Aurelia Butler

Vietnam needs to take aggressive steps to reach its economic targets this year, the country’s finance minister has said, warning that the export-driven manufacturing hub was struggling to maintain strong growth amid a drastic decline in orders.Vietnam was one of Asia’s fastest-developing economies last year, expanding more than 8 per cent, its highest growth rate since 1997. But growth slowed in the first quarter of 2023 to 3.3 per cent, down from 5.9 per cent in the fourth quarter of last year, as a grim global economic picture and high inflation cut into demand for the country’s exports.“We rely on the world’s demand for our products, which is facing a lot of difficulties,” Ho Duc Phoc told the Financial Times, adding that the war in Ukraine had raised petroleum and consumer prices, putting pressure on manufacturing input and trade costs and depressing buyers’ appetite. “Our orders from international partners have reduced drastically.”He said the government was targeting full-year growth of 6 to 6.5 per cent, following anticipated first-half growth of about 4 per cent.“In the next six months, we will probably have [to take] aggressive steps to achieve that target,” he said, citing an extension of deadlines for tax payments, the reduction of value added tax and petrol levies amid proposals to help lower costs and boost demand. Vietnam’s central bank this month cut interest rates by 50 basis points, its fourth reduction this year.

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Vietnam’s export-led growth has pulled tens of millions of people out of poverty over the past 30 years, catapulting the south-east Asian country from the ranks of the world’s poorest into lower middle-income status. Reform policies launched in the late 1980s known as Doi Moi, or “renovation”, dismantled central economic planning, turning the one-party communist state into a manufacturing powerhouse following decades of deprivation and war.Vietnam is also emerging as a beneficiary from a “friendshoring” drive, as companies look to protect their supply chains from geopolitical tensions between Washington and Beijing, thanks to its proximity in the region and low labour costs. Phuc said Vietnam’s “facilitative” business environment was also a big draw for business, as was its “abundant” and cheap labour force. “Our investors mainly come from South Korea, Japan and Singapore,” he said. “We believe more investors will come from the European Union, Germany, India, the US, the UK and even China,” which remains Vietnam’s largest trading partner. Companies including Samsung and Foxconn have relocated to Vietnam or increased operations there in recent years, a shift accelerated by China’s stringent zero-Covid regime, which disrupted global trade. But Vietnam’s infrastructure, which developed rapidly to meet demand from offshoring manufacturers, is increasingly under strain. Extreme heat and low rainfall have contributed to power cuts across the country’s north in recent weeks.“The power cuts are affecting a lot of business activities, especially some industrial zones,” said the minister, pledging new investment in the coal and hydropower-reliant electricity grid, as well as highways, seaports and airports. Phuc noted that at least 700bn dong ($30mn) was set aside annually for infrastructure investment.

The National Assembly in March named Vo Van Thuong as president, the country’s second-highest position, following his predecessor’s resignation. The reshuffle came amid a years-long anti-corruption campaign that allowed communist party chief Nguyen Phu Trong to consolidate his grip on power by eliminating potential rivals.Business lobby groups and investors said decision-making had ground to a halt in the wake of the anti-graft crackdown. Phuc dismissed the suggestion that the reshuffle had an impact on the economy. “The aim of the crackdown on corruption is to make the economy healthy and transparent,” he said. More

