Economy

LONDON (Reuters) – Leading UK and U.S. pension investors managing more than $1 trillion have launched a campaign to stop companies using dual-class share structures that concentrate voting power in the hands of certain shareholders at the expense of others.Launched by British railways pensions scheme Railpen and the non-profit Council of Institutional Investors (CII), others backing the Investor Coalition for Equal Votes (ICEV) include the New York City Comptroller’s Office and the Washington State Investment Board. Companies with dual-class structures have two or more types of shares with different voting rights – usually one with greater voting rights for founders or early investors, and another for other shareholders with less voting power.The imbalance means most investors have less control over how the company is run and can make it harder to collectively push back on issues such as executive pay and corporate strategy.Big fund managers have fought with little success against the arrangements for years, arguing such structures – often favoured by high-growth technology firms – erode shareholder rights and undermine long-term corporate performance. Despite this, policymakers in countries including the United States and Britain have warmed to dual-class structures as a way to attract new listings to their markets.The group said it will lobby market participants and policymakers to make clear that proportionate shareholder voting is essential to effective stewardship and long-term corporate performance.”Voting is an important part of the stewardship toolkit, but dual-class share structures without automatic time-based sunset clauses mean long-term investors are trying to influence with one hand tied behind our backs,” Caroline Escott, ICEV Chair and senior investment manager at Railpen, said in the release. “The issue is fundamental to the ability to engage with, and hold companies to account on, material risks and opportunities, and we hope that the work of ICEV will mark a turning point in the dual-class share structure debate,” Escott added.Amy Borrus, executive director of CII, said the campaign would complement efforts by the group to push for legislative change in the United States, where the group’s draft legislation aims to curtail the use of dual share classes. Under the draft legislation, national stock exchanges would be required to bar listings of new dual-class companies unless they have seven-year sunset provisions, or both classes of voters approve the structure within seven years of listing. More

LONDON (Reuters) – Britain’s economy faces stagnation next year and could easily fall into recession, the Confederation of British Industry (CBI) warned on Monday after it slashed its outlook for growth due to surging inflation.The CBI is the third major body to cut its growth forecasts for Britain in the past week, following a downgrade from the British Chambers of Commerce and a warning from the OECD that Britain had the weakest outlook of any major economy bar Russia.”Let me be clear – we’re expecting the economy to be pretty much stagnant. It won’t take much to tip us into a recession. And even if we don’t, it will feel like one for too many people,” CBI director-general Tony Danker said.Households’ real disposable incomes are on track to fall 2.2% this year, the largest decline since records began in the 1950s, the CBI predicted, despite 37 billion pounds ($46 billion) of cost-of-living support measures from Britain’s government.The CBI predicts Britain’s economy will grow 1.0% next year, down from a previous forecast of 3.0%. The growth of 3.7% forecast by the CBI for 2022 largely reflects a favourable comparison with depressed output in 2021, when businesses faced COVID-19 restrictions for much of the year.The CBI urged the government to commit to replacing a generous tax break on business investment that is due to expire, and to avoid unilateral action in a dispute with the European Union over post-Brexit trade rules for Northern Ireland.”This is a tough set of statistics to stomach. War in Ukraine, a global pandemic, continued strains on supply chains – all preceded by Brexit – has proven to be a toxic recipe for UK growth,” CBI chief economist Rain Newton-Smith said.($1 = 0.8118 pounds) More

