2024-09-23 14:01

ORLANDO, Florida, Sept 23 (Reuters) - China's political and economic leadership are thought to have a keen sense of history, but Beijing's tepid response to the unfolding property crash that's strangling the country's growth and spreading deflation is baffling. The clear lesson from major housing crises that have occurred in recent decades is that cure and recovery only come following bold, decisive action in the form of massive monetary and fiscal stimulus. Beijing is providing neither and instead taking a scattergun approach. The People's Bank of China on Friday chose not to cut benchmark borrowing rates, but on Monday injected two-week cash into the banking system for the first time in months and at a lower rate too. But in the words of the Institute of International Finance's Gene Ma and Phoebe Feng, Beijing's policy response has been "slow, timid, and sometimes very vague," a far cry from the "big bazooka" that's needed. FALLING BEHIND The impact of this muted response on China's economy has been stark. Growth in 2024 is likely to fall short of the government's 5.0% target, deflationary pressures are intensifying at an alarming rate, investment is collapsing, and credit growth is at a record low. Morgan Stanley economists are now forecasting nominal GDP growth of just 3.9% this year and next. For comparison, nominal U.S. GDP growth is currently running at an annualized pace of around 5.5%. China's stock market is also a notable laggard. As the rising tide of global monetary easing has lifted stock markets around the world to new highs, China has gone in the opposite direction. Shanghai's blue chip index is down 15% since May, has nearly halved since February 2021, and is close to making new multi-year lows. In many cases, foreign capital is staying away or leaving. Chinese equity funds have attracted inflows in only two of the last 13 months, and foreign direct investment flows have turned negative, according to the IIF. True, foreign investors have continued to participate in the country's bond market rally. But the overall message is that investors are reluctant to invest in China until there's a clear path to economic recovery. And that's nowhere in sight. TRILLIONS NEEDED The property sector is pivotal to the crisis. Its implosion is damaging growth, financial stability and household wealth. And the deflation it's fueling is affecting corporate profitability and investment, while increasing real debt burdens. At its peak three years ago the property sector accounted for a quarter of China's GDP. Since then, housing investment is down 30%, home sales have halved, and housing starts have plunged by two thirds, according to the IIF. Analysts at Jefferies reckon Beijing may need to spend at least 2 trillion yuan ($285 billion) this year to successfully implement its plan to reduce the country's excess housing stock by purchasing unsold properties and converting them into social housing. And they estimate that up to 7 trillion yuan ($1 trillion) will be needed to get housing inventory down to more healthy levels. EXCESSIVE CAUTION So why isn't Beijing firing the proverbial bazooka? First, flooding the system with liquidity may not address the root cause of the crisis because China's property bubble is a result of simple oversupply as much as debt-fueled leverage. A flood of stimulus could also weaken the exchange rate so much that capital flight out of the country accelerates. And deep rate cuts would wipe out banks' already slender interest margins. Finally, China's leaders have simply shown themselves to be more cautious than cavalier. But this policy paralysis has consequences. By failing to follow its global peers in aggressively cutting rates, the PBOC has helped lift the yuan to its strongest level in over a year. The last thing China's sluggish economy needs is a buoyant exchange rate. Beijing's hesitancy may reflect its concern about repeating the mistakes of Japan, which spent decades in a deflationary and slow-growth funk after its housing bubble burst in 1990. House prices there still haven't fully recovered. But taking an overly cautious approach could make this outcome more likely, not less. WISHING AND HOPING Many China bulls argue that Chinese assets are attractive because, when push comes to shove, Beijing will ultimately take the necessary steps to stimulate growth. How can investors ignore the world's largest consumer of many key commodities – an innovative, competitive behemoth with a huge savings pool worth trillions of dollars? But bonds aside, Chinese assets are cheap for a reason. Lots of reasons. And thus far, Beijing has shown little appetite for the overwhelming monetary and fiscal stimulus experts believe is necessary. This could obviously change. But, for now, there's little indication that it will. (The opinions expressed here are those of the author, a columnist for Reuters.) Sign up here. https://www.reuters.com/world/china/chinas-failure-fire-policy-bazooka-may-keep-markets-deep-freeze-mcgeever-2024-09-23/

2024-09-23 12:34

Sept 23 (Reuters) - U.S. energy firm Berkshire Hathaway Energy shut its Cove Point liquefied natural gas (LNG) export plant in Maryland for about three weeks of annual autumn maintenance, according to a company notice to customers. The amount of natural gas flowing to the plant, which shut around Sept. 20, fell to near zero from an average of around 0.7 billion cubic feet per day (bcfd) since Aug. 1, according to data from financial firm LSEG. The plant, which has the capacity to turn about 0.8 bcfd of gas into LNG, has pulled in an average of around 0.8 bcfd since it returned to service in mid October 2023 from its last autumn maintenance outage. One billion cubic feet is enough to supply about 5 million U.S. homes for a day. U.S. LNG export plants typically shut for planned maintenance in the spring or autumn when global demand for gas for heating or cooling is lower than during the peak winter and summer months. Berkshire Hathaway Energy is a unit of U.S. multinational conglomerate Berkshire Hathaway (BRKa.N) , opens new tab. Berkshire Hathaway Energy completed the purchase of 50% of Cove Point from Virginia energy company Dominion Energy (D.N) , opens new tab in September 2023 for about $3.3 billion. Berkshire Hathaway Energy operates Cove Point and owns 75% of the facility. The other 25% has been owned by units of Brookfield Asset Management . Cove Point's LNG has been sold under 20-year agreements to a subsidiary of GAIL (India) (GAIL.NS) , opens new tab and to ST Cove Point, which is a joint venture between units of Japanese trading company Sumitomo (8053.T) , opens new tab and Tokyo Gas (9531.T) , opens new tab. Sign up here. https://www.reuters.com/business/energy/berkshire-hathaways-maryland-cove-point-lng-export-plant-shut-maintenance-2024-09-23/

