Aurelia Butler

WASHINGTON (Reuters) -The International Monetary Fund (IMF) on Tuesday confirmed that it is moving toward expanding emergency financing for countries hit by surging food prices and shortages triggered by the war in Ukraine, with some 20 to 30 countries seen most in need.IMF Managing Director Kristalina Georgieva said the fund’s executive board members were “very positive” about the proposed “food shock window” when they met informally on Monday, and she hoped they would approve it to allow a swift disbursal of funds.The plan, first reported by Reuters on Monday, would allow the IMF to provide additional, unconditional emergency financing to countries hit hard by the food crisis unleashed by Russia’s war against Ukraine and global inflation following the COVID-19 pandemic.”There is a sense that it is a necessity and we have urgency to act,” Georgieva told an event hosted by the Center for Global Development. “What we are proposing is to increase access to emergency financing for a year to countries that are most vulnerable.”She said the changes would benefit low-income food importing countries that have seen their costs skyrocket, or others like Ukraine whose exports have been hampered by the war.Georgieva said the program would be available to countries that did not already have a larger IMF program, and estimated that some 50 countries would be eligible, of which 20 to 30 were expected to have the greatest need.IMF spokesman Gerry Rice said the fund has lent over $268 billion to 93 countries since the start of the pandemic and was looking at “all options to enhance our toolkit, including to help countries impacted by the food crisis.”Further discussions were planned with the executive board to ensure formal approval of the changes, he said.Rice said the fund had provided $27 billion in loans to 57 low-income countries, and was continuing to encourage its member countries to “come to us early for needed financial support.”The proposal discussed Monday would temporarily increase existing access limits and allow all member countries to borrow up to an additional 50% of their IMF quota under the IMF’s Rapid Financing Instrument, with low-income countries able to tap the Rapid Credit Facility, sources familiar with the plan said.Georgieva said she hoped it would be approved in time for the Fund’s annual meetings in October, they said.Food prices – already hit by inflation – surged worldwide after the start of the Ukraine war due to blocked supply routes, sanctions and other trade restrictions, although a UN-brokered deal that allowed resumed exports of grain from Ukrainian ports has begun to ease trade flows and lower prices in recent weeks. More

The results come even as MSCI’s gauge of stocks around the world has rallied 3% so far in September, though after a bruising first half the index is still down 16% this year. The survey also marks a return to doom and gloom after August’s iteration found investors were bearish but no longer “apocalyptically” so. BofA, which polled 212 investors overseeing $616 billion in assets from Sept. 2-8, said 72% of those surveyed said they expected a weaker economy next year, and the most crowded trade was long U.S. dollar.The U.S. currency is typically seen as a safe haven in times of economic difficulty. In contrast, investors were staying away from equities which typically rise in good times, and the survey found investors had a record underweight position in stocks. They found the net percentage of investors who said they were overweight stocks was -52% compared to -26% the previous month, a lower level than during the financial crisis. More

WASHINGTON (Reuters) -International Monetary Fund chief Kristalina Georgieva said she and Ukraine’s President Volodymyr Zelenskiy on Tuesday agreed to explore ways to expand the IMF’s support for the war-torn country and build toward a full-fledged financing program.Georgieva told an event hosted by the Center for Global Development that she and Zelenskiy agreed that an IMF mission would meet with Ukrainian authorities in the next weeks to work on a “pathway of engagement that is deeper.”She said the IMF was also working to ensure board approval for a proposal aimed at expanding emergency aid for Ukraine and other countries facing urgent balance of payments problems due to Russia’s war against Ukraine.The new “food shock window” in the IMF’s Rapid Financing Instrument would provide Kyiv with about the same amount of funding as the $1.4 billion it got in March, shortly after the Russian invasion, Georgieva said.”We discussed first how we can immediately be of help to Ukraine,” she said, adding that Ukraine’s needs had grown since the first disbursement of emergency financing.”Secondly we discussed a longer-term engagement with Ukraine and how we can build towards a program that can more comprehensively benefit Ukraine,” she said. “That is a build up towards a full-fledged fund program.”Georgieva said Zelenskiy also expressed interest in how the fund could work with other institutions to provide policy support for Ukraine, and start working on how it will transition to a sound, sustainable future.Alfred Kammer, director