Aurelia Butler

Mexico’s government is reviving a railway between the Gulf of Mexico and the Pacific Ocean that had been in decline for more than a century, in a bold bid to steal container traffic away from the Panama Canal.The project seeks to capitalise on multinationals’ desire to be closer to the US and the canal’s periods of low water levels as the region suffers increasingly frequent droughts. For populist president Andrés Manuel López Obrador, it forms part of a gambit to draw investment to the poorer south — albeit one that industry figures are sceptical can succeed.The $2.8bn Tehuantepec isthmus corridor will feature a 308km railway between renovated ports at Salina Cruz in Oaxaca state and Coatzacoalcos in Veracruz, and industrial parks close to transport hubs, including airports, along the route. Trains have already traversed the route on test runs ahead of its opening in December.Mexico’s government is bullish about prospects for the rail crossing, which will offer proximity to the US and a transit time of 6.5 hours excluding loading time — less than the eight to 10 hours it takes on the 80km canal.“Mexico right now is one of the most attractive countries, among the top five most attractive in the world,” economy minister Raquel Buenrostro said in an interview. “There’s no way that this doesn’t develop.”But experts said it could take years to build enough infrastructure and create the underlying industries to woo global logistics players, if that proves possible at all. And the added cost, time and insecurity in unloading containers on to a train with a fraction of a ship’s capacity, then back on to a vessel at Coatzacoalcos on the Gulf of Mexico, make it a tough sell, said logistics industry figures.President Andrés Manuel López Obrador’s vision for the isthmus region is part of an ambitious resurrection of Mexico’s passenger railways More

(Reuters) -Nelson Peltz’s activist hedge fund Trian Fund Management has built a stake in Allstate Corp (NYSE:ALL), one of the insurers struggling to cope with the fallout of natural disasters such as the Maui wildfire in Hawaii, people familiar with the matter said. The move could increase pressure on Chief Executive Tom Wilson, who has led Allstate since 2007, to turn the Northbrook, Illinois-based company around following five quarters of losses. It has blamed natural disasters that are sometimes amplified by climate change for its poor performance.Allstate has hired investment bankers to advise it on how to handle Trian, the sources said. Trian’s exact stake and plans for Allstate could not be learned.The sources spoke on condition of anonymity because the matter is confidential. Allstate and Trian did not immediately respond to requests for comment.Allstate shares jumped 6% on the news to $127.46 in Monday trading in New York. Prior to news of Trian’s involvement, Allstate’s stock price had dropped 9% year-to-date, significantly underperforming a 4% rise in the S&P 500 Property & Casualty Insurance index, due to its exposure to losses in property and auto insurance. Like many insurers, Allstate has not raised its premiums fast enough to cover losses it incurs by paying out on big natural disasters such as wildfires, while inflation has also made it harder for it to cover replacement costs.Activist investor Carl Icahn built a position in Allstate two years ago but did not publicly push for board seats or other major changes.Trian, which recently overhauled its top ranks and promoted two veterans, including Peltz’s son, Matthew, to co-chief investment officers, is already busy with another high-profile corporate battle. It reignited its activist campaign against Walt Disney (NYSE:DIS) this month after it dropped a board challenge earlier this year in the wake of CEO Bob Iger’s return.Trian has previously pushed for change at companies such as Procter & Gamble (NYSE:PG), Unilever (LON:ULVR) and Invesco. More

SINGAPORE (Reuters) – The U.S. dollar started Tuesday on the back foot as investors took stock of developments in the Middle East and braced for a slew of speeches by central bank officials this week headlined by Fed Chair Powell to gauge the monetary policy outlook.The yen was pinned close to the key 150 per dollar level, keeping traders on edge for any signs of intervention by the Japanese authorities. The yen last fetched 149.62 per dollar, having slipped to 150.17 on Oct. 3, the weakest in a year, before getting some relief in a brief rally.Japan’s top financial diplomat Masato Kanda said the yen was still perceived as a safe haven asset like the dollar and the Swiss franc despite its recent weakness, and was benefiting from demand due to the conflict in the Middle East.Israel’s shekel on Monday breached the key level of four per U.S. dollar for the first time since 2015 on jitters over Israel’s war with the Palestinian militant group Hamas. It was last down 1% at 4.0199 per dollar in early Asian hours.”Geopolitics will continue to be a key driver for markets in the week ahead as investors continue to weigh the risks of an escalation with the approach of the U.S. authorities to prevent the conflict spreading to rest of the Middle East region,” said Charu Chanana, market strategist at Saxo in Singapore.The dollar index, which measures the U.S. currency against six rivals, eased 0.038% to 106.20, after dropping 0.36% on Monday. Investor attention will firmly be on Fed Chairman Jerome Powell, who is due to speak on Thursday, during a busy week of speeches by regional bank heads. Fed officials will enter into a blackout period on Oct. 21 before the Fed’s Oct. 31–Nov. 1 meeting. Federal Reserve Bank of Philadelphia President Patrick Harker said on Monday the central bank should not create new pressures in the economy by increasing the cost of borrowing.”We should not at this point be thinking about any increases” in the Fed’s rate target, Harker said.Christopher Wong, currency strategist at OCBC, said the dollar is likely caught in a range for now.”Higher for longer (rates), relative U.S. growth resilience and fears of broadening conflict are some of the factors that may underpin support for the dollar,” Wong said.”But less-hawkish Fed speaks suggests the Fed maybe setting the stage for an extended pause. This may mitigate dollar upside.” In other currencies, the euro was down 0.01% at $1.0557, while sterling was last at $1.2214, down 0.02% on the day.The Australian dollar rose 0.27% to $0.636. Australia’s central bank considered raising rates at its recent policy meeting but judged there was not enough new information to warrant a move, minutes of the Reserve Bank of Australia’s Oct. 3 policy meeting showed. The News Zealand dollar eased 0.30% to $0.591 after data on Tuesday showed the nation’s consumer inflation hit a two-year low in the second quarter, reducing expectations the central bank will hike the cash rate further in November. More

