Aurelia Butler

“Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated,” according to minutes of the Dec. 14-15 meeting of the U.S. central bank’s policy-setting Federal Open Market Committee, published Wednesday.“Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate,” the minutes said. At the conclusion of the December meeting, the FOMC announced it would wind down the Fed’s bond-buying program at a faster pace than first outlined at the previous meeting in early November, citing rising risks from inflation. The new schedule puts the central bank on track to conclude purchases in March.Fed officials were also unanimous in expecting they would need to begin raising rates this year, according to anonymous projections published after the meeting. That marked a shift from the previous round of forecasts in September, which had shown the FOMC at the time was evenly divided on the question.©2022 Bloomberg L.P. More

Outflows from the sector totaled $32 million last week, taking the tally for the last three weeks to $260 million, although the trend was diminishing following record weekly outflows in mid-December, CoinShares said.For 2021 as a whole inflows hit $9.3 billion, a 36% jump from 2020 as the launch of bitcoin futures ETFs lured big institutional investors. By comparison, the increase in inflows from 2019 to 2020 was 806%. Total assets under management ended the year at $62.5 billion in 2021 versus just $2.8 billion at the end of 2019, which “represents a maturing industry,” said James Butterfill, investment strategist at CoinShares.Ethereum’s inflows doubled to $1.3 billion in 2021 from $920 million in 2020. Bitcoin, by contrast, saw a 16% increase to $6.3 billion, the lowest growth in inflows relative to other digital asset investment products, according to CoinShares. Bitcoin, last trading at $46.186.55, has lost a third of its value from its all-time high of $69,000 hit on Nov.10. Ether, the currency for the Ethereum blockchain, last exchanged hands at $3,800.20, down about 20% from its November peak.Blockchain data provider Glassnode, in its latest research report, said across many on-chain measures, “there is a general lack of activity” in bitcoin despite a modestly bullish undertone in supply dynamics.It added that bitcoins continue to migrate to increasingly illiquid and dormant wallets, while investor profitability and cyclical metrics paint a more bearish picture.”With a balance of both bull and bear signals at hand, our expectations into the start of 2022 are likely continued sideways consolidation,” Glassnode said.CoinShares noted the total number of coins in investment product form expanded from nine to 15 in 2021, while 37 investment products were launched versus 24 in 2020, indicative of the demand and popularity of digital assets.Assets under management at Grayscale and Coinshares, the two largest digital asset managers was $43.23 billion and $4.2 billion, respectively. More

Britain this week joined the (hardly exclusive) band of countries tightening up on foreign investment. Like similar rules in the US and China, Britain’s National Security and Investment Act is broad and vague. It renders deals in 17 sectors subject to political scrutiny; those falling short on certain criteria will be blocked or subjected to remedies. Deals already completed, as occurred in the US with dating app Grindr and its Chinese buyer, get caught in the dragnet. So too are intra-company deals and foreign-to-foreign transactions, so long as business activities impinge on the UK.Mandarins tasked with reviewing putative deals can expect to be busy. The government expects up to 1,800 notifications a year, or 36 a week. Any investment banker obliged to deal with the Committee on Foreign Investment in the US can explain what follows: glacial delays and hurriedly drafted-in junior staff.One might easily dismiss this ramped-up scrutiny as antithetical to the UK, a country ranked by the OECD among the least restrictive countries on foreign direct investment and hardly protectionist. But Britain feels obliged to adhere to global security trends while still seeking foreign investment. Hence the creation, just 14 months before the NSIL became law, of the Office for Investment, which has so far pulled in £18bn of investment. Unfortunately, foreign investment does not conform to domestic industrial policy. Inevitably the areas that trigger review — robotics, artificial intelligence, data infrastructure — are precisely those in which buyers are most interested. A cynic might further cavil that China, whose prowess in the field spooks those in Washington, is unlikely to find much worth sneaking away from the UK in any case. Past deals in sensitive areas illustrate where attractions lie. Chinese ownership of a stake in a nuclear plant, cemented in the golden era of Sino-British relations, is now due to be unwound. Nvidia’s proposed purchase of chip designer Arm has regulators across the globe crawling over the deal.Precedent, however, shows that it is often economic concerns that cause any teeth-gnashing about foreign buyers. California-based Viasat was able to proceed with its $7.3bn takeover of UK satellite company Inmarsat alongside promises to keep on investing in the country. Cobham, controlled by Advent of the US, has guaranteed jobs as part of its £2.6bn offer for Ultra Electronics, now under scrutiny. The UK’s sweeping new powers may serve to extract similar promises, more often than blocking deals. More

