In a relief for Pakistan, South Korea defers a loan worth millions
The Republic of Korea on Monday differed Pakistan’s loan worth $19.911 million, under the G-20 Debt Service Suspension Initiative (DSSI) framework as Islamabad battles a worsening economic crisis.
According to the details, the cash-strapped country inked a Debt Service Suspension Agreement with Korea today. This amount, initially had to be repaid between July and December 2021, will now be repaid over a period of six years (including a one-year grace period) in semi-annual installments, said a press release issued by the Economic Affairs Division (EAD).
Due to the support extended by the development partners of Pakistan, the G-20 DSSI has provided the fiscal space which was necessary to deal with the urgent health and economic needs of the country.
The total amount of debt, that is to be suspended under the DSSI framework, covering the period of repayment from May 2020 to December 2021, stands at $3,686 million.
Pakistan has already concluded and signed 104 agreements with 21 bilateral creditors for the deferment of its debt repayments under the G-20 DSSI, amounting to $3,633 million.
The signing of the agreement as mentioned above brings this total to $3,653 million. Negotiations for the remaining contracts to be signed under the G-20 DSSI are ongoing.
UK interest rates: Prices to be higher for longer, Bank of England warns
Soaring food costs mean prices will remain higher for longer, the Bank of England warned, as it raised interest rates for the 12th time.
Interest rates were hiked to 4.5% from 4.25% – the highest in almost 15 years – in the battle to slow inflation.
“It’s taking longer for food price [falls] to come through,” Bank boss Andrew Bailey told the BBC.
But Mr. Bailey was more optimistic about how quickly the UK economy would grow, saying it would now avoid recession.
The Bank has been rapidly raising rates to try to slow the sharp rise in the cost of living.
UK inflation remains close to its highest level for 40 years and is not dropping as quickly as predicted as prices in UK supermarkets remain high.
Some have questioned why a drop in the cost of wholesale food prices globally has not led to falls in the fees charged by UK supermarkets.
However, Mr. Bailey said he did not think supermarkets and other grocers charged customers more than they should.
“It actually doesn’t look like that’s going on,” he told the BBC, adding that higher energy prices and the war in Ukraine had made it harder to import some foods and led to higher costs for retailers.
Energy is quite a big element in the cost of food production and that’s certainly had an effect in this crisis. Often producers have bought forward (supplies) at high prices because they were concerned about whether they were going to get the things they needed.
“But, as we said before, we are in very unusual times.”
He said grocers had told him that they expected food inflation to “come down quite rapidly” throughout the rest of the year.
Under Armour sends potential warning sign about retailers’ profits
Under Armor, shares sank Tuesday, even after the athletic apparel and footwear retailer beat Wall Street’s quarterly revenue and earnings expectations.
The reason for the drop may offer insights into challenges faced by other retailers.
The company drove higher sales, in part, by offering lower prices. Under Armour missed fiscal fourth-quarter expectations on gross margin as it leaned more on promotions than expected.
Shares fell more than 6% in afternoon trading.
The company’s finance chief David Bergman chalked up the margin decline to higher promotions as Under Armour marked down merchandise from prior seasons and sold it through off-price retail.
Under Armour warned the issues could persist. The company said it expects margins will still be under pressure as higher promotions outweigh lower freight costs. Diluted earnings per share are expected to range between a loss of 3 cents to a loss of 5 cents in the first quarter, below expected earnings of 6 cents per share, according to FactSet. It said it expects margins to improve as the year goes on.
Under Armour’s results could spell trouble for retailers that report quarterly results in the coming weeks. The report could signal that to move merchandise, companies may have to offer discounts and sacrifice more of their profits.
Tech layoffs: LinkedIn cuts 700 jobs and closes China app
LinkedIn has become the latest tech firm to axe jobs, closing 716 roles out of a 20,000 workforce.
The social media network which focuses on business professionals will also phase out its local jobs app in China.
In a letter by the company’s chief executive Ryan Roslansky, he said the move was aimed at streamlining the firm’s operations.
In the last six months, firms including Amazon, LinkedIn’s parent Microsoft, and Alphabet have announced layoffs.
“With the market and customer demand fluctuating more, and to serve emerging and growth markets more effectively, we are expanding the use of vendors,” Mr. Roslansky wrote.
