Economy

By Anshuman DagaSINGAPORE (Reuters) -Australian venture capital firm Square Peg is raising $550 million to expand its commitment to back startups in its key markets of Australia and Israel, with a growing focus on Southeast Asia’s booming tech markets.”We do want to continue to double down in Southeast Asia in particular,” Tushar Roy, a Singapore-based partner at Square Peg, told Reuters in an interview. “We are currently exploring investment opportunities across most markets in the region.” Founded in 2012, the venture capital firm is one of Australia’s largest, with more than $1 billion in assets under management across multiple funds.Roy said Square Peg’s Fund 4, targeting new investments, and Opportunities Fund 2, designed to invest in later-stage follow-on offerings in portfolio firms, were set to complete their fundraisings in the first half of the year.Venture firms have been ramping up investments in Southeast Asia as rising consumer adoption of digital platforms since the COVID-19 pandemic fuels startups across many sectors.”There’s now more capital that’s becoming available in these markets to take these companies from early stage to mid stage to growth stage,” said Roy, who moved from Sydney in 2020 to set up Square Peg’s Southeast Asia office.”The overall prospects of success for companies from an end-to-end journey perspective are better today than they were, maybe five years ago,” he said.Last month, global venture capital firm Accel launched a $650 million fund for Indian and Southeast Asian startups, while Indonesia-focused Alpha JWC Ventures and AC Ventures raised new funding rounds late last year.Square Peg’s 50-plus investment portfolio includes Australian design collaboration platform Canva, Singapore-headquartered global e-scooter operator Neuron Mobility, and Southeast Asian fintech firm FinAccel.The VC firm invests in areas such as consumer Internet and software as a service, and mainly participates in companies’ Series A and B funding rounds. It hired Piruze Sabuncu, a former senior executive of U.S. digital payments firm Stripe, as a partner in its Singapore office in late 2020.Roy said a sharp fall in equity markets in recent months had affected private fundraisings of companies. “With round sizes stabilizing and possibly getting smaller, you should see the commensurate effect on valuations.”Still, capital was available for some companies, he said.”You are seeing a flight to quality in private markets where a smaller cohort of companies that have healthy unit economics, healthy balance sheets, healthy business and a proven product market are attracting more and more attention,” Roy said. More

WASHINGTON (Reuters) – Jamie Dimon, CEO of JPMorgan Chase & Co (NYSE:JPM), published his closely watched annual letter to shareholders on Monday, covering critical issues including the war in Ukraine, the energy crisis, sanctions, inflation and interest rates.Here are five of the key takeaways from the letter: THE U.S. ECONOMY IS STILL STRONG…Dimon has long been bullish on the U.S. economy and repeated that message in his letter, noting the average American consumer is “in excellent financial shape” with leverage among the lowest on record, excellent mortgage underwriting, plentiful jobs with wage increases and more than $2 trillion in excess savings….BUT INFLATION WILL REQUIRE AGGRESSIVE RATE HIKESThe Federal Reserve and the government were right to take bold actions amid the pandemic, but stimulus probably lasted too long, said Dimon. He believes the rate rises needed to rein in inflation would be “significantly higher than the markets expect.” Dimon also had some advice for the Fed: it shouldn’t worry about the market volatility rate rises will cause unless that volatility affects the economy. It should be flexible in its plan and be prepared to respond quickly to events on the ground. THE WAR IN UKRAINE WILL SLOW THE GLOBAL ECONOMY”The hostilities in Ukraine and the sanctions on Russia are already having a substantial economic impact,” Dimon wrote. JPMorgan economists think that the euro area, highly dependent on Russia for oil and gas, will see GDP growth of roughly 2% in 2022, instead of the 4.5% pace expected just before the invasion began. By contrast, they expect the U.S. economy to advance roughly 2.5% versus a previously estimated 3%, Dimon wrote. “These estimates are based upon a fairly static view of the war in Ukraine and the sanctions now in place,” Dimon wrote. More Russia sanctions are possible, he noted. “Along with the unpredictability of war itself and the uncertainty surrounding global commodity supply chains, this makes for a potentially explosive situation,” he wrote….THE WORLD MAY BE FACING AN “UNPRECEDENTED” MOMENTThe confluence of the dramatic stimulus-fueled recovery from the pandemic, the likely need for rapid rate rises, the war in Ukraine and the sanctions on Russia may be unprecedented. “They present completely different circumstances than what we’ve experienced in the past – and their confluence may dramatically increase the risks ahead,” Dimon wrote, adding the war will also affect geopolitics for decades. WITHOUT STRONG AMERICAN LEADERSHIP “CHAOS” WILL PREVAIL”American global leadership is the best course for the world and for America,” Dimon wrote. Since nature abhors a power vacuum, it is increasingly clear that without strong American leadership “chaos likely will prevail,” he added. However, he noted the world does not want an “arrogant” America bossing everyone around, but an America that works with allies, collaborating and compromising.”We can organize military and economic frameworks that make the world safe and prosperous for democracy and freedom only if we work with our allies,” he added. More