SEOUL (Reuters) – A strike by South Korean truckers entered its seventh day on Monday, posing a test for the country’s new president and deepening stress on Asia’s fourth-largest economy, already facing stagflationary pressures.The strike by unionised truckers seeking higher pay has crippled ports like Busan in the export-dynamo economy, snarling the shipment of components and finished products for the automobile, steel, cement and liquor industries.Steelmaker POSCO (NYSE:PKX) plans to halt some plants from Monday due to a lack of space to store unshipped products. Automaker Hyundai Motor has cut production at some lines.Prolonged labour strife could test President Yoon Suk-yeol, a political novice who took office five weeks ago, potentially distracting from his conservative agenda and raising the risk of long-term antagonism with powerful trade unions. Hundreds of strikers were expected on Monday to join the 100 or so who had gathered on Sunday at the main gate of an enormous Hyundai Motor factory complex in the southern city of Ulsan near Busan, a union official said.Dozens have been detained by police, local media said, but their protest has so far been mostly peaceful. The union and Yoon’s government have met four times but failed to reach an agreement.Protesting against soaring fuel prices and demanding minimum pay guarantees, about a quarter of the Cargo Truckers Solidarity union’s 22,000 members were estimated to be participating in industrial action on Sunday, the land ministry said.The ministry has urged the truckers to return to work but said it would seek to reflect their demands in the legislative process and keep trying to end the strife through dialogue with the union.The truckers demand an extension of subsidies, set to expire this year, that guarantee minimum wages as fuel prices rise. The government says it is up to parliament whether to change the legislation.As the global economy struggles with supply bottlenecks, any prolonged slowdown in the production and shipments of chips, petrochemicals and autos could add to concerns of rising inflation and slowing growth.South Korea’s inflation is set to hit a 24-year high 4.8% this year, the Organisation for Economic Cooperation and Development said last week, while cutting its growth forecast to 2.7% from a December projection of 3.0% More

When Britain left the EU, Prime Minister Boris Johnson agreed a deal that effectively kept Northern Ireland in the EU single market and customs union to preserve the open border with Ireland specified in the Good Friday peace agreement.It imposes customs checks between the province and the rest of the United Kingdom, which pro-British communities in Northern Ireland say erodes their place within the UK.Johnson has said the protocol’s implementation has damaged trade within the United Kingdom and has threatened political stability in Northern Ireland.The legislation will be presented to parliament by British Foreign Secretary Liz Truss.Brussels believes any unilateral change could breach international law. It could respond by launching legal action and by imposing countermeasures, such as tariffs.Britain’s Northern Ireland Secretary Brandon Lewis insisted on Sunday that the legislation complied with the law.He declined to say how the protocol would be changed, but said the government would set out the legal basis for the bill.It is expected to propose a “green channel” for goods moving from Britain to Northern Ireland, as well as scrapping rules that prevent the province from benefiting from tax assistance and ending the role of the European Court of Justice as sole arbiter, according to reports.The plan will be a test of Prime Minister Boris Johnson’s authority after he was almost removed from office last week when four in ten of his lawmakers opposed him in a confidence vote. However, it will be seen by the EU as an inflammatory move that violates an international treaty.European Commission vice-president Maros Sefcovic said in May that Brussels would respond with all measures at its disposal. U.S. House of Representatives Speaker Nancy Pelosi has said there will be no U.S.-UK trade deal if London scraps the protocol.Ireland’s Sinn Fein, the nationalist party that won a historic victory in an election in Northern Ireland last month, said Britain would “undoubtedly” break the law by imposing unilateral changes to the protocol.”(Britain) has sought a destructive path, and is now proposing to introduce legislation that will undoubtedly breach international law,” Sinn Fein president Mary Lou McDonald told Sky News. More