Here are reactions from investors and analysts:QUINCY KROSBY, CHIEF GLOBAL STRATEGIST AT LPL FINANCIAL:”Markets typically do not respond well to events that are unfolding and are uncertain,” particularly relating to Putin and Russia.”If the uncertainty escalates, you’re going to see Treasuries get a bid, gold will get a bid and the Japanese yen tends to gain in situations like this.”Markets will be “cautious” and “alert” in the coming days.NICOLA MARINELLI, ASSISTANT PROFESSOR OF FINANCE, REGENT’S UNIVERSITY, LONDON:”The impact on markets clearly depends on the final outcome of Russia’s internal power struggle; if it leads to an early conclusion of the war, it will be positive for markets in the short term.”GENNADIY GOLDBERG, HEAD OF U.S. RATES STRATEGY AT TD SECURITIES IN NEW YORK:”It certainly remains to be seen what happens in the next day or two, but if there remains uncertainty about leadership in Russia, investors may flock to safe havens. I suspect that even though it seems the leadership challenge in Russia has been de-escalated, investors may remain nervous about subsequent instability, and could remain cautious. Of course we will continue to watch how things evolve over the next few days.” ALASTAIR WINTER, GLOBAL INVESTMENT STRATEGIST AT ARGYLL EUROPE:”Uncertainty over various bad outcomes in Russia, as this looks like, means a stronger USD and possibly JPY now that Japan seems to be back in favor.””Short-term U.S. Treasuries “should pull back some of their recent losses relating to the Fed delaying further cutting rates. Global equities were wilting last week over stagflation worries and the news from Russia will not change that, even if it may not make much difference to most corporate earnings. There is not a lot of good news around.””I suspect markets may not react much at all now. However, Putin has clearly been weakened and there will be more developments. USD will certainly find some support as the market returns to speculating over rate hikes and cuts and recession in different economies.”RICH STEINBERG, CHIEF MARKET STRATEGIST, THE COLONY GROUP, BOCA RATON, FLORIDA:”Some frayed nerves were calmed in the short run” by the de-escalation, and “the markets will kind of treat this as another geopolitical risk.” Safe haven assets may not react because Wagner forces did not reach Moscow and inflame the situation, he said.”Calmer nerves have at least prevailed for the moment. This is a fluid situation but I definitely think the heat has been dialed down by Putin.”STEVE SOSNICK, CHIEF STRATEGIST AT INTERACTIVE BROKERS:”This is a truly exogenous event that leads to initial shock and a flight to safety. It should awaken VIX from its stupor. First move is likely to be a bump in government bond prices (lower yields) and USD. Riskier assets tend to decline. The question is how much and how lasting the reaction will be, much of which depends upon unknowable developments.””Even with Russian embargoes, they still sell plenty of raw materials to sympathetic nations like China and matter to the global supply. It is reasonable to expect oil and other key commodity prices to rise. If oil prices rise sharply, that will indeed weigh upon equities and reignite stagflation fears. Gold is tough to read. In theory it should benefit from a flight to safety, but in practice a strong dollar can impede it.” “U.S. Treasuries should rise on the safety trade.””With Russia largely disconnected from the global economy, few U.S. or European companies will have direct impacts from instability in a country that’s already a pariah. So the broader markets will take their cues from bonds and commodities. Defense-related stocks should catch a bid – the world is not a safer place today – and commodity-linked stocks should also be outperformers for the reasons stated above.”MICHAEL PURVES, CEO AT TALLBACKEN CAPITAL ADVISORS:”Certain parts of the stock market have been flying really high. We do know that’s largely been driven by P/E expansion rather than earnings and this might give people an excuse to sell.””These types of geopolitical shocks are often short lived and usually don’t have much impact on the U.S. stock market but this time it may because stocks have run up so high.””Any time you have these kinds of political disturbances in a commodity nation you at least expect a short term shock to the prices of the commodities produced there.””We should start seeing classic risk-off dynamics on Sunday night such as global equity futures lower, crude oil higher, treasury prices higher.”DAVID KOTOK, CHIEF INVESTMENT OFFICER AT CUMBERLAND ADVISORS IN SARASOTA, FLORIDA:”This is a potential civil war in Russia. Important implications as Putin is already weakened by events and now faces existential threat as does his antagonist.””Turmoil effects include the price and availability of Russian energy. Geopolitical impact on Russian alliances like Belarus and nearby countries in Soviet sphere. In EU what does Hungary (Orban) or NATO ally Turkey do.”Regardless of the outcome, this is already a very big deal.””Initial market reaction will be driven by news reports and by any concrete events. That is usually true of most rapidly changing event sequences. The strategic damage is already done. Every capital in the Russian alliance of countries and in the adversaries’ alliance and in the neutral alliance is rethinking the relationship with Putin.”GEORGE BOUBOURAS, HEAD OF RESEARCH AT K2 ASSET MANAGEMENT IN MELBOURNE:”Current reported Russian events are not helpful. It’s very concerning for the complex geopolitical global landscape and any uncertainty will obviously impact markets.””Higher vol lies ahead. However fundamentals will eventually resurface. That is, economies in developed markets remain resilient & central banks’ concerns with stubborn inflation create many challenges as rates need to go higher & remain higher for longer.”JAMIE HALSE, PORTFOLIO MANAGER, PLATINUM ASSET MANAGEMENT, SYDNEY:”If Putin removed, pure speculation and a hypothetical on my part, troops withdrawn from Ukraine and peace deal agreed, then that would be bullish for Russian-exposed businesses, Eastern Europe stocks, probably Chinese stocks by implication. Bearish energy, resources and defense stocks.””Probably bearish Indian stocks too as the dividend they’ve received from cheap Russian oil likely disappears.””On the other hand, civil war, especially if prolonged, in a major nuclear armed nation should make anyone uncomfortable …(though) we don’t really know what’s going on at this point. Civil war may be too long a bow to draw.” More

