Cardano Becomes a Multi-Asset Blockchain With Today's Hard Fork – Yahoo Finance
The Cardano blockchain, which runs the ADA token, will become a multi-asset chain with its hard fork today.
Named “Mary,” the hard fork will allow users to create tokens that run on Cardano natively, just as ADA does. Enabling new tokens was one of the first big use cases that caught on for Ethereum, enabling 2017’s multi-billion dollar initial coin offering splurge.
In a video update previewing the hard fork, Charles Hoskinson, founder of IOHK, the company behind Cardano, called the move “historic.”
Related: Binance Becomes Limited Partner in Multicoin Capital Crypto Fund
Hoskinson said that for node operators, the transition should be fairly simple. They just need to update their software and everything should work well. “We’ve been testing it for almost a month, and the test looks good. Exchanges are happy,” he said in the video.
Enabling new tokens is a step on the path to full smart-contract functionality.
Cardano recently became the third-largest cryptocurrency by market capitalization. Besides founding IOHK, Hoskinson was previously a co-founder of Ethereum and also of BitShares, with Dan Larimer.
Cardano Becomes a Multi-Asset Blockchain With Today’s Hard Fork
Cardano Becomes a Multi-Asset Blockchain With Today’s Hard Fork
Cardano Becomes a Multi-Asset Blockchain With Today’s Hard Fork
(Bloomberg) — Deliveroo Holdings Plc collapsed in its London public debut as investors abandoned the food-delivery startup criticized for its labor practices and corporate governance, just as the broader technology sector falls out of market favor.The stock plunged as much as 31% in its first minutes of trading to trigger circuit breakers — the worst performance in decades for a big U.K. listing. The stock closed down 26% at 287.45 pence.Deliveroo’s 1.5 billion-pound ($2.1 billion) IPO was meant to be a triumph for the City in its post-Brexit push to lure tech firms away from New York. Instead, the first-day performance looks like a disaster.As appetite sours for stocks that flourished during the lockdown, institutional investors have rebuffed the bellwether for the gig economy in droves. Asset managers including Legal & General Investment Management said they wouldn’t buy the stock because Deliveroo’s treatment of couriers doesn’t align with responsible investing practices.Investors have also balked at the dual-class structure that allows Chief Executive Officer Will Shu to retain control of the business for three years. Hundreds of riders are planning a protest next week to lobby for better pay and conditions.The shares were priced at 390 pence, the bottom end of the initial range. Among the five biggest deals in London this year, Deliveroo is the only company that didn’t receive the highest targeted valuation, data compiled by Bloomberg News show. Goldman Sachs Group Inc. and JPMorgan Chase & Co., the lead banks on the offering, declined to comment.“It’s not a great endorsement of setting IPOs in the U.K.,” said Neil Campling, analyst at Mirabaud Securities. “You have the combination of poor timing, as many ‘at home’ stocks have been under pressure in recent weeks, and the well-publicized deal ‘strike’ by a number of A-list institutional investors.”Investors are also souring on the fast-growing companies that benefited during the pandemic. Doordash Inc. has slumped 24% this month, and European rivals Just Eat Takeaway.com NV and Delivery Hero SE have also fallen this year.“The window for tech-driven IPOs just couldn’t be worse,” said Oliver Scharping, a portfolio manager Bantleon AG. “Deliveroo was trying to keep the window open with brute force.”The company and its banks also sought a premium valuation for the stock. At the offering price, Deliveroo fetched 6.4 times last year’s revenue, versus a multiple of 5.8 for Just Eat. At the middle of the original price range, the stock would have been valued at 19 times gross profit versus less than 7 times for its Dutch rival, said Alberto Tocchio, a portfolio manager at Kairos Partners.Among the losers in the IPO will be retail investors, who were given the option to buy shares via Deliveroo’s app. Retail investors will only be able to trade the stock from April 7.IPO DetailsDeliveroo and investors sold 384.6 million shares at the offer price, equal to a 21% stake. The company raised 1 billion pounds, while shareholders including Amazon.com Inc. and Shu, the founder, sold the remaining 500 million pounds of stock.The prospectus indicates Amazon was looking to sell 23.3 million shares in the offering. At the IPO price, this means it received proceeds of 90.9 million pounds, with its remaining stake valued at about 818 million pounds, according to Bloomberg News calculations.Deliveroo is the largest IPO in the U.K. since e-commerce operator THG Plc’s 1.88 billion-pound listing in September.Like THG, Deliveroo listed with weighted voting rights on the LSE’s standard segment and therefore can’t be included in indexes such as the FTSE 100, despite its size. While the stock will lose out on fund flows from passive strategies that track these benchmarks, the same situation hasn’t prevented THG’s shares from surging 26%.Goldman and JPMorgan were joint global coordinators on Deliveroo’s IPO, while Bank of America Corp., Citigroup Inc., Jefferies and Numis Securities Ltd. were joint bookrunners.(Updates to add closing price in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The funding round was led by Qiming Venture Partners, and included Signum Capital, HashKey and IDG Capital.
MUMBAI (Reuters) -An Indian court on Wednesday granted no relief to China's ByteDance, owner of the TikTok video app, in a case where the company challenged the local tax authority's decision to block its Indian bank accounts, dealing a blow to its operations. Indian authorities in mid-March blocked ByteDance's bank accounts for alleged tax evasion, prompting the company to ask a court to quash the directive which it feared would hurt its operations. All bank accounts are frozen.
