, recently raised its 2024 growth outlook to 4.4% from 3.8%. Last year’s growth was 2.6%.Srettha was speaking at an event hosted by The Nation newspaper.($1 = 36.1700 baht) More

EU governments expressed alarm that the $369 billion-plus in U.S. subsidies for electric vehicles and other green goods, often with local content requirements, could put Europe-based companies at a disadvantage or encouraging them to relocate.The bloc’s leaders asked the EU executive in June to assess the IRA’s impact and its report on Tuesday concluded that the macroeconomic effect on Europe was so far limited, not least because potential investments had not yet fully materialised.Longer term, the Commission’s report said that different studies had produced contrasting results.The report noted that the IRA tax credits were not capped and so it was hard to estimate their total value. It was also difficult to differentiate between the impact from the IRA and other factors, such as higher EU energy costs.A build-up of clean tech investment in the United States did not necessarily mean a decline in Europe, the report said. Europe’s predictable demand, science base and talented workforce promoting innovation were also pull factors for the continent.The Commission said it would continue to monitor investment flows, while also discussing with Washington possible ways to mitigate the IRA’s impact. More

RIYADH (Reuters) -Wall Street’s top financiers struck a pessimistic tone about the global economy at a flagship gathering in Saudi Arabia aimed at deal brokering, as a violent conflict between Israel and Hamas that has killed thousands of people unfolds.The annual event is typically used by attendees to build relationships with some of Saudi Arabia’s biggest companies and its $778-billion sovereign wealth fund, drawn by the promise of deals as the kingdom seeks to wean its economy off oil.But an escalation between Islamist group Hamas and Israel into a broader conflict overshadowed the event dubbed “Davos in the Desert”, a nod to the annual gathering of world leaders and corporate bosses in the Swiss Alps.JPMorgan Chase (NYSE:JPM) Chief Executive Jamie Dimon encouraged Saudi Arabia not to abandon a United States-led initiative for the kingdom to establish official relations with Israel.”Despite what happened in Israel, I urge you all to keep up that effort,” Dimon told the Future Investment Initiative (FII) in Riyadh. “It is the only way to get there with some leadership from Saudi Arabia, for the folks of the Middle East.”Saudi Arabia is putting U.S.-backed plans to normalise ties with Israel on ice, two sources familiar with Riyadh’s thinking said, signalling a rapid rethinking of its foreign policy.Geopolitical tensions heightened by the Middle East conflict pose the biggest threat to the world economy, World Bank President Ajay Banga said.”There is so much going on in the world and geopolitics in the wars that you’re seeing and what just happened recently in Israel and Gaza. At the end of the day, when you put all this together, I think the impact on economic development is even more serious,” Banga said.Although the globe’s top financiers dwelt little on the conflict, speaking instead about topics such as artificial intelligence, the economic fallout of war combined with record debts created a bleak backdrop.”There’s no question if these things are not resolved, it probably means more global terrorism, which means more insecurity, which means society is going to be fearful … and … we see contractions in our economies,” BlackRock (NYSE:BLK) Chairman and CEO Laurence Fink said. Fink was flanked on a panel at FII by bank CEOs including JPMorgan’s Dimon, Goldman Sachs’ David Solomon, and Citi’s Jane Fraser. They spoke about topics including women in the workplace but also the implications of rising interest rates.Ray Dalio, founder of hedge fund Bridgewater Associates, said he was pessimistic.”If you take the time horizon, the monetary policies that we’re going to see and so on, will have greater effects on the world,” Dalio said. “And you look at the world gaps, so it’s difficult to be optimistic on that.”HSBC Group CEO Noel Quinn also warned of the perils of heavy government debts. “I’m concerned about a tipping point on fiscal deficits,” he said. “When it comes, it will come fast and I think there are a number of economies in the world where there could be a tipping point and it will hit hard.” ‘UNRELENTING’The remarks come as Israel’s military said it was preparing for “unrelenting attacks” to dismantle Hamas. Former U.S. President Barack Obama warned that “any Israeli military strategy that ignores the human costs could ultimately backfire.”The conflict could upset the stability of the Middle East just as regional powerhouse Saudi Arabia pours hundreds of billions of dollars into a vast economic transformation plan.But the finance chiefs were mostly focused on business.The last year has seen Saudi Arabia spend billions on companies, from sports to gaming to aviation. This year, Saudi Telecom Corp took a near 10% stake in Spain’s Telefonica (NYSE:TEF).”While today’s world seems uncertain, we continue with our mandate to inspire … the future of business and future-proof our societies to create a more stable and resilient world order,” Yasser al-Rumayyan, governor of Saudi Arabia’s sovereign Public Investment Fund, told the conference.Goldman Sachs’ Salomon addressed the potential for more dealmaking. “Over time, scale matters enormously in the competitive nature of global businesses,” he said.Stephen Schwarzman, co-founder, chairman & CEO of the Blackstone Group (NYSE:BX), flagged the threat to investors in office buildings, now often empty in the wake of the pandemic. “Say you have 30% unused space in office buildings, that means those office buildings are not survivable as economic entities. So that’s going to have a very bad ending,” Schwarzman said. More than 5,000 people registered to attend this year’s Future Investment Initiative and only a handful withdrew due to current events.Saudi Crown Prince Mohammed bin Salman has sought to lift the kingdom’s profile to secure investment and trade alliances, seeking dialogue with former regional foes, and pivoting to Eastern partners amid strains with U.S. President Joe Biden’s administration.This year’s forum is meant to demonstrate that eastward shift. There will be 70 speakers from Asia, of whom 40 will be Chinese, FII Institute CEO Richard Attias told Reuters. Saudi Arabia is halfway through an ambitious economic transformation plan – Vision 2030 – to wean the economy off oil by creating new industries, generate jobs for citizens, and to lure foreign capital and talent.FII is partially aimed at attracting investment to fund this, a daunting task as total foreign investment flows in this year’s second quarter were down. More

