Aurelia Butler

Evergrande said in a Hong Kong Stock Exchange filing that Siu Shawn, 50, who was chairman of the board of China Evergrande New Energy Vehicle Group Limited, had entered into a service contact for three years.The stock exchange filing said that Lai Lixin and Huang Xiangui had both resigned as executive directors of Evergrande. Lai had resigned as executive director to devote more time to his other duties with the group, while Huang stepped down for health reason, the filing said. Both will remain with the group.Evergrande is the world’s most indebted property company, with more than $300 billion in total liabilities, which include nearly $20 billion of international bonds all deemed to be in default after a run of missed payments late last year. More

In a pre-released interview with German business daily Handelsblatt, Rehn said the future pace of normalization of the ECB’s loose monetary policy depended on the economic data.”Personally, I expect the economic data to remain relatively good despite being affected by the Omicron variant,” Rehn said, adding he therefore viewed rate hikes in 2023 as a logical step, at least as long as there are no new economic shocks.Rehn, who is also an ECB Governing Council member, pointed out that Germany’s nuclear phase-out at the end of the year would increase dependence on natural gas imports from Russia and bring more volatility to energy markets.”The decisions about energy policy in Germany affect price fluctuations and thus the uncertainty about inflation,” Rehn said.”For me, switching from coal to natural gas is not a green transition, and this transition phase will take a long time in Germany,” he added.In the debate about the European Union’s fiscal rules, the head of the Finnish central bank backed calls for a reform to make the so-called Stability and Growth Pact more consistent, realistic and flexible at the same time.”A debt limit of around 60 percent of gross domestic product, as prescribed by the previous regulation, is clearly unrealistic,” Rehn said, pointing to Italy’s debt-to-GDP ratio which is projected to be around 160% after the pandemic.”If goals are unattainable, they will not achieve anything either,” Rehn said. More

Hello and welcome to the working week.Changes in political leadership are back on the agenda — I did warn you that this was going to be a theme of 2022.First, we are expecting this to be the week that Sue Gray finally publishes the “partygate” report. Will it produce a smoking gun for rebel MPs to end Boris Johnson’s time in Downing Street or will it enable the prime minister to wriggle out of this latest existential leadership crisis? It’s Burns Night on Tuesday, so a good time perhaps for those plotting Johnson’s downfall to reflect on the Scottish poet’s wisdom about the best laid schemes o’ mice an’ men.There will be change at the top in Italy as the presidential election begins on Monday. Prime minister Mario Draghi, who has done much to restore confidence in the Italian government and unify the nation, is the frontrunner — he also has the backing of the FT editorial board and former Economist editor Bill Emmott. But the process of deciding who will replace Sergio Mattarella, whose seven-year term ends on February 3, is complex — made more so by the attempted comeback of Silvio Berlusconi. And if Draghi wins, who will replace him as PM?The week will finish on Sunday with elections in Portugal, called two years ahead of schedule by the country’s president Marcelo Rebelo de Sousa after parliament rejected the minority Socialist government’s 2022 state budget. Political change is in the air. Anger about several corruption scandals is fuelling support for populist candidates.Are we at The Week Ahead satisfying your needs? Cast your vote with an email to [email protected] dataThe main economic event this week comes on Wednesday when the Federal Open Market Committee announces its latest decision on US interest rates, although this is likely to be a holding operation, with the first rate rise widely expected to be in March. There are plenty of other items in the diary, however, giving us a better indication of Omicron’s impact on economic growth around the holiday season, with a clutch of quarterly gross domestic product estimates and purchasing managers’ index data.CompaniesChina is the linking factor for the corporate earnings reports this week.How have H&M’s full-year sales — out on Friday — been affected by the state influenced consumer boycotts in China of its clothing? Similarly, how much is Sweden’s tough stance on Huawei hurting Ericsson, whose numbers are out on Tuesday?China is part of the reason why analysts are expecting healthy quarterly numbers from Apple, which reports on Thursday. Sales have been helped by the tech company’s products gaining market share among richer Chinese users.The availability of technology — in particular, semiconductors — will be weighing on the minds of Hyundai’s investors. Hyundai fared relatively well last year after stockpiling components — although sales in 2021 fell short of target as inventories ran out — and there are expectations that the carmaker will report its highest operating profit in eight years on strong demand for recreational vehicles and premium Genesis sedans.Finally, there are also high hopes for Tesla, whose car production numbers have been, er, motoring forward.