Aurelia Butler

SANTIAGO (Reuters) -Lawmakers in Chile’s lower house of Congress gave final approval on Wednesday for a long-awaited mining tax reform that now requires only the signature of leftist President Gabriel Boric, who has publicly backed it, to become law.The reform will require large copper and lithium producers that operate in the mineral-rich Latin American nation to pay more taxes and royalties to the government.Chile is the world’s top copper producer and No. 2 in lithium, both seen as key to making future fleets of electric vehicles powered by rechargeable batteries.By a vote of 101 in favor to 24 against, lawmakers approved modifications to the tax and royalty bill endorsed by the Senate last week.The lopsided vote was hailed by Finance Minister Mario Marcel, who underscored that the higher government take required of mining companies would address past abuses.”With this legislation, we seek to avoid what happened many times with our country’s natural riches: they were exploited, they disappeared, which left very little for the country and its future development,” Marcel told reporters after the vote.Under the reform, the top tax rate will reach up to nearly 47% for companies that produce over 80,000 tonnes of fine copper a year, considered high by the industry. It also establishes a 1% ad valorem tax on copper sales from companies that sell more than 50,000 tonnes of fine copper, as well as an additional 8% to 26% tax depending on the miner’s operating margin. Mining association Sonami expressed relief that the measure ended uncertainty over the type of reform lawmakers would ultimately adopt.”Uncertainty lasted for almost five years and, without a doubt, hurt the country’s main productive activity,” Sonami said in a statement.The association described the final legislative language as “better” than what was initially proposed by the government, giving credit to Marcel for enacting industry-friendly revisions. More

The two companies, Zinc Health Services and Ascent Health Services, are group purchasing organizations, that negotiate after-market discounts or rebates with drug manufacturers on behalf of PBMs and hold the contracts that govern those rebates.Zinc Health negotiates rebates for CVS Health Corp (NYSE:CVS) and Ascent Health for Cigna (NYSE:CI) Group’s Express Scripts (NASDAQ:ESRX) unit and Prime Therapeutics, which is a privately held PBM, the FTC said on Wednesday.PBMs act as middlemen and negotiate rebates and fees with drug manufacturers, create lists of medications that are covered by insurance, and reimburse pharmacies for patients’ prescriptions.The inquiry aims to shed light on unfair PBM practices, which include directing patients towards PBM-owned pharmacies, using “complicated and opaque” reimbursement methods, as well as negotiating rebates and fees with drug manufacturers that may impact the cost of prescription drugs to payers and patients, the agency said.The FTC last year demanded information from the six largest PBMs in the United States, including CVS’ Caremark, Humana Inc (NYSE:HUM), Express Scripts and UnitedHealth Group Inc (NYSE:UNH)’s OptumRx. More

LONDON (Reuters) -The European Union’s executive body said on Wednesday it has formally adopted a draft memorandum of understanding (MoU) to allow financial regulators from Britain and the bloc to cooperate more closely, though stopping short of market access.Britain’s EU exit largely severed its financial sector’s previously unfettered access to the bloc, raising concerns over London’s role as a global financial centre.As part of Brexit terms, the EU agreed to formalise cooperation between financial watchdogs. However, that was put on hold Brussels following disagreements between the bloc and Britain over Northern Ireland, now resolved through the Windsor Framework.The European Commission said on Wednesday is has adopted the draft MoU, though it still needs final political endorsement from EU states.”I am confident that our relationship and future engagement in financial services will be built on a shared commitment to preserve financial stability, market integrity, and the protection of consumers and investors,” Mairead McGuinness, the EU’s financial services commissioner, said in a statement.The MoU will create a joint EU-UK Financial Regulatory Forum, similar to one the EU already has with the United States.”The MoU does not deal with the access of UK-based firms to the Single Market – or EU firms’ access to the UK market – nor does it prejudge the adoption of equivalence decisions,” the Commission said.Joanna Penn, treasury minister in the UK parliament’s upper house, welcomed the “positive move” given how EU and UK financial markets are deeply interconnected.”The Treasury stands ready to sign the MoU and we do look forward to operationalising the forum as soon as possible this year,” Penn told a debate on EU-UK financial services.Treasury ministers will meet with McGuinness next week, Penn added.The EU has granted ‘equivalence’ or EU market access to derivatives clearing houses in London until the end of June 2025.In the meantime, the bloc has proposed a draft law to force banks and asset managers in the EU to shift a yet-to-be-decided chunk of their clearing home from London, though industry officials expect equivalence to be extended in some form after June 2025. More

