News Items.
by John Ellis. (7/22/2019)
1. As the Chinese Century nears its third decade, Fortune’s Global 500 shows how profoundly the world’s balance of power is shifting. American companies account for 121 of the world’s largest corporations by revenue. Chinese companies account for 129 (including 10 Taiwanese companies). For the first time since the debut of the Global 500 in 1990, and arguably for the first time since World War II, a nation other than the U.S. is at the top of the ranks of global big business.
2. China is hastening the transfer of shares in state-owned companies to its main pension fund in a bid to quell widespread panic felt by younger Chinese over projections that the account will be broke by 2035. Beijing hopes moving the shares to the fund could bolster its reserves enough to keep it going for longer. But many younger Chinese are pessimistic that the scheme will survive by the time they retire.
3. China's new Nasdaq-style stock exchange commenced trading today, with shares soaring between 106.97% and 415.44% during morning trading. Around 25 companies debuted on the Shanghai Stock Exchange's Star Market, which is meant to serve as a testbed for market reforms and prevent local money and startups from going abroad. Some 145 technology companies have applied to hold initial public offerings on the new market, potentially raising 75 billion yuan ($11 billion).
4. Growing distrust between the United States and China has slowed the once steady flow of Chinese cash into America, with Chinese investment plummeting by nearly 90 percent since President Trump took office. The falloff, which is being felt broadly across the economy, stems from tougher regulatory scrutiny in the United States and a less hospitable climate toward Chinese investment, as well as Beijing’s tightened limits on foreign spending. It is affecting a range of industries including Silicon Valley start-ups, the Manhattan real estate market and state governments that spent years wooing Chinese investment, underscoring how the world’s two largest economies are beginning to decouple after years of increasing integration.
5. Ford Motor Company's multibillion-dollar push to expand in China this decade has veered off course, leaving it mired in a sales slump that is weighing on its future in the world’s largest auto market. The No. 2 Detroit auto maker’s sales in China fell 27% in the first six months of 2019 from the prior-year period, as a downturn in the Chinese car market extended to a 12th month in June. The sharp drop-off in China auto sales—the industry’s first since Beijing opened the market to foreign car companies in the 1980s—is challenging even stronger and more-established global car manufacturers in the country, like General Motors and Volkswagen.
6. China has signed a secret agreement allowing its armed forces to use a Cambodian navy base near Sihanoukville as Beijing works to boost its ability to project military power around the globe, according to U.S. and allied officials familiar with the matter. The pact—signed this spring but not disclosed by either side—gives China exclusive rights to part of a Cambodian naval installation on the Gulf of Thailand, not far from a large airport now being constructed by a Chinese company.
7. Tankers are offloading millions of barrels of Iranian oil into storage tanks at Chinese ports, creating a hoard of crude sitting on the doorstep of the world’s biggest buyer. The store of oil has the potential to push down global prices if Chinese refiners decide to draw on it, even as Organization of Petroleum Exporting Countries and allies curb production amid slowing growth in major economies. It also allows Iran to keep pumping and move its oil nearer to potential buyers.
8. Hong Kong police fired a barrage of tear-gas canisters at thousands of demonstrators late Sunday as public unrest stretched into a seventh weekend. Antigovernment protesters came out in big numbers during the day and, as darkness fell, thousands began to occupy main thoroughfares and target official buildings. Several hundred demonstrators gathered outside the Chinese government’s liaison office, defacing the national emblem with black paint and pelting the building with eggs, before being driven back along key business districts by police in riot gear and with dogs. In a separate clash, footage from a local television station showed, masked men, dressed in white and wielding sticks, assaulted antigovernment protesters in a train station late Sunday night in northwestern Hong Kong.
9. Islamic State militants who escaped the defeat of their self-declared caliphate in Syria earlier this year have been slipping across the border into Iraq, bolstering a low-level insurgency the group is now waging across the central and northern part of the country, according to security officials. About 1,000 fighters have crossed into Iraq over the past eight months, most of them in the aftermath of the caliphate’s collapse in March, said Hisham al-Hashimi, a security analyst who advises Iraq’s government and foreign aid agencies.
10. Ships plying the Strait of Hormuz are getting caught in the middle as Iran pushes back against U.S. sanctions and maneuvers around a more muscular American regional presence, raising the risk of direct military confrontation. A British-flagged oil tanker Iran seized on Friday became the latest casualty of an Iranian response to perceived aggression that stops short of full conflict. Iran initially said it impounded the British vessel after it collided with a fishing boat. But the move was widely seen as retaliation for British forces this month seizing an Iranian tanker off the coast of Gibraltar that was allegedly transporting oil to Syria.
11. Iran-backed terrorist cells could be deployed to launch attacks in the UK if the crisis between London and Tehran deepens, intelligence sources have warned. Intelligence agencies believe Iran has organized and funded sleeper terror cells across Europe including the UK and could green-light attacks in response to a conflict in the Gulf. The cells are operated by radicals linked to Hizbollah, the Lebanese militant group. Counter-terror police disrupted a cell in 2015 that was caught stockpiling tonnes of explosive materials at businesses on the outskirts of London.