TOKYO/LOS ANGELES (Reuters) – The Japanese creator of one of the longest-running online role-playing titles, whose most popular video game has attracted nearly a billion registered users, is gearing up for global expansion and setting its sights on the West. Nexon Co Ltd – little known outside Asia – is one of the world’s 10 largest video game companies by market capitalization; its $22 billion valuation is larger than Take-Two (NASDAQ:TTWO) Interactive, the company behind “Grand Theft Auto,” or Roblox.Last year it completed the acquisition of Stockholm-based Embark Studios, whose founder led development of the hit “Battlefield” franchise. In 2022 it invested $400 million for a minority stake in AGBO, the independent studio founded by Anthony and Joe Russo, the creative duo who directed Marvel’s “Avengers: Endgame” and “Avengers: Infinity War.””The idea overall with that is to combine what we’re really good at – making a virtual world last and grow forever – with what they’re really good at,” Nexon’s chief executive, Owen Mahoney, told Reuters. Nexon is working with AGBO to explore ways to extend its game franchises to film or television and develop virtual worlds or video games inspired by AGBO’s movies. “Our vision, which aligns well with Nexon’s, recognizes that audiences have come to expect real immersion in the IP they care most about,” said AGBO CEO Jason Bergsman.The two companies are in early talks on adapting Nexon franchises such as “MapleStory” and “Dungeon and Fighter,” which have rich lore and passionate fan bases. These talks are still in preliminary stages, cautions one source with direct knowledge of the situation.They are also discussing a game or virtual world inspired by “Battle of the Planets,” an iconic Japanese anime show from the 1970s that AGBO is developing as a feature film.Mahoney hopes to leverage Nexon’s experience in operating “live games” – updating titles while they are running – to launch big budget titles with a Western sensibility, such as the free-to-play shooter game “ARC Raiders,” from Embark Studios. Embark’s founder, Patrick Soderlund, once led Dice, the company that developed the “Battlefield” franchise and was acquired by Electronic Arts (NASDAQ:EA) when Mahoney was head of mergers and acquisitions there. VIRTUAL WORLD PIONEER Nexon has assiduously avoided the frenzy around the “metaverse” that has gripped tech giants Microsoft (NASDAQ:MSFT) and Facebook (NASDAQ:META). “Nobody can define it and most importantly they can’t define why it’s so darn great,” Mahoney said. “It’s a big nothingburger.”Nexon was an early adopter of features that have become common in the industry including in-game virtual currencies and the free-to-play business model.These features were rolled out in games such as Nexon’s “KartRider” racing game, which has been running for almost two decades – one of what the company calls its “forever franchises.” Its most popular franchise, the arcade-style fighting game “Dungeon and Fighter,” has earned more than $20 billion since 2005 – more than the combined box office proceeds of the “Star Wars” or “Harry Potter” film franchises. One big new challenge as part of Nexon’s expansion will to generate returns from higher-budget Western games. “Nexon does not have much of a track record in operating photorealistic games for hardcore gamers,” Citigroup (NYSE:C) analysts wrote in March, initiating coverage of the stock at “neutral”.Nexon wants to control the cost of developing titles in an era when budgets top $100 million. For instance, it uses machine learning technology to animate some character actions instead of relying on workers. “I don’t really care what happens in the first one or two quarters,” Mahoney said. “What I care about is what happens from years two to 20.” More

Chinese banks extended 1.89 trillion yuan ($282.62 billion) in new yuan loans in May, nearly tripling April’s tally and handily beating expectations, data released by the People’s Bank of China on Friday.Analysts polled by Reuters had predicted new yuan loans would surge to 1.3 trillion yuan in May from 645.4 billion yuan in April and against 1.5 trillion yuan a year earlier.”Credit growth was stronger than expected last month and is likely to accelerate further following the clear signal in late May that policymakers want banks to step up lending,” Capital Economics said in a note. “More policy easing is likely. But private sector credit demand is likely to remain subdued while, on current budgetary plans, local government borrowing is about to slow. A dramatic increase in credit growth still seems unlikely.”New household loans, including mortgages, rose to 288.8 billion yuan in May, after contracting 217 billion yuan in April, while new corporate loans soared to 1.53 trillion yuan in May from 578.4 billion yuan in April.However, 38% of the new monthly loans were in the form of short-term bill financing, which was down from 80% in April but still higher than 10% in the first quarter, suggesting real credit demand remains weak. Chinese policymakers have recently stepped up support for the slowing economy as Shanghai and other cities ease tough COVID-19 lockdowns following a drop in new infections.The cabinet announced a package of policy steps last month, including broader tax credit rebates and postponing social security payments and loan repayments to support businesses.Local media also reported last month that financial authorities had told commercial banks to speed up lending.In May, the central bank cut its benchmark reference rate for mortgages by an unexpectedly wide margin, its second reduction this year, in a bid to turn around the contracting housing market, a key economic growth driver.But analysts say both banks and potential borrowers remain cautious in case there are further virus disruptions. After discovering a handful of new cases, China’s commercial hub of Shanghai will lock down millions of people for mass COVID-19 testing this weekend – just 10 days after lifting a gruelling two-month lockdown – unsettling residents and raising concerns about a fresh blow to businesses. MORE POLICY EASING UNDERWAYPremier Li Keqiang has vowed to achieve positive economic growth in the second quarter, although many private sector economists have pencilled in a contraction.China will increase the credit quota for policy banks by 800 billion yuan ($120 billion) for them to support infrastructure construction, state television CCTV quoted a cabinet meeting as saying. Broad M2 money supply grew 11.1% from a year earlier, central bank data showed, above estimates of 10.4% forecast in the Reuters poll. M2 grew 10.5% in April from a year ago.Outstanding yuan loans grew 11.0% in May from a year earlier compared with 10.9% growth in April. Analysts had expected 10.7% growth.Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 10.5% in May from 10.2% in April. Chinese provinces are racing to issue hundreds of billions of dollars worth of special bonds in June, frontloading investment to revive the slowing economy.Analysts and policy insiders expect China to issue special treasury bonds later this year, to maintain a steady stream of funding.TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.In May, TSF jumped to 2.79 trillion yuan from 910.2 billion yuan in April. Analysts polled by Reuters had expected May TSF of 2.02 trillion yuan. More