LONDON (Reuters) -Holders of credit insurance linked to Credit Suisse bonds will not get a payout after a committee that adjudicates on disputes in the derivatives market said on Wednesday the bank’s state-engineered merger with UBS was not a credit event.The Swiss bank in March was taken over by UBS in a state-assisted rescue deal that wiped out Credit Suisse’s $17 billion Additional Tier 1 (AT1) bondholders.”A Governmental Intervention Credit Event had not occurred,” the EMEA Credit Derivatives Determination Committee (CDDC) said in a statement on its website, responding to a question from an investor last week.The CDDC said it had come to the conclusion following an examination of the ranking clauses for the AT1 bonds listed in the request made by the investor. The investor said the AT1 bonds were pari passu, in other words ranking at the same level, with the reference bond underlying the CDS contracts, which included a subordinated bond that matured in 2020. But the committee’s view was that holders of the 2020 bonds were priority creditors compared with AT1 bondholders. “Common sense prevailed,” said Jerome Legras, managing partner and head of research at Axiom Alternative Investments. “Effectively, saying that subordinated Tier 2 and AT1 are pari passu would have been very problematic for the AT1 market.”The amount of gross notional outstanding CDS linked to Credit Suisse bonds stood at more than $19 billion in March, according to data from the Depository Trust & Clearing Corporation. The DTCC provided no details of what seniority of bonds the CDS contracts were written against.A panel of eleven finance companies, including Barclays (LON:BARC), Citibank, Deutsche Bank (ETR:DBKGn) and Goldman Sachs (NYSE:GS) as well as Elliot Investment Management and PIMCO came to a unanimous decision, the CDDC statement said.    Credit Suisse, which is still listed as a member of the EMEA CDDC on the group’s website, was not listed as having taken part in the decision.  TEST CASEThe debate on the CDDC committee was another test case for AT1s, which took a beating in March following the surprise decision by Swiss regulators.     AT1 bonds, introduced after the 2008 financial crisis, act as shock absorbers if a bank’s capital levels fall below a certain threshold as they can be converted into equity.    European regulators have said they would continue to impose losses on shareholders first if a bank fails, helping to calm panicky investors. Hong Kong and Singapore also said they would stick to the traditional hierarchy of insolvency claims in which equity investors usually rank below bondholders.Some investors still hope to recover some of their money if litigation attempts prove successful.Hundreds of lawsuits have been filed over the terms of the emergency deal to save Credit Suisse.The 3 billion Swiss franc ($3.35 billion) rescue, hammered out over a March weekend amid turmoil in the global banking sector, upended a long-established practice of giving bondholders priority over shareholders in a debt recovery.Law firms including Quinn Emanuel Urquhart & Sullivan and Pallas Partners have filed claims on behalf of investors. More