(Bloomberg) — Wall Street banks grappling with the implosion of Bill Hwang’s investment firm spent Monday briefing U.S. regulators as Washington starts to dig into one of the biggest fund blowups in years.The Securities and Exchange Commission summoned the banks for hasty meetings on what triggered the forced sale of more than $20 billion of stocks linked to Hwang’s Archegos Capital Management, said people with knowledge of the matter who asked not to be named in discussing private conversations. The calls also involved the Financial Industry Regulatory Authority, with officials quizzing brokerages about any impacts on their operations, potential credit risks and other threats, said one of the people.Hwang’s brokers included Credit Suisse Group AG, Nomura Holdings Inc., Goldman Sachs Group Inc. and Morgan Stanley. The speed at which Archegos ran into trouble and Wall Street’s swiftness in liquidating its positions shocked traders, while prompting a race at U.S. agencies to keep up with events.“We have been monitoring the situation and communicating with market participants since last week,” an SEC spokesperson said in emailed statement. A Finra spokesman declined to comment.The banks either declined to comment or didn’t immediately respond to messages.“This is a challenging time for the family office of Archegos Capital Management, our partners and employees,” Karen Kessler, a spokesperson for the firm, said in an emailed statement. “All plans are being discussed as Mr. Hwang and the team determine the best path forward.”Credit Suisse and Nomura warned investors earlier Monday that they may face “significant” losses after an unnamed U.S. hedge fund client defaulted on margin calls. Goldman told investors and clients that any impact from Archegos is likely to be immaterial, a person familiar with the matter said.Oversight QuestionsThe blowup has prompted questions about oversight, particularly because Archegos amassed tens of billions of dollars in stock bets without disclosing its positions to other market participants.Hwang’s family office did so by entering into derivative transactions with banks that gave him exposure to companies without buying actual shares. He also maximized his wagers by borrowing significants amount of money from his brokers, increasing risks to banks. Among stocks sold starting March 26 were GSX Techedu Inc. and Discovery Inc.The episode has rekindled fears of earlier hedge fund failures that blew holes in lenders’ balance sheets. Still, the industry is arguably much better equipped to handle such meltdowns because of rules implemented after the 2008 financial crisis that forced banks to hold significantly more capital as a buffer against losses.Administration MonitoringThe fallout reached the highest corridors of power in Washington, with White House Press Secretary Jen Psaki telling reporters that the Biden administration was monitoring the situation. She referred specific questions to the SEC.Hwang is no stranger to the Wall Street regulator, which joined prosecutors in accusing him and his former hedge fund, Tiger Asia Management, of insider trading in 2012. In resolving the case, the firm pleaded guilty and paid more than $60 million in penalties. Hwang started Archegos after the SEC barred him from managing money on behalf of clients as part of the settlement.(Updates with comment from Archegos in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Saudi Aramco will set strict business criteria for ventures it backs under a new private partnership initiative to help diversify the kingdom's oil-reliant economy and was not being pushed into projects by the state, the CEO said. His comments in an interview on Wednesday came a day after Saudi Crown Prince Mohammed bin Salman announced the new Shareek (Partner) initiative, in which the state-controlled oil giant and petrochemical firm SABIC would lead private sector investments worth 5 trillion riyals ($1.3 trillion) by 2030. "You can look at Shareek as a catalyst in making Saudi Arabia even more compelling as an investment destination for both local and foreign investors," Aramco Chief Executive Amin Nasser told Reuters.
(Bloomberg) — Canada’s economy continued showing surprising strength at the start of the year despite a second wave of closures that forced many businesses to shut their doors again.Gross domestic product grew 0.7% in January, Statistics Canada reported Wednesday in Ottawa. A preliminary estimate for February shows the country kept the momentum going with output expanding 0.5%, the 10th-straight monthly gain in GDP.The numbers highlight how well the nation’s economy handled the latest wave of lockdowns, resilience that’s fueling expectations for a strong rebound in 2021 after the nation suffered its sharpest downturn in the post-World War II era.“This is yet another pleasant upside surprise,” Doug Porter, chief economist at the Bank of Montreal, said in a report to investors.Economists were anticipating a 0.5% gain in January and the better-than-expected numbers for the first two months of the year suggest first-quarter growth will be better than the Bank of Canada forecast. Growth for the quarter is tracking at more than 5% on an annualized basis even if the expansion stalls in March.The central bank, which had originally expected a contraction in the first quarter, has begun signaling it will slow the pace of its purchases of Canadian government bonds. The bank’s first foray into what’s known as quantitative easing has been a key tool policy makers have used to keep market interest rates low since the pandemic hit a year ago.“With the economy doing much better than policy makers expected, it seems likely that the Bank of Canada will cut the pace of its asset purchases,” Stephen Brown, an economist at Capital Economics, said in a report to investors.To be sure, the winter lockdowns are having some impact. Overall, despite the robust start to the year, growth is still expected to slow in the first three months of this year after a 10% annualized gain in the fourth quarter of 2020.In January, wholesalers led gains, with activity for the sector up 3.9% for the month. Manufacturing was another strong sector, posting a 1.9% expansion in January, led by growth in fabricated metal and machinery. The pandemic-exposed sectors like retail and restaurants all posted declines in January amid shut downs, but Statistics Canada said retail rebounded in February.(Updates with details throughout, chart, economist quotes.