Symax Fintech Daily Insights 23.08.23

Today’s euro-area PMI data will provide further evidence of the impact of ECB tightening. Bloomberg Economics said the focus will be on the extent to which economic deterioration is visible beyond the manufacturing sector. Meanwhile the UK’s manufacturing gauge may decline in August to 45, from 45.3 last month. BB

Nvidia’s highly anticipated earnings report is due postmarket, with the options market bracing for a large share-price gain. Shares touched a record yesterday before slipping. Meantime a trade group said Huawei is building a collection of semiconductor facilities across China that may let the blacklisted company skirt US sanctions. BB

Goldman is ramping up pressure on more staff to return to the office five days a week. While most revenue-producing employees are back full time, senior managers are frustrated by the resistance of workers in other groups. They may not be the only ones: More than a third of office desks worldwide are empty all week, a XY Sense report said. BB

The UK’s small businesses are in peril after their sales collapsed at a time of soaring inflation and rising interest rates.

• Revenue slumped28% in the three months to March compared with a year ago, according to a Sage research. The second quarter improved slightly but revenues were still down 21% on the year. Profits fell 8.3% in the first quarter. BB

Global funds are shedding China’s blue-chip stocks, offloading $9.3 billion over 12 days—the longest streak streak since Bloomberg began tracking the data in 2016. The selloff comes as a prolonged housing slump raises contagion risks, with the equity benchmark among the world’s worst performers this month. BB

Chinese President Xi Jinping called on South Africa to join him in boosting the countries’ combined influence on international affairs in the Global South. The pair have thrown their weight behind the expansion of the BRICS bloc — which also includes Brazil, India and Russia — in an attempt to extend the group’s clout on the world stage and challenge the US-led status quo. More than 20 nations have formally applied to join, according to South African President Cyril Ramaphosa. They’re reported to include Saudi Arabia, Indonesia and Egypt. On Tuesday Xi attended a BRICS summit leaders’ dinner hosted by South Africa, after skipping a scheduled appearance at a business forum at which he was due to give a speech. BB

Asia’s day is set to be dominated by China’s battle to prop up the yuan, or at least slow its slide. Authorities escalated their defense this week, pushing up offshore funding costs to squeeze bears and setting a new record at Tuesday’s daily fixing with how much stronger the reference rate was compared with expectations.

The defense is only managing to hold the line at best, with the Chinese currency weakening in both onshore and offshore markets despite efforts made by the People’s Bank of China. Even if the funding costs do manage to deter speculators from betting on further declines, most expect the sagging economy to send the renminbi lower in the coming months. Last time the spot rate opened up this sort of gap was in late 2022, when the yuan ended up bouncing back as expectations for a slower pace of US rate hikes saw the dollar top out, just as optimism that China would move toward scrapping Covid-zero policies bolstered the yuan. With those drivers absent, the yuan is more likely to break down than to rebound this time. BB

China escalated the defense of its currency by making it more expensive for investors to bet on declines. While the central bank is easing monetary policy, it is also trying to slow yuan losses with stronger-than-expected fixings, dollar sales by state banks, and measures such as tweaking rules on capital flows. Yet strategists at JPMorgan, Nomura and UBS Wealth Management continue to see further weakness in the currency, which is approaching its year-to-date low in the offshore market.  BB

Financial companies around the globe sold $2 trillion of bonds in record time this year as European lenders raised money to repay cheap central bank loans and Chinese companies bolstered balance sheets against mounting economic stress. The collapse of several US regional banks, China’s real estate woes and central bank rate hikes weren’t enough to slow the surge. Issuance by financial firms (excluding real estate companies) has climbed about 6% this year, according to data compiled by Bloomberg, the fastest pace to $2 trillion in the almost quarter century we’ve tracked the data. But the party may not last: Hurdles are getting higher as Treasury yields spike and investors reassess the threat slowing growth may pose for borrowers. BB

The biggest social media platforms all have their niches. Instagram is for showing off the best of your 500 selfies. Facebook is for learning too much about an acquaintance from college. And LinkedIn is for updating the obligatory professional profile when you’re looking for a job, then receiving constant emails prompting you to congratulate someone on their “work anniversary.” Or at least that’s how it used to be. As other networks stagnate, shift their algorithms or in one particular case burn themselves to the ground, LinkedIn is becoming a site where regular people actually want to hang out and post their thoughts. It might even be cool. BB

The Alps are under a heat wave that’s pushing temperatures above freezing at altitudes higher than the tops of the mountain range’s glaciers. Large swaths of normally balmy Switzerland have seen near-tropical evening temperatures in recent days. Searing heat has recently raised the freezing point above 5,000 meters (16,400 feet). Glacial peaks in the Alps are lower than that.  BB

A warlord with a cocaine empire has become an unlikely protector of the Amazon rainforest. Insurgents like Ivan Mordisco—who has a bounty on his head—are doing the jobs of park rangers in Colombia and making an impact. As he prepares for peace talks with the Petro government, there’s the implicit threat he may make a U-turn if he doesn’t get what he wants. BB

S&P Global Ratings downgraded ratings for several US banks including KeyCorp and Comerica, two weeks after Moody’s Investors Service cut ratings for 10 American lenders. Many depositors have “shifted their funds into higher-interest-bearing accounts, increasing banks’ funding costs,” S&P wrote in a note summarizing the moves. Non-interest-bearing deposits have fallen 23% in the past five quarters, according to S&P, as a spree of Federal Reserve rate hikes prompted consumers to seek higher deposit rates elsewhere.  BB