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayEurozone, France, Germany, Japan, UK, US: IHS Markit flash composite purchasing managers’ index (PMI) data releasesSouth Korea, GDP figuresUK, Bank of England’s Asset Purchase Facility Quarterly ReportResults: Halliburton Q4, IBM Q4, Philips Q4TuesdayGermany, Ifo Institute monthly business confidence indexRémy Cointreau Q3 sales updateUK, HMRC publishes tax receipts and National Insurance Contributions dataUS, Federal Housing Finance Agency monthly house price index and consumer confidence dataResults: 3M Q4, American Express Q4, Atlas Copco Q4, Ericsson Q4, General Electric Q4, Hyundai Motor Q4, Johnson & Johnson Q4, Lockheed Martin Q4, Texas Instruments Q4, Tod’s FY, Verizon Q4WednesdayCanada, Bank of Canada interest-rate decisionFrance, consumer confidence figuresUS, Federal Open Market Committee meeting interest-rate decisionResults: AT&T Q4, Boeing Q4, Intel Q4, Lonza Group FY, Nidec Q3, Tesla Q4, Wizz Air Q3Trading update: Brewin Dolphin Q1, CMC Markets Q3ThursdayAnglo American Q4 production reportGermany, consumer confidence dataUS, GDP Q4 estimate plus consumer spending dataResults: Apple Q1, Banco Sabadell Q4, Comcast Q4, Deutsche Bank H1, Diageo H1, easyJet Q1, JetBlue Airways Q4, LVMH FY, Mastercard Q4, McDonald’s Q4, Mondelēz International Q4, Northrop Grumman Q4, Rogers Communications Q4, Safilo Group FY, Samsung Electronics Q4, SAP FY, Sartorius FY, STMicroelectronics Q4, Visa Q1Trading updates: CVS Group H1, Fevertree FY, Mitie Q3FridayFrance, preliminary Q4 GDP plus producer price index (PPI) figuresGermany, flash Q4 GDP figuresItaly, PPI dataUK, Bank of England capital issuance statisticsUS, personal income and spending dataResults: Caterpillar Q4, Chevron Q4, Colgate-Palmolive Q4, Daiwa Securities Q3, H&M FY, Saipem Q3, UniCredit FY, Volvo Q4World eventsFinally, here is a rundown of other events and milestones this week. MondayEU, UK: British foreign minister Liz Truss and the EU commissioner responsible for Brexit negotiations Maros Sefcovic meet for further talks in BrusselsItaly, Libya: presidential electionsSwitzerland, executive board of the World Health Organization begins its 150th session in GenevaUK, a year of events celebrating 1900 years of Hadrian’s Wall kicks off today on the birthday of the Roman emperorTuesdayEgypt, 11th anniversary of the beginning of the Egyptian Revolution, involving street protests, labour strikes and violent clashesEU General Affairs Council meets in BrusselsUK, Burns Night celebrated on the birthday of Scottish poet Robert Burns, plus in London “The Blue Boy” by Thomas Gainsborough returns to the National Gallery 100 years after it was last displayed there, and England will drop most remaining Covid restrictions, such as mask wearing and vaccine passportsWednesdayAustralia Day, marking the arrival at Sydney Cove of the First Fleet in 1788India, Republic Day commemorating the introduction of the Indian constitutionThursdayHonduras, Xiomara Castro is to be sworn in as the nation’s first female presidentInternational Holocaust Remembrance Day on the 77th anniversary of the liberation of the Nazi German concentration camp AuschwitzFridayEU, Data Privacy DayGermany, the Greens hosts a party congress from BerlinSaturdayAustralia, women’s final day in the Australian Open tennis tournamentSundayAustralia, men’s final day in the Australian Open tennis tournamentPortugal, general election. 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Coronavirus, with its universal threat of illness and death, may have demonstrated exactly what the whole world has in common. The economic recovery is doing the opposite. As a World Bank report made clear this month, the legacy of the pandemic is a widening gap between those living in the rich world and those elsewhere. Tighter monetary policy from the Federal Reserve, to combat higher inflation within its own borders, is likely to deepen this divide.As China’s president Xi Jinping told the World Economic Forum last week, if the rich world “slams on the brakes” on monetary stimulus, it risks spilling over to vulnerable middle- and lower-income countries and eventually causing a crisis that, in turn, affects the rich world. Many of these countries have