Aurelia Butler

LONDON/FRANKFURT/NEW YORK (Reuters) -Dalian Wanda Group, owned by China’s once-richest man Wang Jianlin, is seeking to sell its sports marketing unit Infront as financial pressure mounts on the property developer to shore up its finances, four people familiar with the matter told Reuters. China’s largest commercial property group has tapped Deutsche Bank (ETR:DBKGn) for advice on the sale of Infront Sports & Media, the sources said, adding the process is in the early stages and could take months to complete.Private equity firms are looking at Infront, three of the sources said. The successful buyer is likely to be an investor with deep pockets because of the minimum guarantees the company is required to pay for sports rights, one of the sources added.Headquartered in Switzerland, Infront’s businesses include managing Italy’s Serie A and the UK Premier League’s international media rights, as well as event operations, media rights distribution and sponsorship sales.In June, Infront was awarded broadcast rights in 22 countries in Central and South East Asia for the Olympic Games from 2026 through 2032.Wanda and Deutsche Bank declined to comment. A spokesperson for Infront said: “We confirm that, together with our shareholder Wanda Sports Group, Infront has launched a strategic review process with the aim to find a fully committed strategic investor,” adding that the company generates total annual revenues of around 1 billion euros ($1.09 billion).The sources, who requested anonymity as the matter is confidential, cautioned a deal is not certain and is subject to market conditions.China’s property developers have been battered over the last few years as falling sales and a wave of debt defaults have savaged a sector that previously contributed around a quarter of the country’s gross domestic product. In July, the three main credit ratings agencies downgraded Dalian Wanda’s commercial management unit, warning of “non-payment risk” ahead of the repayment of a $400 million bond that had been due at the time. It raised $320 million through the partial sale of its entertainment unit Beijing Wanda Cultural Industry to pay it off. It also stalled on a $22 million-dollar bond coupon payment in June, though it ultimately paid within the grace period. Additionally, it is facing litigation and asset freeze orders from courts in China due to payment disputes. Wanda bought a majority stake in Infront for 1.05 billion euros ($1.1 billion) in 2015, in what was then an effort to support China in bidding for major sports events. It does not disclose financials for Infront. Companies in the sports marketing sector have been strapped for cash after a downturn during the COVID pandemic.Spain’s Mediapro, which manages international media rights for LaLiga, restructured 900 million euros in debt a year ago selling shares to investors including the group’s majority shareholder Southwind. ($1 = 0.9196 euro) More

The UK is struggling to subdue a persistent inflation problem — leaving it an outlier compared to other major economies. China has fallen into deflation, while in the US and the eurozone there are signs that price pressures are moderating.In the two years since July 2021, consumer prices in Britain have climbed 17.6 per cent. Although the annual rate of increase slowed to 6.8 per cent in July, according to new figures, the improvement has been in the volatile parts of the index — food and energy.The Bank of England has raised interest rates 14 times to a current level of 5.25 per cent, a 15-year high, yet most economists are surprised by the strength of prevailing price pressures. Hussain Mehdi, a strategist at HSBC Asset Management, said: “Overall, it’s clear that the extent of UK monetary policy tightening required will be more substantial than in the US and eurozone.”Core UK inflation is stuck at 6.9 per cent, with the BoE’s favourite measure of domestic price pressures moving in the wrong direction. Annual services price inflation rose from 7.2 per cent in June to 7.4 per cent in July, the highest rate since 1992, with almost all categories getting more expensive, more quickly — especially rents, holidays, air fares and restaurants. This week’s figures have made economists question how much further the Monetary Policy Committee is likely to raise rates, starting with its next meeting in September. Before it gathers, there is another month of data to come. If this were to show that the latest hot inflationary data is just a blip, there might be a chance that interest rate rises will be paused or the BoE might signal that a September hike is probably its last. On top of continued price pressures, annual wages rose to 8.2 per cent in the three months to June, representing the fastest increase since comparable records began in 2001, outside a period of data distortion in the Covid pandemic. Naturally, many were happy that pay levels appear to be clawing back the hits from high inflation, but the BoE will worry that this could prompt companies to raise prices further. This risks prolonging high inflation with marginal benefit to living standards, as raised costs would eat away the gains from higher salaries.Weak retail sales data, meanwhile, did little to dampen concerns because the drop in spending on the high street in July was affected by the wet weather.In financial markets, traders have taken the view that the data implies the BoE will not necessarily have to raise rates further than previously thought, but will maintain high borrowing costs for longer. The yield on 10-year UK gilts — representing an expectation of the average interest rate over the next 10 years — rose to their highest level since 2008 on Thursday with the government paying a fixed-rate of over 4.7 per cent a year to borrow for the next decade.

