Canadian consumer debt has reached a record-high debt-to-GDP ratio in the G7, according to the Canada Mortgage and Housing Corporation. The trend is having a knock-on effect for the country's five biggest banks: Scotiabank, RBC, CIBC, BMO and TD Bank all felt the impact in their financial results this quarter. To shield themselves from bad loans, the banks set aside billions of dollars, leading one finance expert to say that it could become even harder to borrow as they struggle to manage their own spending. Meanwhile, 30% of Canadians are overwhelmed by debt, according to a survey by BDO Debt Solutions.
Record heatwaves across Asia have driven demand for cooling systems, leading to a surge in sales of air conditioning units. Countries including India, Singapore, Thailand and Vietnam have all faced scorching temperatures leading to more air conditioning purchases by people who can afford it. In areas where temperatures soar, such units can be a lifesaver. However, the use of air conditioners accounts for around 10% of global energy usage. They consume significant amounts of electricity and much of that power production in Asia comes from fossil fuels, adding to greenhouse gas emissions. Despite this, cooling systems are seen as increasingly vital to lives and productivity. Meanwhile, Chinese manufacturers Midea and Gree have seen shares cut by half, despite the record demand, as saturation levels have risen across many of China's largest cities.
Financial Times' Lex newsletter has said poor regulation means businesses will chase profits over social responsibility when it comes to artificial intelligence (AI) despite the worries of experts, and that slow-moving regulators and politicians will then be left to pick up the pieces. The publication urged readers to respond with their opinion. It also said OpenAI, which began as a non-profit committed to responsible AI development, will inevitably increase its profit goals as it seeks new capital, despite creating a "capped profit" branch. The newsletter added that major banks such as UBS need to keep the best wealth managers right now, and Credit Suisse is planning to sue regulator Finma about bonus payments that mirrored the value of $17bn of additional tier one bonds. Finally, Lex said the rise of tablets and peripheral sales is causing a decline in personal computers.
The mixed energy stock of UK energy group SSE, which is exposed to both old and new energy economies, is proving to be a steadier proposition for private investors than “pure green” energy groups. SSE is cheaper than most European peers, trading on a forward earnings multiple of more than 12.5 times, and has done well by resisting pressure to spin off its renewables arm. Its diversified structure helped it benefit from Russia’s invasion of Ukraine in 2022 and its thermal business, which runs gas-fired power plants, contributed most to adjusted annual pre-tax profits, up 89% to £2.2bn. However, the growth of renewables at SSE was “ironically damped by insufficiently blustery weather conditions last year”. SSE’s aim is to expand its network and upgrade investment plans to spend £18bn by 2026-27. Its upgrade to its investment plan accounts for around £2bn of supply chain cost increases.
Wall Street has seen solid gains as technology stocks are sowing healthy increases due to another strong demand related to artificial intelligence. The encouraging finish comes before an announcement is made to lift the US government’s debt ceiling and giving investors further confidence. Expected to rise the Australian sharemarket is set to open at a 70 point increase. Critics warn of this revolutionary AI as it could be a potential bubble, while supporters believe it could be the latest revolution to reshape the global economy.
Electric vehicle (EV) drivers are encountering charging infrastructure problems as EVs become more widespread in the US. While the number of EVs in the US has soared to 3 million over five years, the charging station industry has not kept pace with the growth. The US has 135,000 public charging points, but these are often located in inconvenient spots and are unreliable. The Biden administration has set a target of 500,000 public charging stations by 2030, but this is unlikely to match up to China’s 1.8 million stations that are already up and running.
Toyota could theoretically buy Toyota Industries using cross-holdings; currently Toyota Industries is the largest private sector owner of Toyota Motor shares; its 7.31% stake is valued at $16.4bn. Toyota, owning a third of all outstanding shares of Toyota Industries, could make an all-share offer, for the two-thirds of Toyota Industries it doesn't already own at a 30% premium, for free. Japan remains undervalued with a pro-shareholder-friendly ethos that many fund managers cannot ignore. However, factors such as the absence of inflation, the sustainability of high valuations, and the lack of potential corporate control change weigh on investor sentiment.
A sudden surge in court-ordered liquidations and debt defaults is challenging the assumption that the worst of China's property crisis is over. A year ago, homebuyers went on strike and developers struggled to borrow. However, in 2019, the central bank saved sagging financial foundations by your $29bn in loans, while local banks have extended debt deadlines. Chinese property companies KWG Group is the latest developer to default on its debt repayments, facing court-ordered liquidation in Hong Kong earlier this month. Meanwhile, a sharp drop off in sales has been predicted for April, being the 25 largest listed developers.
European shares fell slightly on Monday due to losses in the technology and bank sectors, as investors mulled over the tentative deal US lawmakers had reached concerning raising the nation’s debt ceiling. The pan-European STOXX 600 recorded its strongest one-day gain in nearly two months on Friday, and yesterday's 0.1% drop saw it heading to its steepest monthly drop this year. Investors remained cautious over the effect of inflation, ECB rate hikes and a possible hard landing in the US. Markets in the US, UK and several European countries were closed for a public holiday on Monday.
