Aurelia Butler

Britain and India will this week intensify trade talks in a bid to remove “significant” barriers to a deal before Rishi Sunak, UK prime minister, and Narendra Modi, his Indian counterpart, meet in New Delhi next month.Kemi Badenoch, UK trade secretary, will travel to India on Wednesday to try to give political impetus to the discussions, although British officials said there were still “some quite significant issues” to be resolved.Britain hopes the deal will open up trade in whisky and cars to India as well as services and investment opportunities, while New Delhi wants better access for manufactured goods, services and work visas.Officials and diplomats in India had speculated that talks on the proposed trade deal might be concluded before the G20 summit, hosted by Modi in Delhi on September 9-10.Sunak, whose parents are of Indian descent, will hold bilateral talks with Modi on the margins of the summit and the prospect of a UK-India trade deal is seen as a significant goal by both sides.However, British officials say there is little chance of a full trade deal being ready by next month and the best that it might be possible for the leaders to sign is an “agreement in principle”, a declaration of political intent.Britain and Australia signed such an “agreement in principle” in June 2021 six months before a final trade deal was sealed. One UK government official said: “That’s not currently the plan, although this is a live negotiation.”The UK-Australia deal was widely criticised by British MPs for being rushed and Badenoch has repeatedly stressed that she is not tied to any deadline in reaching an agreement with India.Badenoch will fly to Jaipur for a meeting of G20 trade ministers before moving on to Delhi for bilateral talks with Piyush Goyal, minister of commerce and industry.Boris Johnson, former UK prime minister, had previously promised in 2022 that a trade deal with India would be signed “by Diwali”, but that self-imposed October deadline came and went.The UK Department for Business and Trade said: “The UK and India are committed to working towards the best deal possible for both sides. We’ve made good progress in closing chapters, and are now laser-focused on goods, services and investment.“While we cannot comment on ongoing negotiations, we are clear that we will only sign when we have a deal that is fair, balanced and ultimately in the best interests of the British people and the economy.”The UK government has calculated that a trade deal could increase the UK’s gross domestic product by “around £3.3bn in 2035” (in 2019 prices), equivalent to an increase in UK GDP of 0.12 per cent to 0.22 per cent.

Goyal wants to use the G20 event this week to move along India’s trade negotiations, and is planning to have discussions with the UK as well as the EU and Canada, with whom India is also discussing trade agreements.An Indian government official said the talks with the UK had made progress, and India hoped the face-to-face meetings with ministers will allow them to tackle some of the outstanding issues.“The political leadership has more flexibility in negotiation” than the trade teams, the official said. Goyal told the Financial Times last month that India has made “good offers” to the UK on cars and whisky. More

WASHINGTON (Reuters) – U.S. Commerce Secretary Gina Raimondo will travel to China next week for meetings with senior Chinese government officials and U.S. business leaders, the department said on Tuesday.Last month, Raimondo vowed to go forward with the visit despite the reported Chinese hacking of her department’s emails.Raimondo “looks forward to constructive discussions,” during the visit to Beijing and Shanghai from Aug. 27 to 30, the department said in a statement.The talks would cover issues related to the U.S.- China commercial relationship, challenges faced by U.S. businesses, and areas for potential cooperation, it added. Last week, China said it welcomed Raimondo’s expected visit.Raimondo said recently that she wanted to raise with China “really serious concerns about the way they are targeting U.S. tech companies, about the way they don’t respect intellectual property but also try to find lanes of commerce.”Her trip follows a four-day visit last month by Treasury Secretary Janet Yellen, who held more than 10 hours of meetings with senior officials in Beijing.The United States and China agreed this month to approve twice the number of passenger flights now permitted by air carriers between the two countries, in a rare sign of co-operation between the world’s largest two economies.Raimondo was among a group of senior U.S. officials whose emails were hacked this year by a group Microsoft (NASDAQ:MSFT) said was based in China, according to a person briefed on the matter.Earlier, China’s embassy in Washington said that identifying the source of cyber attacks was complex and warned against groundless speculations and accusations.In July, Raimondo said the Biden administration was seeking to carefully target U.S. controls on exports to China.Raimondo met Chinese Commerce Minister Wang Wentao in May, discussing trade, investment and export policies in what was until then the first U.S.-China cabinet-level exchange in months, after a string of trade and national security irritants derailed plans for re-engagement.In April, Raimondo warned Chinese cloud companies could pose threats. Some Republican senators want her to add such companies to the entity list that imposes U.S. export controls on foreign companies. More