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Krishna Guha, vice-chair of Evercore ISI, said that unlike in the US or Europe, these continued inflationary pressures were “unique” to the UK and the consequences will be ugly as the BoE takes further action. “We think that preventing excessive real wage catch up will require higher unemployment and weaker growth, and possibly even a recession [in the UK],” he added.Not everything is going wrong for the BoE, unlike earlier in the year when its forecast misses on inflation raised questions over its credibility. Beyond wages, elements of the labour market have cooled and are beginning to generate conditions that are likely to bring price rises under control. Unemployment has risen from 3.8 per cent a year ago to 4.2 per cent in the three months to June. Vacancies have fallen, bringing the number of available jobs for each person unemployed, on some measures, back to the 2019 average.

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According to some economists, indicators of a fully functioning labour market are a more important guide for future inflation than rapid wage rises. “The labour market is continuing to loosen at a faster rate than the monetary policy expects,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics. But as the jobs market unwinds, the BoE is left with a dilemma. Speaking about this week’s economic data, Benjamin Nabarro, Citi’s chief UK economist, said: “What is forward-looking is not hawkish and what is hawkish is not forward-looking.” Pithy comments such as this do not help the MPC take a decision, however. If the committee members take the view that interest rates at 5.25 per cent are now “restrictive” and do not need to be raised further to bring down inflation sustainably, they run the risk of doing too little and appearing weak. The danger is that inflation remains too high for too long, building further pressure for high pay awards and further price increases, embedding an inflationary psychology into society where large price rises are expected by everyone and they adapt to the new reality. But if the committee takes the other route, as most economists expect, and raise rates further in September, and perhaps November, it risks too harsh an outcome and a deep downturn.This could return inflation to 2 per cent, but go further causing unnecessary damage to economic growth and people’s lives. Swati Dhingra, an MPC member who voted to hold rates at 5 per cent, said: “The risks of overtightening had continued to build, increasing the likelihood of output losses and volatility that would require sharper reversals of policy.” More