BAE Systems and Rolls-Royce have been accused of “criminal conspiracy” over alleged corruption relating to deals with India’s defence ministry. The Central Bureau of Investigation has filed a criminal complaint against the companies, alleging that they cheated the government of India while striking deals to build dozens of BAE Hawk aircraft, which used Rolls-Royce engines, between 2003 and 2012. The complaint drew on the UK’s Serious Fraud Office’s investigation into Rolls-Royce, which resulted in a deferred prosecution agreement. Last year, BAE signed a deferred prosecution agreement over allegations of bribery in Tanzania.
Chinese EV maker Li Auto has seen its stock more than double in value, and analysts expect further growth despite a slowing Chinese economy and price war among the competition. The automaker posted profits in the past two quarters and has outpaced rivals in introducing new models each quarter, while the cost of falling battery prices puts pressure on margins. Analysts are bullish, with Citigroup expecting an 88% climb in the shares by the end of the year. Meanwhile, Li Auto is anticipated to introduce its first purely electric vehicle alongside its present range of hybrid cars later this year.
Roughly 6.2 million workers in the US have lost access to health insurance through their employers since the start of the COVID-19 pandemic, according to research from the Economic Policy Institute (EPI). Analysis of job churn and net employment changes led the EPI to estimate that 9 million people had lost employer-sponsored insurance (ESI) coverage as of April 2020. This was the largest number since the August 2013 Current Population Survey. While Medicaid enrolments have increased by at least 4 million since the pandemic began, it is likely that some of those who lost ESI have yet to find alternative cover.
US stock index futures rose as lawmakers tentatively agreed to raise the nation's debt limit to avert a default. President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending. Reflecting investor optimism, the cost of insuring exposure to a US debt default fell further, while yields on longer-dated US Treasuries fell. Chipmaker Nvidia led an early rally among AI-related firms after saying on Monday it was building Israel's most powerful AI supercomputer to meet soaring customer demand for AI applications.
3M India has reported a Q1 2017 profit after tax of INR1.36bn ($16.4m), up 24%. Profits were buoyed by global demand for robust electronics and transportation products. 3M India has raised prices in order to counteract rising costs from mounting commodity prices. Consolidated revenues from operations for the business rose 13% to INR10.46bn, against total expenses up some 11.3% to INR8.72bn. Revenue is primarily generated from the power tools and cables within the transportation and electronics business which produce 42% of the company's total revenue.
Billionaire Warren Buffett’s claim that share buybacks are beneficial for the US economy and not particularly advantageous to CEOs is disputed by Canadian businessman Frank Giustra. Giustra argues share buybacks also help executives accumulate stocks and bonuses, trimming back long-term company investments and reducing employee pay. Additionally, he argues that more than half of all share buybacks are financed by debt, making those debts significantly more expensive to service as interest rates rise. To combat the trend, Canadian and US governments have enacted taxation to curb the misuse of share buybacks and regulation, such as imposing hurdles to prevent self-dealing in the corporate sector.
S4 Capital's chief operating officer, Christopher Martin, has sold over 2 million shares in the advertising group in order to cover personal financial arrangements. This has reduced his stake in the company by almost a quarter, to 6.5m shares or 1.13% of the total issued share capital. However, with S4's shares down 85% from their peak and 55% from last year, investors remain sceptical. Tactical acquisitions and the growth of technology services saw a 24% increase in like-for-like billings in 2022, however high personnel costs, a loss of £135m ($185m), and a sixfold rise in net debt to £110m ($150.7m) caused concern.
Anne Boden is stepping down as CEO of Starling Bank to remove potential conflict issues arising from her being a significant shareholder in the company, according to a statement. Boden founded the digital start-up in 2014 and owns 4.9% of Starling's shares. It's a stake that includes 18% of the voting rights. A report, meanwhile, speculates on how the de facto threshold may be set at 4.9% and questions how many CEOs and chairmen of London Stock Exchange premium-listed firms might be subjected to the same standard.
Executives attending the Financial Times’ Business of Luxury summit in Monaco said that, despite a share-market slowdown caused by concerns of moderation in China and the US, top brands such as Louis Vuitton and Dior would remain resilient due to global reach, “genuine creativity” and marketing know-how. Top executives added that Europe was doing extremely well, highlighting the return of wealthy travelers. Although China is the other question mark for the industry, there is growing evidence that a slowdown in the US, especially among middle-class luxury consumers who are more sensitive to changes in the economy, is under way.
Qinetiq, the UK defence technology group specialising in robotics, cyber and high-energy laser weapons, has revealed plans to double revenue to almost £3bn ($4.1bn) over the next four years. Last year it purchased cyber and data firm Avantus Federal for $590m. Qinetiq CEO Steve Wadey has reportedly stated that he expects the agreement between the US, the UK and Australia to supply Canberra with nuclear-powered submarines to help boost Qinetiq’s long-term growth strategy.
US investors are flooding back into bonds following a period of turbulence for the asset. Bond prices fell last year after US interest rates were raised steeply. Presently, yields on Treasury notes are higher than they have been for most of the last ten years, making them an attractive investment for asset managers. $100bn has already been invested in actively managed fixed-income funds in the country during the first four months of this year, according to data site Morningstar. This follows outflows of more than $332bn in 2018. The sizeable rotation back into bonds is international, with UK retail investors moving back to gilts and fixed-income products. Pension fund reform is expected in the UK, which could see billions of pounds pushed into domestic businesses. The government is considering allowing the Pension Protection Fund to take on struggling pension funds in order to free up assets, while think-tanks are suggesting public and private sector schemes be merged to form large “superfunds” worth up to £500bn.