of the IMF’s European department and his deputy, Julie Kozack, will meet with Ukrainian officials in the Bosnian capital of Sarajevo this week, an IMF spokesperson said.”Excellent call with President @ZelenskyyUa,” Georgieva wrote on Twitter (NYSE:TWTR), before the event. She said they discussed how the global lender could “continue to back Ukraine and agreed to explore ways to ramp up our financial and policy engagement to (Ukraine) using all tools available to us.”In a separate posting on Twitter, Zelenskiy said he spoke with Georgieva and thanked her for “the allocation of $1.4 billion of additional support. Discussed future cooperation to increase Ukraine’s financial stability.”Zelenskiy and other Ukrainian officials have grown frustrated in recent months by what they see as slow progress toward a larger financing package.Ukraine’s central bank governor, Kyrylo Shevchenko, told Reuters in July that Kyiv was seeking $15-20 billion from the IMF over two or three years – an amount that would put Ukraine well over the fund’s “exceptional access limit” for lending. Speaking through an interpreter, Prime Minister Denys Shmyhal told a conference on Sunday that the IMF had been “very passive” in responding to Ukraine’s request to date.He said the fund loaned Ukraine $17 billion after Russia’s annexation of the Crimea region in 2014, but was dragging its heels this time around.”Now we have a certain procrastination, but we have to speed up our cooperation and the response of the IMF, which was created to support countries in dire straits like we find ourselves in,” he said. He said Ukraine was working closely with the United States, Germany and other partners, but the IMF was an important “uniting factor.””It’s very important to have the IMF on board with their leadership and partnership,” he added. More

NEW YORK (Reuters) -An already-murky outlook for U.S. stocks and bonds is growing darker, as sizzling inflation ratchets up expectations for how aggressively the Federal Reserve will need to raise rates. For weeks, investors had debated whether the full extent of Fed hawkishness had been priced into markets, after the central bank already raised rates by 225 basis points this year, with many penciling in another 75 basis point rate hike at its meeting next week.Tuesday’s hotter-than-expected inflation report – which slammed stock and bond prices – is bolstering the case for those who argue the central bank will need to be far more hawkish than anticipated in the weeks ahead. That’s forcing investors to gird themselves for a potentially bigger dose of Fed tightening that has rocked asset prices all year. The closely watched CPI report showed U.S. consumer prices unexpectedly rose in August, with such prices rising at an annual pace of 8.3%, not far from the four-decade peak reached in June.“The Fed was already going on a tightening path in the next several months and now they have got to actually increase that given this report,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management. “It’s pretty negative across the board for markets.”Fed funds futures are now pricing in a roughly 36% chance that the Fed next week raises its benchmark rate by a full percentage point, a view supported by analysts at Nomura, who on Tuesday forecast a 100 basis point hike in September. Some analysts also raised expectations on how high the central bank will lift rates in coming months. The reaction in markets was swift: the benchmark S&P 500 ended down 4.3% on Tuesday and the tech-heavy Nasdaq fell 5.2%, the biggest one-day drops for both indexes since June 2020. Yields on the benchmark U.S. 10-year Treasury note, which move inversely to bond prices, rose as high as 3.46%, the highest in about three months.Growing expectations for Fed hawkishness are an unwelcome development for a market already contending with uncertainty on multiple fronts, from worries over whether the central bank’s inflation fight will bring in a recession to the knock-on effects of rising real yields on asset prices.September also sees the Fed ramp up the unwinding of its balance sheet to $95 billion per month, a move some investors worry may add volatility in markets and weigh on the economy.Phil Orlando, chief equity strategist at Federated Hermes (NYSE:FHI), said the market “at a minimum” could test its mid-June low of around 3,600.“The market has been completely wrong in judging the inflation question,” he said. “Today … was a massive wake-up call that forced equity investors to face reality.”’PIVOT’ HOPES DASHEDEven the time of year is to some, a source of concern: the S&P 500 has fallen an average of 0.5% in September since 1950, the worst monthly performance for the index, according to the Stock Trader’s Almanac. So far for the month, the index was logging a 0.6% loss; for the year it is down over 17%.Tuesday’s inflation report put further pressure on a rebound that had seen the S&P 500 rise by 17% from its mid-June low. Stocks have now given back roughly half of those gains.It also dashed some optimism that the Fed would soon be able to “pivot” to easing monetary policy, hopes for which has periodically helped support risk