Aurelia Butler

(Reuters) – Foreign investors withdrew more money from emerging Asian equities in 2022 than they had done in any year since the global financial crisis in 2008, as rising U.S. interest rates pulled funds towards dollar assets. Data from stock exchanges in Taiwan, India, the Philippines, Vietnam, Thailand, Indonesia and South Korea showed foreigners sold equities worth $57 billion last year, the biggest outflow since 2008. Graphic: Monthly foreign investment flows Asian equities – https://fingfx.thomsonreuters.com/gfx/mkt/znvnbbrxkvl/Monthly%20foreign%20investment%20flows%20Asian%20equities.jpg After four straight 75-basis point hikes earlier in 2022, the U.S. Federal Reserve raised its overnight borrowing rate by another 50 basis points in December.Due to the hikes, the yield on safer 10-year U.S. Treasuries climbed about 230 basis points to 3.83% last year, which hit the foreign demand for riskier regional equities.Taiwanese equities faced outflows worth $41.6 billion last year, leading the regional sales, while India and South Korea witnessed an outgo of $15.4 billion and $9.6 billion, respectively. Graphic: Yearly foreign investment flows: Asian equities – https://fingfx.thomsonreuters.com/gfx/mkt/xmvjkkmnzpr/Yearly%20foreign%20investment%20flows-%20Asian%20equities.jpg Hit by falling foreign demand and a worsening economic outlook, the MSCI’s Asia Pacific index plunged 19.4% last year – the biggest fall since dropping 43.3% in 2008.Some analysts expect more outflows, at least in the first half of the year, as U.S. interest rates are expected to rise further this year. “The first half of the new trading year could continue to bring a cautious tone in the region, as market participants brace for further economic impact from tighter global central banks’ policies, along with risks of China’s reopening triggering cross-border virus spreads,” said Yeap Jun Rong, a market strategist at IG.In December, emerging Asian equities, excluding Japan and China, witnessed net sales worth $3 billion, with Taiwanese, Indonesian and South Korean equities facing outflow of $2.55 billion, $1.34 billion and $1.31 billion, respectively.On the flip side, India, Vietnam and Thailand received net inflows of $1.36 billion, $559 million and $372 million, respectively, in December. More

