(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Chinese ride-hailing giant Didi Chuxing said it will start the process of delisting its shares from the New York stock exchange and prepare a Hong Kong listing, shortly after US regulators adopted a rule that would allow them to remove foreign firms. Didi's move comes in the wake of a sweeping Chinese regulatory crackdown in the past year that has clipped the wings of major internet firms wielding huge influence on consumers' lives – including Alibaba and Tencent – and just months after its mammoth New York debut. "After careful consideration, [Didi] will start the process of delisting from the New York Stock Exchange from today, and start preparations for listing in Hong Kong," the company said in a statement on social media. The ride-hailing firm's IPO in June was quickly overshadowed by an investigation by China's internet watchdog on the grounds of cybersecurity – just days after the listing and sending the shares plunging.
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US market regulators on Thursday announced the adoption of a rule allowing them to delist foreign companies from Wall Street exchanges if they fail to provide information to auditors, which is aimed primarily at Chinese firms. The mandate requires companies to disclose whether they are "owned or controlled" by a government, the Securities and Exchange Commission said. Congress last year passed a law specifically targeting Chinese companies under which the Public Company Accounting Oversight Board must be able to inspect audits of foreign firms listed on US markets. The law also requires companies to name any Chinese Communist Party members on their board of directors. Beijing has refused to allow the PCAOB to inspect audits of companies registered in China and Hong Kong.
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Embattled Chinese developer Kaisa is facing a default after saying it had failed in a bid for a debt swap that would buy it crucial time, warning there was "no guarantee" it would be able to meet its payment obligations. The company is one of several real estate firms that have plunged into crisis over the past year after China embarked on a regulatory drive to curb speculation and leverage, cutting off a crucial avenue for accessing cash. The highest profile of them is China Evergrande, which is drowning in a sea of debt worth USD300 billion, and is struggling to meet its own obligations.
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The US is suing to block the USD40 billion merger of semiconductor producer Nvidia Corp with UK firm Arm because the deal would undermine competition in the computer chip industry, the Federal Trade Commission said Thursday. "The proposed vertical deal would give one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips," the competition regulator said in a statement, calling the chips "critical infrastructure." The move comes as the world faces a global shortage of semiconductors, that has put a dent in auto manufacturing and sent new and used car prices surging. US President Joe Biden has launched an effort to ramp up domestic chip production to ease American industry's reliance on imports.
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Royal Dutch Shell on Thursday said that it had pulled out of its plan to develop the Cambo oilfield in the North Sea near the Shetland Isles. The planned oilfield, which was set to produce around 132 million tonnes of carbon during its lifetime, drew a volley of criticism from activists. The oil major said that, after "comprehensive screening", it decided against the oilfield as the economic case for the investment was "not strong enough". It also mentioned that there would have been potential for delays.
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HSBC, NatWest and Barclays were among four lenders fined a combined EUR344 million by the EU for rigging the foreign exchange spot trading market. The European Commission hit HSBC with the highest penalty – at EUR174.3 million, while Barclays was fined EUR54.3 million, and NatWest EUR32.5 million. Crisis-hit Credit Suisse also was fined, with the second largest penalty of the four, at EUR83.3 million. A fifth bank – fellow Swiss lender UBS – was spared a EUR94 million fine because it blew the whistle on the cartel, according to the European Commission, the EU's executive arm. The commission said HSBC, Barclays and NatWest – which was called Royal Bank of Scotland at the time of the offences and until a rebrand last year – had their fines cut for cooperating with the investigation.
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Investment platform Hargreaves Lansdown has hired Amy Stirling as its next chief financial officer, succeeding Philip Johnson. She is currently CFO of the Virgin Group. She also is a non-executive director at Virgin Money UK, where she is also the representative director of Virgin Enterprises, but will step down come summer. She was previously CFO of TalkTalk Telecom. Stirling will join Hargreaves Lansdown on February 21 and Johnson, while stepping down from the board at the end of January, will remain available to assist with the handover until May 31. Her appointment comes in time for Hargreaves Lansdown's investor day on February 22, when it plans to set out the next phase of its strategy.
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MARKETS
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European stock markets were dress up an ugly week with a bright finish, despite a positive lead from the US and Asia. Meanwhile, Wall Street futures were pointing to renewed weakness at the open on Friday. The day so far has focused on a string of PMI readings from Asia and Europe, but the main event is the US nonfarm payroll report for November, due at 1330 GMT. "A positive surprise could still give the dollar an additional boost and propel it back to levels close to the yearly maximums reached last month," commented Ricardo Evangelista, senior analyst at ActivTrades.
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CAC 40: marginally lower, down 3.00 points at 6,792.75
DAX 40: down 0.1% at 15,251.70
FTSE 100: marginally higher, up 0.91 point at 7,130.12
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Hang Seng: closed up 1.0% at 28,029.57
Nikkei 225: closed up 1.0% at 28,029.57
S&P/ASX 200: closed up 0.2% at 7,241.20
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DJIA: called down 0.2%
S&P 500: called down 0.3%
Nasdaq Composite: called down 0.4%
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EUR: down at USD1.1294 (USD1.1315)
GBP: down at USD1.3279 (USD1.3317)
USD: up at JPY113.33 (JPY113.03)
Gold: up at USD1,767.43 per ounce (USD1,761.10)
Oil (Brent): up at USD71.79 a barrel (USD69.67)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The eurozone's service sector was able to deliver "solid" expansion in November, data from IHS Markit showed, with demand increasing for a seventh straight month. The IHS Markit eurozone purchasing managers' index business activity index for services increased to 55.9 points in November from 54.6 in October, but was behind the flash reading of 56.6. The manufacturing PMI had inched up to 58.4 points from 58.3. As a result, the final eurozone composite index improved to 55.4 in November from 54.2, but was down slightly on the flash reading of 54.2.
