Economy

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FILE PHOTO: Employees work on a mobile phone production line at Huawei's factory campus in Dongguan, Guangdong province
FILE PHOTO: Employees work on a mobile phone production line at Huawei’s factory campus in Dongguan, Guangdong province, China March 25, 2019. Picture taken March 25, 2019. REUTERS/Tyrone Siu

April 22, 2019

BEIJING (Reuters) – Guangdong, China’s top province by economic output, maintained a growth rate of 6.6 percent in the first quarter thanks to improving industrial production and infrastructure spending, the 21st Century Business Herald reported, citing local officials.

That came in a notch above the Guangdong provincial government’s target of 6.0 percent to 6.5 percent this year and unchanged from growth in the fourth quarter of last year.

Export-oriented Guangdong, whose gross domestic product of about $1.4 trillion is equivalent to that of Australia, has been battling intense pressure from a nine-month long trade war between the United States and China, with many businesses in the region shifting production out of China as factory orders dried up.

Exports have yet to show any sustainable improvement, up just 1.8 percent in the first three months, according to the Herald. That was slightly faster than the 1.2 percent growth in 2018 but still pointed to sluggish global demand.

To keep foreign customers, Chinese manufacturers have been giving discounts and scaling back workforces, among other measures.

In line with the national trend, Guangdong’s industrial production raced to a nine-month high in the first quarter, with output of new energy vehicles rising 252.1 percent from a year earlier.

Some analysts had attributed the jump to manufacturers building inventory to take advantage of Beijing’s announcement of value-added tax cuts that went into effect on April 1.

Production in telecommunication base stations in Guangdong surged 154 percent, likely due to the government’s push to launch 5G services across the region. Guangdong is targeting to build 7,300 5G towers by 2020.

Output in advanced manufacturing, accounting for over half of total industrial output, rose 6.9 percent in first quarter, while that in high-tech manufacturing surged 9.6 percent.

Infrastructure investment jumped 28.3 percent in the first quarter, up 17.2 percentage points from a year earlier, according to the newspaper, as government fast-tracked railways and highways to boost growth.

(Reporting by Stella Qiu and Ryan Woo; Editing by Shri Navaratnam)

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Japan's national flag is seen behind the logo of Mitsubishi UFJ Financial Group Inc (MUFG) at its bank branch in Tokyo
Japan’s national flag is seen behind the logo of Mitsubishi UFJ Financial Group Inc (MUFG) at its bank branch in Tokyo, Japan September 5, 2017. REUTERS/Kim Kyung-Hoon

April 22, 2019

TOKYO (Reuters) – Japan’s MUFG will book a charge of about 100 billion yen ($893.34 million) in the year ended March after its credit card unit stopped development of a new system, but will keep its full-year profit outlook, the Nikkei reported on Monday.

Mitsubishi UFJ Financial Group Inc, Japan’s biggest bank by assets, continues to forecast net profit of 950 billion yen, the newspaper said. MUFG will report earnings in middle of May.

An MUFG spokesman declined to comment on the report when contacted by Reuters.

The subsidiary, Mitsubishi UFJ Nicos, had been developing a new system since 2016 to merge the management of three credit card brands, with 75 billion yen invested in the project out of a planned total of 150 billion yen, the Nikkei reported.

Separately, MUFG is considering scaling back its bond and equity sales and trading operations in London and New York, as part of a broader restructuring of its global markets division Reuters previously reported.

(Reporting by Takashi Umekawa; Editing by David Dolan and Christopher Cushing)

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Illustration photo of a U.S. Dollar note
A U.S. Dollar note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration

April 22, 2019

By Daniel Leussink

TOKYO (Reuters) – The dollar drifted higher against the euro and British pound on Monday, supported by the relative strength of the U.S. economy, though moves remained small as many investors were still away for the long Easter weekend.

Financial markets in Australia, Hong Kong and many major countries in Europe are closed on Monday for the Easter holiday. Currency trading continues globally but volume is expected to be light.

The dollar has found support in recent weeks on the back of a gradual rise in U.S. 10-year Treasury yields and signs of strength in the world’s top economy, including better-than-expected retail sales in March, following a weak start to the year.

“It’s better to say that the euro has been weak rather than that the dollar is strong,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

“Traders have mostly priced in the weakness of the euro zone economy by now,” Ishizuki said. “It’s a little bit difficult to see the euro weakening further from here, so I think it will be hard for the dollar to strengthen.”

The dollar index was last down a tenth of a percent at 97.369, drifting slightly lower after booking a 0.4-percent gain last week.

The index remained within striking distance of its 2019 high of 97.71 brushed in early March.