SHANGHAI (Reuters) – When graduate student Cai Zhishan decided to spend her Labour Day holidays in northern China, she wished she had enough money to hire a car for the more-than 4,000km (2,500 mile) round trip – the equivalent of driving from New York to Los Angeles. Instead, she chose “travelling like special forces,” a new trend in China that has emerged as a symptom of the underlying weakness in household consumption, and which is casting a shadow over a post-pandemic recovery in domestic tourism.Cai, 22, mostly took slow trains and buses as she made her way from the city of Hangzhou where she studies, around the northern Shanxi province, and back. To get to the ancient temples, pagodas and grottoes she wanted to visit, she walked roughly 30,000 steps a day. For accommodation, she chose overnight trains and cheap hostel beds.Over nine days, she spent just 2,500 yuan ($362).”I don’t have much money, but I like to travel,” Cai said. “I can control the expenses, to go to many places for the least amount of money, but it is really tiring.”On social media, the hashtag “special forces travel” – which refers to an aggressive assault on a tourist area to see and do as much as possible for as little money one can spend – went viral before and during the Labour Day break starting in late April.Cai was inspired by the online discussions, like many other Chinese travellers who surprised with their thriftiness.Ministry of Culture and Tourism data showed a boom in domestic travel this year, as many Chinese made up for the three years of COVID-19 restrictions that kept them largely stuck at home.During the May holiday break, which for most Chinese covered the April 28-May 3 period, 274 million trips were made, up 19% from 2019 before the pandemic. But total spending was 148 billion yuan ($21 billion), on par with 2019, meaning travellers spent an average of 540 yuan in 2023 versus 603 yuan in 2019.In another sign of tight pockets, international trips by Chinese tourists this year remain a fraction of pre-pandemic levels.”Chinese overall are not ready to spend as much as before and, even if the government tries … to entice consumption and reduce excess savings, I doubt it will manage,” said Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis Research.”People need jobs and higher wages to start spending big again.”Domestic consumption, which Chinese policymakers want to play a greater role in powering the world’s second-largest economy, has recovered since COVID restrictions were lifted in December, but has consistently underwhelmed so far this year.China’s struggling property market, record high youth unemployment and broader worries over job stability, as well as government parsimony on wages, pensions and medical benefits are keeping consumers cautious, analysts say.Data on Tuesday showed retail sales up 18.4% in April from last year, when Shanghai was under lockdown, undershooting expectations of a 21.0% rise. Consumer confidence has bounced from last year’s record lows, but remains below the range of the previous two decades.One travel blogger, who posts on the Instagram-like social media app Xiaohongshu under the name of Icecube, told Reuters he slept overnight in a public toilet to save money on a trip to Huangshan mountain in the southern Anhui province.”It’s worth it,” said the blogger, who declined to give his real name.”Although I suffered a little, I spent the least money possible to see beautiful scenery. In the future, I may consider adding a little to the budget to improve accommodation conditions.”For those betting on consumption gathering speed as the year progresses, maybe not all is lost.Beijinger Xing Zicong, 23, tried to visit the historical silk road city of Xi’an on a shoestring, but found it too uncomfortable and ended up spending more money than planned.”Maybe I didn’t wear the right shoes, but my feet started to hurt after walking more than 10,000 steps,” she said, joking that she exemplified “the battle-scarred version of special forces travel.”($1 = 6.9121 Chinese yuan renminbi) More

WELLINGTON (Reuters) – New Zealand is set to deliver what it calls a “no frills” budget on Thursday as falling tax revenues squeeze coffers and inflation risks cap cyclone reconstruction efforts, constraining stimulus as the Labour government faces an election this year.Finance minister Grant Robertson has said the budget will focus on fiscal sustainability as they cut NZ$4 billion ($2.54 billion) in spending to fund programmes viewed as core and to rebuild infrastructure damaged in the floods and cyclones earlier this year.”This budget has seen us make difficult trade-offs to keep to our balanced approach,” Robertson said in a speech to the Wellington Chamber of Commerce last week. “It is focused on providing support for people today, while also building our nation for the future.”The budget is the first for Prime Minister Chris Hipkins, who replaced Jacinda Ardern when she stood down in January after five years at the helm.New Zealanders will head to the polls in October in what is set to be a close run election with no party likely to win a majority.The 2023-24 budget is expected to show a worsening bottom line with the country unlikely to hit surplus by 2024-25 as was forecast in December.In December, the government forecast a deficit of NZ$3.36 billion in the year ended June 2023, with a surplus of NZ$1.66 billion expected in the year ended June 2025.Government forecasts on Thursday are also likely to reflect the worsening domestic situation with the economy shrinking 0.6% in the fourth quarter of last year.Money will be set aside to provide relief for those on social welfare while more than NZ$1 billion has already been earmarked for rebuilding after the cyclone.The government has also promised NZ$748 million to boost defence staff pay and for equipment upgrades. Money for climate-friendly initiatives is also expected.Bank of New Zealand economists said that although the budget will include some stimulus measures they are unlikely to be significant.”Even if the government wanted to go larger with spending, and large on tax relief, the accounting boundaries would ring alarm bells,” they said.($1 = 1.5763 New Zealand dollars)(This story has been refiled to correct wording in paragraph 1) More

