Aurelia Butler

SEOUL (Reuters) – South Korea’s National Pension Service (NPS), manager of the world’s third-largest public pension fund, will collaborate with foreign exchange authorities when needed to help stabilise the market, its chairman told Reuters. Chairman Kim Tae-hyun also said during an interview on Friday with Reuters that re-establishing a currency swap arrangement with South Korea’s central bank which expired at the end of last year could be part of such collaboration.NPS has nearly $700 billion under its management and needs to buy dollars to invest abroad. That sometimes brings criticism for aggravating the situation when a sharp decline in the won causes tension in the market. “Based on last year’s experience, we have prepared measures aimed at easing dollar demand and volatility in the foreign exchange market,” Kim said. The pension fund will cooperate with foreign exchange authorities to deploy the measures in case of excessive volatility, acting according to prearranged plans when the dollar/won exchange rate reaches certain levels, he said. “We have our own target rate for foreign exchange that we can endure,” Kim said. “A predictable and stable foreign exchange rate is also advantageous to us,” he said, adding that cooperation with foreign exchange authorities would be based on achieving good investment returns. Regarding the possible re-launch of the foreign exchange swap arrangement with the Bank of Korea, Kim said it would be “definitely necessary to stabilise the market”, without elaborating. The swap programme, in place for the final three months of last year, allowed the pension fund to use the central bank’s foreign reserves for overseas investments when there was increased volatility in the foreign exchange market. The won in February suffered its worst monthly loss in more than 11 years, weakening by nearly 7% against the dollar and again sparking concerns in the onshore currency market over the demand for dollars outpacing supply. Kim said the fund was enjoying improved investment earnings of around 5% so far this year, after scoring a record 8.22% loss for the whole of 2022. The fund would continue to increase investment in overseas assets and other alternatives for better returns, he said. Kim said he plans to simplify processes for alternative investments and devise a new strategy that allows more flexible management while strengthening partnerships with offshore outsourcing firms. Despite criticism that the relocation of its headquarters to Jeonju, 200 km (125 miles) south of the capital Seoul, has caused difficulties in hiring strong employees and securing resources, Kim said he hopes to attract more investment and offshore-directed companies to set up liaison offices in the city and transform it into an “information hub”. With the fund expected to be depleted by 2055, his top priority is to provide support for the government’s plan to reform the national pension system, he said. This was Kim’s first exclusive interview with any media outlet since his three-year term began last September. More

NEW YORK (Reuters) – Bridgewater Associates has raised at least $800 million in recent months for a new fund strategy, regulatory filings show, an additional offering that comes as the hedge fund manager revamps business after founder Ray Dalio gave up control.Connecticut-based Bridgewater, which manages $145 billion, launched the “Defensive Alpha” strategy in July last year, regulatory filings showed. A source close to Bridgewater said the strategy, which has not been reported previously, is designed to help weather equity bear markets and generate returns negatively correlated to equities, which means the fund’s profits will increase if stocks fall.Two fund vehicles under that strategy’s name had raised $836.4 million from investors since their launches in July, regulatory filings at the end of October show, according to Convergence Inc, a provider of alternative funds data which analyzed Bridgewater’s filings per a Reuters request. Bridgewater declined to comment on the $836.4 million raised.Initially, Bridgewater invited a small set of clients, including seed investors who provide money for new launches, and has now been offering its strategy to more investors, one source familiar with the matter said. There are 10 investors so far, the filings show, according to Convergence.      