Europe’s largest economy is heavily dependent upon Russia for energy, and nations banks echoed concerns over possible energy disruption expressed by big names in industry in recent days.Christian Sewing, the chief executive of Deutsche Bank (DE:DBKGn), said in his role as president of Germany’s BDB bank lobby that banks expected sharply slower growth this year of around 2% due to the war in Ukraine.”The situation would be even worse if imports or supplies of Russian oil and natural gas were to be halted. A significant recession in Germany would then be virtually unavoidable,” Sewing told journalists.”The question of government aid measures for companies and sectors would then become even more urgent,” he said.Sewing once again called on the European Central Bank to act to fend off inflation.He said the ECB should end its net asset purchases soon and should send a signal with interest rates.”A signal that is urgently needed,” he said. More

Investing.com — European politicians are set to discuss fresh sanctions on Russia later Monday after the emergence at the weekend of evidence of atrocities committed by Russian troops against civilians in Ukraine.However, the continent still appears no nearer to a complete boycott of Russian energy, seen by many as the only way to exert enough economic pressure on Russia to change its course.Finance ministers from the Eurozone are due to meet at 6 AM ET (1000 GMT). Charles Michel, president of the EU Council that coordinates the actions of the member states, tweeted earlier that “further EU sanctions & support are on their way,” without specifying further.French President Emmanuel Macron told the radio station France Inter earlier that EU sanctions should be extended to cover Russian oil and coal, although he left out natural gas. “What happened in Bucha requires a new round of sanctions and very clear measures,” said Macron, who faces the first round of a presidential election at the end of this week. “Unless the sanctions target energy supplies to Europe, or firms from other countries (e.g. China or India) doing business with Russia, the marginal economic impact (of new sanctions) is likely to be limited,” said Paul Donovan, chief economist with UBS Global Wealth Management, in a morning briefing.Europe sends Russia nearly $1 billion a day to pay for its imports of oil, refined products, coal and natural gas. Benchmark northwest European gas futures were little changed on Monday morning, indicating low expectations of a dramatic change to policy. The euro fell 0.3% to $1.1025.Various reports over the weekend uncovered evidence of mass executions of civilians by Russian troops during their three-week occupation of the area. The Mayor of Bucha, Anatoly Fedoruk, said the authorities had found 280 people in a mass grave, all shot in the back of the head, some with their hands tied behind their back. Iryna Venedyktova, Ukraine’s prosecutor-general, said 410 bodies of civilians had been recovered from the Kyiv region.Moscow said that the images distributed around the world were fake and had been staged by the Ukrainian authorities.However, the German political establishment remains reluctant to impose a boycott that would have an immediate impact on the German economy, due to the practical difficulties of finding alternatives to Russian energy in the short term.SPD head Lars Klingbeil said on a talk show late on Sunday that he still considers an immediate gas embargo to be “the wrong course”. Bavaria’s Governor Markus Soeder, head of the center-right CSU party, agreed, pointing to the fact that Russia is already looking for alternative customers such as India. Development Minister Svenja Schulze, also a member of Chancellor Olaf Scholz’s center-left Social Democrats, told the TV stations RTL and NTV that sanctions should “above all hurt Russia and not us.” She added that the steel and chemical industries would be particularly hard hit by a sudden stop of Russian energy supplies.  Germany’s Vice-Chancellor Robert Habeck said last week that Germany will be unable to wean itself off Russian gas until 2024. More