By Dietrich KnauthNEW YORK (Reuters) – Bankrupt crypto exchange FTX on Thursday sued a former aide to Hillary Clinton and the former aide’s investment firm, seeking to claw back $700 million in investments allegedly made with misappropriated FTX funds.FTX said its founder Sam Bankman-Fried was a “profligate patron” who showered Michael Kives, his firm K5 Global, and K5 co-founder Bryan Baum with cash as part of an ongoing scheme to fraudulently use company assets for personal gain, according to a complaint filed in Wilmington, Delaware, bankruptcy court. Bankman-Fried authorized the transfer of $700 million to K5 entities in 2022, and he leaned on K5’s celebrity and business connections in his effort to obtain rescue financing in the days before FTX went bankrupt in November 2022, according to the lawsuit.Bankman-Fried described Kives, who served as an aide to Clinton when she was a Democratic U.S. senator from New York, and who worked as a Hollywood agent for clients including actor and former Republican California governor Arnold Schwarzenegger and singer Katy Perry, as “probably, the most connected person I’ve ever met,” and “a one-stop shop” for political relationships and celebrity partnerships, according to the complaint. Bankman-Fried brushed off FTX employees’ concerns that K5 was “trying to nickel and dime” or “scam” FTX, continuing to make investments in a quest to burnish his own political and social influence, according to the complaint. Bankman-Fried authorized investments in K5 projects that enriched Kives and Baum with no payoff for FTX or its customers, who were footing the bill, FTX alleged. In one poor investment, according to the complaint, a Bankman-Fried-controlled shell company used $214 million in funds from FTX to buy a minority stake in Kendall Jenner’s 818 Tequila brand, at a time when the tequila company’s assets were valued at just $2.94 million in its filings with the U.S. Securities and Exchange Commission.K5 said that the lawsuit was without merit.“K5 was under the impression – like many others – that SBF was completely legitimate, and that they were entering into a fair, long-term, and mutually beneficial business relationship,” spokeswoman Elizabeth Ashford (NYSE:AINC) said in an email, referring to Bankman-Fried by his initials. Kives did not immediately respond to a request for comment. A spokesman for Bankman-Fried declined to comment.Bankman-Fried has pleaded not guilty to charges alleging that he defrauded FTX customers by using their funds to prop up his own risky investments.Since filing for bankruptcy, FTX’s new leadership has recovered more than $7 billion in assets that can be used to repay customers whose funds were frozen when the crypto exchange collapsed. FTX has also filed lawsuits over its pre-bankruptcy investment in the stock platform Embed and its payments to Genesis Global Capital, the bankrupt lending arm of crypto firm Genesis. FTX on Wednesday announced a settlement with the Metropolitan Museum of Art, in which the museum agreed to return $550,000 in donations that it received from FTX companies in 2022. More

