Aurelia Butler

HONG KONG (Reuters) – Hong Kong’s move to raise the maximum mortgages available to some homebuyers, its first relaxation in curbs on home purchases adopted in 2009, boosted shopping interest over the weekend but did little for transaction volumes, property agents said.One of the world’s most expensive property markets, the Asian financial hub raised its cap on the loan-to-value (LTV) ratio on Friday to 60% to 70% from 50%, for properties worth up to HK$30 million ($3.8 million).Aimed at helping those looking to buy or upgrade homes for their own use, the step drove up visitors to new home launches and existing homes by 20% to 30% during the past weekend compared to the previous week, said Louis Chan, Asia Pacific vice chairman of Centaline Property Agency. “However the buyers would not react so quickly, because the economy is still not good,” Chan added, citing uncertainty over the prospect of interest rate hikes. Chan said 75% of existing transactions are worth HK$10 million or less, featuring small-sized apartments, so the new measure would help only about a fifth of the transactions. After home prices dropped 15% last year, market participants urged the government to relax property curbs with measures such as scrapping extra stamp duties for second-time homebuyers and non-citizens. But the government has no intention to relax more measures after Friday’s move, Financial Secretary Paul Chan has reiterated.With property prices still relatively high amid a housing shortage, it was not an appropriate time for more adjustments, Chan said on Saturday.Stock market reaction to the easing was muted on Monday, with the majority of property developers rising less than 1%, in line with a gain of 0.6% gain in the benchmark index.Sun Hung Kai Properties and New World Development, eased 1.6% and 1% respectively, however.Setting a limit on higher transaction volumes is an existing stress test on the repayment ability of borrowers, which has not been relaxed, said Alvin Cheung, associate director of Prudential Brokerage Ltd.Property agents in the former British colony say a borrower needs a monthly income in excess of HK$100,000 in order to borrow 60% of a home purchase price of HK$30 million.”To improve the property market you can’t just loosen one measure, you need a basket of relaxations,” Cheung said, adding that people were usually reluctant to borrow more at times of rising interest rates.But many developers welcomed the government move. Henderson Land (OTC:HLDCY) said it facilitated property trading for homebuyers, while Asia Standard International said it eased some of the burden of down payments.Phileas Kwan, executive director of Asia Standard, which began selling flats in a new development on Friday, said it had been 9.4 times oversubscribed over the weekend, with buyers including newly-weds and home upgraders.The company plans to launch more new sales shortly, he added. More

(Reuters) – A new Missouri securities rule offers a template for Republican U.S. state officials who want to advance an “anti-woke” business agenda even as such ideas struggle for legislative backing.Missouri’s Republican secretary of state, John “Jay” Ashcroft, issued a rule on June 1 that requires broker-dealers to obtain consent from customers to purchase or sell an investment product based on social or other nonfinancial objectives, such as combating climate change.Ashcroft acted after Republican lawmakers failed to pass a similar measure during the state’s legislative session that ended on May 12, amid infighting over which bills should be prioritized.Both the new rule and failed legislation were part of a broader push by Republicans in some U.S. states to limit the growing consideration of environmental, social and governance (ESG) factors by business and investors.Many Republican politicians call such concerns “woke” overreach, using a term the Merriam-Webster dictionary defines as attentiveness to racial and social-justice issues. This year they proposed some 165 pieces of legislation in 37 states to counter ESG investment practices, according to Pleiades Strategy, a climate-focused research and advisory firm.But of those 165 proposals, only 22 anti-ESG laws in 16 states were approved this year, Pleiades found. Concerns over costs, bureaucracy and economic fallout led to bills stalling or passing in weakened form even in so-called red states, where Republicans dominate state government.Several corporate attorneys said other Republican officials may adopt Ashcroft’s playbook and act on their own. “In the absence of legislative action, which can be hard to achieve, you’ll see a migration to action via executive or administrative orders and attorney general opinions,” said Beth I.Z. Boland, a securities litigator for Foley & Lardner in Boston.The policy changes pursued by Republicans have yet to put a major dent in ESG as an asset class, as investors take stock of issues like climate change and workforce diversity. Morningstar Direct tracked $2.74 trillion in funds globally that used ESG criteria to evaluate investments or assess