Today’s top storiesChina’s securities regulator has announced a package of market-friendly reforms to try to boost investment and trading after months of underwhelming economic growth that has hit stocks and bonds.The US on Friday approved requests by Denmark and the Netherlands to export American-made F-16 fighter jets to Ukraine, marking a significant upgrade of Kyiv’s military capabilities in its war against Russia.Former Austrian chancellor Sebastian Kurz has been charged with giving false testimony to parliament. Kurz and his ex-chief of staff Bernhard Bonelli are alleged to have misled a parliamentary committee in relation to questions over the establishment of Austrian sovereign wealth fund.For up-to-the-minute news updates, visit our live blogGood evening.This week marks one year since the Inflation Reduction Act and the Chips and Science Act were signed into law, within days of each other, by President Joe Biden. The two laws amounted to more than $400bn in tax credits, subsidies and loans, to spark development of a domestic cleantech and semiconductor supply chain.The past year has seen over 110 large-scale manufacturing announcements — including in semiconductors, electric vehicles, batteries and solar and wind parts — boosted by this new era of US industrial policy. In total, the roughly $224bn in cleantech and semiconductor manufacturing projects announced since the IRA and the Chips Act promise to create 100,000 jobs. Schemes announced this month include Singapore-based Maxeon Solar Technologies’s $1bn solar cell and panel facility in Albuquerque, New Mexico, and US manufacturer First Solar’s fifth factory, worth $1.1bn, in Iberia Parish, Louisiana — the largest capital investment in the area’s history.The largest commitments have come from semiconductor groups: Intel will expand a campus in Arizona and Taiwan Semiconductor Manufacturing Company will build a second fabrication plant in the same state; IBM will invest in New York’s Hudson Valley region and Micron will build the US’s largest semiconductor plant in Clay, New York.The investment has not fallen evenly across red and blue states. The FT found that more than 80 per cent of cleantech and semiconductor investments announced in the past year are heading to Republican districts, despite there having been no votes from congressional Republicans for the IRA and only lukewarm support for the Chips Act.The reason for these districts’ success in attracting investment is in part due to them having large areas of available land and cheap labour. However, others, like Georgia and Ohio, have also used sizeable tax breaks and subsidies to attract developers, including through roadshows in Europe and Asia.“That hasn’t stopped them [Republican lawmakers] from claiming credit for the billions of dollars and thousands of jobs that are coming to their states,” President Biden told a crowd at a new wind tower factory in New Mexico last week. The president made similar attacks on Republican senator Lindsey Graham and congresswoman Marjorie Taylor Greene during a tour of a new solar inverter facility in South Carolina last month. Greene and Graham both represent constituencies at the front lines of the cleantech boom. Greene’s, in particular, is home to the largest solar supply chain investment since the IRA’s passage.This represents a growing problem for Republicans who want to welcome new projects and jobs in their own districts but are, in Washington, launching efforts to repeal or water down pieces of the IRA, which passed in the Senate along party lines. However, the White House is also struggling to translate the IRA’s successes into votes for the Democrats. Biden’s approval ratings are currently languishing amid persistently high inflation. Meanwhile, a Washington Post and University of Maryland survey in July found that more than half of US voters disapprove of his actions on climate and are unaware of the IRA clean energy tax credits.Europe has also taken notice, with Paolo Gentiloni, the EU’s economy commissioner, telling the Financial Times last month that the “pull factor of the IRA is increasing” and called on Europe to step up its response. In February, the EU announced a rival industrial plan, including subsidies to keep developers in the bloc.The threat to the EU comes from companies like Meyer Burger, a Swiss solar manufacturer, that last month announced it was putting its German expansion plans on hold to open a $400mn factory in Colorado to receive tax credits from the IRA.Similarly, a few Chinese companies have made investments — defying the worsening relations between Beijing and Washington — but many are too small to be included in the FT analysis. Among the largest are Gotion’s $2.4bn battery factory in Michigan and Fuyao Glass’s $300mn expansion of its automotive glass factory in Ohio.Need to know: UK and Europe economyThe Belgian justice minister called cocaine trafficking an “even bigger” challenge than terrorism in Belgium. Vincent Van Quickenborne has called on the EU to speed up international co-operation to help catch drug lords hiding abroad. Belgium’s port city of Antwerp is the largest cocaine trafficking hub in Europe, with a record of almost 110 tonnes seized last year, up from about 90 tonnes in 2021 and 66 tonnes in 2020, according to customs authorities.The passage of a cargo ship from Ukraine to Turkey this week vindicated Kyiv’s gamble that Russia would not act on threats to attack commercial shipping in the Black Sea. However, the successful gambit leaves a bigger question for Ukraine: will any other commercial vessels follow the Joseph Schulte and dare to call Russia’s bluff?Need to know: Global economyForeign investors have dumped Chinese stocks and bonds after losing confidence in Beijing’s promises to step in and address the country’s flagging economic recovery.Around Europe’s tourism hotspots, visitors have faced sharp price increases as businesses pass on rising costs to their customers. Now rate-setters at the European Central Bank are becoming concerned that a fresh wave of summer inflation spurred by tourism could complicate their efforts to keep prices under control.Japan’s consumer price growth in July slowed from the previous month, complicating the central bank’s task as it debates a historic shift in monetary policy. The “core” inflation rate, which excludes volatile fresh food prices, retreated to 3.1 per cent in July from 3.3 per cent the previous month, leading some economists to predict that inflation in the country had peaked. “Project Cheetah”, a landmark conservation effort by the Indian government that, if successful, could provide a global blueprint for reviving animal populations and ecosystems, has taken a dark turn. Nine cats — including three cubs born in India — have died of causes from malnutrition to collar infections that critics blame on inexperience, mismanagement and the government sidelining experts.Spain’s acting prime minister Pedro Sánchez achieved his first tactical win in the country’s post-election wrangling as lawmakers elected his party’s candidate as Speaker of Congress yesterday. The country has been in stasis since an inconclusive general election on July 23 that left neither Sánchez’s Socialists nor Alberto Núñez Feijóo’s People’s party with a clear path to taking office.Need to know: businessOfficial data suggests that UK companies are not pursuing “greedflation” as some have claimed, with profitability levels remaining stable in the first quarter of 2023.The Ukraine war is proving to be a huge opportunity for businesses to try out new technologies, fuelling hopes that the country might one day develop its own version of Silicon Valley, writes academic and EU adviser Marietje Schaake.Have we reached peak coffee? Our latest visual presentation looks at whether the world can produce enough beans to fulfil growing demand as climate change hits yields.