1.  Arm files for Nasdaq IPOSoftbank-owned Arm released a preliminary prospectus for a Nasdaq listing, firing the starting gun on a long-awaited initial public offering that could be one of the biggest U.S. flotations in nearly two years.Japan’s Softbank (TYO:9984) has only recently provided a timeline for the IPO, as the tech investor looks to take advantage of soaring enthusiasm for the development of generative artificial intelligence. Arm could prove to benefit from the AI boom, given that its processor designs are used in chips made by tech behemoths like Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA). The firm receives royalties for every chip sold by its customers.Cambridge, U.K.-based Arm estimated in the filing that about “70%” of the world’s population uses its products, noting that chips containing its technology constituted an almost 49% share of a total addressable market that was worth approximately $202.5 billion at the end of last year.The company did not specify how many shares will be issued or their valuation in its filing with the U.S. Securities and Exchange Commission late Monday. However, it confirmed that SoftBank Group bought the 25% of Arm it did not already own from its Saudi-backed investment vehicle earlier this month at a valuation of roughly $64B.At this level, Arm would become the most valuable business to IPO in the U.S. since electric vehicle maker Rivian (NASDAQ:RIVN) in 2021. But Arm stressed that the purchase price of the transaction may not be “and should not be treated as” indicative of the offering’s potential trading price.2. Futures higher despite Treasury yield surgeU.S. stock futures edged up on Tuesday after mixed returns on Wall Street in the prior session in the wake of a spike in bond yields.By 05:22 ET (09:22 GMT), the Dow futures contract had climbed by 50 points or 0.1%, S&P 500 futures added 13 points or 0.3%, and Nasdaq 100 futures rose by 61 points or 0.4%.Fears that the Federal Reserve may keep interest rates elevated for longer to tamp down inflation sparked a renewed sell-off in U.S. bond markets on Monday. The benchmark 10-year Treasury yield jumped to its highest level since November 2007, while the 2-year note’s yield also increased. Bond prices typically fall as yields rise.But the tech-heavy Nasdaq Composite still registered its biggest gain so far this month, moving up by 1.6%. Excitement over Nvidia’s upcoming earnings on Wednesday helped offset the impact of the higher yields on tech stocks, which tend to rely heavily on debt to finance their growth plans.The broad-based S&P 500 also eked out a gain of 0.7%, although the 30-stock Dow Jones Industrial Average dipped slightly by 0.1%.Anticipation is now intensifying around an annual symposium at Jackson Hole later this week, where traders hope Fed Chair Jerome Powell will deliver remarks on the central bank’s inflation outlook.3. Microsoft and Activision submit new merger proposalMicrosoft (NASDAQ:MSFT) has proposed a revised version of its merger with “Call of Duty”-maker Activision Blizzard (NASDAQ:ATVI) in a bid to receive approval from U.K. competition authorities for the video-gaming industry’s largest-ever tie-up.Under the terms of the new deal, Microsoft said Activision would sell its cloud streaming rights outside the European Economic Area to French rival Ubisoft.The restructured transaction aims to appease Britain’s Competition and Markets Authority (CMA), which has become the final regulatory body to stand in the way of the $69B merger. On Tuesday, the CMA unveiled a final order blocking the original form of the deal, citing worries over innovation in the lucrative cloud gaming market.Microsoft argued that the fresh proposal was “substantially different” than its predecessor. But the CMA stressed that the altered merger does not yet have a “green light,” adding that it will still assess the deal “carefully and objectively.”4. Lowe’s and Macy’s highlight earnings dayLowe’s (NYSE:LOW) and Macy’s (NYSE:M) are scheduled to announce quarterly results on Tuesday, with investors keen to see how the consumer retail chains have fared during a recent pull-back in consumer spending on nonessential items.Earlier this year, DIY group Lowe’s lowered its full-year sales and earnings outlook, warning of a near-term slowdown in expenditures on big-ticket home improvement items.But Chief Executive Marvin Ellison described the medium- and long-term strength of the business as strong, thanks in part to more customers choosing to shell out cash to make repairs on an aging U.S. housing stock. Meanwhile, if recent comments from Lowe’s rival Home Depot (NYSE:HD) are any indication, input cost pressures are showing signs of easing.Department store operator Macy’s has also slashed its annual sales and income forecast in recent months, saying it needed to take a conservative approach to a spring slowdown in shopper spending. The company also predicted that it would likely need to roll out more discounts to spur demand in an uncertain economic picture marked by higher, albeit cooling, inflation.The main event in the earnings calendar this week is still to come. On Wednesday, chipmaker Nvidia will announce returns that will likely provide a look into the extent of surging hype around generative AI.5. Crude mixed ahead of fresh U.S. inventory dataOil prices hovered around the flatline Tuesday, as traders warily weighed the prospect of a faltering economic recovery in top crude importer China and awaited more signals on U.S. monetary policy at the Jackson Hole symposium at the end of the week.Demand for oil is expected to be driven by China over the rest of 2023, but concerns are rising that Beijing may not be providing strong enough support for a sputtering post-pandemic recovery in the world’s second-largest economy.Meanwhile, U.S. crude oil and gasoline inventories are also due later in the session from the American Petroleum Institute industry group, while the Energy Information Administration, the statistical arm of the U.S. Department of Energy, will release its own data on Wednesday.By 05:23 ET, U.S. crude futures were mostly unchanged at $80.14 a barrel, while the Brent contract inched down by 0.1% to $84.42. More