their societal impact as of March 31, up from $2.69 trillion a year earlier.But the attacks have persuaded some Wall Street firms to change their messaging to avoid controversy. BlackRock (NYSE:BLK) Chief Executive Larry Fink said last month he had stopped using the term “ESG” because it has become too politicized.’NOVEL APPROACH’Ashcroft is also running for governor of Missouri on a conservative platform, including a vow in a campaign video to protect residents of the midwestern state from banks that focus on what he called “woke politics.”Ashcroft told Reuters in an interview that “an extremely dysfunctional session” prevented the measure in question from advancing through a Senate committee after it passed the state’s House of Representatives. Committee members did not return messages.But Ashcroft also said he wanted to take a different tack than in other states with new Republican-backed restrictions like barring certain companies from managing public money.”We think we’ve taken a novel approach that protects people but doesn’t preclude them from deciding what to do with their own money,” he said about the rule he implemented, which is set to take effect at the end of July.According to a spokesperson, Ashcroft initiated the rulemaking before the legislative session began, essentially as a backup plan in case lawmakers did not act on the same idea introduced in January.Business groups had raised objections including on legal grounds and that the rule would create unnecessary costs and logistical hurdles. “You can’t get away from the fact that this is a new mandate on employers and the financial industry,” said Dan Mehan, president of the Missouri Chamber of Commerce.EXTRA ARROWSFinancial executives who so far have avoided the strongest laws worry that the possibility of executive or administrative actions, as in Missouri, gives state officials flexibility to keep up the pressure.”There’s a lot more arrows in the quiver,” said K&L Gates attorney Lance Dial, whose clients include asset managersMissouri is one of ten states whose secretaries of state have jurisdiction over securities, according to the nonpartisan national association of these officials who are often known for overseeing elections and business licenses. Of those ten officials, six are Republicans.In Wyoming, Secretary of State Chuck Gray has proposed ESG disclosure rules for investment advisers similar to Missouri’s. A public comment period is expected soon.Before this year’s legislative wave, examples of Republican anti-ESG efforts included Florida’s chief financial officer and West Virginia’s treasurer withdrawing assets from BlackRock, and Kentucky’s treasurer and attorney general guiding state officials to limit investments in ESG.To be sure, Republicans have also passed some notable new anti-ESG laws such as a bill signed by Florida Governor Ron DeSantis prohibiting ESG bond sales. DeSantis, who has been embroiled in a feud with Walt Disney (NYSE:DIS), is seeking the Republican nomination for president. More

OTTAWA (Reuters) – The Bank of Canada (BoC) is heading toward a second consecutive quarter-point interest rate hike on Wednesday after a month of economic data revealed resilient growth, a stubbornly tight labor market and sticky underlying inflation, analysts said.In June, the central bank raised its overnight rate to a 22-year high of 4.75% after a five-month pause, saying monetary policy was not restrictive enough. It then said further moves would depend on economic data.The BoC will announce its decision on Wednesday at 1000 am ET (1400 GMT). Data in the past month showed some signs of a slowdown – inflation cooling to 3.4%, a tepid May jobs report and a surprise trade deficit in May. Still, the market expects another rate hike. Growth has remained resilient and the housing market has showed signs of picking up despite nine rate increases totaling 450 basis points since March of last year. The economy regained momentum in May, likely growing 0.4% on the month, after stalling in April.Canada added far more jobs than expected in June, according to data published on Friday.”While the data released since the June meeting suggests that the economy has cooled on the margin, the details have been uniformly stronger,” said Jay Zhao-Murray, FX analyst at Monex Canada. “We expect the BoC to take the policy rate 25 basis points higher to 5%.” Twenty of 24 economists surveyed by Reuters expect the bank to lift rates by another quarter-point and then hold well into 2024. Though the headline inflation figure is now less than half of last year’s 8.1% peak, the three-month annualized rates of the BoC’s core measures are just barely creeping lower.While the BoC’s job is to get inflation to its 2% target, it also aims to take borrowing costs just high enough to bring down costs without sending the economy into a tailspin. Money markets show some are betting on yet another hike by year end.”Interest rates are already at, or even above, levels that would have prevailed under a more normal hiking cycle,” said Andrew Grantham, a senior economist at CIBC Capital Markets. “Any moves from here should be about fine-tuning policy and responding to most recent data.” More

