by Samuel Mbaki | Jul 26, 2023 | Banking
Key Points
- Britains richest man Gopichand Hinduja has come out to accept that Brexit was a disastrous decision for the U.K. and has driven the economy down.
- The Indian-born investor believes that PM Rishi Sunak can resuscitate the economy and lift pain from the markets.
Britains richest man Gopichand Hinduja believes it was a bad idea for Britain to go on with Brexit, which could be attributed to the current economic slowdown. However, he is convinced the current regime could pull the country out of its economic shackles.
Brexit was not good for the U.K.: Britains richest man Gopichand Hinduja.
Billionaire Gopichand Hinduja condemned the departure of the U.K. from the European Union, saying, “The step taken of Brexit was not good for the U.K.,”
He spoke to CNBC’s Tanvir Gill on Monday, reflecting on the decision for the U.K. to leave the European Union in 2016, seen through in Jan 2020. He says the current regime has everything it takes to turn the economy around.
At the time, India and the U.K. had bilateral trade talks to increase their partnerships. The Indian-born billionaire is the chairman of the Indian conglomerate Hinduja Group. He believes that increased cooperation between the two countries will provide a much-needed boost to their economies.
India has been projected to become an overwhelmingly big economy in the coming years, which makes it wise to invest in them. In a recent report by the UN, India is set to overtake the U.S. to become the second-largest global economy by 2080.
In the talks with the CNBC reporter, Hinduja said:
“The biggest help the U.K. can get is from India, because India’s economy, by 2027, will be the third largest in the world.”
He also added that the U.K. still needs to be better off, but bureaucracy could hinder its growth. He terms it as the “biggest problem,” but added that the continued cooperation between the two countries will open more opportunities for them and their citizens.
Keep watching FinTech Express for more updates on this other fintech-related developments.
by Samuel Mbaki | Jul 20, 2023 | Banking
Key Points
- The two-year U.K. government bonds yield has fallen by 24 basis points to 4.843% following a drop in the country’s inflation rates.
- An August rates hike by 50 basis points now seems increasingly unlikely.
U.K. borrowing costs have fallen sharply owing to a drop in inflation rates in the U.K. A July 19 report indicates that the country’s inflation rate stood at 7.9% in June, lower than the expected 8.2%.
U.K. borrowing costs lower as markets digest strong inflation data
The U.K. has started a slight entry into a recovery cycle as June data comes with a notable drop in the inflation rate. The country has been struggling with very high inflation rates compared to other powerful economies like the U.S.
Like the U.S., bank rates in the U.K. are working out well, with its inflation rates falling to 7.9% in June. The U.S. had reported earlier this month that its annual inflation rates had dropped to 3%, which sent global stock markets up.
Recent data on U.K. borrowing costs show a remarkable drop sending hope to the struggling homes in the country and to global supply chains. The yield on the country’s two-year bonds, which is always sensitive to rates decisions, has fallen 27 basis points to 4.808% as investors expect a rates hike to peak 5.75% to 6% this year, lower than the 6.5% expected in June.
As a result, markets now believe it will be less costly to borrow money going forward in the country. However, the country is still not free of interest rate hikes as it still has mixed job market reports owing to the tight labor market and strong wage growth, which calls for more action from the Bank of England.
Keep watching Fintech Express for more updates on finance and other Fintech-related developments.
by admin | Jul 10, 2023 | Banking
Key Points
- China announced its economic performance in June, with both CPI and PPI being lower than expected.
- The CPI was flat year over year in June as PPI Fell by 5.4%
- The economy’s growth rate of core CPI, however, narrowed to o.4%
China has been one of the strongest economies in the world in the ongoing financial crisis, and it still sends relatively strong economic data. Its CPI remained flat in June, but the PPI has fallen to the lowest levels since 2016.
