Notable market news this past week (03-Dec-23)
Here is the Skeptivest roundup of the latest market headlines for the week
🌳 Global Commitments and Actions at COP28 Climate Summit
Major Pledges and Investments: The COP28 climate summit began with significant commitments, including the UAE's $30b pledge for climate initiatives, the UK's £11b investment in offshore wind, and Japan's decision to stop building new unabated coal power plants.
Cimate Compensation Fund Agreement: Nations agreed on establishing a compensation fund for countries affected by extreme weather, marking a key achievement in addressing climate-related damages.
Leaders' Emphasis on Renewable Energy and Fossil Fuel Phaseout: World leaders, including the French President and Indian Prime Minister, stressed the urgency of phasing out coal and fossil fuels and transitioning to renewable energy sources to combat climate change effectively.
India Offers to Host: India’s Prime Minister Narendra Modi offered to host the 2028 conference as he seeks to position his country—the third-largest emitter behind China and the US—as a climate leader
🏢 China's Banking Turmoil: Balancing Property Support and Rising Financial Risks
Risky Developer Loans: Chinese banks, including the Industrial and Commercial Bank of China Ltd., are facing challenges due to potentially being asked to provide unsecured loans to struggling property developers. This situation is adding stress to a sector already dealing with rising bad loans and record low net interest margins.
Financial Impact: Major Chinese banks might need to set aside an additional $89b for bad real estate debt in 2024, equating to 21% of their estimated pre-provision profits. This strain is leading banks to consider lowering growth targets and cutting jobs.
Potential Measures for Relief: The government is guiding banks to trim deposit rates and has reduced reserve requirements to bolster lending capacity. However, these measures might not fully offset the impact of lowered lending rates and margin pressures.
☕️ Quick fire happenings to note
🌏 Global macro
- Global bonds rally: Global bonds are witnessing their strongest rally since the 2008 crisis, with a 4.9% November gain fuelled by expectations that the Federal Reserve and global counterparts may halt rate hikes and begin reductions as early as next year, signifying a potential shift towards looser monetary policy.
- Soaring rice prices: Rice prices are nearing a 15-year peak in Asia, with the benchmark Thai white rice rate climbing to $640 per ton due to heightened demand from countries like Brazil and the Philippines, alongside domestic price increases and the Thai baht's strength, amidst export curbs by India and looming El Niño-related supply concerns.
- Middle East’s largest broadcaster seeking IPO: MBC Group is targeting to raise $222 million in a Saudi IPO, offering a 10% stake at a valuation of up to $2.2 billion, amidst a resilient regional market for listings despite global economic uncertainties.
- Hong Kong’s property slump: Hong Kong's property market downturn has led to a record number of failed land tenders this year, with only one-third of plots sold, signalling waning confidence among developers due to rising funding and construction costs.
- Fed Chair Powell's Stance on Interest Rates: Federal Reserve Chair Jerome Powell has indicated that while the Fed is prepared to hike interest rates further, if necessary, it is currently premature to speculate on easing policies. He emphasized the need for cautious movement with borrowing costs at a 22-year high.
- Week-long truce in the Gaza Strip over: Hostilities between Israel and Hamas have reignited in the Gaza Strip, causing global unrest marked by anger, polarization, and a surge in hate crimes against both Jewish and Muslim communities. In response to this escalation, the Israeli military issued evacuation warnings in southern Gaza, a move that followed a directive from US Secretary of State Antony Blinken.
🏦 Individual stocks/companies
- Berkshire Hathaway’s No. 2 passes on at 99: Charlie Munger, the alter ego, sidekick to legendary investor Warren Buffet for almost 60 years as they transformed Berkshire Hathaway from a failing textile maker into an empire, has died at 99.
- Apple looks to exit credit card partnership with Goldman: The iPhone maker recently sent a term sheet to the financial giant signalling a first step toward severing the contract as its savings account drew complaints from some users, who were unable to easily withdraw cash.
- Pinduoduo surges: PDD surged 18% after reporting a stronger-than-anticipated doubling in revenue, as its shopping app Temu ramped up discounts and marketing to grab consumers from SHEIN and Amazon.com Inc.
- Tesla's Cybertruck Pricing and Release: Tesla Inc. has announced that the base version of its much-anticipated Cybertruck will cost $60,990, significantly higher than initially projected, and will not be available until 2025. Higher-end models are priced at $79,990 and $99,990, respectively.
- General Motors announced its biggest-ever stock buyback plan: The $10b stock buyback plan sent shares rallying on Wednesday. CEO Mary Barra promised better days ahead in response to critics of its unsteady push into EVs and self-driving cars.
🇸🇬 Singapore related
- Singapore to start technical studies into 'Long Island' off East Coast: Singapore’s reclamation plans on the East Coast, will likely include up to 60,000 new homes, transforming East Coast Park's shoreline into a freshwater reservoir. The project aims to offer more opportunities for waterfront living and jobs.