WASHINGTON (Reuters) – The Republican-controlled U.S. House of Representatives and the Democratic-led Senate this week will start to seek the upper hand in a spending showdown that could trigger a government shutdown just months after Congress narrowly avoided default.Hardline Republicans are pushing their leader, House Speaker Kevin McCarthy, to cut budgets below the levels he and Democratic President Joe Biden agreed to a little more than a month ago. But Senate appropriators are aiming for bipartisan deals — all of which point to difficult negotiations ahead — as Congress returns from a two-week July 4 recess.A host of hot-button issues ranging from abortion to transgender rights are expected to be pulled into the debates, further complicating matters. If lawmakers fail to agree on a budget before the next fiscal year begins on Oct. 1, the United States could see its fourth partial government shutdown in a decade.”July is going to have a lot of late-night votes and a lot of really big issues being tackled,” House Majority Leader Steve Scalise, the chamber’s No. 2 Republican, said in an interview. “Start the appropriations process, get the Senate moving appropriations bills. I think that alone would be a victory.”House Republicans are aiming to craft a series of 12 detailed spending bills covering every aspect of government funding, an intricate feat Congress has not pulled off on time since fiscal 1997. Last year, all 12 — totaling $1.7 trillion — were crammed into one sweeping “omnibus” bill.Senate negotiators, who were largely sidelined during the recent talks between House Republicans and the White House over the federal government’s $31.4 trillion debt ceiling, were working on bills that are attracting strong bipartisan support.”We are determined to continue working together in a bipartisan manner to craft serious funding bills that can be signed into law,” Democratic Senator Patty Murray and Republican Senator Susan Collins said in a joint statement.Republicans hold the House by a narrow 222-212 majority, while Democrats hold a razor-thin 51-49 majority in the Senate, meaning that nothing can pass into law without votes from both parties.CONFLICTING TARGETSLeaders of the two chambers don’t even agree on the spending targets they are aiming at.Senate negotiators plan to hold to the $1.59 trillion discretionary spending target that Biden and McCarthy agreed to in the May deal that averted default. House Republicans last month voted on a lower target of $1.47 trillion, which would cut spending for the environment, public assistance and foreign aid.”House Republicans really are committed to shrinking spending. Not everyone in the Senate agrees with that approach,” said Representative Dusty Johnson, who chairs the Main Street Caucus, which includes more than 70 Republicans. “That has been the source of a little bit of tension to date, and I think that has the potential to grow.”Spending is only one flashpoint. House Republicans are also trying to use the legislation to rescind key Biden priorities in areas such as climate change and tax collection. They also seek to eliminate or alter some existing programs involving workforce diversity, transgender protections and women’s access to abortion that Democrats are fighting for.”I am ready to end this charade of considering extreme Republican funding bills and join my colleagues in both chambers and on both sides of the aisle in working toward a final agreement” on government spending for next year, Democratic Representative Rosa DeLauro said in a statement to Reuters on Friday.She is the senior Democrat on the House Appropriations Committee, and noted that, given the House Republicans’ slim majority, “They know and have said publicly, that in the end they are going to need Democratic votes to keep the government open.”Failure to agree on appropriations could lead to a partial government shutdown into the autumn and winter that could hobble many federal activities, including air traffic control, military pay increases and the operation of national parks.Some of the roughly three dozen members of the hardline Republican House Freedom Caucus have suggested in the past that a shutdown would not be an unwelcome outcome.But Representative David Joyce, who chairs the Republican Governance Group, or RG2, a more moderate group of 42 lawmakers concerned with House governance, said there could be scope for a short-term funding deal to maintain government operations while talks continue into the fall.”I’m not a big fan at all of shutdowns, and I don’t think anybody in RG2 or our groups are really thinking about that,” Joyce told Reuters. “We’re trying to think how to make things work.” More

