Week 48

28 November – 02 December

 

28 November

 

Ireland’s insurance regulator has increased its staff numbers by more than a quarter ahead of an expected influx of applications from London-based insurers looking to move operations following the Brexit vote.

 

The coming days will be crucial for the future of the European economy. The Basel Committee on Banking Supervision will officially present its final set of proposals on capital requirements for the banking sector, known as the Basel IV framework.

 

Tata Steel has signed a letter of intent with commodities trader Liberty House, pushing on with its move to sell its UK steel business.

 

British sportswear retailer JD Sports has acquired Go Outdoors in its latest bid to strengthen its position in the outdoor goods market.

 

29 November

 

Mario Draghi has warned that Britain, rather than the eurozone, will “first and foremost” feel the pain of Brexit, as he called for clarity over the negotiation process that will govern the UK’s departure from the EU.

 

Komatsu of Japan, which has included monitoring technologies in its construction and mining equipment since the late 1990s, began releasing a monthly geographic breakdown of average working hours last year, under pressure from investors.

 

To resolve battles with dissident investors, spin-offs can provide a straightforward solution for besieged companies. Shareholders receive a piece of the newly separated company while keeping shares in the slimmer parent. Each company, afterwards, may become easier to value. The dream scenario may be that a bidder emerges willing to acquire either of the leftovers at a premium price.

 

In late October, the manager of a big long-only Japan fund returned from a European client tour with a perfect record: 28 meetings, 28 negative views on Japan. Contrarian klaxons rarely blare so loudly. Just a few weeks later foreign investors made their biggest splurge of net Japan buying since the Abenomics bull run of January 2015. The sharp, post-US election descent of the yen has helped that leap of faith. But so too have the latest results of the world’s biggest pension fund, the fact that Topix profit margins in the first half of fiscal 2016 were rising despite the yen’s strength, and, obliquely, the gold-plated Honma golf club that Prime Minister Shinzo Abe gave Donald Trump.

 

30 November

 

A gauge of US consumer sentiment has hit a post-recession high, painting a positive outlook ahead of the key holiday shopping season as recent data point to a strengthening US economy.

 

The role of foreign direct investment in emerging economies should go roughly as follows. In the early stages of development, countries import FDI and the technical and management expertise that goes with it. As they become richer, they develop domestic companies that invest abroad themselves. China, having followed the first part for some decades, appears to be balking at the second. Beijing is planning tough restrictions on outbound FDI via a clampdown on the foreign exchange purchases necessary to execute deals.

 

Markets around Asia were again treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weaker US dollar and as investors turn their attention to a meeting between Opec members later today.

 

South Korea plans to ban the sale of six foreign car models imported by Nissan, BMW and Porsche due to errors with their environmental certification documents. Seoul’s environment ministry said on Tuesday that it would fine the local units of the three groups a combined Won6.5bn ($5.6m) after they found certification errors in 10 models — two from Nissan, one BMW and seven Porsche. Four of the seven Porsche models have already discontinued sales, the ministry added. .

 

01 December

 

Opec has agreed to cut supplies for the first time since the global financial crisis eight years ago, sending prices soaring above $50 a barrel as Saudi Arabia and its Gulf allies accepted big reductions in production.

 

Long-term US bond yields shot up by the most since the market turmoil that followed Donald Trump’s election victory, after his nomination for Treasury secretary nominee indicated he is open to the issuance of longer-term debt.

 

Agustín Carstens, one of Mexico’s most respected policymakers, is quitting as head of the Bank of Mexico next July to lead the Bank of International Settlements. José Antonio Meade, finance minister, told a seminar on Thursday that the move – which comes as Mexico’s economy prepares for further shocks as Donald Trump takes office and fleshes out trade plans that he has said will require a renegotiation of the North American Free Trade Agreement – “reflects confidence in his management”.

 

Frank Matsaert, chief executive of TradeMark East Africa, a donor-funded agency working to boost trade in the region, attributes the progress to “a series of interlocking reforms that have worked as a result of concerted political will by east African leaders”.

 

02 December

 

Agustín Carstens, who has announced he is leaving the helm of the Bank of Mexico next year to run the Bank for International Settlements, said he believed expansive monetary policy had run its course globally.

 

There are some voices who have been warning about mega, hyper, collapse-of-western civilisation scale inflation for decades (or more). Then there are others who started warning about it just as dramatically from 2009 (QE interventions) onwards. All of them got the last eight years wrong. Not only did inflation not happen, it was deflation that became the critical problem.

 

Electricals retailer Dixons Carphone led the FTSE 100 risers on Thursday after Credit Suisse argued that post Brexit-vote worries were probably overblown. Dixons has dropped a fifth in value since the EU referendum on fears about weakening consumer confidence and higher costs due to sterling’s devaluation. However, Credit Suisse argued that Dixons’ European peers were largely untroubled last year when the euro lost about 15 per cent of its d

 

BP has given the go-ahead for the $9bn Mad Dog 2 oil project in the US Gulf of Mexico, in a decision that points to a way forward for offshore producers hit hard by the slump in crude prices.