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The German service sector saw a moderate rise in November. The IHS Markit services PMI improved slightly to 52.7 from October's six-month low of 52.4. Following a slight manufacturing drop to 57.4 from 57.8, the composite PMI output index registered 52.2, up slightly from October's eight-month low of 52.0
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In France, the services sector hit a five-month high on the back of strong hiring and improving demand. The IHS Markit services PMI improved to 57.4 in November from 56.6 in October. The manufacturing PMI grew to 55.9 from 53.6. As a result, the composite PMI increased to 56.1 in November, from 54.7 in October.
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Eurozone retail sales rose in October, both on a monthly and yearly scale, according to data released by Eurostat. Seasonally adjusted volume of retail trade increased by 0.2% month-on-month in October in the single currency area, matching FXStreet's analyst consensus.
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The UK service sector's recovery continued to come along nicely in November, with a relaxation of travel rules boosting new business from abroad. The IHS Markit/CIPS UK services business activity index eased to 58.5 points in November from October's three-month high of 59.1. The reading was marginally below November's flash figure of 58.6. While service firms continued to signal robust demand for staff in November, the rate of job creation was the slowest since July as businesses struggled to fill vacancies. Wage pressures, along with a spike in energy costs and other rising prices, resulted in November's input price growth being the strongest in 25 years of survey data collection. In tandem, output prices rose at a survey-record pace. In combination with Wednesday's manufacturing purchasing managers' index, which rose to 58.1 in November from 57.8 in October, the UK's composite PMI for last month dipped to 57.6 from 57.8.
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The service sector in Ireland continued to see strong growth in November, but the pace slowed from October amid the highest input price inflation in more than 20 years, according to the results of a survey conducted by IHS Markit. The AIB services PMI read 59.3 points in November, down from the remarkably high score of 63.4 in October. The reading indicated the slowest increase in output in the service sector since April, and the more than 4-point month-on-month drop in the PMI score was the largest in survey history, IHS Markit said. The AIB composite PMI similarly fell to 59.3 points in November from 62.5 in October, reflecting both the services reading and the manufacturing one. This declined to 59.9 points in November from 62.1 in October.
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Growth in the service sector of the Chinese economy slowed in November, as a sharp rise in input costs forced service providers to raise their own prices to customers, according to the results of a survey by IHS Markit. The Caixin China general services PMI read 52.1 points last month, down from 53.8 in October. The score remained above the neutral 50-point mark for the third month in a row but was the weakest reading of the three, IHS Markit noted. Total new business rose at the slowest rate in three months, with service providers saying that measures imposed by the government in Beijing to control the spread of Covid-19 hurt new order inflow, while foreign demand increased only slightly. As a result, the China general composite PMI slipped to 51.2 points in November from 51.5 in October.
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Japan's service sector surged in November, data from IHS Markit showed, advancing at its sharpest rate in over two years. The au Jibun Bank Japan services PMI increased to 53.0 points in November from 50.7 in October - marking the fastest upturn in 27 months. The services growth follows Wednesday's manufacturing PMI rising to 54.5 points from 53.2 in October. As a result, the au Jibun Bank Japan composite PMI rose to 53.3 in November from 50.7 in October.
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US Congress approved a stopgap funding bill on Thursday in a rare show of cross-party unity to keep federal agencies running into 2022 and avert a costly holiday season government shutdown. With the clock ticking down to the 11:59 pm Friday deadline, the Senate voted by 69 to 28 to keep the lights on until February 18 with a resolution that had already advanced from the House. The "continuing resolution" avoids millions of public workers being sent home unpaid with Christmas approaching, as parks, museums and other federal properties and services closed. "I am glad that, in the end, cooler heads prevailed – the government will stay open," Senate Majority Leader Chuck Schumer said. "And I thank the members of this chamber for walking us back from the brink of an avoidable, needless and costly shutdown." Congress watchers had expected to see the resolution getting a rough ride in the Senate, where a small group of hardline Republicans threatened to tank the measure in protest over the White House's pandemic response.
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US President Joe Biden announced a winter campaign against Covid-19, with new testing requirements for travellers and a surge in vaccination efforts as the new Omicron variant threatens to revive the pandemic. Biden has brought steady leadership after the chaotic Donald Trump years, but the mutating coronavirus continues to defy him, helping drive his approval ratings deep underwater. Urging the nation -- in particular his political rivals – to unite behind the strategy, Biden unveiled a raft of actions designed to tamp down Covid-19 in the coming months, as the latest Omicron variant spreads worldwide. "I know Covid-19 has been very divisive. In this country, it's become a political issue," he added. "A sad, sad commentary. It shouldn't be, but it has been." Ten cases of the new strain have so far been confirmed in the US, including five in New York announced Thursday evening by state Governor Kathy Hochul, one in Los Angeles county and one in the Pacific island state of Hawaii.
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Major oil producers decided on Thursday to raise output levels in January, despite the Omicron coronavirus variant raising fresh questions over demand. The OPEC+ alliance led by Saudi Arabia and Russia has so far resisted US-led pressure to significantly boost output to rein in surging energy prices. But the emergence of the variant further complicated the equation, as countries have imposed new travel curbs and mull other measures that could dampen demand and hurt oil prices. The 13 members of the Vienna-based Organization of Petroleum Exporting Countries and their 10 allies met for a little over an hour on Thursday afternoon via video conference. The group decided to stick with its modest increase in output by 400,000 barrels per day every month, as they have been doing since May.
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By Tom Waite; thomaslwaite@alliancenews.com
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