The new strategy is an addition to other offerings from the 48-year-old hedge fund, best known for its All Weather and Pure Alpha funds. Bridgewater’s most recent launch had been a sustainability focused fund in 2021. Investors have been trying to navigate an uncertain market and economic outlook after central banks suddenly shifted from accommodative monetary policy to aggressive interest rate hikes to fight inflation. The S&P 500 tumbled 19.4% in 2022, while the tech-heavy Nasdaq plummeted 33.1%, the biggest annual percentage decline for both indexes since 2008.In that market last year, Bridgewater’s flagship fund, Pure Alpha gained roughly 9.5% and outperformed global equities indexes. But that came after a much stronger start to the year, and its returns lagged rival macro funds. Pure Alpha actively bets on the direction of various types of securities — including stocks, bonds, commodities and currencies — by predicting macroeconomic trends.The new strategy underscores how Bridgewater is quickly changing under a new generation of investors after Dalio, its founder, gave up control last year. On Wednesday, Chief Executive Nir Bar Dea announced a major overhaul at the hedge fund, including restricting investments in Pure Alpha and plans to launch new products.A strategy like Defensive Alpha could appeal to pension funds, which have portfolios already loaded with bets on stocks and have not found in hedge funds the best protection against equity market downturns, according to one hedge fund investor who declined to be named. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.Asian markets will likely open on the front foot on Monday, following Wall Street’s whoosh higher on Friday, but a raft of Chinese economic data and remarks from U.S. Fed Chair Jerome Powell later in the week could quickly shift sentiment.Monetary policy decisions from Australia and Japan on Wednesday and Friday, respectively, will be market-moving events too. Before that however, investors have a deluge of headlines from China this weekend to digest.The annual session of the National People’s Congress, and reports from the finance ministry and state planner – the National Development and Reform Commission – have outlined Beijing’s broad goals and plans for the year ahead.On the economy, the government said it would aim for growth this year of around 5%, lower than last year’s target of 5.5%. It will also take steps to minimize risks in the property sector, intensify its push to make China self-reliant in tech, and the central bank will provide ‘forceful’ support for economic development.Perhaps most significantly, Beijing said it would boost defence spending by 7.2% – up on last year’s rate of increase and outpacing expected GDP growth – as Premier Li Keqiang called for the armed forces to boost combat preparedness. (Graphic: MSCI Asia ex-Japan – weekly change – https://fingfx.thomsonreuters.com/gfx/mkt/zjvqjydnwpx/ChinaCPI.png) Beijing’s macro, military and geopolitical vision for the next 12 months outlined this weekend comes as investors get more of an insight into how China’s economic reopening is progressing with the release of February trade, inflation, and credit and lending data this week.Inflation figures from South Korea, The Philippines, Thailand and Taiwan this week will be closely watched by investors and policymakers alike. With the Fed seemingly on track to tighten policy further, a renewed rise in the dollar could intensify FX-fueled inflationary pressures in Asia.Attention will turn to Japan later in the week, with the release of fourth-quarter GDP data on Thursday and BOJ’s policy decision on Friday, the last under the governorship of Haruhiko Kuroda. (Graphic: MSCI Asia ex-Japan – weekly change – https://fingfx.thomsonreuters.com/gfx/mkt/klvygnjqgvg/MSCIASIA.png) Asian stocks have generally underperformed their U.S. and global peers in recent weeks, but the underlying question still applies: How long can markets hold up – and volatility stay so low – in the face of soaring U.S. bond yields, rate and inflation expectations?Global bond yields are moving sharply higher too. Something might be about to give.Here are three key developments that could provide more direction to markets on Monday:- China’s National People’s Congress- South Korea inflation (February)- Euro Zone retail sales (January) (By Jamie McGeever; Editing by Diane Craft) More

