Aurelia Butler

Supply bottlenecks have propelled shares in European logistics groups such as Maersk to record heights. The phenomenon has sparked interest in Asian goods movers too. Singapore’s Mapletree and Japan’s Daiwa House just announced their own investment plans. These may pan out better long term, given the region’s stronger growth outlook.Western media has lately been littered with stories on “the threat to Christmas”. Ports such as Long Beach, California, and Felixstowe in the UK have been gridlocked with containers stuffed with consumer goods. But backlogs start in Asia.Products made in hubs including China and Vietnam have been held up by shortages of ships and trucks. Profits from transportation and warehousing are soaring. That is spurring investment in a once-unfashionable sector. Mapletree Logistics Trust, backed by Singaporean state investor Temasek, will spend more than $1bn acquiring assets across China, Japan and Vietnam. Japan’s largest developer Daiwa House Industry is launching an international goods transport business in south-east Asia. Its subsidiary Daiwa House Logistics Trust plans to raise about $343m on Friday. This would be Singapore’s largest listing this year.The read-across from Mapletree is discouraging. Its own shares have gone nowhere over the past year. Daiwa House’s stock has fallen, underperforming the 14 per cent gain in the benchmark Nikkei 225 index. It is hoping for a boost as growth in the region’s logistics and industrial sector remain strong.Even if global supply chain disruptions normalise earlier than expected, investors have a fallback. Recent investment in logistics and manufacturing supply chains has been heavily weighted towards south-east Asian countries such as Vietnam, Thailand and Malaysia. All of these have local ecommerce markets that are far less mature than the rest of the region. Rapid growth in local demand should be expected. Dividends are another hedge. Mapletree’s payout exceeds 4 per cent. The Daiwa House trust has a projected yield of 6.5 per cent at the IPO price. Those compare favourably with the likes of Maersk, albeit that the business lacks the same pricing power. More

The Turkish lira suffered its worst day since a currency crisis three years ago after President Recep Tayyip Erdogan praised a recent interest rate cut and declared that his country was fighting an “economic war of independence”.The currency, which is down 42 per cent against the dollar this year, plunged as much as 11 per cent on Tuesday — the biggest drop since August 2018 — and broke through the symbolic threshold of 12 to the dollar after Erdogan used a combative speech to expound his vision for the country’s economy. “It’s like a horror film,” said Enver Erkan, an analyst at the Istanbul-based Terra Investment, adding that it was hard to say how much further the currency would plunge given that policymakers appeared willing to simply let it fall. “This is the inevitable consequence of Erdogan’s war on rates,” said Uday Patnaik, head of emerging market debt at Legal & General Investment Management. “The thing that would stop the freefall is some sign of an independent central bank in Turkey. But there’s not much prospect of that. Erdogan’s the type of guy who likes to keep doubling down.”Erdogan, a life-long opponent of high interest rates, declared in an address on Monday night that he was “pleased” the central bank had cut rates for the third month in a row last week, despite warnings from economists that it would stoke inflation which is already running at an annual rate of 20 per cent and further destabilise the currency.Painting a picture of a dark global conspiracy aimed at subjugating Turkey, Erdogan said the country would not give in to economists, “opportunists” and “global financial acrobats” calling for interest rate rises.The government was prioritising growth, he said, in order to encourage investment, production, exports and employment. “That’s why we pay no attention to the clamour of the doomsayers,” he said. He compared the struggle to the one the nation fought against foreign occupiers in the aftermath of the first world war, which culminated in the foundation of the modern Turkish republic in 1923. “With the help of God and the support of our people we will emerge victorious from this war of economic independence,” he said.