2024-09-23 12:32

SINGAPORE, Sept 23 - Singaporean state-owned investor Temasek said on Monday that it is setting aside S$100 million ($77.43 million) as a community gift to support climate action initiatives that will accelerate the green energy transition. Temasek said in a statement that the gift, named "Concessional Capital for Climate Action", will provide more flexible, patient and favorable financing to projects that include marginally bankable clean infrastructure projects in Asia. Temasek, whose net portfolio value totaled $288 billion as of March 31, 2024, announced the community gift in conjunction with its 50th anniversary dinner on Monday. Sign up here. https://www.reuters.com/business/environment/singapores-temasek-sets-aside-77-mln-support-climate-action-initiatives-2024-09-23/

2024-09-23 12:20

NEW DELHI, Sept 23 (Reuters) - India's finished steel imports from China hit a seven-year high during the first five months of the 2024/25 financial year, provisional government data reviewed by Reuters showed. India's overall finished steel imports also reached a six-year high at 3.7 million metric tons in the April-August period of this year, and the country was a net importer. The world's second-biggest crude steel producer has been consuming the alloy at a faster pace with robust demand from the infrastructure and automotive sectors. India shipped 1.1 million tons of the alloy from China in the April-August period, up 31.7% year-on-year, the data showed. China was the largest exporter of finished steel to India during this period, followed by South Korea and Japan, primarily shipping stainless steel, hot-rolled coil steel, galvanised sheets, and plates. India's federal steel ministry is discussing various trade measures against imports in response to calls from Indian mills. India's imports of finished steel from Russia during the April-August period also hit a six-year high, the data showed. Russia, whose exports of finished steel at around 54,000 tons, more than doubled from a year ago, was also the fifth-largest exporter of finished steel to India during the period. Domestic steel prices fell in August, India's steel ministry noted in its report. "Indian domestic rebar prices fell during the month under review reflecting the ongoing challenges in the market which included supply-demand mismatch and falling offers," it said. However, for April-August, domestic demand was robust, as finished steel consumption touched a seven-year high at 60.3 million metric tons, up 13.8% from a year ago. But, overseas markets were subdued and finished steel exports fell to a seven-year low during the period. India's overall finished steel exports were 1.9 million tons in April-August, down 39.6% from a year ago. Italy, the top export destination for India's finished steel exports, imported around 360,000 tons, down 48.3% year-on-year. India's crude steel production was at 60.9 million tons during the period, up 4.2% from a year ago, the data showed. Sign up here. https://www.reuters.com/markets/commodities/indias-finished-steel-imports-china-hit-7-year-high-april-august-data-shows-2024-09-23/

2024-09-23 12:14

BUENOS AIRES, Sept 23 (Reuters) - Argentina's foreign currency deposits have jumped by around $8 billion since libertarian President Javier Milei took office in December, driven by a series of pro-market austerity measures and incentives to lure dollars back into the financial system. The latest central bank data available on Monday show that total foreign currency deposits now exceed $24 billion, up from around $16.5 billion when Milei, an economist and former TV pundit, took power amid a major economic crisis. The government needs an injection of funds into Argentina's economy and financial system to help drag the country out of recession, as well as to shore up creaking state finances after years of fiscal deficits, draining reserves and high inflation. Milei has offered an amnesty until Sept. 30 for people to bring funds back into the formal system without penalty after years of savers looking to hoard dollars outside the formal banking system, offshore, or even stuffed under mattresses. Sign up here. https://www.reuters.com/markets/currencies/argentina-dollar-deposits-spike-by-8-billion-under-milei-2024-09-23/

2024-09-23 12:06

DUBAI, Sept 23 (Reuters) - Brookfield Asset Management (BAM.TO) , opens new tab said on Monday it has raised $2.4 billion for the Catalytic Transition Fund (CTF), which is backed by the United Arab Emirates and aims to scale up climate finance in emerging markets. CTF was launched at the COP28 climate talks in Dubai last December and was anchored by a $1 billion commitment from ALTERRA, a $30 billion UAE-based climate fund. ALTERRA, which was also announced during last year's climate summit, aims to attract $250 billion of investment by the end of the decade. It was established by Abu Dhabi-based alternative investment manager Lunate. Brookfield said in a statement the initial closing of $2.4 billion marked "a significant milestone towards the target of raising up to $5 billion for deployment towards clean energy and transition assets in emerging markets." Canada's Caisse de dépôt et placement du Québec, Prudential (PRU.L) , opens new tab and Singapore's Temasek and GIC were among investors joining as additional investment partners for CTF, the statement said. The CTF fund is expected to announce its initial investments later in 2024, Brookfield said, adding a traditional first close with further capital from its ongoing fundraising efforts was expected by early next year. Sign up here. https://www.reuters.com/business/brookfield-raises-24-billion-climate-fund-backed-by-uae-2024-09-23/