Investors’ immediate focus will be on U.S. existing home sales for March, due at 1400 GMT, for further cues on the health of the U.S. economy.

In February, U.S. home sales surged to their highest in 11 months, as the country’s housing market showed renewed momentum following a pause in interest rate hikes by the Federal Reserve.

The euro was a tad lower at $1.1244, adding to last week’s losses of nearly half a percent after data on Thursday showed that activity in Germany’s manufacturing sector shrank for a fourth straight month in April.

The pound was last down 0.05 percent at $1.2994, dipping below the $1.30 handle and nearly 0.4 percent off a two-month low of $1.2945 hit last month.

Against the Japanese yen, the dollar was 0.1 percent higher at 111.98 yen, within reach of this year’s peak of 112.17 hit on Wednesday last week.

Starting Saturday, Japan will have an unprecedented 10-day holiday from late April to early May to mark the ascension of the new emperor, Crown Prince Naruhito.

Daiwa’s Ishizuki said he expected currency trading by Japanese investors to remain relatively light as traders and companies are shifting into holiday mode.

(Editing by Jacqueline Wong)

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People walk on a street in downtown Havana
FILE PHOTO – People walk on a street in downtown Havana December 29, 2015. REUTERS/Alexandre Meneghini

April 21, 2019

By Marc Frank

HAVANA (Reuters) – The Cuban government has ordered its state-run power system to further reduce electricity generation in the latest sign that a cash crunch exacerbated by new U.S. sanctions is taking an economic and human toll, a newspaper reported on Sunday.

Ciego de Avila’s provincial Communist Party newspaper, Invasor, reported that local generation would be cut 10 percent to save fuel as part of a nation-wide reduction ordered on April 18.

The report said cuts in fuel allocation for power generation begun in 2016 had so far spared the residential sector and essential services from blackouts but warned that could change.

More than 95 percent of the country’s electricity is generated by oil-fired plants.

Most business and infrastructure are state owned.

“We are at a critical point, according to the electric union, and if at certain times of the day the fuel allocated for the day runs out, we will have to shut down some circuits,” the paper said, adding that for now no programmed blackouts were planned.

Last month the United States began sanctioning ships and companies carrying Venezuelan fuel to Cuba. Cuba barters medical and other assistance for the oil and will be hard pressed to find an alternative given the cash crunch.

Communist Party leader Raul Castro and President Miguel Diaz-Canel have both told the National Assembly that the country should prepare for hard times, but a more diversified economy meant it would not be as harsh as the 1990s.

Cubans suffered through years of daily blackouts in the 1990s after the fall of former benefactor the Soviet Union.

Cuba’s foreign exchange earnings used to purchase abroad more than 50 percent of the fuel it consumes, food, animal feed and much more, have steadily fallen since 2015 when strategic ally and oil supplier Venezuela began to implode.

Declines in key exports nickel and sugar, and cancellation of a health services for cash deal with Brazil, have worsened matters.

Foreign trade fell 25 percent from 2013 through 2017, with imports dropping to $11.3 billion from $15.6 billion.

(Reporting by Marc Frank; Editing by Susan Thomas)

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FILE PHOTO: The financial district can be seen as a person runs in the sunshine on London's south bank
FILE PHOTO: The financial district seen from London’s south bank, Britain February 23, 2019. REUTERS/Henry Nicholls/File Photo

April 21, 2019

By Simon Jessop

LONDON (Reuters) – Nearly half of all people working in Britain’s financial services industry have followed their parents into the sector, more than three times the national average, research from consultants KPMG showed.

The finding comes as policymakers and investors push the industry to improve diversity in senior management and make firms more inclusive in an effort to improve corporate governance as well as shareholder returns.

The research revealed that forty-one percent of financial services staff had parents in the same sector against a national average of 12 percent. In insurance, the figure was even higher, at 54 percent.

“The fact that people in financial services are more than three times more likely than the national average to have followed in their parent’s career footsteps is staggering,” said Tim Howarth, head of financial services consulting at KPMG.

KPMG spoke to more than 1,500 people for the survey, a third of whom worked in the banking, insurance or asset management industry, while the rest were employed in a range of other sectors across the country.

The lack of diversity in the industry was a “huge challenge”, said John Mann, a lawmaker for the opposition Labour party who sits on the government committee responsible for overseeing the finance industry.

“Its biggest problem, by far, has been its cultural problem,” he told Reuters. “That’s what’s led to the collapse of a number of financial institutions. The cultural problems are reinforced by not bringing in a wider array of people.”

The finance industry is one of Britain’s biggest tax payers and has some of the country’s highest-paid jobs. Of those working in the sector, 87 percent said they liked their job, the report found, pipping the 82 percent satisfaction rate seen outside the industry.