The US economy will tip into a recession next year, according to nearly 70 per cent of leading academic economists polled by the Financial Times. The latest survey, conducted in partnership with the Initiative on Global Markets at the University of Chicago’s Booth School of Business, suggests mounting headwinds for the world’s largest economy after one of the most rapid rebounds in history, as the Federal Reserve increases efforts to contain the highest inflation in about 40 years. Almost 40 per cent of the 49 respondents project that the National Bureau of Economic Research — the arbiter of when recessions begin and end — will declare one in the first or second quarter of 2023. A third believe that call will be delayed until the second half of next year.The survey results, which were collected between June 6 and June 9, run counter to the Fed’s stance that it can damp demand without causing substantial economic pain. The central bank predicts that, as it raises interest rates, employers in the red-hot US labour market will opt to pare back historically high job openings as opposed to laying off staff, in turn cooling wage growth.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

The Fed has already embarked on what will be one of the fastest tightening cycles in decades. Since March it has raised its benchmark policy rate by 0.75 percentage points from near-zero levels.The Federal Open Market Committee gathers once again on Tuesday for a two-day policy meeting, at which officials are expected to implement the first back-to-back half-point rate rise since 1994 and signal the continuation of that pace until at least September. Share your feedback on this newsletter by emailing [email protected]. Thanks for reading FirstFT Asia. Here’s the rest of the day’s news — AmandaFive more stories in the news1. Senators agree on modest US gun reforms in wake of shootings A bipartisan group of US senators reached a tentative deal on gun-control measures after a string of a deadly mass shootings. The agreement includes funding for states to enact “red flag” laws and tighten background checks. The agreement falls short of the more stringent measures supported by the Biden administration, including the reinstatement of an assault weapons ban.

Thousands of gun-control advocates marched in Washington this weekend in support of stronger gun-control laws © Saul Loeb/AFP/Getty Images

