Aurelia Butler

SYDNEY (Reuters) – Asian shares inched higher on Monday following a much-needed bounce on Wall Street, but nerves are stretched ahead of a near-certain rate hike in Europe and another round of corporate earnings reports.It is shaping up to be a tense week for Europe as it waits anxiously to see if Russia resumes the flow of gas through the Nord Stream 1 pipeline on July 21, while Italy teeters on the brink of political turmoil should Prime Minister Mario Draghi go ahead and resign. “If gas flows do not resume meaningfully, European gas prices will surge, prompting Germany and others to enact gas and power rationing with a deep recession all but guaranteed if this were to occur,” said Taylor Nugent, an economist at NAB.”Our base case is that gas flows resume.”The uncertainty will haunt the European Central Bank as it holds a policy meeting where it is likely to kick off a tightening cycle with a rise of 25 basis points.Markets are also hanging on details of an anti-fragmentation tool intended to ease pressure on borrowing costs for the Union’s most indebted members.Investors found some relief in Friday’s rally on Wall Street and MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.4%, having shed 3.5% last week.Japan’s Nikkei was closed for a holiday, but futures traded at 27,000 compared to a cash close of 26,788, while South Korea gained 1.1%.S&P 500 futures edged up 0.2% in early trade, while Nasdaq futures firmed 0.4%.A who’s who of corporates report earnings will be on show this week including Goldman Sachs Group Inc (NYSE:GS), Bank of America Corp (NYSE:BAC), International Business Corp, Netflix Inc (NASDAQ:NFLX), Tesla (NASDAQ:TSLA) Inc and Twitter Inc (NYSE:TWTR).Of the 35 companies in the S&P 500 having reported, 80% have beaten Street expectations, according to Refinitiv. Analysts now expect aggregate year-on-year second-quarter profit growth of 5.6%, down from 6.8% at the beginning of the quarter.EURO NEEDS GASInvestors have also been encouraged that the Federal Reserve is likely to hike by “only” 75 basis points next week, in part thanks to an easing in consumer fears of inflation.”This softening of inflation expectations is one reason why we expect the FOMC will not accelerate the near-term hiking pace and will deliver a 75bp hike at the July FOMC meeting,” said analysts at Goldman Sachs in a note. It is a lighter week for U.S. data, though the first round of flash surveys on global manufacturing will provide a timely reading on how industries are faring this month.The Bank of Japan holds its policy meeting amid concerns the breakneck drop in the yen is adding to the cost of imported commodities and widening the country’s trade deficit.Yet markets assume the central bank will stick with it ultra-easy policies, making it the only one of the majors not to be raising rates.The dollar was a shade softer at 138.30 yen, having climbed 1.8% last week to a 24-year peak of 139.38. Against a basket of currencies, it was holding at 107.910, off last week’s top of 109.290.The euro was a little steadier at $1.0089, after bouncing from a two-decade trough of $0.9952 last week.”The Russia-Europe natural gas pipeline that is currently closed for maintenance is scheduled to be turned back on Thursday,” noted CBA economist Joseph Capurso. “However, if the gas flow does not resume EUR/USD could drop by at least 2%.”Rising interest rates and a firm dollar have been a major drag for non-yielding gold which was stuck at $1,708 an ounce after shedding 2% last week. [GOL/]Oil prices drifted lower as President Joe Biden continued his trip to the Middle East hoping to get agreement on an increase in output. [O/R]Saudi Arabia’s foreign minister said a U.S.-Arab summit on Saturday did not discuss oil and that OPEC+ would continue to assess market conditions and do what is necessary.Brent dipped 82 cents to $100.34, while U.S. crude eased 86 cents to $96.73 per barrel. More