Yet 65 percent of all the people surveyed by KPMG said they would not consider a role in financial services. Of these, 41 percent said it was because the industry “sounds boring”, while 16 percent cited a lack of contacts in the sector.

“There’s clearly a gap between what the public think, and the realities of working in financial services … that has to be addressed if we are to attract the diverse mix of skills and experiences needed to navigate the changes going on in financial services and society,” Howarth said.

The biggest driver for more than a third of the 500 financial services workers surveyed was the higher pay on offer.

Just 16 percent of the 1,000 non-financial services sector workers put money as their main motivation.

“We are always told that Millennials and Generation Z are more interested in their social impact than their finances, and so our sector has to get more imaginative in the way it attracts and retains staff,” KPMG Head of Financial Services Jon Holt said.

(Additional reporting by Iain Withers. Editing by Jane Merriman)

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Man walks past a flower installation set up for the upcoming Belt and Road Forum in front of the Chinese Foreign Ministry in Beijing
A man walks past a flower installation set up for the upcoming Belt and Road Forum in front of the Chinese Foreign Ministry in Beijing, China April 18, 2019. Picture taken April 18, 2019. Jia Tianyong/CNS via REUTERS

April 21, 2019

By John Ruwitch

SHANGHAI (Reuters) – World leaders meeting in Beijing this week for a summit on China’s Belt and Road initiative will agree to project financing that respects global debt goals and promotes green growth, according to a draft communique seen by Reuters.

The Belt and Road Initiative is a key policy of President Xi Jinping and envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with massive infrastructure spending.

But it has proved controversial in many Western capitals, particularly Washington, which views it as merely a means to spread Chinese influence abroad and saddle countries with unsustainable debt through nontransparent projects.

The United States has been particularly critical of Italy’s decision to sign up to the plan last month, the first for a G7 nation.

In an apparent nod to these concerns, the communique reiterates promises reached at the last summit in 2017 for sustainable financing – but adds a line on debt, which was not included the last time.

“We support collaboration among national and international financial institutions to provide diversified and sustainable financial supports for projects,” the draft communique reads.

“We encourage local currency financing, mutual establishment of financial institutions, and a greater role of development finance in line with respective national priorities, laws, regulations and international commitments, and the agreed principles by the UNGA on debt sustainability,” it added, referring to the United Nations General Assembly.

The word “green” appears in the draft seven times. It was not mentioned once in the summit communique from two years ago.

“We underline the importance of promoting green development,” the draft reads. “We encourage the development of green finance including the issuance of green bonds as well as development of green technology.”

The Chinese government’s top diplomat, Wang Yi, said on Friday that the Belt and Road project is not a “geopolitical tool” or a debt crisis for participating nations, but Beijing welcomes constructive suggestions on how to address concerns over the initiative.

A total of 37 foreign leaders are due to attend the April 25-27 summit, though the United States is only sending lower-level representatives, reflecting its unease over the scheme.

The number of foreign leaders at the April 25-27 summit is up from 29 last time, mainly from China’s closest allies like Pakistan and Russia but also Italy, Switzerland and Austria.

China has repeatedly said Belt and Road is for the benefit of the whole world, and that it is committed to upholding globally accepted norms in ensuring projects are transparent and win-win for all parties.

“We emphasize the importance of the rule of law and equal opportunities for all,” the draft reads.

(Reporting by John Ruwitch; Writing by Ben Blanchard; Editing by Edwina Gibbs)

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Customers walk past Avianca airline check-in machines at Congonhas airport in Sao Paulo
FILE PHOTO – Customers walk past Avianca airline check-in machines at Congonhas airport in Sao Paulo, Brazil, April 12, 2019. REUTERS/Nacho Doce

April 20, 2019

BRASILIA (Reuters) – Avianca Brasil has canceled more than 1,300 flights, Brazilian media reported on Saturday, as the bankrupt airline was forced to reduce its fleet by more than two-thirds.

The cancellations, for April 19-28, are nationwide, with airports in Brasilia, Guarulhos in Sao Paulo, and Galeao in Rio de Janeiro, the hardest hit, O Estado de Sao Paulo reported.

Avianca, which filed for bankruptcy protection in December, has to return 18 leased planes after Easter, Brazil’s National Civil Aviation Agency said on Thursday, reducing its fleet to just eight aircraft.

Earlier this month, the airline had 35 planes.

(Reporting by Jamie McGeever; Editing by Richard Chang)

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Illustration photo of a Thomas Cook logo
The Thomas Cook logo is seen in this illustration photo January 22, 2018. REUTERS/Thomas White/Illustration

April 20, 2019

(Reuters) – Thomas Cook has been tentatively approached about a takeover of its tour operating unit, or the entire company, by several parties as its lenders prepare for crunch talks over the state of its finances, Sky News reported on Saturday.