Since the 19th century, Pakistan’s clattering railways have carried passengers and cargo from the Arabian Sea to the Himalayas. But the colonial-era network is in severe disrepair, with decrepit trains and some tracks left unusable by devastating flooding last year.Together with its close ally China, Pakistan is now preparing at least a partial solution: a $10bn revamp of its 1,700km arterial Main Line 1 railway to be paid for with loans from Beijing. Prime Minister Shehbaz Sharif and President Xi Jinping agreed in November to begin work on the line, which links the southern port city of Karachi to Lahore and the capital, Islamabad. The project is expected to increase maximum train speeds on the route to 160kph.But the ML1 upgrade has raised questions about whether heavily indebted Pakistan should be borrowing billions of dollars more for expensive infrastructure at a time of severe financial strain.Some analysts believe Pakistan, which owes about $100bn in external debt to lenders including the World Bank and China, is at risk of defaulting after a plunge in its foreign exchange reserves.Ahsan Iqbal, Pakistan’s planning minister, said the ML1 upgrade was vital to keep trains running and an example of the transformative work that Chinese credit had made possible.“If we do not undertake this project, in a couple of years Pakistan will lose its railway logistics,” Iqbal told the Financial Times. “The whole railway system will break down, this main line will break down. It will be very risky to run commercial operations on this track. It is no longer a choice. It is an imperative.”But critics said taking on more debt for the ML1 project was an example of the kind of bad borrowing decisions that had led Pakistan into successive economic crises in recent years. Pakistan’s foreign reserves have sunk to below $6bn, or equivalent to less than one month of imports. The government “is fooling the country”, said Zubair Khan, a former Pakistani commerce minister and IMF official, who argued Pakistan was closer to running out of reserves than officials acknowledged. “There are truths being hidden.”Iqbal, who oversees Pakistan’s involvement in the Belt and Road Initiative, China’s international infrastructure scheme, said it would take six to nine years to complete the ML1 upgrade. The work will include replacing track, modernising signalling, converting level crossings into underpasses or flyovers and building fences to stop cattle crossing the line.The planning minister said the project would proceed in phases “to make it more manageable”, with an initial cost of $3bn. The loan from China would be repayable over 20 to 25 years and would be “concessional”, he said, without providing further details.Chinese lending to Pakistan goes back years, part of an effort to forge economic and military ties that will help to counter their mutual rival India. The ML1 upgrade is part of the China-Pakistan Economic Corridor, a BRI centrepiece with an estimated total cost of $60bn.The CPEC also includes Chinese development of a deep-sea port at Gwadar in south-western Pakistan, among other projects. Beijing is separately supplying Pakistan’s military with eight submarines and advanced J-10 C fighter jets.A western diplomat in Islamabad said that for such projects to have continued even as Beijing saw growing financial distress in BRI recipient countries pointed to the importance it put on ties with Pakistan.“Even if the rest [of BRI] lags behind, China wants to stay the course with Pakistan,” the diplomat said, adding that the relationship had “important military aspects developed over the long term”.The projects — and Chinese financing — have also stoked domestic tensions. Police in Gwadar last month imposed emergency measures and dismantled a protest camp that had obstructed operations at the port with demands, among others, for Chinese nationals to leave.The ML1 upgrade will add to Pakistan’s overseas debt © Mohsin Raza/ReutersProjects such as ML1 have also fuelled analyst concerns over whether excessive Chinese lending is exacerbating strains on Pakistan’s precarious finances. Chinese state lenders are together among the largest creditors to Islamabad, accounting for about $30bn of its outstanding debt.Abid Hasan, an economist and former World Bank adviser, argued ML1 should be “deferred”, saying Pakistan ought to suspend public investment that generated revenue in rupees but was financed with foreign currency debt.Sakib Sherani of advisory firm Macro Economic Insights said it was unfair to single out China’s role in Pakistan’s debt woes, with the largest repayments in the current financial year actually due to multilateral lenders.But Chinese loans tend to carry higher interest rates than multilateral or other bilateral creditors, according to the AidData research lab at William & Mary college in the US. Chinese annual interest is typically 3-4 per cent compared with 1-2 per cent from OECD lenders, AidData said.

Even as it taps Beijing for the ML1 project, Pakistan is looking elsewhere for funds to help stabilise its shrinking reserves. The finance ministry is in talks with the IMF to secure the next tranche of a $7bn assistance programme, and has said it will approach “friendly” countries such as Saudi Arabia for more loans.Sharif’s government is betting it can steady the economy in time for parliamentary elections that must be held before the end of this year. Iqbal said he was confident the country would pull through. “Pakistan is facing economic [and] fiscal difficulties, but it is not in the range that it is a default economy yet. We are managing very prudently.” More

WASHINGTON (Reuters) -The U.S. Postal Service (USPS) can continue to deliver prescription abortion medication despite a June 2022 Supreme Court ruling that overturned a landmark abortion rights decision, the Justice Department said on Tuesday.The department’s Office of Legal Counsel said in an opinion sought by USPS that the mailing of mifepristone and misoprostol, commonly used to terminate pregnancies, did not violate an 1873 law known as the Comstock Act.USPS said in a statement the opinion “confirms that the Comstock Act does not require the Postal Service to change our current practice, which has been to consider packages containing mifepristone and misoprostol to be mailable under federal law in the same manner as other prescription drugs.” Mifepristone is a prescription drug approved by the Food and Drug Administration (FDA) to induce an abortion up to 10 weeks into a pregnancy. It must be followed by a second drug, misoprostol. Both drugs also have other uses.A Justice Department spokesman declined to comment on the opinion.The FDA in December 2021 permanently eased some restrictions on the medications, allowing them to be sent by mail rather than restricting them to in-person dispensing.USPS said it took no position on abortion policy at either the federal or state level and noted the Justice Department opinion “specifies that the mailing of those drugs to a particular jurisdiction that may significantly restrict access to an abortion is not a sufficient basis” for the USPS to refuse to deliver them. USPS said the Justice Department concurred with its “determination that under the doctrine of intergovernmental immunity, any state laws that may apply to the shipment of those prescription drugs cannot be applied to Postal Service employees who are complying with their duties under federal law.”The Supreme Court’s decision overturning the landmark 1973 Roe v. Wade ruling that recognized women’s constitutional right to abortion put a spotlight on abortion by medication, which accounts for more than half of U.S. abortions. A Dutch supplier of abortion pills by mail saw demand surge in the wake of the decision, which allowed more than 20 states to begin enforcing new restrictions on abortion.Restrictions on the abortion medication lifted in 2021 had been in place since the FDA had approved the drug in 2000. They had been lifted temporarily earlier in 2021 due to the COVID-19 pandemic, enabling women to consult healthcare providers by telemedicine and receive the pills by mail. More