The US and Mexican governments have in effect parked two trade disputes, frustrating business leaders who want to see an important regional trade pact respected. Officials and experts following the talks blame next year’s presidential elections in both nations.Talks between the US, Canada and Mexico that ended in Cancún on Friday produced little progress on disputes that have dragged on since 2021 over Mexico’s nationalist energy policies and protectionist motor industry rules in the United States.The US has failed to comply with a January panel decision under the US-Mexico-Canada trade agreement, known as the USMCA, that ruled in favour of Mexican and Canadian carmakers. Mexico has not complained about the US’s failure to abide by the ruling, while Washington has not advanced a dispute over Mexico’s nationalist energy policies, which favour state-backed champions at the expense of North American rivals. “There has been a decision in both the US and Mexican governments to try to manage all the tensions until after the two elections,” said Claudia Ruiz Massieu, a Mexican opposition lawmaker who heads the Senate committee for USMCA implementation. She said USMCA had “lost strength” as a result.Luis de la Calle, a former North American Free Trade Agreement (Nafta) negotiator and trade expert, said the US was not abiding by the panel decision on car parts — which determined Washington was applying rules on the proportion of parts that needed to be made regionally, too strictly — to appease unions. “There is a lot of pressure from the United Auto Workers [union] and the steel producers, who are an important base for the Democrats,” he said, adding: “Mexico has not insisted on adherence as it has an incentive for the panels not to be respected because of its own energy dispute.”The uncertainty over the disputes has unsettled investors in a region with more than $1trn of annual commerce transacted under the three-year-old USMCA, the successor to Nafta. It could damage a once-in-a-generation opportunity to attract more manufacturing investment as part of the global trend to move production closer to home.“The lack of adherence to the procedures [for resolving trade disputes] sends the wrong message,” said a business leader in Mexico City involved with USMCA issues. “How can you have confidence in the agreement?”Keen to fend off Republican criticism that he is soft on illegal migration, US president Joe Biden has made it a priority to win co-operation from his populist Mexican counterpart Andrés Manuel López Obrador in reducing unprecedented numbers of mainly Latin American migrants from reaching the southern US border.As a result, experts say, Biden’s government has been reluctant to criticise Mexico’s nationalist energy policies. Were it not for the migration issue, one senior diplomat from the region said the US would be “much more aggressive” on the trade disputes.“As long as López Obrador’s administration is mostly co-operating on immigration, my sense is the [Biden] administration is very reluctant to push hard on the other issues,” said David Gantz, a fellow at Rice University’s Baker Institute in Texas. “The [US] election is getting closer and closer and the impact of . . . presidential decisions in a number of areas are being severely influenced by that.”The Office of the United States Trade Representative (USTR) and Mexico’s Economy Ministry did not respond to requests for comment in time for publication. USTR officials said before the talks that they were engaging with Mexico and Canada on finding a positive solution on cars that would benefit all the stakeholders.US officials also say they have had to work hard to rebuild dialogue since the presidency of Donald Trump, who described Mexicans as killers, rapists and drug dealers and threatened to close the border. They point to the deal’s success in protecting workers’ rights in Mexico under far-reaching labour provisions. The three leaders met in January and in recent months both US and Canadian companies have won individual permits and contracts in energy for some companies.Domestic political considerations could yet mean that the US escalates its fight against Mexico’s opposition to genetically modified corn before the election, since it matters to key states in the corn belt such as Iowa.But the deadlock over energy supply and the motor sector are likely to continue until new governments are in place in 18 months’ time. Mexico’s presidential and congressional elections are in June 2024, while the US follows in November. US business groups have expressed frustration, as has Mexico’s car and truck sector, the world’s seventh largest. Many believe US non-compliance sets a bad precedent and would make it easier for Mexico to ignore future rulings. “It weakens the pact as an instrument for legal certainty,” one industry representative said, adding that non-compliance also threatens to undermine a review of the USMCA scheduled for 2026. Few think the pact is at risk of unravelling, but how and whether it is modified depends on who is in office in the US and in Mexico.“Full implementation and enforcement of the USMCA agreement are the only way to sustain broad political support for it,” said Arturo Sarukhán, a former Mexican ambassador to the US who is now a consultant in Washington. “Kicking the can down the road until after the presidential elections in Mexico and the US in 2024, or failure to enforce or abide by the agreement’s commitments, will harm political support for USMCA in the longer term.” More