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) — It’s a very odd security, technically a perpetual bond from Vale SA that pays out when the Brazilian mining giant’s ore output reaches certain thresholds. And for years, few in Sao Paulo financial circles seemed to notice it, with prices stuck at just a few cents in thin trading.But investors are giving the notes a fresh look, and prices are soaring. The appeal is that while the bonds are sold in the local currency, the payout is based on Vale’s dollar revenue. That means securities from an investment-grade company will pay a dollar yield of about 10% this year, an almost unheard of figure in a world where global central banks have done their best to hold down interest rates.Now, a fresh supply of the notes is about to hit the secondary market, increasing liquidity and providing an opportunity for new investors to jump in just as prices for industrial metals seem on the cusp of a new supercycle. Brazil’s government and state development bank BNDES, which own about 55% of the outstanding amount, plan to sell their stake next month, worth about 12.9 billion reais ($2.24 billion) at current prices. It’s part of a plan to shed state assets championed by Economy Minister Paulo Guedes.“The notes are very attractive right now,” said Ulisses de Oliveira, a money manager at Sao Paulo-based Quasar International Cap Mgmt Ltd., which owns the debt. “The BNDES sale brings liquidity to the trade.”The securities now fetch almost 60 reais after more than doubling over the past 12 months, according to data compiled by Anbima, the country’s capital markets association.The notes were issued with a face value of 0.01 real each in 1997, just before Vale’s privatization, with owners given one for each equity share they held. The idea was that investors would be directly rewarded as Vale ramped up production, and would get windfall payouts in years when output and metals prices were particularly robust.The notes don’t have a fixed coupon and instead pay holders a dividend equal to 1.8% of net revenue from some iron-ore sales and 2.5% of net revenue from copper and gold after certain production thresholds are met, some of which are tied to where the ore is being mined. The revenue is calculated in dollars, then converted to reais for the distributions to investors.While output thresholds haven’t been reached in the region that encompasses southern Brazil after a deadly dam rupture in Minas Gerais curbed production, the northern region alone is providing bondholders with attractive yields, according to Oliveira. In October last year, Vale payed 1.27 reais per note in dividends. The first payment this year will be for 2.76 reais on April 1, and Oliveira estimates a payment of at least 3 reais this October, which would provide a dollar yield of 9.6% given a price of 60 reais for the security.That’s an extraordinary level when considering that Vale’s longest term overseas bonds, due in more than 20 years, yield just 4.2%. The perpetual notes also pay more than three times the 2.8% average dollar yield for emerging-market companies rated in the BBB bucket, according to data compiled by Bloomberg.With an increase in production volumes at Vale’s northern mines and considering the 80% jump in iron-ore futures over the past year, the securities represent a great value, according to Jorge Junqueira, a partner at asset management firm Gauss Capital Gestora de Recursos Ltda., which owns the notes.“Those notes are very peculiar, and some time ago there was a total lack of knowledge of those assets, even from some of Vale’s top equity analysts,” he said. “With the dollar at this level, this asset is very interesting for investors.”Of course the payouts to noteholders are painful for the Rio de Janeiro-based company. Chief Financial Officer Luciano Siani Pires said in a conference call with analysts in October that Vale planned to repurchase the securities at some point, a prospect that concerns bondholders since it could reduce liquidity.At a bondholder meeting March 19, the government and BNDES voted their majority stake in favor of changing the clauses of the securities — without paying any compensation to bondholders — so that Vale can repurchase them. Oliveira and Junqueira say they voted against the proposal and now that it was approved are considering legal options to try to revert the decision.In a emailed response to Bloomberg, Vale said repurchases aren’t a priority for now, and it would do “a public and transparent” tender offer if it decides to buy back the notes in the future. It said capital market regulations forbid the company from bidding on the notes being sold by the government and BNDES next month, and also don’t allow Vale to buy the securities slowly on the secondary market, denying speculation it was doing so.BNDES, also based in Rio de Janeiro, mandated banks in September to organize the sale, with presentations to investors running from March 30 to April 9.“If Vale wants to buy back the notes, they will have to come up with a very attractive proposal,” Oliveira said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) — Huawei Technologies Co.’s quarterly revenue shrank for the first time on record, reflecting the devastating impact of U.S. sanctions that forced China’s largest technology company out of smartphones and into other technology arenas.The disappointing results underscore the depth of the damage Washington has wrought on a company that once vied with Apple Inc. and Samsung Electronics Co. to lead the global smartphone market. It reported revenue fell 11% to 220.1 billion yuan ($33.5 billion) in 2020’s final quarter. That’s down from 3.7% growth in the September quarter and 23% in the second quarter, according to Bloomberg calculations based off previously reported figures.Full-year sales and profit rose 3.8% and 3.2%, respectively, in line with the “marginal growth” previously projected, according to financial statements audited by KPMG. Huawei had credited record 5G base station orders and strong mobile sales in the first half for offsetting the final six months.Huawei is emerging from its toughest year on record, when Trump-administration sanctions smothered its once leading smartphone business and stymied advances into chipmaking and fifth-generation networking. The Biden White House has shown few signs of letting up, prompting billionaire founder Ren Zhengfei to direct Huawei toward new growth areas such as smart agriculture, healthcare and electric cars. It hopes for a seat at the table with tech giants vying to define the rapidly evolving fields of connected vehicles, homes and workplaces.