Costa Ricans on Sunday elected a former World Bank official accused of sexual harassment to be the country’s next president after a bruising campaign that was marked by low voter turnout.With more than 95 per cent of the ballots counted, economist Rodrigo Chaves had 53 per cent of the vote compared with 47 per cent for José María Figueres, a former president, according to the electoral tribunal. Figueres accepted defeat on Sunday evening.Chaves, who has worked outside the country for most of his career, had styled himself as a change candidate. He will take office in May and will need to work with other parties to advance his agenda.The 60-year-old former finance minister has vowed to renegotiate a $1.8bn loan from the IMF secured last year aimed at supporting the country’s economic recovery from the pandemic. He has also indicated that he wants to strengthen trade ties in the Asia-Pacific region and attract more Chinese tourists. “I take on the sacred commitment to make a democratic government based on respectful dialogue, the constitution, the law and Costa Rican values,” Chaves said in a speech in the capital San José after the results were released. The negative tone of the campaign and high rejection rates of both candidates meant turnout was about 57 per cent, low by the country’s standards and less than in the first round in February.The economy of Costa Rica, known as a stable eco-tourism destination in a turbulent region, grew more than 7 per cent in 2021 following the pandemic. But the new president will have to navigate cutting the deficit under the IMF deal while tackling high unemployment with a congress split across different parties.Chaves’ Social Democratic Progress party will have 10 seats in the country’s 57-seat congress, and will have to rely on coalitions to pass legislation.Chaves worked for decades for the World Bank, including as its chief in Indonesia before returning to Costa Rica for a seven-month stint as finance minister for the current government.

Several female World Bank colleagues have accused him of sexual harassment, including making unwelcome sexual comments, inquiries about personal relationships and attempts to kiss them, according to an administrative tribunal decision at the institution. Chaves was demoted and his access to the premises was later restricted, the decision showed. The bank apologised to the women for mishandling the sexual harassment claims. Chaves has denied misconduct.His presidential campaign is also being investigated by electoral authorities for alleged illegal financing. Chaves has said that the trust being probed complied with the rules. More

Dockworkers in Los Angeles have seldom been busier. America’s biggest port reported its highest-ever level of activity for the month of February in its 115-year history, reflecting record trade volumes globally.Yet the surge in activity comes as policymakers, economists and investors fear that globalisation may have peaked after 30 years of growth. Some even predict that trading volumes may suffer a sharp reversal as disputes between leading nations intensify after Russia’s invasion of Ukraine and as companies strive to build more resilience into global supply chains.It would not be the first time a crisis triggered significant changes in trading patterns. Trade growth slowed sharply after the 2008-09 global financial crisis, shifting from rising roughly twice as fast as global gross domestic product to a similar rate. An earlier era of globalisation, linked to the industrial revolution and underpinned by the gold standard currency regime, was snuffed out by the first world war. Trade’s share of global GDP did not return to its 1914 level until the mid-1970s.The challenge for globalisation advocates is to determine the scale of the potential reversal, including the impact on competition, supply chains and the hit to developing economies.Are we witnessing a turning point for global trade?Geopolitical pressures are expected to generate a large shift towards deglobalisation, with the boost to trade as countries recover from the pandemic being seen as a last hurrah before fresh barriers are erected. Larry Fink, chief executive of the $10tn asset manager BlackRock, said the Ukraine conflict had “put an end to the globalisation we have experienced over the last three decades”. Companies and governments would be looking hard at their dependencies on other nations and seeking to “onshore or nearshore more of their operations”, he added. Shamik Dhar, chief economist at BNY Mellon Investment Management, said trade patterns would be shaped by the return of great power politics and the prevalence of friendly trading blocs. Even if Russia’s war was relatively shortlived, he said “the existing international economic architecture is increasingly peripheral to the big political economy questions”, with governments in future likely to “promote security interests at the expense of comparative advantage”.Erik Nielsen, economic adviser to UniCredit, said it was inevitable “we are heading into a prolonged period of deglobalisation” — a process that would raise costs and prices for goods and services. Financial officials have generally been more circumspect in their warnings, but Andrew Bailey, governor of the Bank of England, said last week that the world was at a “more challenging point” in terms of trade fragmentation than at the time of the global financial crisis, when countries largely avoided new tariffs or other measures. Are the strains visible in the data yet?No. The most recent global data produced by the Netherlands’ Bureau for Economic Policy Analysis showed that even though there were declines in trade volumes for China and emerging economies in January, as imports were hit by higher prices, overall global trade volumes hit a record level, about 9 per cent above pre-pandemic levels in December 2019.This put global trade back above the trend level that it had sustained since the financial crisis.