already suffered permanent scarring from the pandemic, as governments struggled to deploy the same fiscal firepower as advanced economies to keep workers employed and businesses open through lockdowns. The result has been a “two-track” global recovery: output in advanced economies is predicted to return to 2019 levels by 2023, while in emerging economies it remains well below pre-pandemic trends. Progress towards a more equitable recovery, both from the pandemic and the recession it induced, will need global co-operation. The first task is ensuring equal access to vaccines. These, perhaps even more than stimulus efforts, have been vital to allowing economic activity to resume in the rich world. But getting economic growth back to where it needs to be will also require what the World Bank politely calls “financial resources”.With major central banks tightening monetary policy, financing conditions for emerging economies will only get worse. Many poorer countries are likely to pursue fiscal retrenchment to preserve their access to bond markets, just at the moment when cross-border capital flows may go into reverse. Middle-income countries that have used the decades of cheap money to pursue reform efforts and shore up their foreign exchange reserves will be far better placed than those, such as Turkey, that encouraged credit-fuelled booms.The position of the very poorest countries is the most precarious. Finding a way to offer assistance should be an urgent global priority. Efforts so far have consisted of lacklustre statements of goodwill and halfhearted steps towards the establishment of mediocre debt resolution programmes. The current “common framework” drawn up by the G20 in November 2020 to deal with the debt problem is unfit for purpose: private creditors have little to no incentive to participate in its processes, which are cumbersome and unclear. Almost no nation has been willing to engage with it for fear they will be designated as “basket cases”. Granted, the creation of effective debt resolution programmes has become more difficult in recent times. The appearance of new lenders to frontier markets, while welcome, has made it harder to bring all creditors to the table. But not even the most rose-tinted vision reveals any real global effort to confront the issue of poor-country debt with the degree of seriousness it deserves. Even though advanced economies seeking to emerge from the pandemic face their own complex problems, the issue of inequitable global recovery — and its relationship to existing debt burdens — cannot be ignored. To do so would recklessly endanger decades of poverty reduction. Self-interest alone should convince richer countries to act: the consequences of re-emergent poverty, much like viruses, are rarely confined to national borders. More

President Joe Biden has nominated three smart, diverse candidates to fill vacancies on the Federal Reserve Board of Governors. Predictably, Republicans are already complaining about their views, particularly those of Sarah Bloom Raskin, the nominee for vice-chair of supervision, who has expressed concern about the effects of climate change on financial stability and has an interest in the risks posed by shadow banking, cryptocurrencies and cyber security. Conservatives say her appointment would “politicise bank supervision”.The arguments are cynical and flawed. For starters, the notion of “politicising” the Fed ignores the fact that it has for several decades now been increasingly political, in the sense that central bankers have, by choice and by force, become the chief economic actors in the country.From Alan Greenspan onwards, the Fed has successfully used low interest rates to bolster asset prices and stretch out the business cycle. Average recovery cycles have been expanding since 1982. This has made it convenient for politicians of both parties not to take hard decisions that involve trade-offs between interest groups. Instead, they kick the responsibility for keeping an economy increasingly driven by asset price inflation, rather than by productivity and wage growth, over to the Fed.This dysfunctional dance sped up after the 2008 financial crisis and even more so after 2010, when the Fed’s quantitative easing programme expanded. Monetary policy, not fiscal policy, has driven the recovery since. Biden tried to change this, with his Build Back Better agenda. But polarised politics in Congress mean passing serious, long-term fiscal stimulus is tougher than ever. This puts more political pressure on the Fed.Inflation has forced the central bank to start winding back its easy money policies, at least for now. This will ultimately have some big market impacts. Over the past decade, financial risk has migrated from the traditional banking sector towards areas like private equity, non-financial