Economy

(Reuters) – The Group of 20 (G20) big economies is exploring whether the group could collectively regulate cryptocurrencies, Finance Minister Nirmala Sitharaman said on Saturday.Given the sophisticated technologies involved with these virtual assets, countries must discuss whether a given regulation is needed, said Sitharaman, whose country is this year’s G20 president.Prime Minister Narendra Modi’s government has for several years debated drafting a law to regulate or even ban cryptocurrencies but has not made a final decision.”We are talking to all nations, that if it requires regulation, then one country alone cannot do anything,” Sitharaman told reporters after meeting the central bank’s directors in New Delhi.”We are talking with all nations, if we can make some standard operating procedure which is followed by everyone to make a regulatory framework, and if it can be effective.India will host G20 finance ministers and central bank governors this month.Last year, Modi has said a collective global effort is needed to deal with problems posed by cryptocurrencies. The Reserve Bank of India has said that cryptocurrencies should be banned as they are akin to a Ponzi scheme. More

Locked in at historically low interest rates. Platforms that make managing rentals a breeze. Homeowners have little incentive to put a house on the market.I’m part of the problem.Selma Hepp was talking about the housing market: how house prices remain wildly expensive compared to where they were a few years ago, how the inventory of homes for sale is still low. As the chief economist for CoreLogic, a real estate data and consulting firm, Ms. Hepp’s day job is to predict the course of rent and home sales with the math of charts and data. But instead of hard numbers she was describing her weekend home search.Ms. Hepp lives in Los Angeles, where she and her partner rent an apartment in the Mid City neighborhood. They are looking to buy, and despite making a barrage of offers they keep getting outbid on homes in the area.Their problem has an obvious remedy: Ms. Hepp owns a house in Burbank that she rents to other tenants. She could sell if she wanted, and use the cash to spruce up the next bid. Asked why she doesn’t do this, Ms. Hepp answered: “Why would I?”The rental income more than covers the mortgage, she explained, which carries a 2.8 percent interest rate that despite the recent dip is still less than half current rates. Besides, she added, the homes she’s seen on the market are so unremarkable that it doesn’t seem worth walking away from a stream of income.“I’m part of the problem — and the solution,” she said. “I don’t want to give up my inventory until I see other inventory available.”After three years of rapid price increases during the pandemic, the housing market is experiencing what economists are calling “a correction.” Monthly sales have fallen. Construction activity has slowed, and home builders are offering steep discounts and other concessions to attract buyers.As mortgage rates edge down slightly from the 20-year high of late last year, homebuilders and real estate agents both report a thaw in sales and buyer interest. But economists like Ms. Hepp are still predicting a much slower year.Inflation F.A.Q.Card 1 of 5What is inflation? More

From July 1, banks must classify assets beyond the currently required loans – including bond investment, interbank lending and off-balance-sheet assets – into five categories ranging from “normal” to “loss”, according to rules published by the central bank and the banking and insurance regulator.The rules will help “commercial banks evaluate credit risks more accurately and reflect the true quality of their financial assets,” said the People’s Bank of China and the China Banking and Insurance Regulatory Commission (CBIRC).Current rules are inadequate because “in recent years, the asset structure of China’s commercial banks has changed quite a lot, and risk classification faces many new situations and problems,” the CBIRC said. The new rules, it said, will help prevent credit risks more effectively, the regulator said.The rules will apply to banks’ new business. They have until the end of 2025 to reclassify existing financial assets.The authorities had already urged banks to step up lending and bond purchases to support recovery in the world’s second-biggest economy, after a surge in COVID-19 infections and problems in the vast property sector. New bank loans jumped more than expected in January to a record 4.9 trillion yuan ($720 billion).Saturday’s rules urge banks to scrutinise the underlying assets when they classify risks for asset management or securitisation products.Lenders will also be required to strictly abide by the rules when assessing credit risks in debt restructurings. An increasing number of property developers face restructuring as they struggle to meet repayment obligations.Commercial banks should perform risk classification of all financial assets at least once a quarter, and they must “strengthen the monitoring, analysis and early warning” of the risks, and take preventive measures in a timely manner, the rules say. More