Taiwan is setting up a $200m fund to invest in Lithuania and is aiming to take as many of the Baltic country’s goods banned by China as possible, as Taipei tries to reward Vilnius for its diplomatic support.Eric Huang, head of Taiwan’s representative office in Lithuania, said on Wednesday that it was hoping to make its first investment later this year with the money guaranteed by its national development fund. “It’s time for us to help with your difficulties,” Harry Ho-jen Tseng, Taiwan’s deputy foreign minister, told Lithuania.Vilnius last year agreed to let Taiwan open a representative office — a de facto embassy — in its own name, rather than under the name of its capital Taipei as many other European countries have done. Beijing, which claims Taiwan as part of China and tries to force other governments to treat it as such, has since unleashed a wave of diplomatic and economic punishments against Vilnius.Beijing withdrew its ambassador from Vilnius, banned Lithuanian imports and put pressure on foreign manufacturers to stop using Lithuanian components. The Baltic country was also forced to evacuate its remaining diplomats from China over fears for their safety.Whether Lithuania stands firm and whether it receives the full backing from other EU member states have become test cases for the effectiveness of China’s economic and political coercion tactics. Lithuania’s president Gitanas Nauseda recently reversed his earlier stance and said it had been a “mistake” to let the representative office be in Taiwan’s name, not Taipei’s. He also complained the decision had not been co-ordinated with him by the government, led by Prime Minister Ingrida Simonyte, who he defeated in 2019’s presidential elections.

The spat has led officials to fret that Lithuania’s message risked being diluted as the president represents the country at EU summits and often takes the lead on foreign policy issues.Simonyte said on Wednesday that she was “disappointed” with Nauseda’s comments and that he had endorsed the move for months since its announcement.Radvile Morkunaite-Mikuleniene, vice-chair of Lithuania’s parliament and deputy head of the governing Homeland Union party, told the Financial Times on Wednesday that the government was sticking to its guns and would not change the name of the representative office.“It is important for the international community to understand what is the position on foreign affairs. We are not withdrawing from our position,” she said.Lithuania has been shocked by the strength of China’s reaction. Not only has it stopped Lithuanian imports, but it has also put pressure on other European manufacturers such as German car parts maker Continental not to use Lithuanian components in its Chinese operations.Building economic ties has been a big focus for Taipei since it started expanding relations with Lithuania last year. Kung Ming-hsin, minister of the National Development Council which oversees the national development fund, led a delegation to Lithuania in late October and said he expected the country to become a focal point of Taipei’s pivot to central and eastern Europe.But in the face of China’s punitive measures, Taipei feels compelled to make up for some of the economic damage Vilnius is suffering. “Originally, this had nothing to do with a competition between us and Beijing, and it should not be a zero-sum game,” said a senior Taiwanese government official. A senior Taiwanese foreign policy official said: “We want to ensure that China’s economic coercion against Lithuania will be offset by our effort in trade and investment.”State-owned Taiwan Tobacco and Liquor Corporation on Monday snapped up a shipment of 24,000 bottles of Lithuanian rum that had been rejected by Chinese customs. Huang said on Wednesday that Taiwan had taken 120 shipping containers of Lithuanian exports blocked by China.The Taiwanese representative said he expected the priority investment areas for the new fund to include semiconductors, lasers and biotechnology. Taiwan has previously also identified financial technology as a possible area of co-operation, and Vilnius has more regulated fintech companies than any other EU country. More

A probe by India’s Directorate of Revenue Intelligence showed that Xiaomi India’s payment of royalty and licence fees to Qualcomm (NASDAQ:QCOM) USA and Beijing Xiaomi Mobile Software Co Ltd, China was not added in the transaction value of imports by the company and its contract manufacturers, the government said in a statement.”By not adding “royalty and licence fee” into the transaction value, Xiaomi India was evading customs duty being the beneficial owner of such imported mobile phones, the parts and components thereof,” the statement said.Three show cause notices have been issued to Xiaomi for the tax demand and recovery of 6.53 billion rupees for the period April 2017 to June 2020, it added.”At Xiaomi India, we give utmost importance to ensuring we comply with all Indian laws. We are currently reviewing the notice in detail. As a responsible company, we will support the authorities with all necessary documentation,” a spokesperson for the company said. ($1 = 74.3710 Indian rupees) More