Turkey’s central bank, which has faced growing interference from the president, last month sought to argue that rate cuts would help to stabilise the plummeting currency and soaring inflation by erasing the country’s chronic current account deficit. Economists warn that such logic is flawed, and say that allowing the lira to spiral risks creating hyperinflation in a country that is heavily reliant on imported energy and raw materials. The sharp slide in the currency also threatens further eroding living standards at a time when Erdogan is already facing mounting public anger at the rising cost of basic goods.One Turkish banker described the lira’s slide as “a policymaker-induced currency shock” that had been actively chosen by the government. “The choice is clear,” he said. “They are just implementing their strategy now. This is the new approach.”Semih Tumen, a former central bank deputy governor who was last month among several senior officials sacked by the president, spoke publicly for the first time since his firing as the currency tumbled to call on the government to “abandon this irrational experiment that has no chance of success”. He wrote on Twitter: “We need to immediately return to high-quality policies that will protect the value of the lira and the welfare of the Turkish people.” More

Business activity in the eurozone picked up this month despite surging inflation driven by supply chain disruptions, rising energy costs and higher wages, which together with a rebound in Covid-19 cases damped sentiment.The eurozone IHS Markit flash composite purchasing managers’ survey, a monthly poll that takes the pulse of business activity, showed costs and average selling prices for goods and services rising at the fastest pace since the survey began in 1998. Businesses reported that shortages were driving up prices for many goods and services, alongside higher shipping costs, rising energy prices and increases in staff costs. Selling price inflation also accelerated in both manufacturing and services to the fastest recorded by the survey as companies sought to pass higher costs on to customers, most notably in Germany.However, the headline eurozone IHS Markit flash composite purchasing managers’ index, a measure of the health of the economy, unexpectedly increased to a two-month high of 55.8 in November from 54.2 in the previous month.The figure, based on data collected between November 12 and 19, was stronger than the drop to 53.2 forecast by economists polled by Reuters, reflecting higher than expected readings for Germany and France. Official data published by Eurostat earlier this month showed that headline eurozone inflation rose to 4.1 per cent in October, the fastest pace since the creation of the currency union, and Tuesday’s data point to a further increase in November. European Central Bank board member Isabel Schnabel told Bloomberg that while it was “plausible” to assume inflation was going to drop below the ECB target of 2 per cent in the medium term, the risks to inflation were “skewed to the upside”.Jessica Hinds, economist at Capital Economics, said that the unexpected rise in the eurozone composite PMI in November “suggests that the region’s recovery has not lost further momentum”, but added that “with supply shortages still acute, Covid restrictions being tightened and price pressures intensifying, renewed falls in the index seem likely”.Chris Williamson, at IHS Markit, said the stronger expansion of business activity in November “was unlikely to prevent the eurozone from suffering slower growth in the fourth quarter.” He added that due to the combination of supply delays, soaring costs and renewed Covid worries, business optimism had sunk to the lowest since January, “adding to near-term downside risks for the eurozone economy”.The survey showed services outperformed manufacturing for a third straight month, recording the strongest growth in activity for three months. Growth also picked up in manufacturing, driven by robust demand for tech equipment, household goods, and food and drink. In contrast, growth was held back by a third successive monthly drop in production in the autos sector, which was severely affected by supply chain disruptions. Across the eurozone manufacturers, suppliers’ delivery times increased at one of the steepest rates on record, easing only modestly from October, due to supply shortages and transport problems.Businesses continued to hire workers at a fast pace but they nonetheless accumulated backlogs of work, particularly in German factories.

Growth accelerated in Germany and France, with the latter recording the sharpest rise in services activity for nearly four years, which offset a second successive monthly drop in factory output. Markit also reported that the rest of the region enjoyed faster growth of both manufacturing and services than seen in France and Germany. The ECB’s Schnabel said stricter Covid restrictions were “likely to have a moderating effect on activity in the short run,” in particular in the contact-intensive services sector. “But I do not think that this will derail the overall recovery.” More