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Science round upScientists have recreated a song (Pink Floyd’s “Another Brick in the Wall”) from the brain activity of patients who had been listening to it, raising hopes for helping people with severe neurological damage to communicate.Genetically modified pig kidneys have for the first time provided “life-sustaining renal function” for a week after transplantation into a human recipient. The success fuels hopes for xenotransplantation — using organs from animals genetically engineered to prevent rejection — to address the severe worldwide shortage of kidneys from human donors. Our battery series continues with a look at “solid-state” technology, seen as the most promising development to solve the problems of the lithium ion batteries in use at present, but which until now has been dismissed as too expensive and difficult to produce.Something for the weekendSoraya Roberts examines the chest thumping machismo of sports-adventure films which went out with the 1990s. Are they set for a return? Some good newsThis week, a judge in Montana ruled in favour of youth climate activists in a landmark decision that established young people had a right to a “clean and healthful environment”. The court case, Held vs Montana, was filed in March 2020 in Lewis and Clark county, which is where the state capital of Helena is located. More

WASHINGTON (Reuters) – Rising Treasury bond yields and home mortgage rates may reduce support at the U.S. Federal Reserve for additional interest rate increases, the prospect of which have already been ebbing on the basis of weaker inflation.The Fed raised interest rates at its July meeting by a quarter of a percentage point, to a range of between 5.25% and 5.5%, a widely anticipated move investors have construed as the central bank’s last step in an aggressive 16-month rate hike campaign to slow inflation from 40-year highs.But bond yields since then have raced higher, with the interest rate on a 10-year U.S. Treasury security rising from around 3.86% the day of the Fed’s July 26 rate decision to as high as 4.32% on Thursday.Rates on a 30-year home mortgage in the U.S. rose to 7.09%, breaching the 7% level for the first time since November and marking a more than 20-year high.Stock markets – which can offer investors higher returns but also higher risk versus less volatile assets like Treasury bonds – have declined, with the S&P 500 reversing a five-month climb to fall about 2.6% since the Fed’s last meeting.Investors in contracts tied to the Fed’s benchmark interest rate added to bets that it will move no higher, a view shared by 99 of 110 economists polled by Reuters this week who also see the risk of a U.S. recession in decline.The recent climb in yields has been fast enough and surprising enough that “the Fed will be monitoring bond market developments – and the wider fall-out across asset markets – carefully,” said Evercore ISI vice chair Krishna Guha.The Fed watches an array of asset prices in its monitoring of the economy, including stocks, home prices, and corporate bonds.”A rise in yields on this scale represents a serious tightening of financial conditions in the Fed’s standard framework,” enough so that the Fed will want to “avoid piling on” with further tightening of its own, said Guha, a former official at the New York Fed.For the Fed, the rising yields may help resolve an issue that has preoccupied policymakers in recent months: whether financial markets and the economy had fully adapted to the rate increases it has imposed since last year, or whether there was still a tightening of market-based borrowing costs yet to come.Indeed, many Fed officials have puzzled over a recent easing of financial conditions, with equity markets rising and some home price indexes moving up despite the Fed’s own rate increases and hawkish rhetoric that rates will stay high for as long as it takes to be sure inflation returns to the central bank’s 2% target.A new Fed financial conditions index has been falling since December, and some policymakers have cited higher home values and other factors as evidence monetary policy was not having as much impact on the economy as expected, and that rates might need to move higher still.As of the Fed’s July meeting, most Fed officials said they thought rates would need to increase more, with key measures of inflation still more than double the Fed’s 2% target.Overall economic growth also has continued to outperform expectations, with a strong July retail sales report the latest example of the economy’s surprising strength – representing another conundrum for policymakers who both expect the economy to slow and feel it must for inflation to continue falling.Normally, Fed officials would be expected to see that sort of economic strength as a reason inflation might stay high and require further rate increases.But if the rise in yields is sustained, that may show the bond market increasing borrowing costs and slowing the economy on its own, in line with what policymakers have been expecting to happen.In the end, how the Fed balances those two interpretations will likely hinge on whether upcoming data shows inflation continuing to ease while job and wage growth slows towards pre-pandemic levels.”It may take sustained higher 10-year yields to slow the economy and the housing sector in particular to re-attain 2% target inflation,” wrote economists from Citi. More