Aurelia Butler

TOKYO (Reuters) – Japan will draw up a plan in June on “new capitalism”, focusing on wage increases, innovation and resolving social problems through support for start-ups, Prime Minister Fumio Kishida said on Wednesday.”First of all, we will aim to compile guidelines by June with regard to labour market reform including reskilling workers and facilitating labour turnover,” Kishida told a panel tasked with implementing the plan.Kishida first launched the idea of a “new capitalism” when he became prime minister in 2021, pledging to fix distortions in the world’s third-largest economy, and signaling a shift away from reflationary policy, saying there was no growth without redistribution.He said he called it “new capitalism” because of the need to solve downsides such as widening inequality.By pushing structural wage increases, Kishida said on Wednesday Japan would strive to narrow wage differentials between domestic firms and rivals overseas, while taking different economic situations into account.Kishida places human capital investment at the core of his growth strategy as rapidly-aging Japan faces an acute labour crunch as its working-age population shrinks.Under pressure from Kishida, major companies have concluded their annual labour talks with average wage increases of 3.8% for the next fiscal year, the biggest rise in about three decades, although the outlook seems less positive for workers at smaller companies, which account for almost 70% of the workforce.Salaries have been virtually unchanged since the late 1990s and are now well behind the average for the OECD group of rich countries. More

BANGKOK (Reuters) -Thailand’s central bank raised interest rates by 25 basis points on Wednesday, as it attempts to bring inflation back within target while the economic recovery gathers pace against rising global headwinds.The Bank of Thailand’s (BOT) monetary policy committee voted unanimously to raise the one-day repurchase rate to 1.75%, as expected by 18 of 22 economists in a Reuters poll, for a fifth straight meeting.The BOT trimmed its growth forecasts for this year and next, pointing to increased global uncertainty, but expected the strength in the tourism sector to lessen the impact of any global slowdown. While it lowered its headline inflation forecast for this year, it increased its 2024 projection.”The economy has good momentum while inflation, albeit easing, remains higher than that in the past … so (rate) normalisation will have to continue,” Assistant Governor Piti Disyatat told a news conference.”Our task going forward is to ensure that the economic recovery is stable,” he added.An election on May 14 should not impact the economy or inflation much, Piti said.Kobsidthi Silpachai, head of capital markets research of Kasikornbank, said the BOT’s news conference highlighted inflationary risk “which is likely to be passed onto consumers as tourism helps the economy to recover”. With Wednesday’s move, the BOT has raised its key rate by a total of 125 basis points since August, less aggressive than many of its regional peers. The latest hike was in a “gradual and measured manner toward a level consistent with long-term sustainable growth”, the BOT said in a statement, adding it was ready to adjust the size and timing of rate changes if the growth and inflation outlook shifts. Headline inflation dropped to a 13-month low of 3.79% in February, but was still above the BOT’s target range of 1% to 3%. On Wednesday the central bank cut its forecast for 2023 to 2.9% from 3.0%, and said it expected headline inflation to return to within target in the middle of this year.The BOT trimmed its economic growth projections to 3.6% this year and 3.8% next year, from the previous forecasts of 3.7% and 3.9%, respectively, with a strong rebound in tourism the main driver. Southeast Asia’s second-largest economy expanded 2.6% last year at a time when its tourism sector had just started to recover. The central bank forecast foreign arrivals of 28 million this year and 35 million in 2024, up from previous forecasts of 25.5 million and 34 million, respectively and said those numbers could climb higher. That compares with nearly 40 million in pre-pandemic 2019. Exports, another key driver of growth, have lagged, and the BOT said persistent inflationary pressure and banking challenges in advanced economies were risks. The baht gained 0.4% to 34.14 per dollar at 1006 GMT. The BOT forecast exports to contract 0.7% this year and to grow 4.3% in 2024. It had previously forecast export growth of 1.0% in 2023 and 2.6% in 2024.Tim Leelahaphan, economist at Standard Chartered (OTC:SCBFF) Bank, said he expects a final 25 bps hike at the next meeting on May 31.”We acknowledge global uncertainty, but given Thailand’s robust economic indicators and the BOT’s positive outlook on the economy, we expect continued policy normalisation in an effort to build policy space.” More