corporations and fintech. It’s the right time to think about expanding the mandate of the types of risks that the Fed looks at — from cyber, crypto and climate to geopolitics.In fact, this was already happening under Randy Quarles, vice chair of supervision under President Donald Trump. He chaired the Financial Stability Board, the international body that co-ordinates national financial regulation, in July 2021 when it put out a white paper addressing climate-related financial risks. This stuff simply isn’t as controversial as Republicans say it is.Meanwhile, industry is moving ahead of regulators and politicians. Insurance companies have for years been laying out the economic and market risks associated with climate change. Increasingly, companies themselves are taking a market hit for not dealing with it. CEOs are actually desperate for more guidance on consistent expectations on this front. For the Fed to ignore climate would be a breach of duty.The same goes for cyber security, which Bloom Raskin looked at when she was deputy secretary of the Treasury, as well as cryptocurrency and digital coin. If this is “political”, then it is political around the world. Dozens of central banks are exploring or experimenting with digital currencies. Wider adoption of these represents an opportunity, but also a challenge, for regulators. This will be no less true over time for the dollar’s position as the global reserve currency, a risk that the Fed should be looking at closely.The Fed should work closely with regulators such as the Securities and Exchange Commission, which have made cryptocurrency and cyber risk target issues, perhaps through the Financial Stability Oversight Council. This umbrella group brings together all US financial regulatory bodies to assess future risks. Bigger, broader conversations, in and outside the central bank, are crucial for detecting risk, which often falls in the seams between regulatory bodies, particularly now when we are undergoing such major technological, geopolitical and financial market shifts.It’s also worth remembering that the Fed actually has a three-pronged job, which involves not just keeping inflation low and employment high, but also making communities more economically stable. That community mandate has received far less attention over many years than the details of trading rules or capital requirements. But it’s arguably more important, given the amount of speculative retail investing today.One of the most worrisome things about the “everything bubble” brewed up by the Fed is that it has turned us all into speculators. It’s not only professionals but individuals who are buying into bitcoin and other highly speculative assets, using new online trading platforms and moving the market in ways that need much closer examination. That’s why expanding the diversity of thought at the Fed, and the universe of risks being studied, is a great thing. As former Minneapolis Fed president Narayana Kocherlakota wrote recently, “Fed officials are too homogeneous, and too likely to empathise more with banks and investors than they do with the broader set of Americans whose wellbeing they are supposed to defend.” Biden’s new slate would help fix that, broadening perspective and risk management in the process. Here’s hoping it’s a smooth [email protected]  More

The ECB has long held the view that inflation will decline this year from its current record high, an expectation its President Christine Lagarde repeated on Friday.Euro zone inflation hit 5% in December, more than twice the ECB’s target, but the bank sees it back below 2% by the fourth quarter.”It is not yet ruled out that that will happen. However, we also do not know whether inflation will stay at a higher level after all,” Holzmann, who is governor of the Austrian National Bank, told Die Presse.”Is inflation therefore a mountain or is it becoming a high plateau? There is a great deal of uncertainty about that because it also cannot be reproduced very well by our models,” he told the Austrian newspaper.Second-round effects like wage increases would be decisive, he added and, like Lagarde, he said that for now there was no sign of a price-wage spiral, but much would depend on wage negotiations this year.”Fundamentally there is therefore the danger of a wage-price spiral. I believe, however, that labour and employer representatives are acting very rationally and thoughtfully here,” Holzmann said.As part of its asset purchases, the ECB can only hold up to 33% of a euro zone country’s bond volume, and in some countries it is “very close” to that limit but not in Austria, he said.There are other means by which those countries’ bonds can still be bought, such as the European Union’s NextGeneration recovery fund, which does not count towards the 33% figure, he added. More