“It’s important to remember that we need the EU and they need us very much. So it’s important that we put a little bit of arrogance aside and we try to use common sense for us to negotiate. And that goes for us and that goes for them,” Lula said to journalists in Paris.The leftist Brazilian leader said he discussed with his French counterpart, Emmanuel Macron, the differences in the stance of the two sides on the agreement.”I think it’s normal that France tries to defend its agriculture,” Lula added. “It may be a more difficult inflection point, but it is normal that they also understand that Brazil cannot give up government purchases,” he said referring to an unwanted procurement clause of the deal allowing European companies to sell to Brazil’s public sector.The clause was agreed upon by former Brazilian President Jair Bolsonaro to speed up the deal. Lula, however, has held a firm stance on removing it since he took office in January.He stated, however, that “no matter how much disagreement there is, it is possible that we will end up with an agreement. This is the law of nature, and this is what we will manage to do.”His remarks come a day after he described an addendum included in the deal by the EU attaching climate change commitments and introducing penalties for nations failing to comply with the climate goals as a “threat” to Brazil.The agreement was struck in 2019 after lengthy negotiations but was then put on hold largely due to European concerns over Amazon (NASDAQ:AMZN) deforestation. More

China’s new prime minister used his first trip abroad to pitch a new approach to Europe, focusing on areas where the two sides see eye to eye in a bid to avoid replicating Beijing’s rocky relationship with Washington.In Germany and France this week, Li Qiang went on a charm offensive with government officials and business leaders, pledging to focus on the fight against climate change and announcing a debt relief deal for Zambia at a climate financing summit convened by Emmanuel Macron — a diplomatic win for the French president.Li’s approach signalled that Beijing is embarking on a two-track approach with Europe, attempting to handle business relations and climate co-operation separately from thornier issues, such as China’s support for Russia in the Ukraine war.By contrast, Chinese officials have often made climate co-operation with the US conditional on foreign policy demands.“Chinese elites see reassuring and engaging with Europe as a top strategic priority,” said Seaver Wang of the Breakthrough Institute, a California-based think-tank. “Due to Russia’s war in Ukraine, Europe and the US are more strategically aligned than they have been in decades.”

French President Emmanuel Macron, left, greets Li Qiang at the Élysée Palace on the sidelines of the New Global Financial Pact Summit in Paris © Ludovic Marin/AFP/Getty Images

Beijing’s new tack comes as the European Commission explores ways to “de-risk” its economic relationship by reducing its dependence on raw materials from China and limiting the export of cutting-edge technology to the Asian giant, spurred by the US’s more far-reaching restrictions.Chinese state media and diplomats have roundly criticised that term and warned European capitals against becoming too closely drawn into US trade disputes.In May, China’s foreign minister Qin Gang warned his German counterpart that if the EU “seeks to decouple from China in the name of ‘de-risking’, it will decouple from opportunities, co-operation, stability and development”.But Li, whose brief covers tackling a sluggish Chinese economy that is increasingly in need of private investment, adopted a more conciliatory approach in Berlin. During a roundtable with German businesses, Li said that he “understood each side’s concerns about security”, and that “protecting against risks does not conflict with co-operation”. As the concept of de-risking still leaves room for interpretation, the Chinese side is “trying to figure what the gap is between rhetoric and action,” said Yu Jie, senior research fellow at the Chatham House think-tank. “Political Europe talks about it all the time, while Business Europe is less keen.”Li channelled some of the business leaders’ own fears, warning them that “not co-operating is the biggest risk, not developing is the biggest insecurity”. Martin Brudermüller, chief executive of chemicals giant BASF, in March warned that while there were risks linked to operating in China, “there’s also a huge risk not to be in China”.BASF is one of several large German groups, including chipmaker Infineon and the country’s leading carmakers, that are heavily dependent on China in terms of both sales and supply chains.

Li Qiang with German chancellor Olaf Scholz, right, at the federal chancellery in Berlin © Kay Nietfeld/dpa