UBS has turned to its former chief executive Sergio Ermotti to lead the complex and challenging integration of its rival Credit Suisse following this month’s forced takeover by Swiss regulators and banking authorities.Ermotti, who was chief executive for nine years before stepping down in 2020, is replacing Ralph Hamers, UBS announced this morning. The new chief executive, who will start on April 5, faces the immediate challenge of combining the two Zurich-based banks as rivals seek to capitalise on the turmoil at two of Europe’s largest financial institutions.Julius Baer, Pictet, Lombard Odier, EFG and LGT are among the wealth managers attempting to poach clients and bankers from Credit Suisse as steep bonus cuts and job losses force bankers into the market.Ermotti is a career banker who completed stints at Citigroup, Merrill Lynch and UniCredit before moving to UBS. He served as chair of Swiss reinsurer Swiss Re and held a board position at fashion group Ermenegildo Zegna after leaving UBS in November 2020. (Read more about the 62-year-old’s career.)🎧 Inside the UBS takeover of Credit Suisse: In this week’s edition of the Behind the Money podcast, banking editor Stephen Morris explains how the shotgun marriage was brokered.Here’s what else I’m watching today: Silicon Valley Bank hearings: US regulators face a second day of questioning by lawmakers into the collapse of SVB, having been accused of being ‘asleep at the wheel’ yesterday. Howard Schultz vs Bernie Sanders: The Starbucks founder and billionaire will face off with the liberal firebrand senator in a congressional showdown over the coffee company’s approach to unionising workers.Economic data: Home sales data is expected to show that pending sales in the US declined in February compared with January.King Charles’s state visit to Germany: The British monarch begins his postponed trip to continental Europe after riots in France delayed the start of the state visit.What did you think of today’s FirstFT? Let us know at [email protected]. Thanks for reading.Five more top stories

JPMorgan Chase chief Jamie Dimon © Reuters

1. EXCLUSIVE: JPMorgan chief Jamie Dimon will be deposed in the Jeffrey Epstein lawsuits over his bank’s decision to retain the late sex offender as a client, said people familiar with the matter. The sworn deposition is due to take place behind closed doors in May.2. Tesla’s move to slash prices in China has backfired as Elon Musk’s company loses market share to Warren Buffett-backed BYD. Sales by Chinese carmakers are on course to overtake foreign rivals in the country this year for the first time. 3. China has threatened to retaliate if Taiwan’s president Tsai Ing-wen meets US House Speaker Kevin McCarthy during an upcoming trip to the US. Tsai leaves Taiwan today and is scheduled to meet McCarthy in California during a 10-day trip that will also take in Guatemala and Belize.4. Mike Pence must testify to a grand jury about conversations he had with Donald Trump relating to the former president’s attempt to overturn the results of the 2020 presidential election, according to a person familiar with the matter. 5. US prosecutors have accused former FTX chief executive Sam Bankman-Fried of paying a $40mn bribe to one or more Chinese government officials in order to regain access to trading accounts. The allegation was made in a revised indictment filed in federal court in Manhattan yesterday. Opinion: The time has come for the banking industry to make tough choices on digital assets, writes Brooke Masters.The Big Read

© FT composite

In a complex tale traced through ghost ships, shell companies, triad networks, underground financing channels and sprawling family connections, the FT investigates North Korea’s oil smuggling, shedding new light on how dictator Kim Jong Un has propped up Pyongyang’s shattered economy through murky intelligence and financing operations in Hong Kong and Macau.We’re also reading . . . US backlash against Benjamin Netanyahu: The planned overhaul of Israel’s judicial system has triggered criticism among some of the Jewish state’s most ardent supporters in the US.Brazil: Former president Jair Bolsonaro is expected to return to Brazil tomorrow for the first time since leaving office. His aim is to revitalise the country’s far-right movement but he faces a ban from politics and possible arrest.GPT-4: The Microsoft-backed artificial intelligence system is showing less openness in the race to commercialise chatbots. Chart of the dayWhy, 15 years after the start of the last financial crisis, might we be seeing that of another? Neither a period of ultra-low interest rates imposed by central banks nor the cult of the bailout provides the complete answer, writes Martin Wolf. So who, or what, is to blame?Take a break from the newsTwice married, and best known via party pictures in the Spanish tabloids, Marta Ortega Pérez had been dismissed frequently by the chauvinistic media as being a showjumping socialite. But no one at Inditex and Zara, co-founded by her father, was ruffled when she took over as non-executive chair last year. Read HTSI’s exclusive interview with her on succession, sustainability and sales.