assets.”Any impending Fed pivot isn’t in front of us and this data point confirms that,” said Matt Peron, director of research at Janus Henderson Investors. “The market got a little ahead of itself over the last couple of weeks with the peak hawkishness narrative.”More declines in stocks and bonds promise further pain to investors who had counted on a mix of the two asset classes to cushion market declines.So-called 60/40 portfolios – which hold 60% of their assets in equities and 40% in bonds in anticipation that declines in one asset class will lead to gains in the other – are down more than 12% for the year to date, their worst performance since 1936, according to BofA Global Research.Of course, many investors have been preparing for more volatility after an already rocky year so far. Fund managers increased cash balances to 6.1% in September, the highest in over 20 years, according to BofA Global Research’s monthly survey released on Tuesday.”The key question is at what point does the Fed build enough confidence that they’ve done enough. It’s clear that we’re not near that point now,” said Ed Al-Hussainy, senior global rates strategist at Columbia Threadneedle. “On the risk asset side I think there’s more damage to be done.” More

Good morning. The US Senate foreign relations committee is poised to vote on a bill that would finance weapons exports to Taiwan for the first time and significantly alter relations with Taipei amid rising pressure from China. The Taiwan Policy Act, which will come up for a vote on Wednesday in the US, would provide Taiwan with $4.5bn in weapons and security assistance over the next four years. It would also create a $2bn loan facility to help Taipei buy arms and make Taiwan eligible for a war reserve arms stockpile mechanism.The bill would also punish China if it took military action against Taiwan by requiring the White House to impose sanctions on large Chinese financial institutions over “escalating hostile actions in or against Taiwan”.Coming on the heels of China’s large-scale military exercises in response to House Speaker Nancy Pelosi’s trip to Taipei last month, the bill has sparked debate in the US about how to support Taiwan. Backers of the bill say the US must do more to help the country, while some worry that certain provisions will antagonise China while doing very little to secure Taiwan.Thanks for reading FirstFT Asia. How do you think lawmakers should vote on the Taiwan Policy Act? Tell me what you think at [email protected] — EmilyFive more stories in the news1. Wall Street suffers worst sell-off since June 2020 The benchmark S&P 500 stock index tumbled 4.3 per cent, its worst day since June 2020 with 99 per cent of its companies sliding in value after official data showed US inflation increased unexpectedly in August. The Nasdaq Composite fell 5.2 per cent as technology groups seen as most exposed to higher rates bore the brunt of the selling.2. Evergrande vows to restart all stalled property projects The developer has pledged to resume the construction of 38 remaining projects by the end of September and accelerate 62 restarted projects to “normal level”, according to a company statement released late on Monday that cited its chair, Hui Ka Yan, in a weekly meeting.Related read: Hong Kong’s property developers are having to construct more flexible leasing offers to attract businesses, as the city faces more than 246 football fields of excess supply of office space by 2025.3. Vedanta and Foxconn to build chip plant in India’s Gujarat The two companies are to invest Rs1.54tn ($19.4bn) in prime minister Narendra Modi’s home state of Gujarat to build one of India’s first semiconductor manufacturing complexes — part of a high-stakes, government-backed push to build domestic chipmaking capacity.More on the semiconductor industry: The US is struggling to mobilise its East Asian “Chip 4” alliance amid internal tensions and concerns over China undermining the proposed grouping with South Korea, Japan and Taiwan. 4. Ukraine steps up offensive with push east into Donbas Ukraine’s armed forces are battling for control of a string of towns in the Donbas region, as Kyiv’s counteroffensive pushes east against Russian troops. Serhiy Hayday, the exiled Ukrainian head of the Luhansk region, said fierce battles were under way in Lyman, a town east of Izyum, a big military command post from which Russian forces fled days earlier.Go deeper: The Russian army has been hobbled by a shortage of soldiers.5. JPMorgan warns of up to 50% drop in investment banking fees One of the bank’s most senior executives has said he expected third-quarter investment banking fees to be down 45-50 per cent on the $3.3bn achieved a year earlier, having fallen 44 per cent in the first six months of 2022. The bank will announce its results on October 14.The day aheadXi Jinping’s first trip abroad since Covid pandemic The China president will be among friends and allies — including Russia president Vladimir Putin — when he travels to Kazakhstan today to attend a meeting of the Shanghai Cooperation Organisation in Samarkand, Uzbekistan, beginning tomorrow. Japan economic data The Tankan business