“The global supply chain Huawei heavily relies on has been disrupted,” said Rotating Chairman Ken Hu, one of three executives who take turns filling the top role. “I don’t know who will benefit from it but definitely not the industry.” The global semiconductor supply chain needs to be overhauled in order to resolve the current shortages, he added.Read more: Huawei Pivots to Fish Farms, Mining After U.S. SanctionsCash flow weakened last year as the company built up inventories ahead of U.S. sanctions that effectively cut off its access to American technologies last September and it has enough stockpiles for its enterprise business, Hu told reporters. Huawei had previously purchased $10 billion to $20 billion of components each year from U.S. suppliers and other customers won’t be able to fully make up for the lost business.Huawei’s consumer electronics unit — which still accounts for more than half of total revenue — missed sales targets, he added. Huawei’s smartphone shipments tumbled 42% during the final three months of last year to lag behind Apple, Samsung and domestic rivals Xiaomi Corp. and Oppo, according to research firm International Data Corp. The firm intends to keep launching flagship phones as planned, while it builds up other consumer electronics, like wearables, which grew by 65% last year, Hu said.Huawei is the subject of persistent speculation it wants to join tech giants from Apple to Dubai Inc. and Xiaomi Corp. exploring automotive technology or designing and assembling entire cars. While Huawei has denied it plans to launch a car under its own brand — which Hu reaffirmed Wednesday — it’s worked with several manufacturers to test its autonomous driving and driver-car interaction technologies. Its info and entertainment features can already be found in Mercedes-Benz sedans and the firm has teamed up with domestic players such as BAIC BluePark New Energy Technology Co. to develop smart car systems. The first model under its partnership with the Chinese EV maker, the Arcfox αS HBT, will be unveiled at Auto Shanghai in April.It also plans to begin charging mobile giants like Apple a “reasonable” fee for access to its trove of wireless 5G patents, potentially creating a lucrative revenue source by showcasing its global lead in next-generation networking.The owner of the world’s largest portfolio of 5G patents will negotiate rates and potential cross-licensing with the iPhone maker and Samsung, promising to charge lower rates than rivals like Qualcomm Inc., Ericsson AB and Nokia Oyj. Huawei should rake in about $1.2 billion to $1.3 billion in patent and licensing fees between 2019 and 2021, executives said without specifying which of those stemmed from 5G. It’s capping per-phone royalties at $2.50, versus the $7.50 that Apple says Qualcomm demands of every iPhone.How Huawei Landed at the Center of Global Tech Tussle: QuickTakeTikTok, Hong Kong and More U.S.-China Flashpoints: QuickTake(Updates with comments from rotating chairman starting from sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) — Malaysia’s central bank said it expects the economy to return to pre-Covid levels by the middle of this year, and pledged to keep monetary policy accommodative as the country charts a recovery from the pandemic.Gross domestic product may expand 6% to 7.5% in 2021, Malaysia’s central bank said Wednesday in its annual Economic and Monetary Review. That’s a tad slower than its earlier projection of 6.5%-7.5% growth.The revised outlook comes after virus cases peaked in January, forcing renewed curbs on travel that weighed on the recovery. The easing of those measures following a drop in the infection rate and the country’s vaccine rollout will help the economy rebound by the second quarter, according to the central bank.“The economy is projected to return to 2019 pre-pandemic levels by mid-2021,” Bank Negara Malaysia Governor Nor Shamsiah Yunus said at a briefing. Growth will be driven by a strong recovery in exports, higher private consumption, faster investment activity and progress in major infrastructure projects such as the East Coast Rail Link, she said.“We also expect the the positive growth momentum to be sustained in 2022, supported by further expansion in global growth,” Nor Shamsiah said. “As we reach herd immunity, pent-up demand, particularly in leisure and travel-related spending, will further lift the recovery.”Accommodative StanceStill, the unpredictable course of the health crisis means the country runs the risk of having to withstand the pandemic longer than expected, and that could weigh on the economic recovery, she said in the annual report.“Given this uncertainty in the strength of economic recovery, the thrust of our monetary policy in 2021 will remain accommodative to support an entrenched and sustained recovery,” Nor Shamsiah said in the report.Malaysia’s stock market overlooked the central bank’s recovery outlook, with the main equities index falling the most in four months. The drop was fueled mainly by deepening losses in glove makers’ shares and political and policy uncertainties, according to Chua Zhu Lian, investment director at Fortress Capital Asset Management Sdn. Monetary policy assessments will remain data-driven, while operations will continue to be directed toward ensuring sufficient liquidity in the foreign exchange, bond and money markets, according to the annual report. The central bank held its benchmark interest rate at an all-time low earlier this month amid signs the economy is set to turn a corner.READ: Malaysia Says Mulling New Taxes Once the Economy RecoversPrime Minister Muhyiddin Yassin unveiled a 20 billion ringgit ($4.8 billion) package earlier this month that included discounts on power bills, tax breaks and cash aid to the poor.That stimulus followed 15-billion ringgit worth of aid announced in January after the country declared a state of emergency to help curb the spread of Covid.Malaysia’s average real GDP may have contracted 3% in January from a year ago, worse than in December, analysts at Maybank wrote in a note Tuesday. Real GDP may have shrunk further in February before improving in March, they added.The economy contracted 5.6% in 2020, its worst performance since 1998 and below the government’s projection of -3.5% to -5.5%.Other points from the Governor’s briefing:Headline inflation may temporarily spike to 5% in the second quarter before easing in the second half of 2021; headline inflation to average 2.5%-4% this year2021 current account surplus seen at 2.5%-3.5% of GDPExport growth to rebound to 8.2% this year, driven by U.S., China demand; gross imports to recover to 9.1%(Adds stock market reaction in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Deliveroo shares close well below their expected price after big investors' attitude to company soured.