China’s economy still sends strong economic data
A report from a local media house indicates that China’s drop in Producer Price Index (PPI) has fallen due to a continued decline in commodity prices. The report indicated that the drop in international oil price was also to consider in the PPI moves.
The country’s Consumer Price Index fell to 0, and the month-to-month decline in June was the same as in May. According to information from the National Bureau of Statistics on July 10, the core CPI in China rose by 0.4% Year-on-Year, a decrease of 0.2% from May.
This data comes when the US seeks to make amends with the Asian economic super economy over the continued souring of their bilateral ties. This month, two members of the U.S. Cabinet visited China in a bid to improve their business ties. On July 10, US Treasury Secretary Janet Yellen visited the nation to improve business relations.
She told journalists and media houses that she is convinced her trip has hit its aims. However, more talks are needed to improve the situation between the two countries. Keep watching Fintech Express for updates on finance and other fintech-related developments.
by Fintech Express | Jun 26, 2023 | Banking
Key Points
- Hong Kong’s HSBC is set to offer its customers Bitcoin and Ethereum Exchange-Traded Funds.
- Hong Kong has been asking banks to warm up to crypto customers more and be vigilant in scouting for such emerging markets and supporting them.
- The development comes as a race by TradFi institutions in the US to offer similar products begins.
Hong Kong is spearheading crypto adoption in Asia as banks increasingly support the crypto industry. HSBC has now announced that it will offer customers Bitcoin and Ethereum ETFs.
Crypto adoption and regulation accelerates in Hong Kong
Hong Kong is taking the front in the regulation and adoption of crypto assets in the world. It has been asking its banks to support and offer crypto clients financial services. In June, It called out several banks, including Standard Chartered and HSBC, for gating their banking infrastructure from crypto organizations in the region.
It called a meeting asking all banks to be more active in the scouting and enabling of emerging technologies like the crypto industry. In that meeting, Hong Kong’s central bank explained that emerging industries like crypto mostly take a good market share. Also, it sensitized the banks that crypto may be here to stay, making it prudent to associate with it.
HSBC has announced that it would look forward to introducing Bitcoin and Ethereum Exchange Traded Funds to its customers. This move is a hallmark as other regions have yet to allow such from big banks. However, traditional finance companies have started a race to offer similar products and services.
This move is expected to broaden access to crypto assets for Hong Kong residents. These residents can only explore ETFs like the CSOP Bitcoin Futures ETF, CSOP Ethereum futures ETF, and the Samsung Bitcoin Futures Active ETF.
HSBC was among the banks the Hong Kong regulators questioned for not offering crypto services last month. However, it has been in the process of gearing up for it. It has launched the Virtual Asset Investor Education Centre for investors to read and confirm the risks associated with the virtual asset industry.
It will also allow its users to go ahead and use the HK Easy Invest app, HSB CHK Mobile Banking app, and the Online banking infrastructure to access its ETF products. However, no more official information is yet to be offered regarding the timeline of the product’s availability and other products that could be added in the future.
Keep watching Fintech Express for more updates on crypto and other fintech-related developments.
by Samuel Mbaki | Jun 23, 2023 | Banking
Key Points
- BoE raised interest rates again on June 22 as the economy fights high inflation.
- It is expected to continue hiking the rates or risk embedding inflation through slow business activity, and possibly recession looms.
Eurozone businesses are caught in a tight zone once more as high-interest rates haunt the economy. It is only expected to worsen from here, at least on a short to mid-term basis, as more hikes must be done to tame rising inflation. This means more pain will be felt in the markets even after the eurozone’s flash composite PMI dropped to 50.3 in June.
High-interest rates start haunting Eurozone businesses
June had a slowdown in business activity in the Eurozone after the area was seen to have had a recession, as Q4 of 2022 and Q1 of 2023 had reversed growth rates. To add to the pain, the inflation in the region is one of the highest recorded in the world, which necessitates further rates hike.
