Biden says chaos in Afghanistan was unavoidable. Government-backed investors will bail out troubled giant China Huarong. India’s IPO market is booming. Here’s what you need to know this Thursday morning.
President Joe Biden said the chaos in Afghanistan was unavoidable after the U.S. withdrew troops from the country, while American intelligence reports
didn’t foresee such a rapid collapse of the Afghan military, according to Pentagon leaders. Meanwhile, the International Monetary Fund said that the new government in Afghanistan is cut off from using the fund’s reserve assets and other resources days before the nation is set to receive almost $500 million. And what became of Afghanistan’s president who fled the country after the Taliban moved in on Kabul? The United Arab Emirates said Ashraf Ghani and his family were in the Persian Gulf state “ on humanitarian grounds.” The Russians earlier claimed he left Afghanistan with four cars and a helicopter full of cash.Asian stocks are set to dip after a slide on Wall Street sparked by Federal Reserve minutes indicating officials could start paring stimulus from later this year. Futures were lower in Japan and Australia but steady in Hong Kong. U.S. contracts fluctuated after the S&P 500 and Nasdaq 100 fell for a second day. Most Fed officials agreed last month they could start slowing the pace of bond purchases later this year given the progress made toward inflation and employment goals. Treasuries and the dollar were little changed. Crude oil in New York dropped to the lowest since May after a surprise increase in U.S. gasoline inventories
Government-backed investors will recapitalize China Huarong after the bad-debt manager posted a record $15.9 billion loss, ending months of speculation over whether Beijing would deem the troubled financial giant too big to fail. The rescue package suggests President Xi Jinping’s government is, for now, unwilling to allow a default by one of China’s most systemically important state-owned companies. Elsewhere in China, Xi Jinping put the country’s wealthiest citizens on notice, offering an outline for “common prosperity” that includes income regulation and redistribution of wealth; Tencent warned investors to brace for more regulatory curbs on China’s tech sector; and have dip-buyers finally reached breaking point? It looks like some are finally starting to abandon Chinese tech stocks.
The market for initial public offerings in India is turning into a feeding frenzy. The amount of money raised in IPOs this year has reached $8.8 billion, already surpassing the totals of the past three years though it’s only August. At the current pace, 2021 would exceed the all-time record of $11.8 billion. Founders, bankers, lawyers and advisers are racing to cash in on fervent demand for fresh public offerings. India’s success with startups has long lagged that of the U.S. or China. But this year has been something of a breakout. With the Covid-19 pandemic, many consumers have turned to online services, from grocery deliveries to medical diagnoses. Revenue has surged.
More than three decades ago, Zhang Congyuan converted a pig farm next to paddy fields to a sneaker business, Huali, in western Taiwan. Today, the founder of Huali is worth more than $13 billion. Huali, which counts Nike, Converse and Vans among its customers, produces more than 180 million pairs of shoes a year. Huali’s shares have surged 162% since going public in Shenzhen in April, propelling Zhang, who owns 87% of the company along with his family, to the top of the island’s rich list. He’s now wealthier than more famous names such as Terry Gou of Foxconn Technology Group, which makes iPhones for Apple.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours:
And finally, here’s what Tracy’s interested in today
On the day that the new minutes from the Federal Reserve showed most officials are ready to start tapering later this year, it's worth taking a look at what's happened in New Zealand. There, the central bank refrained from raising rates after the country announced a nationwide lockdown due to a single case of Covid. The move went against expectations that the RBNZ would fire the starting gun on a new tightening cycle, and the effects of the surprise decision were immediate: New Zealand's entire government bond curve flattened.
Not So Dovish
RBNZ disappoints with no hike but its own rate forecast is aggressive
Source: Bloomberg
An optimist might say that the RBNZ example shows that even relatively hawkish central banks can remain nimble in the face of the Covid threat. A pessimist might say it shows that a year and a half into the global pandemic, we still don't really know what's coming.
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