NEW YORK (Reuters) -D.E. Shaw’s largest hedge fund gained 24.7% last year after fees, outperforming average gains for the industry in a high-volatility environment, according to a source familiar with the matter.D.E. Shaw, one of the industry’s biggest managers, saw gains in its D.E. Shaw Composite Fund driven by systematic, discretionary and hybrid investment strategies, the source added. The multi-strategy fund’s performance last year surpasses an 18.8% return the fund posted in 2021.The firm’s macro-oriented fund, the Oculus Fund, ended 2022 up 20%, also beating its own performance a year earlier.Both of D.E. Shaw’s biggest funds are closed for new money. The New York-based hedge fund firm, which manages $60 billion in assets, did not comment on the matter.Industry data compiled by HFR shows that on average hedge funds were down 4.1% last year through November, mainly due to poor performance of equities hedge funds. The benchmark S&P 500 ended 2022 with the biggest annual drop since 2008, down 19.4%.Performance data for the hedge fund industry is likely to be published later this week. Bloomberg reported earlier on D.E. Shaw biggest funds’ annual gains. More

UK food inflation continued to rise in December, according to new sector data that point to “another difficult year for consumers and businesses”. Annual growth of UK food prices hit 13.3 per cent in December, the British Retail Consortium said on Wednesday. That was up from 12.4 per cent in November, and the highest reading since the trade body’s records began in 2005. Overall shop price inflation edged down to 7.3 per cent in December from a record 7.4 per cent the previous month. The figures suggest that households will continue to feel a sharp squeeze even as overall inflation levels are expected to ease this year from multi-decade highs reached in 2022.They also suggest that the 16.6 per cent rate of food inflation — a 45-year high — reported by the Office for National Statistics for November might accelerate when the body publishes December figures later this month. Responding to Wednesday’s data, BRC chief executive Helen Dickinson said: “2023 will be another difficult year for consumers and businesses as inflation shows no immediate signs of waning.” She added that the prices of many essential foodstuffs were rising as Russia’s war in Ukraine continued to push up the costs of animal feed, fertiliser and energy.

This is despite some economists suggesting that the surge in overall annual price levels has passed its peak. The ONS last month found UK inflation had dipped from its 41-year high of 11.1 per cent in October to 10.7 per cent in November. In the Financial Times’ annual survey of leading UK-based economists, DeAnne Julius, distinguished fellow at the think-tank Chatham House, said that “if energy prices do not spike higher due to further Russian action, then inflation will fall steadily” this year. The BRC’s data is in line with forecasts by the Office for Budget Responsibility, the fiscal watchdog, which said in November that food price pressures might linger in 2023 even as overall inflation levels began to ease from the first quarter. Mike Watkins, head of retailer and business insight at the consultancy NielsenIQ, said the rise in food inflation would “put further pressure on household budgets”, making it “unlikely that there will be any improvement in the consumer mindset” in the near term.A separate ONS survey published last month found that, in the first half of December, 45 per cent of Britons had to cut back on food shopping and essentials because of the surge in living costs. Rising prices of essentials have the greatest impact on the poorest households, because they spend on average a larger proportion of their finances on food. Meanwhile, a report published on Wednesday by the Resolution Foundation highlighted that people with disabilities, who account for one-third of the poorest households in Britain, were “hugely exposed” to the cost of living crisis. The think-tank found that people with a disability were almost three times as likely to live in material deprivation as the rest of the population. It added that 31 per cent of people with a disability had had to reduce their spending on food this winter, compared with 18 per cent of the non-disabled population.Charlie McCurdy, co-author of the report, said that “while fast-rising prices for essentials is impacting people across the UK, people with disabilities are more exposed to the most severe effects”. More