He also said the changes would result in creating 250 new jobs and employees affected by the cuts in its sales, operations, and support teams would be eligible to apply.
After mostly withdrawing from China in 2021, citing a “challenging environment”, the remaining app called InCareers will also be phased out by 9 August. InCareers only covers the Chinese market.
A LinkedIn spokesperson said the firm will keep a presence in China to help companies operating there to hire and train employees outside the country.
LinkedIn has been the only major Western social media platform operating in China.
When launched in 2014, the firm had agreed to adhere to the requirements of the Chinese government in order to operate there.
At the time, US senator Rick Scott called the move a “gross appeasement and an act of submission to Communist China”, in a letter to LinkedIn chief executive Ryan Roslansky and Microsoft boss Satya Nadella.
The government has targeted to save $6.4 billion by implementing energy conservation measures under the National Energy Efficiency and Conservation Policy (NEECP) 2023.
The Cabinet Committee on Energy, chaired by Prime Minister Shehbaz Sharif, has recently approved the policy.
It is aimed at establishing an energy conservation Tribunal (ECT) to address issues related to energy efficiency and conservation standards. It encourages private investment in energy conservation and efficiency projects by developing the Super ESCO Model to mitigate investment risks and issue energy-saving certificates and bonds.
The policy also encourages cultural changes, such as vehicle-free weekends and daylight savings, through awareness-raising campaigns.
The National Energy Efficiency and Conservation Authority (NEECA), a federal agency responsible for coordinating all energy conservation activities, will be implementing the policy.
NEECP is intended to achieve the target of 9 million tons of oil equivalent (MTOE) in energy savings by 2030, reducing 35 MT CO2 emissions.
It identifies sector-specific measures for industrial, building, transport, energy, and agriculture sectors, providing precise guidelines for coordination with provincial governments.
Salient features of the policy include regulatory, capacity, and advocacy measures. These ensure compliance with energy performance standards and labeling regimes for appliances and products.
Shares in several regional banks in the US have dropped sharply, as investors fear the banking crisis that has gripped financial markets is not over.
The falls come a day after the collapse of First Republic, which was seized by regulators and sold after worried customers withdrew more than $100bn.
It was the second biggest bank failure in US history and the third since March.
Shareholders were wiped out – and are now eyeing risks at other banks.
California-based PacWest Bancorp, which has been under scrutiny for its lending to firms backed by venture capital, saw shares plunge 28%.
Shares in Western Alliance, headquartered in Arizona, dropped 15%.
The turmoil comes as the banking sector is adjusting to a sharp rise in interest rates.
The US central bank raised its benchmark rate from near zero last March to more than 4.75%. It is expected to announce another 0.25% increase this week.
The moves are impacting the US economy, which could hurt banks as businesses and households start to struggle to make debt payments.
Many analysts are worried about risks to banks lurking in the commercial property sector, which has been hit by a fall in demand for office space due to the expansion of remote work.
The rise in interest rates has put some banks in a bind, as higher rates hurt the market value of some debts issued when borrowing costs were lower.
The fears intensified in March when panic sparked by the sudden collapse of Silicon Valley Bank – then the US’s 16th largest lender – prompted global sell-offs of bank shares and led many US bank customers to shift their money to firms seen as safer.
Bigger banks proved to be the winners, while regional firms came under pressure.
The fears claimed Signature Bank and ultimately First Republic, which could not survive the loss of funds.
PacWest reported last month that its deposits shrunk 16% from the end of December to the end of March, while Western Alliance shares fell 11%.
Both banks said they had seen deposits start to increase again more recently as the fears subsided.
Silicon Valley Bank: HSBC says UK buyout boosted profit by $1.5bn
Banking giant HSBC says its profits got a $1.5bn (£1.2bn) boost from purchasing collapsed Silicon Valley Bank’s British business (SVB UK).
Europe’s biggest bank posted a pre-tax profit of $12.9bn for the three months to the end of March.
That is more than three times the amount it made for the same time last year.
In March, HSBC bought SVB UK for a nominal £1 ($1.25), in a deal led by the government and the Bank of England.
The London-headquartered lender said the profit included a “provisional gain of $1.5bn on the acquisition of Silicon Valley Bank UK Limited”.