1. U.S. futures lower to begin trading weekStock futures on Wall Street edged down on Monday as investors looked ahead to the release of U.S. inflation numbers and a slate of earnings from large banks this week (see below).At 05:02 ET (09:02 GMT), the Dow futures contract had slipped by 30 points or 0.09%, S&P futures lost 10 points or 0.24%, and Nasdaq 100 futures shed 55 points or 0.37%.The main indices finished the prior trading week in the red following mixed jobs market data, which was widely interpreted as an indication that the Federal Reserve will likely unveil a further interest rate hike as expected at its upcoming policy meeting later this month.On Friday, the benchmark S&P 500 fell by 0.29%, the broad-based Dow Jones Industrial Average declined by 0.55%, and the Nasdaq Composite decreased by 0.13%.2. U.S. inflation data and bank earnings highlight weekly agendaFresh inflation figures out of the U.S. are set to be the key event of this week’s economic calendar, while results from big U.S. banks will get the ball rolling on second-quarter earnings.The June consumer price index from the world’s biggest economy is expected to increase by 3.1% annually, which would be the slowest since March 2021. On a month-on-month basis, it is estimated to accelerate slightly to 0.3%. Meanwhile, the core reading, which is closely watched by Federal Reserve policymakers, is seen rising by 5.0% year-on-year and 0.3% monthly.As it was with the labor market data last week, these numbers are anticipated to influence the thinking of Fed officials, who have made corralling elevated inflation a central objective of the central bank’s recent year-long campaign of policy tightening.Elsewhere, Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC) will report their quarterly returns on Friday. Analysts have flagged that the banking giants may be hit by the largest uptick in loan losses since the COVID-19 pandemic.3. Deflation pressures mount in ChinaFactory-gate prices in China decreased by the most in more than seven years in June, while consumer prices flirted with deflation, in the latest sign of sluggishness in the world’s second-largest economy.According to data from the National Bureau of Statistics on Monday, producer prices fell by 5.4% annually last month, the sharpest fall since 2015 and steeper than analysts’ estimates of a decrease of 5.0%. Domestic and foreign demand both weakened.Additionally, the consumer price index was flat year-on-year due to an accelerating drop in pork prices. The figure, which had been expected to increase by 0.2%, was the slowest since 2021.The prints bolstered speculation that China’s central bank will continue to slash interest rates and unveil new stimulus measures to help provide fuel to the country’s sputtering post-pandemic recovery.4. Alibaba shares boosted as China fines Ant Group, soothing regulatory worriesHong Kong-listed shares in Alibaba Group Holding Ltd (HK:9988) closed higher on Monday, driven by hopes that a Chinese fine of its Ant Group fintech arm will bring an end to years of regulatory scrutiny.On Friday, Chinese officials handed down a penalty worth $984 million to Ant, which was spun off by Alibaba (NYSE:BABA) more than a decade ago. The e-commerce behemoth retains a 33% interest in the business.In the wake of the announcement, Ant said it would embark on an up to $6 billion share repurchase program at a valuation of $78.5 billion — around 70% below the level touted by the company in a now-shelved initial public offering.Ant ditched its IPO in 2020, marking the beginning of a corporate crackdown by Beijing that led to uncertainty over the rules governing some of the country’s largest businesses.5. Oil drops on Chinese demand concernsOil prices slipped on Monday as the weak Chinese inflation data sparked fresh worries over the nascent economic recovery of the world’s largest crude importer.By 05:03 ET, U.S. crude futures traded 0.9% lower at $73.21 a barrel, while the Brent contract fell 0.84% to $77.81 per barrel.Both benchmarks had gained more than 4% last week — touching their highest levels since May — thanks in large part to the world’s biggest oil exporters Saudi Arabia and Russia announcing plans to deepen supply cuts in August.These expected reductions helped to limit losses stemming from the Chinese data, according to analysts cited by Reuters. More

