A senior Russian minister predicted that up to $70 billion could flow out of the country this quarter, as investors fret about the effect of sanctions that may be imposed for annexing Crimea. The chief executive of Sberbank, Russia’s biggest financial company, warned that there was a real risk of recession if outflows reach $100 billion. Russian stockmarkets and the rouble have fallen sharply over the past month and speculation has increased that the government may have to impose capital controls. See article
A run on a small bank in eastern China was seen as another sign of the problems building up with shadow banking. The bank is in Jiangsu province, where informal loan providers have failed. As the country’s banking association reassured customers that the bank was solvent, police detained a man suspected of starting the rumour that it was broke.
Another BRIC in a hole
Standard & Poor’s cut its rating on Brazil’s government bonds to just above junk status because of the economy’s weak outlook. The finance ministry insisted that Brazil still has “strong fundamentals” and pointed out that last year’s 2.3% growth in GDP was among the strongest in the G20. See article
In remarks that were taken as a significant softening of his opposition to quantitative easing in the euro zone, Jens Weidmann, the president of Germany’s central bank, suggested that QE was now not out of the question. Mr Weidmann has been one of the most vocal critics of the ECB directly buying government and private bonds, but with the spectre of deflation looming, Europe’s central bankers are thinking again about unconventional policies. See article
In the latest round of bank stress tests the Federal Reserve rejected Citigroup’s capital plans as inadequate for the second time in three years, as well as those of four smaller banks. Citi was at the heart of the financial crisis, but has emerged as a leaner bank. The Fed’s decision means it cannot offer higher dividends and share buy-backs to investors. See article
The British Treasury sold more of its shares in Lloyds Banking Group, reducing the government’s stake to 24.9%. Lloyds was bailed out in 2008 along with Royal Bank of Scotland (which is still a long way from having its government-held shares sold on the market). A further sale of shares in Lloyds is expected this year.
King Digital priced its IPO on the New York Stock Exchange at $22.50, the midpoint of the range of prices at which it had considered selling its shares. But with worries that it may not be able to repeat the success of its “Candy Crush Saga” mobile game, King’s share price fell hard on the first day of trading, closing at $19. It was the biggest opening flop of an IPO that hoped to raise at least $500m in 20 years. See article
Facebook made its second big acquisition this year, forking out $2 billion to buy Oculus VR, which makes virtual-reality headsets for video-games. Sony and Microsoft are currently testing their own virtual-reality gaming hardware for consumers, but Facebook will be more interested in the technology that could be added to its social network in the future, so that, for example, friends could meet up in virtual online rooms. See article
House prices in American cities rose by 13.2% in January compared with the same month in 2013, according to the S&P/Case-Shiller index of 20 metropolitan areas. This was the slowest rate of growth since August. House prices rose the most in Las Vegas, by 24.9%, though they are still some 45% lower there than their peak in August 2006. In contrast, prices were up by 10% and 9% in Dallas and Denver, though those cities are now just 1% away from their recent all-time index highs.
After six years of on-off talks, the European Union’s member states adopted a revised savings-tax directive, which aims to crack down on tax evasion. The deadlock was broken when Luxembourg and Austria received assurances that Switzerland would face similar transparency requirements.
Bouygues, the third-largest telecoms operator in France, increased its offer for SFR, the second biggest, although SFR is in exclusive talks with Altice, the parent company of France’s largest cable operator. The contest for SFR is shaping up as a classic takeover battle in France, pitting the blue-chip Bouygues against the upstart Altice, backed by Patrick Drahi, a French-Israeli entrepreneur. See article
Returned to the fold
Rupert Murdoch, who is 83, shored up his succession plans at his media empire by promoting his sons. Lachlan, the eldest, was appointed co-chairman of both 21st Century Fox and News Corporation. James, the younger son, was also given more responsibilities as co-chief operating officer of 21st Century Fox.
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