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Other indicators are still strong. Container shipping rates have fallen since Russia’s invasion of Ukraine, but are still almost double the levels of a year ago, with ports in every region reporting high levels of business and significant logistics bottlenecks. “It’s not just port congestion. It’s problems on land . . . we don’t have enough warehousing, we don’t have enough truck drivers,” Ngozi Okonjo-Iweala, head of the World Trade Organization, told the Financial Times, adding that problems with supply chains would last for some time. If trade is strong, what is the concern?Strong demand, high shipping prices and increased tariffs or punitive sanctions amid the Ukraine conflict are encouraging companies and countries to prioritise resilience over efficiency. The just-in-time manufacturing model has sometimes struggled to pass the test posed by financial crises, natural disasters, the pandemic and now a major war. Bailey said the BoE was adjusting its thinking to take account of this. “It’s hardly surprising that businesses, given what they are having to deal with, are making adjustments. Inventory levels are going up because they are having to respond rationally to the challenges they face.” Importers would encounter more trading restrictions, often from populist governments seeking to further their domestic ambitions, said Adam Posen, president of the Peterson Institute for International Economics.The west’s move to block Russia from accessing its foreign exchange reserves suggests it is not safe for countries to hold reserves in dollars if they think they too might one day face US sanctions. Johanna Chua, head of Asia economics at Citigroup, said “the use of sanctions is going to drive demand for de-dollarisation”, giving China the incentive to internationalise use of the renminbi for friendly trading partners.

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Who will be deglobalisation’s winners and losers?Its critics say globalisation cost jobs in the developed world and widened inequality in both rich and poor countries. But most evidence suggests it was better technology, rather than trade, that led to lower manufacturing employment, with globalisation able to lift efficiency and productivity. The biggest winners in the past 30 years have been emerging economies that have integrated into the world economy and raised living standards. Emerging economies have generated 60 per cent of global growth in recent years, compared with 40 per cent in the early 1980s, according to IMF figures. Rates of absolute extreme poverty have fallen significantly, especially in Asian countries that have become part of the global economy. The number of people classed as living in extreme poverty fell from 1.9bn in 1990 to 650mn in 2018, according to the World Bank. Lower-income workers in advanced economies did lose out because of the greater competition, though this was offset by cheaper prices of goods and services. Deglobalisation would decrease the efficiency of companies by raising prices and lowering competition, said Posen. The poorest countries would also be hit as multinationals refrain from “investing in places that they see as having undependable transparency”, he wrote in Foreign Affairs magazine. With any reversal predicted to slow growth, UniCredit’s Nielsen said a deglobalised world would be “vastly inferior” to the past 30 years of open trade. More