HONG KONG (Reuters) – Hong Kong is expected to announce lower stamp duties for some property transactions in an annual policy statement on Wednesday that will focus on stabilising an economy hurt by mass emigration from the city and economic weakness on the mainland.Speaking a day before he was due to present policy plans to the legislature, Hong Kong Chief Executive John Lee said the focus would be on stimulating the economy and improving people’s livelihoods.For the property market – a major pillar of the economy – local media say Lee is expected to trim stamp duties for some, but not all property transactions.The business community and home-owners want the government to roll back decade-long cooling measures that aimed to curb speculative activities in one of the world’s priciest markets.Home prices surged nearly 300% in the decade to 2019, when Hong Kong was rocked by anti-government mass protests, the COVID pandemic, and a subsequent braindrain of hundreds of thousands of people amid a national security crackdown.Since then home prices have fallen 13%, amid rising interest rates and a bleak economic outlook.In August, property prices dropped to a seven-month low, and realtors expect them to end 2023 as much as 5% down. Transaction volumes have shrunk in both the luxury and broader markets, reflecting weak sentiment, with the number of residential mortgage loans in negative equity cases expected to rise above 10,000 in September, approaching an 18-year high recorded in the fourth quarter of last year.”Even if the government reviews and relaxes certain stamp duty measures in the future, although this may bring stability and restore some confidence among potential buyers during the downward cycle, we believe that property prices will continue to fluctuate for a while,” said Rosanna Tang, Hong Kong head of research at Cushman & Wakefield (NYSE:CWK), a property consultancy.Hong Kong’s economy is expected to grow 4% this year after contracting 3.5% in 2022. Last year, Lee announced measures to attract top international talent to the city. These schemes have had some success, but applicants have been mostly from mainland China.Hong Kong, like mainland China, is also facing a demographic challenge with falling birth-rates. Local media reported Lee might offer a cash bonus for babies born to one local parent.Lee, who was sanctioned by the U.S. government for his role in cracking down on freedoms, is also expected to emphasize the importance of maintaining a tight national security grip – a priority for Chinese leader Xi Jinping.Despite Hong Kong’s attempts to restore the city’s international reputation and lure more capital, further security legislation including anti-espionage laws are expected to be enacted in the near term. Some Western governments have criticised the ongoing national security clamp down, which has led to the imprisonment of many opposition democrats and closure of liberal media outlets. ($1 = 7.8229 Hong Kong dollars) More

Xi, along with Vice Premier He Lifeng and other government officials, visited the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) in Beijing on Tuesday, the sources told Reuters. The purpose of the visit was not immediately known. The PBOC and SAFE could not be immediately reached for comment outside of business hours. The world’s second-largest economy grew faster than expected in the third quarter. But there are deeper concerns about continued weakness in private sector activity and a lack of longer-term reforms needed to shift the economy to consumer-led growth.The PBOC, which delivered modest interest rate cuts and has pumped more cash into the economy in recent weeks, is constrained in how much it can ease monetary policy for fear of stoking capital flight and hurting the yuan, analysts said.Capital outflows from China rose sharply to $75 billion in September, the biggest monthly figure since 2016, Goldman Sachs’ preferred gauge of foreign exchange flows showed, underscoring intensifying depreciation pressure on the yuan. More