China has been battling to contain a worsening property sector crisis, including a cash crunch for Country Garden, its top private developer, and revive a faltering recovery in the world’s second-largest economy.Taiwan’s Financial Supervisory Commission (FSC) has not recommended any additional measures to limit exposure risks for its lenders and insurers but is closely monitoring developments in China’s real estate sector, the sources told Reuters.The sources spoke on condition of anonymity as they were not authorised to speak to the media.Taiwan banks have high loan loss provisions which puts them in a secure position in the face of any crisis, one of the sources said.”Taiwanese banks have already reduced their risks along the way,” the source said.The exposure of Taiwanese insurers to China reached T$94.7 billion ($2.97 billion) as of June, said the second source. FSC chairman Tien-mu Huang said last week that investment and exposure of Taiwan’s financial industry in Country Garden was limited but the industry should be on high alert for any changes in the situation.($1 = 31.9180 Taiwan dollars) More

Total household credit stood at 1,862.8 trillion won ($1.39 trillion) at the end of June, up 0.5%, or 9.5 trillion won, from three months before, central bank data showed on Tuesday. It marked the fastest percentage gain since the last quarter of 2021, after two consecutive quarterly losses and following a record 0.8% drop in the preceding three months.Bank of Korea (BOK) Governor Rhee Chang-yong said at a parliamentary session on Tuesday that policymakers will take micro as well as macro measures to control household debt, and that it would be problematic if the rising trend continued.Rhee’s comments come two days before the BOK meets for its August policy review, at which the central bank is expected to leave interest rates unchanged for a fifth consecutive meeting. Finance Minister Choo Kyung-ho also said the government would continue implementing strict policy to manage the debt.Mortgage loans increased 14.1 trillion won in the second quarter, more than triple the increase of 4.5 trillion won in the previous quarter, with a recovery in house transactions, the BOK said in a statement, while the decline in other loans also softened to 4.0 trillion won from 15.5 trillion won.South Korea’s house prices rose in July for the first time in 14 months, separate data showed last week, as regulations eased and following the introduction of a policy loan to support the market. Total credit was still down 0.3% on an annual basis, after a 0.5% fall in the March quarter.($1 = 1,341.5000 won) More

JOHANNESBURG (Reuters) – The South African Reserve Bank is likely to leave its repo rate unchanged this year before kicking off a cutting cycle in early 2024, chopping 25 basis points in every quarter as inflation slows closer to its comfort level, a Reuters poll found.If this happens, South Africa’s Reserve Bank will join a list of emerging market central banks that have either already begun cutting rates or will embark on a loosening path after tightening to brake inflation long before many developed nations.In a survey conducted in the past week, 17 of 20 economists predicted the repo rate would be kept steady next month at 8.25%, with 16 of them seeing no change again in November. Two economists predicted a September hike of 25 basis points while the other one saw a 50 basis points lift.However, the poll suggests the SARB will cut rates by 25 basis points as early as January or March and again in every subsequent quarter next year.Investec chief economist Annabel Bishop said the United States is expected to cut interest rates next year and the SARB is expected to do the same, potentially from Q1 24 for South Africa’s repo rate.Bishop added that easing inflation, and potentially flat to lower interest rates next year would be a positive for households. There are risks, however, to the largest component of the CPI, food prices, due to the combination of climate change and El Nino conditions.A sister poll suggested the U.S. Federal Reserve is likely done raising interest rates and a slight majority of economists surveyed now expect the central bank to wait at least through end-March before cutting them.In South Africa, inflation is expected to slow further in the coming months and average 4.9% next year from 5.9% this year and then fall to 4.6% in 2025. The South African Reserve Bank wants inflation between 3% and 6%.Economic growth is expected to be 0.3% this year and 1.2% in 2024.”In terms of the South African growth drivers in 2024, lower interest rates and inflation will help, but we think the major driver of improved growth will be faster private sector fixed investment, fuelled by green-energy-related capex,” said Hugo Pienaar, chief economist at the Bureau for Economic Research.Growth has been hobbled by state power utility Eskom’s inability to transmit electricity during a slow ramp up of alternative power sources such as solar and wind energy.Amid daily power cuts, Eskom is saddled with a massive debt burden forcing it to tread a thin line between allocating capital for regular maintenance and capital expenditure on its fleet of ageing, coal-fired power plants.(For other stories from the Reuters global economic poll, click here) More