(Reuters) – Risks over El Salvador’s embrace of bitcoin “have not materialized,” but use of the cryptocurrency still requires transparency and attention, the International Monetary Fund (IMF) said Friday in a statement after a visit to the Central American country. “Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, the authorities should reconsider their plans to expand government exposures to bitcoin,” the IMF said in a statement.The annual visit by IMF staff followed a $600 million bond payment by El Salvador last month amid investor concerns over its financing sources and fiscal policy. The IMF’s so-called “article IV” visit has been sharply critical in the past. El Salvador’s move to make bitcoin legal tender in September 2021 effectively closed the doors to IMF financing.While the lender noted that risks “have not materialized due to the limited bitcoin use so far,” it said the cryptocurrency’s “use could grow given its legal tender status and new legislative reforms to encourage the use of crypto assets, including tokenized bonds.”El Salvador’s Congress last month passed a law regulating the issuance of digital assets by both the state and private entities.President Nayib Bukele announced on Twitter a series of purchases of some 2,380 bitcoin before mid November, when he said the Treasury would buy a bitcoin every day.If those purchases were made, the government holds nearly 2,470 coins acquired for about $106.4 million. The current value of that investment is $52.2 million, for a paper loss over 50%.The numbers are Reuters estimates, as the government does not officially disclose purchases, holdings or where the coins are kept.”Greater transparency over the government’s transactions in bitcoin and the financial situation of the state-owned bitcoin-wallet (Chivo) remains essential,” the IMF said.The IMF highlighted the “full recovery” of El Salvador’s economy to pre-pandemic levels, “driven by the effective government response to the health crisis.” Real GDP is projected to grow by 2.4 percent in 2023, the IMF said, above the historical average.However, the lender also expressed concern over a rising current account deficit and the possible spillover effects of a recession in the United States. More

The action to cut off five Chinese companies and a research institute from American parts and technologies is part of the Biden administration’s response to the balloon it shot down last week.WASHINGTON — The Biden administration clamped down on Friday on sales of some U.S. technology to several Chinese aviation and technology companies, as part of its response to a Chinese spy balloon that traversed U.S. airspace last week.The Commerce Department added five Chinese companies and one research institute to its so-called entity list, which will prevent companies from selling them American parts and technologies without a special license. Officials said the six entities had supported Chinese military programs related to airships and balloons used for intelligence and reconnaissance.Alan Estevez, the under secretary of commerce for industry and security, said the action was a direct response to the Chinese government’s use of high-altitude balloons for surveillance.“Today’s action makes clear that entities that seek to harm U.S. national security and sovereignty will be cut off from accessing U.S. technologies,” he said.The restrictions mark the Biden administration’s first economic retaliation over the balloon, which the United States shot down last Saturday off the coast of South Carolina after it had floated across much of the country. The administration has mostly registered its anger through diplomatic channels, including the cancellation of a trip by the secretary of state to Beijing.Republicans have condemned the administration for not responding more forcefully, including by not shooting the balloon down before it moved out to sea. The White House said it was following the advice of the Pentagon, which feared the debris could hurt people on the ground.The Chinese government has tried to downplay the incident, arguing that the balloon was a civilian device for monitoring weather.The entities that the United States targeted Friday were Beijing Nanjiang Aerospace Technology Company, Dongguan Lingkong Remote Sensing Technology Company, Eagles Men Aviation Science and Technology Group Company, Guangzhou Tian-Hai-Xiang Aviation Technology Company, Shanxi Eagles Men Aviation Science and Technology Group Company and China Electronics Technology Group Corporation 48th Research Institute.The Commerce Department did not specify whether the companies and the institute had played a direct role in developing or operating the balloon that flew across the United States. But the Biden administration said earlier this week that it would consider taking action against any entities that had aided the balloon’s flight.The government has not yet publicized information about parties involved in the balloon’s manufacture or voyage. But it has said the machine was part of a global surveillance fleet directed by China’s military and was capable of collecting electronic communications.The United States has steadily ramped up its use of the entity list over the last few years, using it to cut off the flow of advanced technologies to rivals like China and Russia. In October, it added a crop of Chinese companies involved in advanced semiconductors to the list, arguing that such technologies were aiding the Chinese military.On Friday, the U.S. government shot down another unidentified object near Alaska. It was not immediately clear which country or company was responsible for it. More