ORLANDO, Florida (Reuters) – Long Japan, short China. If there is a general macro, relative value trade playing out right now, it might be that as the contrasting fortunes of Asia’s economic and financial behemoths become starker by the day.China’s economy is rapidly losing steam and investor appetite for Chinese assets is cooling accordingly, while Japan’s growth is accelerating and its main stock markets are at or flirting with their highest levels in 33 years.Some of these trends are not new – overseas investors have been selling Chinese bonds for over a year and deteriorating U.S.-China relations have hung over investors for just as long – but they have been brought into sharp focus by deeply divergent economic indicators this week. First up, Chinese investment and retail sales in April fell short of economists’ forecasts, industrial production growth was barely half what economists had predicted, and foreign direct investment growth was less than half of that in March.Hot on the heels of data the week before that showed inflation and imports collapsed in April, China’s economic surprises index on Tuesday registered its biggest fall in two years and one of the steepest ever. The growth outlook has darkened quickly and considerably – Barclays (LON:BARC) economists on Wednesday slashed their second-quarter GDP forecast to 1% from 5%, and the full-year outlook to 5.3%. Even Beijing’s official 2023 goal of 5% would be the lowest in over 30 years, excluding the pandemic-driven turmoil of 2020.Analysts at Societe Generale (OTC:SCGLY) on Wednesday revised their outlook on the yuan, and now see it falling to 7.30 per dollar this year – a level flirting with 15-year lows.ON TOPIXOfficial figures from Japan on Wednesday, meanwhile, showed that Asia’s second-largest economy grew in the first quarter four times faster than expected on a quarterly basis at 0.4%, and more than twice as fast on an annualized measure at 1.6%.Also this week, Japan’s benchmark Nikkei 225 stock market index closed above the psychologically important 30,000 point mark for the first time in 20 months, and is now within a few percent of levels it last reached in 1990. The broader Topix index hit a 33-year high on Tuesday.Foreign investors have been net buyers of Japanese stocks for five weeks, but cumulative flows are only back to where they were last summer, according to Goldman Sachs (NYSE:GS) analysts.There’s plenty scope for further buying.”A longer timeframe shows that foreign investors have been net sellers of Japanese equities by a considerable margin. We think long-term investors remain lightly positioned,” they wrote last week in a note “Upside risks in Japanese equities”.Bank of America (NYSE:BAC)’s latest fund manager survey paints a similar picture. A net 11% of those polled are underweight Japanese stocks, 0.7 standard deviation below the long-term average.CHINA CRISIS?Compare that to China.Granted, net buying of Chinese equities by foreign investors earlier this year approached $30 billion, but the bulk of that was in January when COVID-19 restrictions were scrapped and markets surged.But that burst of optimism surrounding the post-COVID reopening has evaporated. Non-residents sold nearly $4 billion of Chinese stocks in April, according to the Institute of International Finance, the first outflow in six months.Bank of America’s monthly fund manager surveys show that “long” Chinese equities was the most crowded global trade in January. That has been scaled back significantly and investors have reduced their net overweight position in Chinese stocks, but they are still comfortably net overweight. If there is scope for investors to increase their exposure to Japanese equities further, there’s scope for them to further reduce their exposure to China. Bond investors, meanwhile, have been voting with their feet. A decade of strong and steady inflows into Chinese debt securities reversed when Russia invaded Ukraine in February last year, and foreigners show no sign of being tempted back.The next steps from Bank of Japan (BOJ) and People’s Bank of China (PBOC) could help cement these trends too. If the BOJ starts dismantling its “yield curve control” policy soon to bring inflation down, perhaps as early as next month, the yen would likely rise and Japanese investor flows could shift back to domestic assets. The PBOC faces a tougher job attracting investors to China given the fragile growth picture and geopolitical tensions surrounding Taiwan, Ukraine, tech espionage and sanctions. The upcoming Group of Seven leaders’ summit in Japan will address these issues, and the joint communique is likely to have a section devoted to China. But it remains to be seen how direct the language will be. Japan and Germany are major exporters to China and may be skeptical about signing on to controls on investment into the world’s second largest economy.Investors, however, are making their positions pretty clear.(The opinions expressed here are those of the author, a columnist for Reuters.) (By Jamie McGeever; Editing by Jamie Freed) More