HONG KONG/LONDON (Reuters) -HSBC Holdings Plc is set to speed up its exit from non-core markets and deploy additional capital in Asia, in a bid to push back against a breakup proposal put forward by its biggest shareholder, two people with knowledge of the matter said.Ping An Insurance Group Co of China Ltd called on the bank in April to explore strategic options such as spinning off its mainstay Asian business to unlock greater shareholder value.In response, HSBC hired advisers including London-based investment bank Robey Warshaw to assist on a review of its strategy but has not directly commented on Ping An’s demands. The outlines of its plan to push back, reported here for the first time, are the result of that review, according to the sources.A spokesperson for HSBC declined to comment. Ping An, which is China’s biggest insurance company, did not immediately respond to requests for comment after regular business hours in Asia. During its earnings announcement on Aug. 1, HSBC is expected to argue that the bank’s future depends on its global network of clients and services, the sources said.But it plans to outline how it will redouble efforts to meet previously announced goals to exit non-core businesses and shift more of its business to Asia, the sources said. That, in practice, could mean ditching more unprofitable clients in countries such as France and Germany, a third source said. It may not mention Ping An by name or allude directly to calls for a breakup, one of the sources said, but by renewing a commitment to reallocate capital to Asia the lender will tacitly acknowledge it has fallen behind in those plans.Further as an indication of HSBC’s commitment to Asia, the two sources said, HSBC Chief Executive Noel Quinn a few days ago flew to Hong Kong and has undergone the mandatory seven-day hotel quarantine to hold the board meeting at its Asian headquarters.SPEEDING UP Ping An’s call for a breakup of HSBC came against the backdrop of growing geopolitical tensions between the West and China, which led some analysts to consider that there were more than just financial forces at play behind the proposal.Citing people inside Chinese state enterprises and HSBC, Reuters reported last year that Beijing had become disenchanted with the bank over sensitive legal and political issues, from China’s crackdown in Hong Kong to the U.S. indictment of an executive at Chinese tech champion Huawei Technologies. But the bank’s shares have also languished and it halted dividends entirely in 2020 at the behest of British regulators who urged banks to conserve capital, which was both a source of frustration to Ping An and the bank’s Hong-Kong based individual shareholders.Since then, it has restored payouts but the consensus estimate of a 2022 payout of 28 cents per ordinary share falls short of its historical payouts. HSBC’s shares have risen 2.5% since news of Ping An’s demands first emerged on Apr. 29.In February 2021, the bank announced efforts to have Asia account for 50% of the bank’s capital allocation in the medium to long term from 42% at the time. The bank also said it will refocus its efforts on countries where it can grow, continuing a strategy of leaving non-core markets in recent years.The bank is trying to exit Turkey, Armenia, Greece and Oman, Reuters reported in January 2020, but progress has been mixed. While the lender announced the sale of its Greece business this year, and in Oman it is talks to merge with local rival Sohar International Bank, little progress has been reported on the other disposals.The bank is hoping accelerating its plans will help mollify Ping An, according to the sources.HSBC could speed up exits from those countries, one of the sources said. More

Britain’s housing market has been showing some signs of cooling after a more than 20% surge in prices since the start of the pandemic, as the cost of living surges and the Bank of England steadily raises interest rates.The average monthly mortgage payment for first-time buyers had risen by 20% since the start of the year, reflecting both higher interest rates and the increased price of property – which hit a record 369,968 pounds ($437,561) this month, Rightmove said.Nonetheless, a shortage of property being put up for sale meant asking prices were unlikely to fall faster than normal for the time of year in the second half of 2022, said Rightmove.Over 2022 a whole, asking prices were likely to rise 7%, more than its initial 5% forecast, it added.”A softening in demand is moving the market from a boil to a simmer,” Rightmove director Tim Bannister said.Non-seasonally adjusted asking prices for July – which were collected between June 12 and July 9 – were 0.4% up on a month earlier, compared with a 0.3% rise in June.($1 = 0.8455 pounds) More

A string of big rate rises by the Federal Reserve has put pressure on central banks around the world to follow suit to counter soaring inflation and the strong dollar. A Financial Times analysis found that central banks are now, more than at any other time this century, opting for large rate rises of 50 basis points or more, laying bare the challenges of tackling price pressures and higher US rates. Rises by the Fed, including its first 75 basis point increase since 1994, and fears over the health of the global economy, have bolstered the US dollar against almost all currencies. As many goods are priced in dollars on international markets, the strong dollar adds to inflationary pressures by raising the cost of imports — creating what analysts have described as a “reverse currency war” between monetary policymakers. “We’re seeing a rate hike feeding frenzy,” said James Athey, a senior portfolio manager at Abrdn, an investment company. “It’s the reverse of what we saw in the last decade . . . Nowadays the last thing anyone wants is a weak currency.”