South Korea and Taiwan will still be key semiconductor hubs in years to come, even as pressure to diversify supply chains leads to new competition from places such as the US and Germany, according to the chief executive of US chipmaking equipment supplier MKS Instruments.John TC Lee, president and chief executive of MKS, added that the current slump in the chip market was just a cyclical downturn, and that the industry was still on track to grow at a “healthy rate” in the medium to long term.“We’ve been through [this] many times,” said Lee in an interview with Nikkei Asia. “Maybe the chip industry capital spending would go down to $70bn in [2023] from 2022. But you know, I’ve been in this industry a long time. Ten years ago that number was $35bn, and that was a good year. Now we say $70bn is a bad year.”MKS is a provider of electronics subsystems, including radio frequency (RF) power sources and lasers used in chipmaking and other fields, and has top global semiconductor equipment makers as customers, including Applied Materials and Lam Research.Chipmakers rely on MKS’s RF power sources to etch extremely fine transistors, especially for cutting-edge processors and 3D NAND flash memory chips. According to the company’s estimate, 85 per cent of the world’s chipmaking equipment uses its technologies.On the question of supply chain shifts, Lee expects South Korea and Taiwan will still be important centres of chipmaking in the future despite major economies pushing to onshore vital areas of production.“As long as Samsung, SK Hynix and TSMC remain chip leaders, I think Korea and Taiwan will continue to be important countries for semiconductor manufacturing,” Lee told Nikkei Asia. He said for most advanced chip plants, the core technologies would probably develop close to the leading players’ headquarters and later be deployed to other places if needed.But the chief executive said more such chip “hubs” would probably emerge, especially in the US and European countries such as Germany. “It’s maybe not as efficient in the beginning but I think once a hub is established, it gets pretty efficient. And once you have multiple fabs [fabrication facilities] in one area, the infrastructure is now supporting multiple fabs, not just one.”The overarching trend of devices needing ever more chips would also help more hubs to flourish, he said. “The number of chips will definitely continue to grow in years to come,” the CEO added.But the semiconductor industry is no longer a place for small companies, he cautioned, as the bigger players will only get bigger. “In the 1990s, companies that had $20mn or $30mn in revenue were fine,” he said. “Now you can’t do that because the problems that we have to solve now are so difficult. That requires a lot of engineering, and a lot of sustained engineering over multiple years.”MKS has made several acquisitions over the past few years to expand its product portfolio and scale. In 2021 it acquired Photon Control, a supplier of optical sensors for temperature control used in chipmaking. The following year it bought the speciality chemicals company Atotech.The acquisitions not only help MKS expand the scope of its business but also its manufacturing footprint, Lee said. The company has production sites in the US, China, Mexico, Singapore, Malaysia, Thailand and other countries around the world.Lee added that the unprecedented supply chain constraints of the past two years made people realise how important chips and their ecosystems were.“The supply chain constraints woke up everybody. There’s a lot of ecosystems and support that go all the way back to your mining of minerals . . . When you start investigating where’s the constraint, you keep going down and down [the supply chain] and you realise, ‘Wow, the entire world economy has something to do with making a chip’,” Lee said.A version of this article was first published by Nikkei Asia on January 30 2023. ©2023 Nikkei Inc. All rights reserved.Related stories‘China, non-China’ supply chains inevitable: chipmaker Diodes CEOChina’s chip self-sufficiency drive in need of factory investmentJapan chip venture Rapidus aims for 2-nm prototype line by 2025Intel CEO committed to long-term investment despite chip glut More