sentiment survey results will be released as well as monthly industrial production data.Queen “lying-in-state” Queen Elizabeth II’s coffin will be placed on a platform in Westminster Hall, the oldest part of the Houses of Parliament, from today until her funeral on Monday.What else we’re reading Queen’s death sparks nostalgia for Hong Kong’s ‘golden era’ Beijing and the Hong Kong government have increasingly denied Britain’s role in the development of the financial hub. Still, thousands of mourners queued outside the British consulate in the territory to pay tribute to the Queen, with many lamenting the territory’s loss of freedoms since the 1997 handover.Shareholders challenge India’s new crop of listed tech groups Last year’s new-age IPOs marked a historic moment for Indian tech. But the experience of Patym’s bungled listing should be a wake-up call for India’s listed tech companies. Investors are growing tired of inconsistent messages and struggles to turn a profit.Globalisation is not dying, it’s changing Evidence suggests that natural economic forces have largely been responsible for past changes in the pattern of world trade. Growing concern over the security of supply chains will no doubt add to these changes, though whether the result will be “reshoring” or “friendshoring” is doubtful, writes Martin Wolf. More likely is a complex pattern of diversification.Debt monsters in the downturn As central banks raise rates to tame inflation, debt-laden companies are facing the uncomfortable prospect of servicing higher interest bills with crimped cash flows. Which groups are flashing warning signals? The Financial Times has compiled a list of companies with debt trading more than 10 percentage points above government bonds.‘Quiet quitting’ is worse than nonsense According to Gallup, about half of Americans are “quiet quitters”: people who are “not going above and beyond at work and just meeting their job description”. HR specialists have been quick to advise on how to fix this problem. But Sarah O’Connor argues that it’s not a problem at all — staff who turn up to do exactly what is asked of them are still working. WellnessThe Theragun massage device, which promises to relax and tone facial muscles, apparently met with enthusiastic approval from footballer Cristiano Ronaldo, who signed a sponsorship deal with Therabody in 2021 and has long been a champion of the brand. Therabody is determined to own the sports recovery market. Can it hit the perfect pressure point? More

BERLIN (Reuters) -A lawsuit accusing Mercedes-Benz of infringing on people’s freedoms by exacerbating climate change was dropped by the Stuttgart district court on Tuesday but the German climate NGO behind the case said it planned to appeal.The case brought by NGO Deutsche Umwelthilfe (DUH) marked the first by individual citizens in Germany against a private company for exacerbating climate change.The DUH said it plans to appeal the ruling in the higher regional court of Stuttgart.”Even if this ruling did not turn out in our favour, we hope for a quick resolution in the higher court, for the climate crisis does not leave us much time,” said DUH lawyer Remo Klinger.The case had demanded that Mercedes-Benz adhere to a tighter carbon emissions budget and commit to ending production of combustion engine cars by November 2030.It was based on a 2021 ruling https://www.reuters.com/business/environment/germany-must-further-tighten-climate-change-law-top-court-rules-2021-04-29/ in Germany’s top court which found the country’s climate law was not doing enough to protect future generations.The plaintiffs, three directors of the DUH, argued that their rights as individuals to be protected from the consequences of climate change were being infringed upon by Mercedes-Benz’ impact on the planet.The court in a statement said it had ruled that there was not yet tangible enough proof of how Mercedes-Benz’ production of combustion engine cars was impacting the rights of the plaintiffs, adding this could change in future.The court also said the case went beyond their call of duty, arguing that decisions on specific ways to protect the environment, a principle anchored in German law, would be carried out, were in the hands of the legislature and not the courts.Mercedes-Benz said it welcomed the ruling.”Which efforts should be shouldered by which actors to achieve Germany’s climate goals is a political question that cannot be answered case-by-case in civil courts,” the company said in a statement.DUH has filed a similar lawsuit against BMW, with a court date scheduled for November. A case supported by Greenpeace against Volkswagen (ETR:VOWG_p) by farmer Ulf Allhoff-Cramer, who says Volkswagen’s carbon footprint is damaging his land, will be heard in court in May next year.In its defence, Volkswagen has argued that 99% of emissions from its vehicles are caused by third parties – in particular by the drivers of the vehicles and suppliers, according to court documents seen by Reuters.It also argued that demanding Volkswagen produce only battery-electric vehicles was too restrictive, pointing to alternatives such as carbon capture or e-fuel powered vehicles. More