2. Russians get first taste of rebranded McDonald’s Vkusno & Tochka, the new name for the fast-food chain, opened its doors on Sunday under local ownership. McDonald’s sold its Russian business last month after declaring operations were “no longer tenable” due to the country’s war with Ukraine. The rebranded business expects to expand to 1,000 restaurants within five to six years.3. US companies lose billions in earnings as dollar reaches 20-year high The rise of the dollar to its highest level since 2002 has led to an estimated $40bn in losses for US companies this year. The dollar’s strength is being driven by higher interest rates and the country’s faster economic recovery from the pandemic. 4. Tory MPs attack Johnson over plan to rip up Northern Ireland Brexit deal Boris Johnson faces fierce opposition as he prepares to release legislation that will revise his Brexit deal with the EU covering trade in Northern Ireland. An internal note circulating among Tory MPs opposing the bill and seen by the Financial Times accused the legislation of breaking international law and damaging “everything the UK and Conservatives stand for”. 5. Leftwing alliance makes strong first-round showing in French election Jean-Luc Mélenchon’s leftwing alliance made a strong showing in the first round of France’s legislative elections yesterday. While it is unlikely Mélenchon’s group will win the majority in the final round, yesterday’s results mark a dramatic comeback for the French left and give them leverage to voice opposition against Macron’s plans for economic reform. The day aheadUK GDP figures The UK will release its April gross domestic product data today plus figures on trade and construction output.India’s Consumer Price Index India will publish its May Consumer Price Index today. Last week, the Reserve Bank of India raised interest rates and said it would remove Covid-19 era stimulus measures to help bring down inflation. What else we’re reading Xi Jinping is reshaping China’s capital markets Beijing’s IPO pipeline is in flux as Xi Jinping aligns the stock market with party objectives. More IPOs now come from industries central to China’s competition with the West (think: biotechnology, renewable energy, and artificial intelligence). Analysts warn this growing state influence could come at a hefty cost if Western governments decide to cut off investment flows.US oil producers ignore Biden’s call to drill Petrol prices in the US are reaching record highs, helping fuel the country’s rampant inflation and spelling trouble for Democrats in the upcoming midterm elections. President Joe Biden has pleaded with oil producers to increase production, but investor demand, supply chain woes, and soaring input costs are making operators reluctant to drill.China fires back at US claims of aggression China’s defence minister Wei Fenghe pushed back against US accusations of aggression at a security conference on Sunday. Wei also said Beijing’s annexation of Taiwan “absolutely must be achieved” and that it was “natural” that China was developing new weapons. His remarks are the closest Beijing has come to confirming special hypersonic missile tests. WTO takes aim at export controls in effort to stem rising food prices At the start of the World Trade Organization’s first ministerial meeting in five years, director-general Ngozi Okonjo-Iweala urged governments to end restrictions on food exports to alleviate the hunger crisis caused by Russia’s invasion of Ukraine. At least 30 countries have imposed such restrictions, according to the IMF.Food vs fuel Millions of people are at risk of “hunger and destitution” as a result of food shortages caused by Russia’s invasion of Ukraine. Some companies and policymakers are eyeing limits on biofuel to boost food supply, but biofuel producers say they are not to blame. Attack on female diners in China sparks outrage over gender violence Chinese authorities raced to silence the backlash after a brutal attack on three female diners sparked uproar over the lack of protections for women. The country has had to grapple with numerous incidents of sexual violence and gender inequality in the past year, including the disappearance of Olympic tennis star Peng Shuai after she spoke up about sexual misconduct.Visual ArtArtist Rashid Johnson evokes feelings of longing and homesickness in his exhibition in Menorca and talks about the potential of new media for artists of colour. “A lot of artists of colour at that time were interested in these new media, partly because it didn’t have all this canonical history that was so framed by western constructs — it was like, maybe we can affect the discourse here,” Johnson said.

Rashid Johnson with his seascape “Angola’ (2022) © Courtesy the artist/Hauser & Wirth. Photo: Daniel Schäfer More

OTTAWA (Reuters) -Canada will announce a multi-million dollar investment on Monday to make the Jansen potash mine run by the globe’s largest listed miner, BHP Group (NYSE:BHP), “the cleanest and most sustainable in the world,” a government source said on Sunday.Industry Minister François-Philippe Champagne and Agriculture Minister Marie-Claude Bibeau are scheduled to make an announcement on “moving toward the net-zero emission economy” in Saskatoon, Saskatchewan, on Monday at 10:00 a.m. central time (1500 GMT).The source declined to say the exact amount of the federal investment in BHP’s Jansen mine, which is located about 150 km (93 miles) east of Saskatoon.The investment will allow BHP to use electric vehicles and equipment to operate the mine, said the source, who is familiar with the investment but was not authorized to speak on the record about it.Prime Minister Justin Trudeau’s government has been investing heavily in clean energy projects, including plants for producing electric vehicle batteries and battery materials, after it set a goal to reach net zero carbon emissions by 2050.Anglo-Australian miner BHP said last month it may accelerate its Jansen potash project in Canada by a year as Russia’s invasion of Ukraine has tightened global supplies.Prices of potash, a key input used in nitrogen fertilizers, have soared since Western sanctions were imposed against Russia.Russia and Belarus, which also faces sanctions, are the world’s second- and third-largest producers of the crop nutrient, while Canada is the No. 1 producer.”We’re looking to do anything we can do to support a commodity in short supply because of the war,” the government source said.When contacted, BHP declined to comment. More