Christine Lagarde has warned that underlying price pressures will remain “sticky in the short term” and signalled that further interest rate rises from the European Central Bank are very likely as “inflation is a monster that we need to knock on the head”.The ECB was not seeking to “break the economy” with rate increases, Lagarde told Spain’s El Correo, as she appealed for banks to reschedule debt repayments for households struggling to cope with soaring borrowing costs on variable-rate mortgages. “We are making progress, but we still have work to do . . . For the moment, the economy is resilient, employment is robust and unemployment is the lowest it has ever been,” the ECB president said, while urging lenders to consider the “reputational side” of giving big pay rises to executives.Lagarde’s comments are the latest sign that ECB officials are fretting about persistently high inflation and the further rate rises needed to tame it — particularly after core price growth, which excludes energy and food, hit a new record high in the eurozone in February.Eurozone inflation has fallen for four months after hitting a record 10.6 per cent in October, mainly because of decelerating energy prices. However, headline inflation fell less than expected to 8.5 per cent in the year to February and the core measure hit a new high of 5.6 per cent.Marco Valli, chief European economist at Italian bank UniCredit, said the data was “likely to have implications for ECB policy because influential members of the governing council have pretty explicitly linked the future rate trajectory to the evolution of core inflation”.Lagarde said it was “too early to declare victory” in the fight to return inflation to the ECB’s 2 per cent target, even though energy price growth had slowed. She predicted that headline inflation would keep falling, but underlying price growth would remain “too high” in the short term — meaning that the central bank was “very, very likely” to go ahead with a well-flagged, half-percentage point rate rise at its next meeting, on March 16.The ECB has raised rates by 3 percentage points since last summer. Financial markets are pricing in a jump in the bank’s deposit rate to 4 per cent later this year, up from its current level of 2.5 per cent. That would overtake the 2001 peak of 3.75 per cent.There are similar concerns in the US, where high inflation and strong labour market and wage data have raised doubts over whether the Federal Reserve will stick with quarter point rate rises or return to a half-point move at its March 21-22 meeting.In the UK, financial markets are betting that the Bank of England will raise rates further, but its governor Andrew Bailey said last week this assumption may be wrong.Rising interest rates have boosted the profits of commercial European banks by allowing them to increase the interest they charge on loans faster than they increase the rate savers earn on deposits. In countries such as Spain that have a high proportion of variable-rate mortgages, there are fears households could find it hard to cope with the higher cost of borrowing.“I’m sure many banks are prepared to reconsider loan conditions and prepared to spread repayments over time,” said Lagarde. “And not out of charity,” she added, pointing out that it was in lenders’ interests to avoid a rise in bad loans.UniCredit, Italy’s second-largest bank, has proposed lifting the pay of its chief executive Andrea Orcel by 30 per cent to €9.75mn a year, making him one of the highest-paid European bank bosses. “There is obviously a reputational side to those kinds of decisions that bank leaders should be aware of,” said Lagarde. More

Hello and welcome to the working week.This correspondence by its nature is concerned only with the future. More specifically, I want to tell you about the things we know are going to happen over the next seven days. But occasionally there is a need for reflection, such as the fact that due to a technical hitch last week the Week Ahead email was not sent. If you still want to read it, or catch up on any of my ramblings, please click here. Now, back to the future.Spring is upon us here in London, and it is not just the weather that is thawing. Relations between France and Britain have warmed to the extent that a bilateral summit will be held this Friday — the first in five years — between President Emmanuel Macron and Prime Minister Rishi Sunak. The hope is that talks can build co-operation on areas of mutual self-interest, such as tackling cross-Channel migration and building support for Sunak’s deal with the EU on Northern Ireland.Something the French and British have in common at the moment is industrial unrest. Could it be a time for talks here too? Widespread action is expected across France on Tuesday in defiance of Macron’s plans to raise the legal retirement age from 62 to 64. More health workers will strike over