Marta Ortega Pérez © David Sims

Additional contributions by Tee Zhuo and Amanda Chu More

Investing.com — UBS sends for its own private Superman, two big chipmakers see an improvement in their fortunes (as does Lululemon) and stocks are back where they were before the U.S.’s regional banks began to wobble.1. Ermotti returns to UBSUBS (SIX:UBSG) brought back its Sergio Ermotti as chief executive, a sign of the difficulties it faces in implementing the takeover of Credit Suisse (SIX:CSGN).UBS’ $3.25 billion acquisition of its failing rival faces legal and political challenges in Switzerland, after the government hastily rewrote its own legislation to allow the deal to proceed without the approval of Credit Suisse’s shareholders. That has triggered a crisis of confidence in the stability of Switzerland as a jurisdiction, prompting massive withdrawals of savings by wealthy Asian customers in particular.Ermotti’s return also signals the departure of Ralph Hamers, who was the star CEO of European banking when UBS plucked him from ING. The switch indicates that Ermotti’s unparalleled knowledge of the Swiss establishment is going to be more important for UBS over the next couple of years than Hamers’ plans, which had gained little traction since his arrival.2. Chipmakers buoyed by Micron updateSemiconductor stocks got a boost from updates on either side of the Atlantic, which saw two big players raise their guidance.Germany’s largest chipmaker Infineon (ETR:IFXGn) raised its forecasts for the quarter and the year, citing “resilient business dynamics” from its key customers in the automotive sector.Micron Technology (NASDAQ:MU), a specialist in memory chips, also raised its guidance for the current quarter, as CEO Sanjay Mehrotra forecast “gradual improvements to the industry’s supply-demand balance,” as the inventory glut of recent months is worked off. Micron still took another $500 million hit in inventory writedowns and increased its planned job cuts.3. Stocks recover to pre-SVB collapse levels; mortgage data, pending home sales due U.S. stock markets are poised to open higher later, with updates from Micron and Lululemon (NASDAQ:LULU) both supporting sentiment. The athleisure company reported better-than-expected earnings late on Tuesday and its guidance was also stronger than the market consensus.By 05:30 ET (09:30 GMT), Dow Jones futures were up 240 points, or 0.7%, while S&P 500 futures were up 0.9% and Nasdaq 100 futures were up 1.0%, all three having recouped all – or nearly all – of their losses due to the spate of banking collapses earlier in the month.Regional bank stocks continue to recover on confidence that the short-term crisis has passed.Stocks likely to be in focus later include Lululemon, which was up 15.1% in premarket, and Apple (NASDAQ:AAPL), which unveiled plans to introduce a Buy Now Pay Later service.Cintas (NASDAQ:CTAS) and Paychex (NASDAQ:PAYX) are due to report earnings early, while the data calendar is light, with only pending home sales data and weekly mortgage statistics due.4. SBF’s charge sheet gets longerThe case against FTX’s Sam Bankman-Fried gets bigger.U.S. attorneys charged the founder of the collapsed crypto exchange with attempting to bribe Chinese officials to let him regain access to accounts with over $1 billion worth of cryptocurrency in them. The deposits were allegedly unfrozen in or around November 2021, allowing Bankman-Fried to carry on funding the trading activities of his hedge fund, Alameda Research.The indictment is the 13th handed down to Bankman-Fried, who is scheduled to face trial in October.This adds to the negative news flow around some of the kingpins of the crypto industry in recent days, following the CFTC’s charges against Binance and its founder Changpeng Zhao. Crypto itself is shrugging off the newsflow, with Bitcoin rebounding back above $28,000 overnight.5. Oil hits two-week high as economic pessimism fades, stockpiles fallCrude oil prices hit their highest in two weeks overnight, as some of the pessimism over the economic outlook triggered by recent banking volatility continued to dissipate. Sentiment was underpinned by the biggest weekly drop of the year so far in U.S. crude stockpiles, which the American Petroleum Institute said had fallen by more than 6 million barrels last week.The U.S. government’s data are due at 10:30 ET, as usual.By 06:07 ET (10:07 GMT), U.S. crude futures were up 1.1% at $74.04 a barrel, while Brent was up 0.8% at $78.75 a barrel.The picture still isn’t entirely bullish, however. S&P Global reported that refined product stockpiles at Fujairah, one of the most important transport hubs in the Persian Gulf, had risen to their highest in five weeks as exports slowed. More

In testimony prepared for the State, Foreign Operations, and Related Programs subcommittee of the House Appropriations Committee, Yellen said Banga would be charged with helping evolve the institution to better address new challenges.”This evolution will help the Bank deliver on its vital poverty alleviation and development goals,” Yellen will tell lawmakers who control the Treasury Department’s purse strings.Banga, 63, recently completed a three-week world tour to meet government leaders, civil society groups and others in borrowing and donor countries as he campaigned for the bank’s top post.President Joe Biden nominated the Indian-born finance and development executive, who is a U.S. citizen, for the post in late February.He has won the support of enough other governments to virtually assure his confirmation as World Bank president, including India, Britain, France, Germany, Italy, Japan, Bangladesh, Colombia, Egypt, Ivory Coast, Kenya, Saudi Arabia and South Korea.The World Bank will accept nominations from other countries until March 29, but no competitors have been announced. The World Bank has been led by an American since its founding at the end of World War Two, while the International Monetary Fund has been led by a European.The bank’s board has said it hopes to elect a new leader by early May.The bank’s current president, David Malpass, was nominated by former President Donald Trump. He announced his resignation in February after months of controversy over his initial failure to say he backed the scientific consensus on climate change. More