BENGALURU (Reuters) – The Bank of Korea will keep its key policy rate unchanged for a sixth consecutive meeting on Oct. 19 but maintain a hawkish bias on resurging inflation, according to a Reuters poll, which also forecast the first cut would come later than expected.Inflation, which had eased steadily to 2.3% in July from a peak of 6.3% last year, marched upward to 3.7% last month. However, that was unlikely to compel the BOK to resume hiking rates as the central bank expected a brief rise in inflation before cooling by year-end.All 49 economists in the Oct. 10-16 poll predicted the BOK would leave the base rate unchanged at 3.50% on Thursday as the central bank, the first among its peers to hike rates, keeps a close eye on already slowing economic activity.The South Korean economy, with one of the world’s highest household debt-to-GDP ratios, is taking a hit from a cumulative 300 basis points of rate hikes.Still, median forecasts showed interest rates remaining unchanged at least until end-Q1 2024, followed by a 25 basis point cut in Q2. In August, the first rate cut was expected to come by end-Q1.”Slowing growth and elevated financial stress will justify rate hold at 3.50%. However, slower disinflation and the U.S. Federal Reserve’s higher-for-longer strategy will likely support hawks at the BOK that it is early to stop the inflation fighting,” said Jeong Woo Park, economist at Nomura.”So, considering those two camps, it’s likely to be a hawkish hold for some time. I don’t think the BOK is currently concerned about KRW. As exports have started to pick up, I expect KRW to stabilize further.”The Korean won – one of the worst-performing Asian currencies this year – has weakened around 7% so far, but was expected to recoup those losses over the coming 12 months, a separate Reuters poll showed.With a weak currency making imports more expensive, inflation was not seen returning to the central bank’s 2% target until Q2, 2025.While half of economists, 16 of 32, expected rates to have fallen 25 basis points to 3.25% by end-Q2 2024 another seven saw a decline to 3.00%. Nine forecast them unchanged.”Stickier headline inflation could prompt a later and shallower easing cycle than initially expected,” said Frederic Neumann, chief Asia economist and co-head of Global Research Asia at HSBC.”For a significant acceleration in GDP growth, either a rebound in the global trade cycle, or a significant easing of local interest rates would be needed. Since both are unlikely in the near-term, it is likely Korea’s economy will grow at a relatively subdued, though steady, pace for the time being.”Korea’s economic growth was expected to slow to 1.2% this year from 2.6% in 2022, followed by a partial recovery to 2.1% next year.(For other stories from the Reuters global economic poll:) More

Minutes of its Oct. 3 policy meeting released on Tuesday showed the Reserve Bank of Australia (RBA) Board was concerned that inflation was not slowing as hoped, suggesting a chance the 4.1% cash rate could be lifted next month.”Members acknowledged that upside risks were a significant concern,” the minutes showed. “The Board has a low tolerance for a slower return of inflation to target than currently expected.”The RBA currently assumes that inflation will not return to its 2-3% target band until late 2025. Consumer price inflation stood at an annual 6% in the second quarter, and at 5.2% in the month of August. As a result, the Board reiterated that some further tightening may be required to bring inflation to heel. Rates have already risen by a whopping 400 basis points to an 11-year high and the RBA judged the full effects of that tightening were yet to be felt. A recent rise in petrol prices could influence inflation expectations, while progress in lowering services inflation was only sluggish, the minutes showed.”Members observed, prior to the November meeting, they would receive additional data on economic activity, inflation, and the labour market, as well as a set of revised staff forecasts.”Figures on employment for September are due later this week, while the key inflation report for the third quarter is out on Oct. 25. Markets currently imply only a 16% chance of a hike in November, but that would increase should inflation surprise on the high side.The board was also concerned that the sustained rebound in housing prices could be a signal that the currency policy stance was not as restrictive as had been assumed and could be supporting household consumption. On the other side of the arguments, the labour market has reached a turning point, output growth has slowed and it would take some time for the full effects of the tightening so far to be observed in the data. Required mortgage payments increased to 9.9% of the household disposable income in August, above the previous estimated historical peak. The Board also noted that the repayment of the first tranche of the Term Funding Facility has passed smoothly. There had been an earlier rise in short-term money market rates, but the rise had been transient. The minutes included no mention of the possibility that the bank could sell some of its government bond holdings early, as some in the market had speculated. More