pay in the UK this week, but unions have heeded the offer of meaningful negotiations by the NHS employers. The Unison and GMB unions on Friday cancelled their planned ambulance strikes in England after a “huge shift” in the government’s position. Separately, the Office for National Statistics is set to publish data on Wednesday showing the impact of strike action since last June on the UK economy.The seemingly interminable process of Sweden and Finland gaining Nato membership appears to be reaching a resolution. This week the two Nordic countries will be in Brussels for talks with Turkey, whose opposition has been a critical barrier to the military alliance expanding its membership.Wednesday is International Women’s Day. I mention this because the Financial Times is staging a free webinar on four things women need to know about money, led by the Financial Literacy & Inclusion Campaign charity. Register at ft.com/fliceventThank you to all those who got in touch during my recent half-term break. I am very pleased to say that the GCSE mock exams will finish at our children’s school this week. All I have to do now is get through the trauma of preparing my second born for the real thing, starting in May. Get in touch with any comments you have about this or other items in this note by emailing me at [email protected] or, if you are reading this on email yourself, hitting reply.Economic dataThere is not so much data, but a lot of talk, about economics this week. The main draw will be Federal Reserve chair Jay Powell’s twice-yearly monetary policy testimony to the Senate Banking Committee in Washington on Tuesday. A day later, the Fed will publish its Beige Book on economic conditions.The UK, EU and Japan will all update on gross domestic product, with the latter also making a rate-setting decision on Friday.CompaniesLego, like its plastic bricks, has proved remarkably resilient in recent years in the face of changing fashions in children’s play and wider societal trends, such as environmental activism (the company has pledged to eliminate plastic bag use in its sets by 2025) and the rise of computer games (Lego City is about the only game on my kids’ Nintendo Switch that I can understand, let alone beat them at). So a key question when the company reports numbers on Tuesday is how long its stellar growth can last.Another resilient and adaptable brand is Greggs, maker of the vegan sausage roll, which also reports on Tuesday. Rising raw material costs have pushed the British high street’s naughty-but-nice bakery to test the elasticity of demand for its products with a series of price increases. The question is whether the love of carbs is trumping the cost of living crisis. The share price of The Restaurant Group has climbed in the past fortnight after activist investor Oasis accused the Wagamama owner of mismanaging the business. Rumours are swirling about a possible carve-out of TRG’s pub business.The insurance sector will also feature heavily this week with figures from Admiral, Royal London and Legal & General on Wednesday, a day before Aviva reports its numbers. Issues include the implementation of Solvency II reforms, expected to reap rewards in terms of investment.And finally, reform of the UK’s gambling industry is a challenge for companies in the sector, such as Entain, which reports results on Thursday.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayEU, January retail sales dataJohan Svanström becomes Rightmove chief executive, succeeding Peter Brooks-Johnson who retiresSouth Korea, February consumer price index (CPI) inflation rate dataUK: S&P Global/Cips construction purchasing managers’ index (PMI) dataUS, monthly factory orders dataResults: Clarkson FYTuesdayAustralia, Reserve Bank of Australia governor Philip Lowe speaks at an AFR Business Summit and is expected to expand on the outlook for more monetary policy tightening after the central bank’s latest rate-setting decisionChina, February trade balance figuresGermany, January industrial orders dataUK, Halifax house price indexUS, Federal Reserve chair Jay Powell gives twice yearly monetary policy testimony to the Senate Banking CommitteeResults: Ashtead Q3, Bank of Ireland FY, Dole Q4, Foxtons FY, Fresnillo FY, Greggs FY, HelloFresh FY, Henkel FY, IWG FY, Johnson Service Group FY, Lego FY, Lindt & Sprüngli FY, Reach FYWednesdayCanada, Bank of Canada rate-setting decisionEU, final Q4 GDP figuresGermany, January industrial production dataJapan, January trade balance figures (AM local time)UK, KPMG/REC jobs reportUK, Office for