Good morning. The number of protesters decrying French president Emmanuel Macron’s pension reforms are falling, but he can hardly celebrate that a mere 450,000 people cursed his name in Paris yesterday. Meanwhile, the rubbish continues to pile up.Today, our trade supremo brings you the inside track on what goodies the US is willing to share with the EU from its $369bn green subsidy bonanza, and the EU’s competition chief tells us that Big Tech wants to avoid EU rules by pretending to be small.Heavy metalA long-awaited deal on how EU battery makers could access US subsidies is finally close, writes Andy Bounds. Washington has offered to make five minerals used in batteries eligible for subsidies under its green-tech promoting Inflation Reduction Act if they are mined or processed in the EU, according to people with knowledge of the talks. Context: The IRA has lined up some $369bn in subsidies for the green transition, offering things such as tax credits for electric cars. But battery components must come from countries with a US free trade agreement to qualify, which has the EU and European businesses fretting they will lose out. US president Joe Biden promised EU commission president Ursula von der Leyen a deal on her visit to the White House earlier this month. The five metals to be eligible under the IRA are cobalt, graphite, lithium, manganese and nickel, which are used in battery production. The US is expected to join the EU’s “critical minerals club”, the brand Brussels wants to use for its global partnerships in this sector.But it seems like the EU is not the only friend with benefits.Japan signed an agreement with the US yesterday, dropping tariffs on the same five minerals. Yasutoshi Nishimura, Japan’s minister of economy, trade and industry, said the trade deal was likely to lead to an agreement for the same metals processed in Japan to be eligible for tax incentives under the IRA.Washington is expected to announce its full guidance on IRA implementation this week. EU carmakers already have one small victory. The US has agreed that customers using lease deals to buy EU-made electric vehicles can receive a tax credit under the IRA which was previously restricted to cars assembled in North America. And Brussels officials say they are still hoping for further eleventh-hour concessions. Chart du jour: Generational shiftOne way to deal with ageing populations: Make the young pay more to support the old. Spain has opted for a pension reform that will increase the burden on the working population instead of cutting benefits for the retired.Playing dumbFor EU competition commissioner Margrethe Vestager, size is everything.The woman with the power to regulate Big Tech has accused players such as Apple and Amazon of playing down their size or deploying other tactics to game EU tech rules in their favour, writes Javier Espinoza. Context: EU regulators have been working for years on a set of new tech laws designed to open up markets and make the internet a safer place for citizens. Rules for larger tech companies under the Digital Services Act and the Digital Markets Act are more strict than for smaller companies.Some large online platforms have so far not revealed their exact number of users in Europe — a key metric to determine whether they will have to comply with more responsibilities under the DSA, which aims to regulate how Big Tech should police hate speech or illegal content.Vestager told the FT that, suddenly, companies such as Google and Microsoft “feel very small”. Her warning comes after Thierry Breton, the EU’s commissioner for the internal market and in charge of digital policy, said Brussels will go after companies that don’t disclose their numbers.While Apple and other large US platforms have reported numbers that would put them in the scope, it is understood a handful of companies are still resisting the commission.Vestager is adamant that the EU will prevail over Big Tech groups. “It’s not easy but they are not rogue. They are part of a system,” she said. “This is a union built on the rule of law and that’s fundamental.”The commission has kept an “open door” policy whereby companies can ask questions to clarify the enforcement of the DMA, another landmark piece of legislation aimed at curbing the power of Big Tech.Vestager hinted at tech companies using the system to their advantage to delay proper enforcement of the rules — such as their lawyers asking obvious questions. “We answer ‘difficult’ questions because we think that the DMA is quite clear and straightforward. [But] there’s a lot of billable hours in trying to figure out what it really means.”She admitted that it is one thing to pass legislation and another to enforce it, particularly when big tech companies seem to be playing dumb.“Making businesses change in their culture, in their business models, of course this is not going to be easy,” she added.What to watch today European parliament kicks off a two-day plenary session.Ursula von der Leyen meets Kenyan president William Ruto.Now read theseCollateral damage: Ukraine’s EU neighbours are being hurt by massive grain imports from Kyiv. Red card: Brussels has blown the whistle on a plan by Italy to use €55mn of EU pandemic funds to renovate a football stadium.Guns vs butter: The Ukraine war is confronting Europe with an age-old dilemma, writes Janan Ganesh. More