The company, which has put its airline business up for sale, last month announced a review of its money division to help focus on its core holiday business after a rough 2018.

Citing unnamed sources, Sky News reported https://news.sky.com/story/bidders-try-to-land-thomas-cook-as-lenders-chart-new-course-11698817U.S. private equity firm KKR & Co and Swedish buyout group EQT Partners were potential bidders for the group, while China’s Fosun International was understood to be among those to have lodged a preliminary interest in the tour business.

Thomas Cook, the world’s oldest tour operator, has brought in advisers from AlixPartners to work on its balance sheet and cost-reduction plans, while its syndicate of more than a dozen lenders has hired FTI Consulting to advise on their financial exposure to the company, the report added.

Thomas Cook and KKR said they won’t be commenting on the report. EQT declined to comment, while Fosun could not be immediately reached for comment.

(Reporting by Sathvik N in Bengaluru; Editing by David Holmes)

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Larry Fink, Chief Executive Officer of BlackRock, stands at the Bloomberg Global Business forum in New York
Larry Fink, Chief Executive Officer of BlackRock, stands at the Bloomberg Global Business forum in New York, U.S., September 26, 2018. REUTERS/Shannon Stapleton

April 20, 2019

BERLIN (Reuters) – There are no signs that the global economy is sliding toward a recession in the next 12 months, BlackRock Inc’s Chief Executive Larry Fink said in remarks published on Saturday.

In an interview with German business daily Handelsblatt, Fink warned, however, that the global economy was in the late stage of a long growth cycle, suggesting that downturn was becoming more likely.

“I see no signs of a global recession in the coming 12 months,” said Fink, who leads the world’s largest asset manager.

“The central banks have loosened their policy above all because of the weak fourth quarter of 2018. We will go through a phase in which things are not great but also not bad.”

He added: “But we are naturally in a late phase of the economic growth cycle.”

The International Monetary Fund cut its global economic growth forecasts for 2019 this month and said growth could slow further due to unresolved trade disputes and the risk of Britain leaving the European Union without a deal.

The global lender said some major economies, including China and Germany, might need to take short-term actions to prop up growth and that a severe downturn could require coordinated stimulus measures.

German Finance Minister Olaf Scholz has ruled out taking on new debt to stimulate growth in Europe’s biggest economy, saying tax cuts, higher investments and a solid labor market will continue to provide growth impetus.

(Reporting by Joseph Nasr; Editing by Alison Williams)

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Ajay Singh, Chairman of Indian low-cost carrier SpiceJet, speaks with the media before the landing of an amphibious seaplane from Japan's Setouchi Holdings in the Arabian Sea as part of a demonstration by SpiceJet in Mumbai
FILE PHOTO: Ajay Singh, Chairman of Indian low-cost carrier SpiceJet, speaks with the media in Mumbai, India, December 9, 2017. REUTERS/Shailesh Andrade

April 19, 2019

(Reuters) – India’s SpiceJet Ltd said on Friday it will prioritize hiring employees of Jet Airways Ltd who are losing their jobs after the crisis-hit Indian airline halted all flight operations indefinitely this week.

“We have already provided jobs to more than 100 pilots, more than 200 cabin crew and more than 200 technical and airport staff,” said Ajay Singh, chairman and managing director of SpiceJet. “We will do more.”

Hundreds of Jet Airways employees protested in Delhi and Mumbai on Thursday to push its management for answers about their future after the airline shut down all flight operations on Wednesday having failed to secure new funding from its lenders.

Jet Airways has lost many employees as the crisis unfolded. About 400 pilots have moved to other airlines, leaving Jet with about 1,300 pilots, a senior Jet pilot told Reuters. About 40 engineers have also left, a senior engineer said.

Lenders, led by State Bank Of India, say they are hopeful of a successful bidding process for Jet. The carrier is saddled with about $1.2 billion in debt.

Low cost carrier SpiceJet, which pledged to add 27 planes over the next two weeks to help to fill in the slots left vacant by Jet’s grounding, said that it is making all possible efforts to minimize passenger inconvenience. The government plans to form a committee to temporarily allocate takeoff and landing slots left vacant by the grounding of Jet’s flights, a senior official said on Thursday. Local airlines including InterGlobe Aviation Ltd and state-run Air India are likely to benefit.

Air India on Thursday offered special fares to passengers stranded in international routes due to Jet’s grounding.

(Reporting By Arnab Paul in Bengaluru and Tanvi Mehta in Mumbai; Editing by Martin Howell)

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