A growing number of chief executives, including the bosses of Siemens and Mercedes-Benz, have been publicly rejecting calls from Berlin and Brussels to diversify away from China, arguing that the market is simply too big. In the words of one automotive supplier executive: “We are totally dependent on China.”This development has turned German multinationals into “the most outspoken and arguably effective lobbying force in favour of more, not less, economic engagement with China,” said Yanmei Xie, Europe-China analyst at consultancy Gavekal Dragonomics.On his trip to Germany and France, Li was accompanied by Chinese companies including the battery giant CATL, which has opened a German plant, and solar-panel maker Longi, which hopes to build one in the country.Li also praised France’s opposition to decoupling and “factional confrontation”, in a veiled reference to the US approach. Last week, President Xi Jinping met Antony Blinken, the first US secretary of state to visit Beijing in five years, and announced there was “progress” towards stabilising ties. But just a day later, President Joe Biden sparked Beijing’s outrage by calling Xi a “dictator” at a private fundraising event.By contrast, Li said during a roundtable with French business leaders: “The good level of political trust between France and China enables us to see stability, certainty and common growth opportunities in our mutual interdependence, rather than risks.”On Tuesday, as Li was on his way to dine with a delegation of Bavarian officials and businesses in a marble-clad hall, the European Commission said it would bring forward a proposal for screening outbound investments and improve the implementation of export controls — measures seen as targeting technology links with China. EU member states, however, remain cautious about such measures.Commission president Ursula von der Leyen, one of Europe’s most hawkish officials on China, urged member states to get behind the “de-risking” strategy. But she acknowledged that “the vast majority of trade and economic relations” with China would remain “business as usual”.While the commission’s new proposals remain controversial, German executives remain convinced of a broader need to diversify supply away from China. Some say the Chinese side is overestimating its ability to build a coalition with European companies against de-risking.“Li’s line that the business community does not want to de-risk is nonsense. We care,” one German executive told the Financial Times.Jens Hildebrandt, head of the German chamber of commerce in Beijing, said: “We see clear signs of de-risking.” He said some companies were shifting their production away from China to other Asian countries, to guard against future sanctions or export controls.“The reasons for de-risking come from multiple sides. The Chinese government doesn’t have all the tools in their hands to tell German companies they need to do less de-risking,” added Hildebrandt.Climate change and the green transition also featured heavily in Li’s German meetings, with the two sides releasing a memorandum setting out broad principles on climate co-operation.Beijing froze climate talks with the US for several months last year, and attempts to reboot them have made little progress. But Europe’s more stable relationship with China “helps the west preserve its last beachhead of working together with China on climate change, which will never be meaningfully addressed without speaking to Beijing,” said Li Shuo of Greenpeace Asia.But both climate analysts and German businesses warn that they have been awaiting Chinese action on cutting emissions, rather than words, for a long time.“It’s now time to deliver. We need to be realistic; there are some things they just cannot solve,” Hildebrandt added.Additional reporting by Patricia Nilsson in Frankfurt More

ISLAMABAD (Reuters) -Pakistan has changed its budget for the financial year starting on July 1, Finance Minister Ishaq Dar said on Saturday, including the latest fiscal tightening measures dictated by International Monetary Fund in a final effort to clinch a stalled rescue package.”Pakistan and IMF had detailed negotiations for the last three days as a last effort to complete the pending review,” he told parliament.For the fiscal year starting next month, Pakistan will raise a further 215 billion rupees ($752 million) in new tax and cut 85 billion rupees in spending, as well as a number of other measures to shrink the fiscal deficit, he said.That will revise Pakistan’s revenue collection target to 9.415 trillion rupees ($33 billion) and put total spending at 14.480 trillion rupees ($51 billion), Dar said. “These changes will make our fiscal deficit much better,” he said.”We have ensured that the new tax will not affect the poor,” he claimed, and said the petrol levy will be raised from 50 rupees to 60 rupees, and will be capped at the new ceiling for any future changes.He also announced lifting of restriction of all imports enforced in December in a bid to cut the current account deficit, which has been one of the major concerns by the IMF to release the funds.Money allocated for cash handouts to the poor was also revised from 450 billion rupees to 466 billion rupees for fiscal 2024, Dar said.The review came a day after Prime Minister Shehbaz Sharif met with IMF Managing Director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris.There is less than a week to go before the IMF’s Extended Fund Facility agreed in 2019 expires on June 30.Under the $6.5 billion facility’s ninth review, negotiated earlier this year, Pakistan has been trying to secure $1.1 billion of funding stalled since November.With central bank foreign exchange reserves barely enough to cover one month of controlled imports, Pakistan is facing an acute balance of payment crisis, which analysts say could spiral into a debt default if the IMF money doesn’t come through.The IMF funding is critical to unlock other bilateral and multilateral financing for the debt-ridden South Asian economy.”I hope, God willing, that we will have an agreement with the IMF,” Dar said. ($1 = 286.0000 Pakistani rupees) More