Ukraine’s tariff-free access to the EU has caused a grain glut in neighbouring countries, tanking the regional agricultural sector and leading to complaints that Brussels is paying farmers too little compensation.After Russia invaded Ukraine last year, the EU scrapped customs duties and quotas on Ukrainian grain imports and rerouted some of the shipments Russia was blocking in Black Sea ports via Polish and Romanian roads and railway networks. But the cheap Ukrainian grain suddenly available in those markets has undercut local producers.“Farmers in Romania are the most impacted by the transit of grain coming in from Ukraine,” said Alexandru Baciu, who farms about 2,200 hectares of grain in south-east Romania. “They have deposits of unsold wheat from last year’s harvest . . . We have three months left and we have not managed to sell last year’s harvest because of this transit issue.”At a European Council meeting in Brussels last week, the European Commission proposed that affected EU farmers receive a total of €56.3mn to mitigate the fallout caused by an “excessive supply” of Ukrainian grain imports. Romania would receive the smallest amount at €10mn, while Poland was allocated €29.5mn and Bulgaria €16.7mn.In late January, Romania, Bulgaria, the Czech Republic, Hungary, Poland and Slovakia wrote a joint letter to the EU, calling for an “urgent response” to curb the impact of a “significant increase” on Ukrainian grain on local markets.Romanian president Klaus Iohannis has accused the commission of ignoring the “huge sacrifices” his country has made in facilitating Kyiv’s grain exports to world markets and asked Brussels to increase the €10mn offered as compensation.Baciu said the EU money offer was “tiny, if not to say a mockery of the issue we face”.Romanian trade groups echoed this sentiment, with the Forum of Professional Farmers and Processors threatening nationwide protests next month over what it called “derisory” compensation.During a visit to Bucharest on Monday, European Council president Charles Michel acknowledged the role Romania had played in setting up alternative export routes for Ukraine, adding that the country had brought vital revenue to its war-torn neighbour.“But I know this has adversely affected Romanian farmers,” he said. “We should look into increasing this amount.”Poland’s prime minister Mateusz Morawiecki has also asked for a higher amount, describing the offer from Brussels as “inadequate”. “The European Commission must help us more in this regard,” he said on Tuesday while on a trip to Bucharest.EU members are set to vote on the farmers’ aid package on Thursday.In Poland, cheap Ukrainian grain imports have destabilised the local market, with the regions most affected located in the south-east, nearest to Ukraine.“Neither the Polish government nor the European Union is aware of the seriousness of the situation,” said Michał Kołodziejczak, a farmer and leader of agricultural movement Agrounia. He said authorities should only permit Ukrainian grain that was transiting to a final destination outside Poland.

The Ukrainian imports had also driven down the price of local grain, he added. “While last year grain prices were around PLN 1,500 per tonne, today prices are well below PLN 1,000, they even reach up to PLN 750.”The governor of Lublin region, which is on the border with Ukraine, has recently highlighted Poland’s issue with failing to re-export most of the Ukrainian grain. Lech Sprawka told TOK FM radio last week that about 800,000 tonnes of grain entered Poland this year, but only about 4,000 tonnes were re-exported outside the EU, including to African countries.Angry farmers have recently thrown eggs at Poland’s minister of agriculture, Henryk Kowalczyk, calling him a traitor and accusing him of destroying their livelihoods. Opposition lawmakers have seized on the anger and called for his resignation. The ministry on Wednesday is scheduled to hold talks with farmers, including about the government’s plans to subsidise the delivery of corn and wheat to seaports in a bid to incentivise the re-exporting of Ukrainian imports.Logistics also pose an issue in Romania, where ports have mainly focused on Ukrainian grain and are now “full of goods” they cannot handle, said Cezar Gheorghe, an adviser to Romania’s agriculture ministry.Besides compensation, the EU needed to invest in infrastructure, such as roads and railways, increase the capacity of trucks, barges and border personnel, and separate Ukrainian grain flows, he added.Drone footage, seen by the Financial Times, shot near Romania’s Black Sea city of Constanța shows huge lorry queues backed-up around the port, which is part of the EU’s so-called Solidarity Lanes offering alternative export routes to Ukraine.“In my 20 years of career in agribusiness, I did not see [queues] like that,” said Gheorghe. More

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