NEW YORK (Reuters) – Martin Shkreli on Friday urged a U.S. judge not to hold him in civil contempt for failing to provide federal and state regulators with information to determine whether he is violating a lifetime ban from working in the pharmaceutical industry.In a filing in Manhattan federal court, Shkreli said he has complied with the February 2022 ban “as extensively as possible and in good faith,” and has provided the materials sought by the Federal Trade Commission (FTC) and seven states.The ban also included a $64.6 million civil fine, which Shkreli said he is “so far unable” to pay. He said he intended to comply fully with the ban and provide requested information.Spokespeople for the FTC did not immediately respond to requests for comment.The FTC had accused Shkreli last month of failing to provide information about Druglike Inc, a company it said he formed last July.In Friday’s filing, Shkreli said he never had an ownership stake or executive role at Druglike, which he believed has been dissolved, and that he hoped to raise money for its successor DL Software, which he co-founded.He also said Druglike and DL Software were “software companies creating professional software for chemists and physicists,” and thus outside his pharmaceutical industry ban.Shkreli became known as “pharma bro” after raising the price of the anti-parisitic drug Daraprim to $750 per tablet from $17.50 in 2015, and appearing unapologetic when criticized.The lifetime ban related to Shkreli’s efforts to keep generic versions of Daraprim off the market. U.S. District Judge Denise Cote, who imposed the ban and $64.6 million penalty, will decide the FTC contempt motion. The states joining the motion are New York, California, Illinois, North Carolina, Ohio, Pennsylvania and Virginia.Shkreli was sentenced to seven years in prison after being convicted in 2017 of defrauding investors in two hedge funds he ran, and scheming to defraud investors in the drugmaker Retrophin (NASDAQ:TVTX) Inc. He was released early from prison last May. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.Chinese inflation on Friday grabs the data spotlight in Asia at the end of a week in which hawkish Fed commentary has taken some froth of risk assets, as investors also ponder the market implications of deepening Sino-U.S. political tensions.Consumer price inflation in January is expected to have risen 0.7% on the month and at an annual rate of 2.2%, up from 0.0% and 1.8%, respectively, as the economy picks up following its COVID-19 pandemic paralysis. On its own, economic re-opening will likely accelerate growth and inflation this year. Economists at UBS expect growth of around 5% to be fueled by consumption growth of 7%, while analysts at Goldman Sachs (NYSE:GS) predict a “faster-than-expected reopening process” will drive 2023 real GDP growth of 5.5%.But immense structural challenges – such as the over-leveraged and debt-saddled property sector – are now being compounded by rising geopolitical risk thanks to the spy balloon crisis. A senior State Department official said on Thursday that the United States will explore taking action against entities connected to the Chinese military that supported the flight of the Chinese spy balloon into U.S. airspace last week. JP Morgan CEO Jamie Dimon told Reuters on Wednesday that he intends to visit China, and that dialogue and communication on all issues between the two superpowers is critical. “No talking will lead to a bad outcome.” But others may not see it that way. Deteriorating Sino-U.S. relations could encourage some investors and businesses to rethink their exposure to China, potentially affecting Chinese assets and rippling through to others, like European equities and U.S. Treasuries.Right now, Chinese stocks, the Hang Seng tech index and the MSCI Asia ex-Japan index are poised to close in the red for a second straight week. The S&P 500 and MSCI World index are on track for their biggest weekly decline in nearly two months. Despite individual economic and stock-specific developments – like the big undershoot in German inflation, or Disney’s share price surge on Thursday – the bigger picture is one of ‘higher for longer’ rates. See Australia, India and Sweden this week.And of course, the Fed. Wall Street is now pricing in a terminal rate this year comfortably above 5%, with barely 10 basis points of easing by year-end. Risk assets are repricing accordingly.Here are three key developments that could provide more direction to markets on Friday:- China CPI and PPI inflation (January)- Japan goods price inflation (January)- India industrial production (December) (By Jamie McGeever; Editing by Josie Kao) More