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Thanks for reading FirstFT Asia. Here is the rest of the day’s news. — SophiaThe cryptocurrency industry is at a critical juncture and the FT is here to guide you through the deepening crisis. Premium subscribers can sign up to a new weekly email written by digital assets correspondent Scott Chipolina and sent every Friday. Sign up here.Five more stories in the news1. India escalates crackdown on Chinese phonemakers A series of legal actions have raised trade tensions between Asia’s two biggest nations. Indian regulators hit Oppo, Vivo and Xiaomi — which together control around 60 per cent of India’s smartphone market — with accusations of tax evasion and unlawful remittances. The move comes as New Delhi seeks to build up its domestic tech sector and reduce dependence on China.2. China growth hopes rest on troubled local government financing vehicles LGFVs play a vital role in funding infrastructure development across China, and they will need to accelerate construction activity if the country hopes to reach its economic growth target of 5.5 per cent this year. Bigger investors have grown reluctant to back LGFVs, causing them to turn to retail investors directly.3. Biden’s fist bump belies unease between Saudi Arabia and US Although the US president’s trip to Saudi Arabia included a summit with other Arab leaders, the enduring legacy of his trip may be the images of his fist bump with Crown Prince Mohammed bin Salman, the man who US intelligence concluded authorised the operation that led to the murder of Jamal Khashoggi.4. Coronavirus sub-variant ‘Centaurus’ spreads across India and parts of Europe The Omicron sub-variant BA.2.75 that is spreading rapidly in India and has been detected in several European countries may be better than other coronavirus strains at overcoming immunity provided by previous infection and vaccines. Nicknamed Centaurus, it appeared to have mutated in a way that could indicate “major immune escape”, the World Health Organization said. 5. BlackRock founder warns of food inflation’s dangerous impact The destruction of arable land during the Ukraine war has dangerous global consequences, BlackRock founder Larry Fink told the Financial Times. Dramatic spikes in oil have distracted investors, but the bigger issue is rising food prices, which will have long-lasting effects.The day aheadBritish Conservatives whittle down list of candidates for prime minister Another vote takes place today to whittle down the pack of Tory MP hopefuls seeking to become the country’s next prime minister. Plus, the UK’s ruling Conservative party will hold a vote of confidence in itself today, which they are expected to win.Haleon opens on the London Stock Exchange The consumer healthcare companies spin-off from GSK, whose brands will include Sensodyne toothpaste and Advil and Panadol painkillers, is expected to seek a valuation of as much as £45bn. It is scheduled to start trading on the London Stock Exchange today.Results Bank of America, Charles Schwab, Goldman Sachs, and IBM release their Q2 results today.Indian presidential election India holds an indirect election of the president by elected members of both houses of parliament, the elected members of the 29 states and the elected members of the Union Territories of Delhi and Puducherry.What else we’re readingThe sultan, his family and a $15bn dispute over oil in Malaysia The heirs to the Sultanate of Sulu have seized state-owned energy assets in a legal battle 144 years in the making. The sultan’s descendants have been seeking compensation for land that their ancestor leased to a British trading company before the discovery of vast natural resources in Sabah, a Borneo state in Malaysia.

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Personal branding makes us cringe, but it works Like networking, a personal brand is something we are told we should be cultivating. But most of us don’t, because we are embarrassed. Viv Groskop suggests breaking down the nebulous term into more tangible components: your professional reputation, and visibility.Moderna’s Noubar Afeyan on the race to create a Covid vaccine The chair of the US biopharma group discusses his approach to combining science with entrepreneurship, and how Moderna’s pivot to tackle Covid — which required larger and faster clinical trials than any it had done before — transformed it into a $60bn company.The era of the Great Exasperation arrives for investors Data on employment, inflation, bond yields and more have all shown turbulence this year, and as instability replaces predictable moderation, fund managers struggle to place accurate bets. Church or cult? Inside the Moonies’ ‘world of delusion’ Tetsuya Yamagami, the man suspected of killing Japan’s former PM Shinzo Abe, is reported to have been seeking revenge against the Unification Church. The connection is the latest controversy for the church, which has built a sprawling multibillion-dollar business empire, with interests ranging from a Brazilian football club to a Californian chinchilla ranch.FoodWhen it comes to meat off the barbecue, there’s nothing quite like a succulent, smoky rib. The trick is in learning how to cook it “low and slow.”