(Bloomberg) — European Central Bank President Christine Lagarde said policy makers won’t shy away from using all their powers should investors try to push bond yields higher.“They can test us as much as they want,” she said in a Bloomberg TV interview on Wednesday. “We have exceptional circumstances to deal with at the moment and we have exceptional tools to use at the moment, and a battery of those. We will use them as and when needed in order to deliver on our mandate and deliver on our pledge to the economy.”The ECB has accelerated its emergency bond-buying program to push back against a rise in borrowing costs that threatens to undermine the euro area’s recovery. Yields have risen as part of a global reflation trade on the back of the U.S. economic rebound, yet the euro zone is bogged down in extended virus restrictions and a slow vaccination rollout.To watch the full 27-minute interview with Bloomberg, click here.Central banks across the bloc bought an average of 20 billion euros ($23.5 billion) worth of debt a week over the past two weeks to keep financing conditions for governments, companies and households favorable. Lagarde declined to say if policy makers have agreed on that specific level of purchases, as Governing Council member Vitas Vasiliauskas signaled in an interview this week.“Given the exceptional situation that we are facing we are using maximum flexibility” with the 1.85 trillion-euro program, Lagarde said. “We will deploy all of it or not, or more and we will certainly adjust as needed.”Inflation CautionThe ECB predicts that the 19-nation economy will grow 4% this year. That’s not enough to recoup last year’s contraction of 6.6%, and the euro zone will likely return to its pre-pandemic size only in mid-2022, a full year behind the U.S.The central bank says any near-term pickup in the region’s inflation will be temporary, with concerns over job losses keeping consumer demand in check over the medium term.Figures published Wednesday showed consumer prices rose 1.3% in March from a year earlier, driven higher by a surge in energy costs. That’s below the ECB’s goal of just-under 2%, and a measure that strips out volatile components such as food and fuels slipped to 0.9%, the lowest in three months.“Many have expressed concern about the consequences of a loose monetary policy,” policy maker Olli Rehn said in a webinar on Wednesday. “Fear of inflation coming to the fore, hyperinflation — however, there are no signs of this. On the contrary, inflation threatens to remain too slow in the euro area.”The ECB’s pandemic bond program is set to run until the end of March 2022, though Lagarde said it can be extended if necessary, and the central bank will give investors plenty of warning when it’s ready to stop.“It’s not as if it were set in stone,” she said. Once it’s time to wind down, policy makers will give “sufficient early notice to avoid the anxiety, the tantrum, or any of those movements” that have happened in the past.Lagarde also said she hopes the European Union’s 750 billion-euro joint recovery fund will start being deployed as scheduled in the second half of the year.Spending plans are still being assessed by the European Commission, and laws to approve the bond issuance to fund the program still need to passed by all national governments. That has raised concerns that hurdles such as a legal challenge in Germany will delay disbursements.“We have an economic situation overall which in this part of the world, Europe, is really marked by uncertainty,” Lagarde said. “What monetary policy has to do and what the ECB has to do is to provide as much certainty as possible.”(Updates with comment from Rehn in ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) — Australia’s AGL Energy Ltd., the nation’s biggest emitter, plans to split off its coal-fired generation into a separate unit as increased renewables generation upends the nation’s electricity landscape.AGL’s decision to separate its fossil-fuel plants is one of the most radical responses yet to Australia’s increased wind and solar generation, which undermined power prices and hurt the company’s profitability. It echoes a global trend to separate dirtier plants, such as when Germany’s largest utilities floated their renewable businesses as separate entities more than five years ago.AGL’s new arm, dubbed with the placeholder “PrimeCo,” would encompass 8.9 gigawatts of installed generation representing a fifth of Australia’s electricity demand, including the company’s coal plants. A second unit, “New AGL,” would be the largest power retailer covering almost a third of Australian households.“AGL is trying to dodge its responsibility to manage the shutdown and rehabilitation of its aging coal burning power stations by hiding its coal assets in a separate business,” Glenn Walker, Greenpeace Australia Pacific senior coal campaigner, said in a statement. “This demerger should be seen for what it is — an attempt by a company worried about its brand to hide its reputation as the nation’s biggest polluter.”A plan for the separation is slated to be completed by the end of June, AGL said Tuesday in a statement. The company’s shares have fallen 11% after it last month flagged expectations of further drops in wholesale prices.“At our results in February, we talked about how those shaping forces of customer, community and technology were accelerating faster than we had anticipated,” AGL Chief Executive Officer Brett Redman said in an investor presentation on Tuesday. “Coupled with continuing pressure on wholesale electricity prices, if anything that pace has only picked up in the past few weeks.”New AGL would take over the company’s retail units, as well as its hydro portfolio, battery pipeline, some gas units and a stake in the PowAR renewable generation joint venture. PrimeCo would encompass assets including the coal stations and non-PowAR wind.AGL’s revenue from customer markets was A$7.69 billion ($5.87 billion) in 2020, up from A$7.54 billion in 2019, while its revenue from wholesale markets was A$4.34 billion over the same period, down from A$5.56 billion in 2019.AGL will immediately start engaging with stakeholders including investors, regulators and government with a view to confirming further details of the separation, the company said.(Updates with Greenpeace comment in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) — FTSE Russell placed Indian government bonds on the watchlist for possible inclusion in its debt index, a move that may bring the nation closer to its aim of joining a global bond gauge after several false starts.Rupee securities will be considered for addition to the FTSE Emerging Markets Government Bond Index, FTSE said as part of its semi-annual review released Monday. In the coming weeks, it’ll start an index that tracks securities issued under the Fully Accessible Route after investors expressed an interest in the notes.India has been trying to gain entry into a global debt index since 2019, but talks with index compilers have made little headway. A report this month said India’s efforts have been stymied by demands from global bond funds including a request that the government doesn’t change tax rules to the disadvantage of investors.