These rates hike to make borrowing more expensive; thus, most businesses start shrinking, which is exactly what has happened in the area. The Stoxx 600 index fell by 1.9% in Thursday’s open in anticipation of the BoE interest hike rate decision. BoE went ahead to hike the rates by 50 basis points, higher than the expected 25 basis points.
Preliminary data shows that the region will also have a difficult ending in the Q2 of 2022, with its flash composite Purchasing Managers’ Index dropping to 50.3 in June from 52.8 recorded in May. This is a huge dive from the expected 52.5, which concerns as the 50 mark indicates an expansion in activity while a dip below 50 marks contraction.
“Eurozone business output growth came close to stalling in June, according to the latest HCOB flash PMI survey data produced by S&P Global, pointing to renewed weakness in the economy after the brief growth revival recorded in the spring,” S&P Global said in a release.
“Although energy and supply chain worries have eased since late last year, June has seen a further escalation of concerns over demand growth, and in particular the impact of higher interest rates, and the resulting possibilities of recessions both in domestic markets and further afield.”
The European Central Bank has consistently raised rates for the past 12 months to bring down inflation. The consequence of this action is higher costs of business operations in the bloc, which is a drag on productivity.
Keep watching Fintech Express for updates on finance and other fintech-related developments.
by Samuel Mbaki | Jun 23, 2023 | Banking
Key Points
- Ex-Coinbase executive Balaji Srinivasan has called out the US Federal Reserve for lying that the US banking system still stands strong.
- Balaji is motivated by the fact that the US Federal Reserve claimed it would only use around $25B for Exchange Stabilization Fund, only to have spent over $102.7 billion by this week.
The US Federal Reserve is under fire again for lying about the general outlook of the US banking system to ‘assure’ investors and citizens that there are no risks. However, the data that is coming forward isn’t all merry. Observers have noticed that the authority is spending more money than previously projected to bail out financial institutions.
EX Coinbase Exec. Balaji calls out US Federal Reserve for lying publicly
The US banking system has been shaken after a recent series of collapses started by the Silicon Valley Bank. Since then, the authorities in charge, like the US Federal Reserve and President Biden, have come out to defend, saying that the banking system stands strong and will weather the misfortunes it has been facing.
They assured investors that all is good and minimal risks are associated with the banking system. However, the word from these agencies and authorities does not match market data and the efforts they put behind the curtains. For instance, the U.S. has been facing high inflation rates; though the US Federal Reserve has managed to gain a bit of control in the battle, more still needs to be done.
It has raised interest rates to 5 to 5.25%, the highest hike since the 2008 financial sector meltdown. Though US Federal Reserve Chair Jerome Powell paused June 2023’s rates hike, he says it is still necessary to raise it at least twice this year. As such, we can see that more needs to be done to harmonize the US financial sector.
In other news, the US is only weeks away from passing the Fiscal Responsibility Act, a bill passed to ‘save’ the US from unfathomable financial consequences as it could have defaulted on its debt. It had breached its debt ceiling as its spending continually eclipses its earning. If it defaulted, over 8 million people would go jobless, with thousands of stocks trading in the red and making huge losses.
This was evaded by only lifting the debt ceiling, which shows that the financial problem still lies underneath. Financial Analyst Joe Consorti has noticed that the risk-taking across US markets is rising as more liquidity is drawn from the US Federal Reserve emergency loan program.
“As liquidity is drawn from the Fed’s emergency loan program, risk-taking rises across markets. There’s a near 1:1 correlation between the usage of BTFP (seen in the BTFP interest rate rising) and the S&P 500:.”
The bank Term Funding Program (BTFP) is a new lending facility launched in March in response to the Silicon Valley Bank. It has risen above the $100B mark while the US Federal Reserve sat back and ‘assured’ citizens that it would only range around $25B. Its immense growth shows that the US banking system is contracting. Wildly, it is projected to continue growing.
Keep watching Fintech Express for more macro-finance updates and other Fintech-related developments.