Cooking ‘low and slow’ © Alamy More

JERUSALEM (Reuters) -Israeli airlines plan to expand and open new routes to India and other Asian destinations after Saudi Arabia announced it would allow unfettered access to its airspace, a move that would save fuel costs and reduce flight times.In the absence of open relations between the countries, however, and given talks on including Oman in the expanded corridor, Israeli Transportation Minister Merav Michaeli said implementation could take several weeks at least.Prior to Riyadh’s announcement on Friday, Israeli airlines could overfly Saudi territory to United Arab Emirates and Bahrain only. Dropping restrictions on access to Saudi airspace means they will be able to use it to reach Asia too.Both flag carrier El Al Israel Airlines and smaller rival Arkia have already applied for permission to fly over Saudi Arabia, they said on Sunday, which would cut about 2-1/2 hours from flights to India and Thailand.Present routes to those popular destinations bypass Saudi airspace by flying south over the Red Sea around Yemen. The United States has been mediating on the expanded overflights, which Michaeli said would eventually entail direct coordination between Israeli and Saudi civil aviation agencies – even though Riyadh has yet to formally recognise Israel. “It’s a better situation than full alienation and zero communication. So whatever we can achieve, we should go for it and work toward building more and more of a relationship and more and more trust,” she said.Asked when the expanded Saudi corridor will be implemented, she said: “Your guess is as good as mine. I hope it’s not months, but weeks.”Asia-bound Israeli planes crossing Saudi would want to skirt Iran by continuing into the airspace of Oman – which, Michaeli said, gave initial approval for Israeli overflights in 2018.”I’m sure it will be worked out again, just to sort of refresh this agreement. But again, this is one of the details that’s being worked out and we need to be cautious about it and wait and see until it happens,” she said.Faster, more direct routes would also mean lower fuel burn.This in turn would help efficiency for El Al by allowing it to use smaller aircraft on its route to Mumbai while saving fuel on its nearly daily flights to Thailand, said Shlomi Am Shalom, an El Al official.”We can take a big airplane and use it in other places like Australia and Japan,” he said, adding flying to Melbourne and Tokyo were still in the planning stages.Similarly, Arkia said it planned to start flights to Goa, India, in November and was considering new destinations such as Thailand and Sri Lanka using Airbus A321neoLR aircraft.Israel’s Tourism Ministry has said the expanded Saudi corridor would eventually make airline tickets some 20% cheaper. The airlines, however, have been less explicit about a price drop. An Israeli official said on Saturday he expected members of the country’s Muslim minority to be able to fly directly to Saudi Arabia for pilgrimage by next year. [nL1N2YX0F1 More

The remarks by the China Banking and Insurance Regulatory Commission (CBIRC) came after a growing number of home buyers across China threatened to stop making their mortgage payments for stalled property projects, aggravating a real estate crisis that has already hit the economy.Investors have continued to dump Chinese banking stocks as well as developers’ shares and bonds, even after the CBIRC vowed on Thursday to strengthen its coordination with other regulators to “guarantee the delivery of homes”.In an interview with the official China Banking and Insurance New on Sunday, the CBIRC reiterated that it will support local governments to promote home delivery, and expressed confidence that with concerted efforts, “all the difficulties and problems will be properly solved.”More specifically, the regulator urged banks to “shoulder social responsibility” and actively participate in the study of plans to fill the funding gap, so that the construction of stalled real estate projects can be resumed swiftly and homes can be delivered to buyers early. It also urged banks to strengthen communication with mortgage clients and support acquisitions of real estate projects to help stabilize the property market.In addition, the watchdog said that financial risks in the northeastern province of Liaoning has been growing recently but were under control, and the government will take measures to prevent risks at China’s small lenders. More