“The attractiveness of IGBs as an ongoing investment will not solely depend on index inclusion,” said Arthur Lau, head of Asia ex-Japan fixed income at PineBridge Investments Asia. “Other factors including expected returns based on the prevailing economic conditions, government policies, and relative value to other local bond markets should be taken into account.”Inclusion in FTSE’s index may attract about $10 billion of inflows into rupee securities, said Dariusz Kowalczyk, a senior emerging-market strategist at Credit Agricole CIB in Hong Kong, adding that this was an initial estimate.India’s 10-year sovereign bond yield climbed three basis points to 6.15%, tracking a rise in their U.S. counterpart. The rupee slumped 1% to 73.2075 per dollar as the greenback strengthened.At its September review, JPMorgan said Indian bonds remain off index and were still under review for inclusion, although about $115 billion in notional value of current and upcoming government debt have been marked for accessibility. Bloomberg LP said in 2019 that it would work with Indian authorities to help the nation gain access to global bond indexes.Fund OutflowsOverseas investors have pulled $2.4 billion from rupee debt so far this year after withdrawing almost $14 billion in 2020. Sentiment has soured as India grapples with a widening budget deficit and a near record borrowing program in the coming fiscal year.Global funds have taken up around 34% of their combined eligible limit of about $47 billion in government bonds under the normal route for all investors including long-term funds. Under the FAR category, where overseas investors can have full ownership of any outstanding bond, total investment stands at about 324 billion rupees ($4.4 billion).FTSE’s announcement will help “ensure greater investment in debt markets and longer term, it will impose greater fiscal discipline on government finances,” said Sanjay Mathur, chief economist for Asean and India at Australia & New Zealand Banking Group Ltd. in Singapore.Bloomberg LP owns Bloomberg Barclays indexes which compete with FTSE Russell gauges.(Adds fund manager and analyst comments in fourth and tenth paragraphs)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) — U.S. employment probably swelled in March by the most in five months as millions of Covid-19 vaccinations and a more open economy helped invigorate hiring, including at businesses hit hardest by the pandemic.Friday’s monthly jobs report will show 650,000 people were added to payrolls and the unemployment rate dropped to 6%, according to the median forecasts of economists surveyed by Bloomberg. Some are projecting an increase of 1 million or more, which would be the sharpest gain since August.The rate of coronavirus vaccinations rose above two million per day in March and dozens of states eased pandemic-related business restrictions or lifted them all together. That likely boosted hiring in sectors most depressed by the health crisis, such as leisure and hospitality, which have been slow to rebound because of limits on capacity and in-person activities.“We know that the sector is still running pretty lean for jobs relative to pre-Covid levels, so there’s room for a nice bounce in job creation in that sector,” said Michelle Meyer, head of U.S. economics at Bank of America Corp.Some industries like food services may also step up hiring in anticipation of stronger sales in coming months, she said.ADP Research Institute data on Wednesday showed companies in March added the most jobs in six months, led by a big pickup in hiring at leisure and hospitality businesses. Total private payrolls increased 517,000 during the month and February employment was revised up to a 176,000 gain. Meanwhile, President Joe Biden signed a $1.9 trillion economic stimulus bill on March 11 that included direct relief payments, an extension of unemployment benefits, aid for restaurants and funding for vaccinations and testing. That should spur further employment growth in the coming months as more money circulates through the economy.In addition, Biden on Wednesday is set to unveil a $2.25 trillion infrastructure plan — paid for by steep tax hikes on businesses. The proposal aims to create new jobs through programs such as a new Civilian Climate Corps, construction on affordable housing and efforts to clean up abandoned mines, and capping old oil and gas wells.“Well-designed public investment can spur innovation and can spur productivity and it can spur job growth all around America,” Brian Deese, director of the National Economic Council, said on Bloomberg Television Wednesday. “This is about public sector investments that we know will actually generate job growth.”What Bloomberg Economics Says…“A pronounced acceleration in the pace of hiring is due to continue through March and into the second quarter as the economy surges out of its winter lockdown. Watch for sectors hit hardest during the pandemic to dominate payroll creation over the next several months.”– Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby, Eliza Winger, economistsFor the full note, click hereEmployment in the construction industry is also poised to rebound in March after a decline in payrolls a month earlier amid severe winter weather in much of the country.Alternative data also suggest robust overall job growth in March. A measure of employees working rose 6.8% between the beginning of 2021 and mid-March, a significant uptick compared to the gains seen in February, according to data from Homebase, an employee scheduling software company.Job postings on Indeed.com, a hiring website, were 13.5% higher than pre-pandemic levels as of March 26.In the meantime, the latest Paychex/IHS Markit small business jobs index advanced 0.3% in March, the most since 2013, while hourly and weekly earnings growth accelerated. Census Bureau data are also showing employment gains, with 1.12 million more Americans reporting that they were working in early March compared with early February, according to the Household Pulse Survey.Despite the positive outlook, Covid-19 variants present a risk to the labor market if they result in another wave of infections. What’s more, a full recovery in the labor market is still a long way off as employment is down 9.5 million from the pre-pandemic peak of 152.5 million in February last year.While the recovery is progressing more quickly than expected, some sectors hit hardest by the virus remain weak, Federal Reserve Chair Jerome Powell said in remarks to the House Financial Service Committee last week.“We welcome this progress, but will not lose sight of the millions of Americans who are still hurting, including lower-wage workers in the services sector,” Powell said.