Investing.com — President Joe Biden is set to announce a coordinated release of strategic petroleum reserves with other big importers, aimed at taking the froth off fuel prices. Zoom Video stock tumbles as its earnings fail to answer questions about its long-term future. Stocks are still under pressure after being dragged down by bonds on Monday in response to Jerome Powell’s reappointment at the Federal Reserve. The ECB sounds a more hawkish tone as new data show the economy holding up well, and it’s a bad week for Turkey, as well as turkeys. Here’s what you need to know in financial markets on Tuesday, 23rd November. 1. Biden to announce oil measures President Joe Biden is set to announce the release of oil from the U.S.’s Strategic Petroleum Reserve, aiming to stop the economic recovery being derailed by gasoline prices that have hit seven-year highs in recent weeks, according to various newswire reports. India, South Korea and Japan are also expected to make similar announcements this week, in a concerted effort by oil importers worldwide to relieve the pressure on their economies.China is unlikely to publicly join the initiative, S&P Global Platts service reported, due to concerns about keeping good relations with Russia and Saudi Arabia.Reuters and others cited unnamed OPEC sources playing down reports (which had supported prices on Monday) that the bloc could respond to the U.S.-led move by halting its phased increases in production.By 6:30 AM ET (1130 GMT), U.S. crude futures were down 1.1% at $75.90 a barrel, while Brent futures were down 0.7% at $79.16 a barrel.2. The Pandemic Trade is over (Zoom redux)Zoom Video (NASDAQ:ZM) stock shed 8% in premarket trading after publishing results and guidance that were, if anything, a little above market estimates.  The pandemic winner par excellence, Zoom stock is now trading back at its lowest since June 2020.  Analysts flagged a disappointing growth outlook both with large customers and with new services. The market move thus arguably reflects disappointment at its ability to grow beyond the basic video-conferencing apps that made its name a verb last year. That leaves it exposed to competition from the likes of Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), whose Meet and Teams apps come with a fuller suite of related services.More broadly, the news means that Zoom has joined a growing list of stocks that have either mostly or wholly unwound their pandemic-era gains. 3. Stocks set for steady opening after bond-driven sell-off; retail earnings in focus againU.S. stocks are set to edge lower at the opening later, having been dragged down by the abrupt move in bonds that followed Jerome Powell’s reappointment as Federal Reserve Chair on Monday. The benchmark 2-year Treasury bond yield continues to trade around 0.63%, its highest since April 2020.By 6:30 AM ET (1130 GMT), Dow Jones futures were essentially flat, while S&P 500 futures were down 0.1% and Nasdaq 100 futures, with their higher concentration of longer-duration, interest rate-sensitive tech stocks, were down 0.4%. Medtronic (NYSE:MDT) and Analog Devices (NASDAQ:ADI) head the list of companies reporting early, along with Best Buy (NYSE:BBY) and Dollar Tree (NASDAQ:DLTR). The retail theme continues after the close with updates from Gap and JW Nordstrom (NYSE:JWN). Hewlett Packard Enterprise and Autodesk (NASDAQ:ADSK) are also due to report.4. Europe appears to withstand rise in Covid-19 casesEurope’s economy withstood the recent rise in Covid-19 cases better than expected, according to the latest round of purchasing manager indices released by IHS Markit.The flash composite Eurozone PMI rose for the first time in four months in November, with activity ticking up in both manufacturing and services. In the UK, services weakened slightly, bringing down the composite PMI to a still-healthy 57.7.The price components of both indices continued to show inflation running at a high level. In an interview earlier, Isabel Schnabel became the first European Central Bank board member to admit that inflation risks are now skewed to the upside, while Dutch central bank chief Klaas Knot said that the fresh wave of lockdowns in Europe shouldn’t stop the ECB winding down its bond purchases.5. Bad week for turkeys, bad week for TurkeyTurkey lurched towards a full-blown currency crisis, the lira falling as much as 8.8% in response to President Recep Tayyip Erdogan’s latest attempts to defy economic orthodoxy.Erdogan had doubled down after a cabinet meeting late on Monday on his insistence that the central bank cut interest rates despite inflation running at over 20%.“”I reject policies that will contract our country, weaken it, condemn our people to unemployment, hunger and poverty,” Reuters quoted Erdogan as saying.The dollar has now risen 66% against the lira so far this year, making the lira by far the worst performing G20 currency in the world. More