Martin Lewis, founder of the MoneySavingExpert consumer advice site, has launched a campaign to end the “lucky dip” of advertised rates on credit cards and loans, urging the UK financial regulator to better protect consumers as borrowing hits record levels. The campaign, which has already won the backing of chancellor Rishi Sunak, comes at a time when millions of families are becoming more reliant on credit cards to make ends meet, yet find they are unable to access low interest deals advertised by lenders. Under current rules, only 51 per cent of applicants who are accepted by a credit provider have to be offered the “representative rate” of interest, meaning 49 per cent of borrowers could end up being charged a much higher rate. As the true rate is not revealed until the application and credit scoring process is completed, many borrowers may feel forced to accept the more expensive offer, or be left with unnecessary marks on their credit file if they reject it. Research carried out by MSE found that over the past three years, 40 per cent of personal loan applicants and 28 per cent of credit card applicants had been offered a higher APR (annual percentage rate) than the one advertised. “For years, credit card applications have been inherently anti-competitive,” said Lewis. “When people apply for debt, they usually apply based on the advertised rate. The fact that a huge number of people can be accepted but charged more is demoralising and dangerous — and staggeringly, there is no cap on what they can be charged.”Martin Lewis: ‘With a new Brexit opportunities minister in place, this seems the right time to push for change’ © Kirsty O’Connor/PAMSE’s research found that some borrowers ended up being offered more than double the rate advertised. One man with a near-perfect credit score applied for a £15,000 personal loan with an APR of 3.3 per cent, but was given a rate of 7.8 per cent, pushing up the cost of his monthly repayments.“I had no option but to go with the APR offered as the mark was already on my credit file as a hard search,” he said. “It’s a lucky dip when applying and can actually put you in a worse financial situation.”The UK started using representative rates of APR in April 2011 in order to homogenise rules across the EU, following an EU Directive. Before this, 66 per cent of borrowers had to be given the advertised rate of interest, known as the “typical” APR.Lewis has challenged the financial regulator to take advantage of Britain’s exit from the EU to return to the former system where two-thirds of borrowers had to receive the rate advertised, as well as capping the maximum amount of interest that can be charged. He also wants the new rules to be applied to 0 per cent credit cards, where borrowers are granted interest-free payments or purchases for a number of months. Currently, applicants can be offered a reduced number of months, but Lewis wants two-thirds to receive the time period advertised. “Lenders tend to make most of the profit from the tail, those that get charged a higher rate — often those with weaker finances,” he said. “With a new Brexit opportunities minister in place, this seems the right time to push for change.”

The MSE report has been submitted to the Treasury and the Financial Conduct Authority.“It is important that the advertised APRs reflect the rate the consumer is likely to receive,” said Sunak, adding that he “welcomed the report” and would ask the FCA “to assess the merits of reform in this area”. The FCA said: “We are continuing our work to ensure that the credit market works well for borrowers and provides the necessary protections, particularly in light of the cost of living crisis. We welcome MSE’s report and will discuss the findings and recommendations with them and the Treasury.” More

The measure suspends taxes on 84 and 90 octane gasoline, gasohol and certain types of diesel until June 30, with a potential extension until December, the government said in a statement. Spiking fuel prices have caused widespread protests by Peruvian truckers and farmers. The government has been taking measures to mitigate rising fuel prices, including subsidies that it says have already prevented a rise of 3 soles (81 U.S. cents) per gallon in the price of diesel and a hike of 5 soles ($1.36) in the price of 10-kg gas cylinders.Oscar Graham (NYSE:GHM), the country’s economy minister, told Reuters on Friday that the biggest threat to Peru’s economy is the prolongation of the Russia-Ukraine conflict.Peru’s inflation hit its highest level in 26 years, the government reported on Friday, largely driven by rising fuel and food prices.The government also announced it was raising the minimum wage by about 10% to 1,205 soles ($278) a month starting in May. The government said the raise was to help improve workers’ purchasing power after analyzing inflation and local economic performance. More