The largest banks in the US are set to report their biggest jump in loan losses since the onset of the Covid-19 pandemic when they begin to publish second-quarter results later this week.JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley are predicted to have written off a collective $5bn tied to defaulted loans in the second quarter of this year, according to the average estimates of bank analysts as compiled by Bloomberg.They will set aside an additional $7.6bn to cover loans that could go bad, according to the analysts’ forecasts.Both figures are nearly double what they were in the same quarter a year ago. However, they remain below the hits big banks took at the beginning of the pandemic when charge-offs and provisions peaked at $6bn and $35bn respectively.Credit cards are the biggest source of pain for a number of lenders while commercial real estate loans are also proving a drag on banks’ performance.JPMorgan, Citi and Wells Fargo report earnings on Friday followed by BofA and Morgan Stanley on July 18 and Goldman Sachs on July 19.Here’s what else I’m keeping tabs on today:Biden’s UK visit: The US president meets British prime minister Rishi Sunak and King Charles III before heading to Lithuania for the Nato summit. Fedspeak: Loretta Mester, president of the Cleveland branch of the Fed, will give an economic and policy outlook, while Atlanta Fed president Raphael Bostic will participate in a public event about US and Atlanta economies. Fed vice-chair for supervision Michael Barr and San Francisco Fed president Mary Daly will discuss bank supervision at separate events in Washington.Five more top stories1. China’s economy teetered on the brink of deflation in June, adding to calls for Beijing to launch a stronger stimulus package to sustain the country’s stuttering post-Covid recovery. The consumer price index was flat year on year and declined 0.2 per cent compared with the previous month, while factory gate prices fell at the fastest pace since 2016. Read more on the latest economic data from China. More China news: Janet Yellen talked up the potential for ongoing US-China trade on a visit to Beijing that ended over the weekend. 2. The US and Germany are under intense pressure from other allies to show greater support for Ukraine’s eventual membership of Nato, just days before the military alliance’s leaders meet in Lithuania. “I think we have to lay out a rational path for Ukraine to be able to qualify to get into Nato,” the US president told CNN yesterday. Read more on Nato’s preparations for its summit in Vilnius. War in Ukraine: African leaders have told Vladimir Putin to “show his desire” to move forward with peace before they convene in St Petersburg for a Russia-Africa summit at the end of this month.3. A flaw in Revolut’s payment system in the US allowed criminals to steal more than $20mn of its funds over several months last year before the company could close the loophole, according to multiple people with knowledge of the episode. Read more about the incident which has not yet been publicly disclosed. 4. SVB Financial Group has sued the US Federal Deposit Insurance Corporation in a bid to recover $1.9bn in cash that the regulator has kept since it took over the group’s banking subsidiary in March. Read more on the lawsuit filed last night in a New York federal bankruptcy court.5. Benjamin Netanyahu faces a fresh wave of resistance against his judicial overhaul plan, including threats by a big shopping centre chain to close its sites, as the Israeli prime minister’s hardline government returns to its bitterly disputed project. Parliament is due to vote today on one of its central elements. Here are more details.Related: In unusually frank remarks, US president Joe Biden has called out “extreme” members of Netanyahu’s cabinet, accusing them of being “part of the problem” in the occupied West Bank.The Big Read

Volodymyr Zelenskyy, left, and Jens Stoltenberg © FT Montage/Reuters/Getty

As his battered troops continue to fight off a relentless invasion and attempt to claw back occupied territory in Ukraine’s south and east, Volodymyr Zelenskyy will this Wednesday be in Lithuania’s capital, Vilnius, with another strategic objective: to gain a seat at Nato’s table. But his bid poses difficult questions for the military alliance’s 31 members, from how prepared they are to fight Russia, to whether its mutual-defence clause needs to be earned before it is given.We’re also reading and watching . . . Investment research: Back in the late 1990s, equity analysts were rock stars. Today, they are endangered, writes Brook Masters, after two decades of scandals and regulatory tinkering.Email: The misdirected email is one of the most disastrous office blunders — and also remarkably common. Pilita Clark shares some recent examples of mis-sends.FT film 🎬: Gautam Adani saw more than $100bn wiped from his listed companies’ valuation after a short seller took aim at his empire. Now, the fallout has spread beyond the markets into Indian politics.Chart of the day

Representatives of 168 member states of the obscure International Seabed Authority will gather today in Kingston, Jamaica for the start of a marathon, three-week negotiation to lay down the first operating guidelines for large-scale commercial mining on the seabed where metals needed in the electrification of the car industry are stored. Read more on what is at stake in the talks. Take a break from the newsAdvantage you? Put your SW19 Grand Slam knowledge to the test in the FT Globetrotter tennis quiz and see how well you actually know your Wimbledon.Additional contributions by Tee Zhuo and Benjamin Wilhelm More