(Adds ADP employment figures in sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) — Shares of some tiny Chinese apparel companies are among the top performers in the country’s stock market over the last three days, as several of their foreign peers face a backlash over their stance on using cotton sourced from the contentious Xinjiang region.Shanghai Metersbonwe Fashion & Accessories Co. and Ribo Fashion Group Co. each surged 33% since Wednesday’s close to feature among the biggest gainers in about 4,000 Chinese A-shares during the period. The stocks jumped after Chinese social-media users last week called for a boycott of Swedish retailer Hennes & Mauritz AB, having found an undated company statement about accusations of forced labor in Xinjiang. Those calls quickly spread to other foreign brands including Nike Inc. and Burberry Group Plc.The operating performance of the two Chinese companies speaks to the speculative nature of the recent rally in their stocks.Shanghai Metersbonwe said in October that it will post a loss as much as 820 million yuan ($125 million) for 2020. That would mark a second year of losses, which could trigger a delisting-risk warning from the stock exchange. Ribo Fashion issued a profit warning in January, citing lower sales due to the pandemic and one-off losses from a unit.“It’s easier for short-term investors to trade these two stocks with poor earnings and few institutional investors,” said Zhang Gang, an analyst at Southwest Securities Co. “The speculative buying on nationalist sentiment is irrational and would be unsustainable.”Further, it would be “hard to shake the consumption habits” of customers of foreign brands, he said.Meanwhile, shares of Shanghai Metersbonwe continued their rally on Tuesday, surging by the daily limit. Ribo Fashion climbed as much as 7.7% before paring the bulk of its gains.Cotton producer Xinjiang Sailimu Modern Agriculture Co. has emerged as another big beneficiary as foreign brands grapple with the backlash. Its stock also jumped 10% on Tuesday, adding to a 33% surge in the previous three sessions.Luxury Companies at Risk of New Tensions With China: Bernstein(Updates prices throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) — The U.S. economic reopening trade is back in full force, sending 10-year Treasury yields up to 1.77% for the first time since January 2020.With the Biden administration rolling out plans to accelerate the vaccine campaign and rebuild U.S. infrastructure, investors are doubling down on bets on the U.S. economic recovery. Yields on bonds climbed to fresh highs on Tuesday and the dollar strengthened.The selloff surprised some market participants, who anticipated a period of grace in bond markets this week. Quarter-end re-balancing flows into bonds from stocks had been expected to boost demand in the short term. So anyone positioned for a wave of buying might feel some pain. Plus, the start of Japan’s new fiscal year on April 1 also had many expecting fresh demand from one of the biggest buyers of Treasuries in the past.“While there was an expectation that quarter-end rebalancing out of equities and into Treasuries would support Treasuries, we have yet to see that develop,” said Larry Milstein, senior managing director and head of government debt trading at R.W. Pressprich & Co. “The market’s focus has instead been on inflation and massive fiscal stimulus, which is weighing on bonds.”Yields on five-year Treasuries rose above 0.9%, followed by a block sale in the notes, before touching their highest level in 13 months. Treasury 10-year note futures volumes were running 50% over 20-day average levels from 7 a.m. in London up to the start of the U.S. session.The selloff rippled through European markets with benchmark U.K. bonds climbing as much as seven basis points to 0.85% and their German and Italian peers experiencing similar moves. Risk appetite is surging as investors weigh a stronger-than-expected global recovery, and a pledge that 90% of U.S. adults will be eligible to get a Covid-19 shot by April 19. The U.S. reached a record three-day stretch of 10 million shots over the weekend, according to the Bloomberg Vaccine Tracker.Asset managers say the boost to sentiment means the Treasury rout has further yet to run. Charles Diebel, who manages about 4.5 billion euros ($5.3 billion) at Mediolanum in Dublin, sees benchmark Treasury yields pushing toward 2% in the second quarter. “It will be volatile but the selling isn’t done yet,” he said.Those who were already positioned for a wave of Treasuries buying, ahead of Wednesday’s quarter-end, may be feeling the most pain amid position stop-outs. According to Bank of America Corp. strategists, $41 billion of U.S. private pension funds is expected to flow into Treasuries over the quarter, with the bulk of that coming by tomorrow. The bund selloff may prove limited in the near term given the negative net Euro government bond supply in April and the elevated bond buying by the European Central Bank, said Bank of America strategist Sphia Salim. HSBC Holdings Plc sees bund yields falling to -0.3% by the end of June, according to head of U.K. rates strategy Daniela Russell.Dollar OutperformsMeanwhile, currency traders are piling into the dollar, with the greenback outperforming almost all its Group-of-10 peers. Investors ditched havens with the yen among the biggest losers in the cohort, and there’s further bad news on the horizon for the Japanese currency — sentiment on the dollar against the yen is at its least bearish in more than four years.“The weaker yen is more a dollar story,” said Andreas Koenig, head of global foreign exchange at Amundi Asset Management. “A wider yield gap is to be expected and the yen weakness could go further.”Bond market volatility has tended to cool off in April in the past. But the Treasury selloff will likely last the week, said John Roe, the London-based head of multi-asset funds at Legal & General Investment Management, who is tactically short on U.S. debt. There’s a realistic chance Friday’s payroll data will show one million jobs added in March, he said.“We think more investors are positioning for that,” he said. “If you want to see how quickly an economy can rebound, and surprise experts, just look at Australia. That same narrative could play out in the U.S.”Australia’s 10-year bond yield rose as much as 10 basis points, with losses amplified by concerns ahead of Wednesday’s A$2 billion ($1.5 billion) debt sale, the first of material size in a month.All this comes just days after the downfall of Bill Hwang’s Archegos Capital Management — and one of the biggest margin calls in history — showing the irrepressible optimism of reflation-driven markets.