12. U.K. Prime Minister Theresa May will spend her last days in office working out how to secure the release of the Stena Impero, a British-flagged oil-products tanker seized by Iran in the Strait of Hormuz last week. Amid the likely handover of power to former Foreign Secretary Boris Johnson, and just over three months before the U.K. is due to exit the European Union, the incident looks like a disastrous miscalculation by a political class that’s had its share of poor decision-making. Indeed, an ill-planned military operation in a vital global shipping lane and a mistaken gamble on Washington’s response looks oddly reminiscent of the Suez crisis – the disastrous 1956 episode that marked the end of Britain’s ambitions as a global power.
13. Britain’s currency sank to a two-year low last week, dipping below $1.24 as fears of a no-deal Brexit grew. Long seen as a symbol of Britain’s stability and national pride, the pound has in recent years become a barometer for concerns about the country and its departure from the European Union. A cheaper pound could invite more foreign investment and tourism, but it could also hurt the country’s ability to buy goods from other places, especially at a time when it will need to negotiate trade treaties.
14. Jeremy Corbyn's popularity among Labour Party members has plummeted, with two fifths wanting him to stand down as leader before the next general election, polling for The Times has found. Amid growing dissatisfaction at his handling of Brexit and the antisemitism crisis that has engulfed Labour, confidence in Mr Corbyn’s leadership has fallen by 24 points since March last year, with 43 per cent of Labour Party members saying he is doing a bad job.
15. Italy’s fractious populist coalition lurches into a make-or-break week as Matteo Salvini decides whether to try to force snap elections while Prime Minister Giuseppe Conte struggles to salvage the government. The fate of the coalition hangs on a possible meeting between Deputy Premier Salvini and his ally-cum-rival Luigi Di Maio of the Five Star Movement, and government talks on granting more powers to northern regions -- a landmark issue for Salvini’s rightist League. Conte is also due to address parliament on the “Russiagate” scandal Wednesday.
16. Central banks world-wide are poised to unleash some of the most aggressive monetary stimulus since the financial crisis a decade ago. But the circumstances are different now, with policies aimed more at breathing life into decade-old expansions rather than at averting an economic collapse. And it is unclear whether the central bankers’ depleted tools will be adequate.
17. The European Central Bank (ECB) is poised to unveil fresh stimulus to combat the deepening economic malaise gripping the region. Markets expect policymakers to announce an interest rate cut on Thursday or at least change guidance to tee up stimulus at the bank’s next meeting in September. The ECB is expected to be spurred into action by stalling growth in the eurozone as a factory slump intensifies and forecasters slash their global growth estimates.
18. A closely watched index that tracks the cost of shipping commodities around the world is at its highest level since 2014. But analysts warn that the surge shouldn’t necessarily be taken as a bullish sign for the global economy. While a rise in the Baltic Dry Index is typically seen as pointing to a broad uptick in economic activity around the world, analysts say the recent gains have largely been driven by a resumption of iron-ore shipments from Brazil.
19. The S&P 500 Index is now trading near its fair value, with limited further upside after its 19% climb so far this year, according to Goldman Sachs Group Inc. “The path forward for index ROE is likely to be challenging, although lower interest rates and lower tax rates may provide support,” Goldman strategists including David Kostin wrote in a note to clients, referring to return on equity. Negative revisions to 2020 earnings-per-share forecasts and “policy uncertainty” will limit upside potential, they wrote.
20. White House and congressional negotiators rushing to hammer out the final details of a sweeping budget and debt deal are unlikely to include many — if any — actual spending cuts, even as the debt limit is lifted for two years, people familiar with the talks said. The agreement appeared likely to mark a retreat for White House officials who had demanded major spending cuts in exchange for a new budget deal. But the process remained in limbo while negotiators awaited final approval late Sunday from President Trump.
21. Some conservative House Republicans are asking President Trump to reject any agreement to set new spending levels and increase the government’s borrowing limit without significant spending cuts, injecting further uncertainty into negotiations toward a deal this week. Rep. Mike Johnson (R-LA), the chairman of the conservative Republican Study Committee, a group of around 150 conservative Republicans, spoke with President Trump on Saturday about his concerns with the still-developing budget agreement. “We believe the White House and congressional leadership should be prepared to walk away from this if necessary,” Mr. Johnson said in an interview. “I’m encouraged after speaking with the president.”
22. Joe Biden continues to be the first choice among Democratic voters across the 2020 primary states holding contests through Super Tuesday. However, rivals Elizabeth Warren and Kamala Harris are gaining on him and have seen increases in the number of voters at least considering them, suggesting they could have more room to gain going forward.
23. Instagram users who download the app Who's in Town and grant it access to their Instagram account are presented with an eerie interactive map of every place the people they follow have visited and shared online since they created their profile. The map updates in real time and is sourced from the wealth of location data the average Instagram user willingly uploads to the platform each time they opt to use its popular geotag feature in a story or post. This information is nominally public already, as Instagram users must choose to share it with their followers. But by collecting them all in one place over time, Who’s in Town transforms data points seemingly meaningless in isolation into a comprehensive chronology of the habits and haunts of anyone with a public Instagram account.
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