National Statistics estimate of the economic impact of strike action from June 2022 to last monthUK, Bank of England Monetary Policy Committee member Swati Dhingra speaks at the Resolution Foundation in LondonUS, Federal Reserve publishes the Beige BookResults: Adidas FY, AIB FY, Admiral Group FY, Brenntag FY, Brown-Forman Q3, Campbell Soup Q2, Cathay Pacific FY, Continental FY, Galliford Try H1, Hiscox FY, Legal & General FY, Royal London Group FY, Thales Group FY, The Restaurant Group FY, Tullow Oil FY, Vivendi FYThursdayChina, February CPI and producer price index (PPI) inflation rate dataJapan, final Q4 GDP figures (AM local time)UK, foreign direct investment dataUK, RICS house price balanceUS, sentencing hearing date for former Goldman Sachs banker Roger Ng, who was convicted last April on bribery and money laundering charges related to the looting of Malaysian development fund 1MDBResults: Allbirds Q4, Aviva FY, Deutsche Post DHL FY, Domino’s Pizza Group plc FY, DS Smith Q3 trading update, Entain FY, Gap Q4, Geox FY, Hammerson FY, Hugo Boss FY, Informa FY, JCDecaux FY, JD.com Q4, John Wiley and Sons Q3, Kier H1, M&G FY, PageGroup FY, Standard Bank FYFridayCanada, February unemployment rateGermany, February CPI and Harmonised Index of Consumer Prices (HICP) inflation figuresIndia, January industrial production dataJapan, Bank of Japan rate decisionUK, January trade figuresUK, January GDP estimateUS, February employment reportResults: Berkeley Group trading update, Groupe Casino FY, Oracle Q3, Robert Walters FYWorld eventsFinally, here is a rundown of other events and milestones this week. MondayAustria, International Atomic Energy Agency board of governors meeting begins in ViennaJapan, Japan Aerospace Exploration Agency to launch H3, its first new medium-lift rocket to enter space in three decades, having had to postpone last monthSwitzerland, World Trade Organization General Council meeting kicks off in GenevaUK, further NHS ambulance worker strikes by members of the Unite union. But the Unison and GMB unions, which represent many more ambulance workers in England, have called off their industrial action after what they described as a “huge shift” in the government’s position. More than 180 other Unite members will strike at the Drax power station in Yorkshire. Also, driving examiners who are part of the Public and Commercial Services (PCS) union begin a programme of rolling strikes over pay, pensions and jobs. In contrast, the Fire Brigades Union will close its ballot on pay, with the FBU recommending members accept a revised offer rather than walking out.UK, parole hearing for 70-year-old Charles Bronson, one of the country’s most notorious and longest-serving criminals, begins in London, concluding on Wednesday. If the risks are deemed low, he could be released on a life licence.TuesdayMicronesia, parliamentary electionsFrance, widespread industrial action planned to protest about President Emmanuel Macron’s plans to raise the legal retirement age from 62 to 64WednesdayInternational Women’s Day commemorated at various events worldwideIsrael, Jewish festival of Shushan Purim in Jerusalem. Financial markets closed.Sweden, EU defence ministers meet in Stockholm as part of the Swedish presidency of the Council of the European UnionUS, tech firm Relativity Space plans to launch the world’s first 3D-printed rocket from Cape Canaveral Space Force Station in FloridaThursdayBelgium, Turkey, Sweden and Finland hold talks in Brussels about the two Nordic nations’ respective bids to become fully fledged members of NatoUS, President Joe Biden presents his Budget for the fiscal year 2024FridayFrance, Emmanuel Macron will host UK leader Rishi Sunak for a bilateral summit, the first such meeting between the countries since 2018 and likely to involve discussions on security, immigration and climate changeUK, a 36-hour strike begins this evening over pay by more than 100 rail engineering workers employed by Balfour Beatty and members of the RMT union, the second in a series of walkouts this monthUS, South by Southwest film and arts festival begins in Austin, TexasSaturdayAustralia, the week-long Canberra Balloon Spectacular beginsLithuania, Independence Restoration DayNigeria, state houses of assembly and gubernatorial electionsSundayCameroon, senate electionsMauritius, National DayUK, Crufts 2023 Best in Show presented in Birmingham on final day of the world’s largest dog showUS, 95th Academy Awards ceremony is held in Los AngelesUS Daylight Savings time begins with clocks advancing one hour More