“We remain focused on improving our performance and maintaining tight cost discipline, but we also saw an opportunity to invest in SVB UK to accelerate our growth plans,” group chief executive Noel Quinn said.
The bank also got a boost from reversing its plan to write off $2.1bn due to the sale of its French business, as that deal may no longer be completed.
HSBC announced its first quarterly payout to shareholders since before the pandemic in 2019 and said it would buy back $2bn of its shares.
It also said the completion of the sale of its business in Canada is likely to be delayed.
The planned $10bn sale, which was originally expected to be completed by the end of this year, is now likely to go through early next year.
The proposed deal is a key part of its strategy to pull back from slow-growing Western markets.
HSBC’s strong performance comes against the backdrop of the global banking sector being rocked by the collapse of Silicon Valley Bank and Signature Bank in March and the forced buyout by Swiss banking giant UBS of rival Credit Suisse.
On Monday, US regulators seized First Republic Bank and sold its assets to Wall Street giant JPMorgan Chase.
The move was aimed to resolve the biggest failure of a US bank since the 2008 global financial crisis and draw a line under weeks of turmoil in the industry.
Japan brewer Kirin buys Australia vitamin giant Blackmores
Japanese brewer Kirin has agreed to buy Australian vitamins maker Blackmores for A$1.88bn ($1.24bn; £999.4m).
The move comes as Kirin expands into healthcare in the face of shrinking beer sales in its home country and increasing regulation of alcohol.
“The acquisition of Blackmores is highly complementary to our existing Health Science business,” it said.
The deal also gives Blackmores an exit as it has been struggling to recover sales since the pandemic.
Before Covid-19, the Australian natural health firm benefited from the practice of “daigou”, in which Chinese consumers bought goods abroad to take back to China.
“The Kirin Scheme represents an attractive, all-cash transaction,” the chair of Blackmores, Wendy Stops, said.
For Kirin, the deal is the latest in its efforts to diversify away from the alcohol business.
Beer sales in Japan have been falling for many years because of lifestyle changes among young people. Last year, the Japanese government launched a nationwide competition calling for ideas to encourage people to drink more alcohol.
At the same time, the World Health Organization has been calling for stricter rules on the global alcohol industry, urging governments to set higher prices to discourage drinking.
Kirin, which is known around the world for its beers, has a wider product range in its home country, including non-alcoholic, sugar-free drinks.
It also owns healthcare businesses and in 2019 started a partnership with Japanese skincare products and dietary supplements firm Fancl.
Kirin has previously said it aims to generate ¥500bn ($3.7bn; £2.97bn) in sales a year from its health business by the end of the decade.
The deal is expected to be completed in August. It is supported by Marcus Blackmore, the firm’s founder’s son, who has an 18% stake.
After the announcement, shares in the Australian firm rose by more than 20%, gaining the most in more than seven years.
Gold reaches a new record high of Rs218,650 per tola
Despite the price of gold remaining stable in the international market, the precious metal’s value reached a record high in Pakistan on Wednesday.
The price of gold (24 carats) rose by Rs450 per tola and Rs386 per 10 grams to reach Rs218,650 and Rs187,457, respectively, according to the All Pakistan Sarafa Gems and Jewellers Association (APSGJA).
The price of gold has risen sharply recently on the back of a weakened rupee and soaring inflation. During times of economic turmoil, people prefer to buy gold as a hedge against inflation and the rupee’s devaluation.
The rupee had fallen to an all-time low of Rs288.43 against the US dollar in the interbank market on April 11. While it has recovered since then, the US dollar continues to trade above Rs280.
The rupee gained Re0.08 or 0.03% to settle at Rs283.89 per dollar in the interbank market on Wednesday.
Another reason for the increased gold demand is the delay in an agreement with the International Monetary Fund (IMF) for a desperately needed economic bailout.
The delay in the revival of the IMF program negatively impacts the currency market which, in turn, bolsters the demand for gold.
The price of gold in the international market remained unchanged at $2,000 per ounce.
According to the data shared by the association, the price of silver in the domestic market also reached a record high. The rate of silver increased by Rs40 per tola and Rs33.36 per 10 grams to reach Rs2,570 and Rs2,203.36, respectively.