(Adds quote in fourth paragraph, updates levels throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) — India’s consumption demand and business activity looked steady in February, although chances of a strong recovery appeared doubtful after a sharp surge in virus cases and the increasing risk of renewed lockdowns.The dial on a gauge measuring so-called animal spirits showed activity cruising at a steady pace for the fifth straight month, with all eight high-frequency indicators tracked by Bloomberg News holding their ground last month. The number was arrived at by using the three-month weighted average to smooth out volatility in the single-month scores.The February reading reflects gains in the economy at a time when virus cases were on the wane. However, the recent weeks have seen the trend reverse, raising the specter of localized lockdowns that could hit consumer mobility and demand in an economy where consumption makes up some 60% of gross domestic product.While central bank Governor Shaktikanta Das has said he doesn’t see any immediate threat to activity, economists see a bumpy road ahead given that the western Indian state of Maharashtra, which contributes 14.5% to the country’s overall GDP, is among the worst hit and accounts for the majority of cases. The state, which includes Mumbai, has imposed a night curfew to tamp down cases that have been rising since mid-February.Business ActivityActivity in India’s dominant services sector expanded at its quickest pace in a year in February, helped by an increase in new orders and optimism generated by a roll-out of vaccines. The IHS Markit India Services Purchasing Managers’ Index rose to 55.3 last month from 52.8 in January, with a reading above 50 signaling expansion.A similar survey earlier showed activity in the manufacturing sector also expanded, helping lift the composite index to a four-month high of 57.3 last month. As a result, input price inflation quickened, pushing the aggregate rate of cost inflation to an 88-month high — a wrinkle for the nation’s inflation-targeting monetary policy makers who meet early next month to decide on interest rates.ExportsExports were up 0.7% year-on-year last month, slower than the 6.2% rise seen in January. More importantly, imports rose 7% as non-oil and non-gold imports saw robust growth, mirroring domestic demand.Consumer ActivityPassenger vehicle sales, a key indicator of demand, rose nearly 18% in February from a year ago, with two-wheelers and tractor sales leading the pack.Demand for loans picked up. Bank credit grew around 6.6% in February from a year earlier, faster than the 5.9% rise seen in late January, central bank data showed. Liquidity conditions were little changed. Bloomberg Economics’ Abhishek Gupta said a pullback in surplus liquidity, as well as rising yields, pose a risk to loan demand.Industrial ActivityIndustrial production contracted 1.6% in January from a year earlier. Consumer non-durables, comprising essential goods, contracted 6.8% in January, while demand for white goods and mobile phones shrank 0.2%.Output at infrastructure industries, which makes up 40% of the industrial production index, rose 0.1% in January from a year ago, after a 1.3% contraction in December. Both data are published with a one-month lag.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The sectors that benefited most from the pandemic-inspired shift to working from home have fallen hard since late January, while hot technology firms and blank-check merger companies have tumbled from their highs.
The National Association of Realtors’ (NAR) Pending Home Sales Index, which tracks the number of homes that are under contract to be sold, fell 10.6% in February from a month earlier — falling for the second straight month.
(Bloomberg) — Chinese sovereign bonds will have the sixth-largest weighting in FTSE Russell’s flagship World Government Bond Index, though global investors have three times longer than they expected to grow their holdings to that level.The index compiler will add Chinese bonds in October in phases over a period of three years, longer than the 12 months initially envisioned after market feedback, FTSE said in a statement. They would comprise 5.25% of the index on a market value-weighted basis, based on prices as of March 25, giving China a slightly bigger weighting than the U.K.Global funds have already been piling into Chinese sovereign debt, which has acted as a haven during the recent bond selloff, given its yield advantage and inclusion in two other bond indexes. Still, the longer phase-in period for FTSE indicates some investors are concerned about issues including market liquidity, while Japan’s Government Pension Investment Fund has also been waiting on the decision.“It’s a sensible decision for a slower process given the potential sizable monthly inflow,” said Becky Liu, head of China macro strategy at Standard Chartered Plc. “It highlights the still slow process of accessing China’s onshore bond market by some investors, likely Japanese lifers who are one of the key users of the WGBI, but still it’s very good news to induce broader-based global investments into China.”Liu expects China sovereign bonds to see total inflows of $130 billion to $156 billion from the inclusion, which could boost foreign buying this year to as much as 1.5 trillion yuan ($228 billion), or at least 30% higher than 2020. Analysts from HSBC Holdings Plc. and Maybank Kim Eng are forecasting inflows of $130 billion.China Bonds to See Inflows of $105b to $156b From FTSE InclusionThe WGBI is widely followed by Japanese investors, including GPIF, which manages $1.6 trillion. Purchases of Chinese bonds by Japan started to pick up in late 2016 and the pace has accelerated in the past two years, according to balance-of-payments data from Japan’s Ministry of Finance. A rolling 12-month sum of net buying reached 707.4 billion yen ($6.4 billion) in January.China’s loose correlation with other debt markets has been a major reason for its outperformance amid a selloff in global peers. The nation’s 10-year benchmark bond yield has risen just four basis points this year compared with a more than 80 basis point climb in yield for similar-dated Treasuries. Still, there’s a spread of around 145 basis points between the two securities.Global investors bought about 320 billion yuan of Chinese debt as of the end of February, according to data from the central bank. They own around 11% of the Chinese sovereign bond market, Bloomberg calculations show.“A more conservative implementation schedule is appropriate” due to the passive nature of the index mandate and the inflows expected from the inclusion, FTSE said in the statement. “Some clients may need longer onboarding time to access the market.”U.S. Debt Rout Ignites Hunt for New Havens That Ends in ChinaThe World Government Bond Index comprises of debt from more than 20 countries, with Japan having the biggest weighting in Asia at more than 16% once China’s inclusion is complete. The index provider owned by the London Stock Exchange Group adjusted its inclusion threshold for Chinese government bonds just this month following feedback from market participants.“China’s bond market has already been the second largest in the world, so isn’t a surprise for China to have a similar weighting as the U.K.,” said Tommy Xie, head of Greater China research at Oversea-Chinese Banking Corp. Chinese sovereign bonds could see inflows of about $150 billion from the inclusion, while foreign ownership will likely rise further to as much as 20% of the total, he said.FTSE is the last of the three main index compilers to add Chinese debt after Bloomberg Barclays and JPMorgan Chase & Co. It announced the decision in September. Bloomberg Barclays is owned by Bloomberg News parent Bloomberg LP.(Updates with more analyst flow estimates in fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.