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Manulife bids for full control of China joint venture, lured by $3.8-trillion funds market, sources say

Manulife Financial Corp moved closer toward taking full control of its funds joint venture in China after regulators there accepted an application for the ownership change, two sources with knowledge of the matter told Reuters.

Manulife, Canada’s largest life insurer, is seeking to bolster its presence in China’s $3.8 trillion funds market, which grew 27% in 2021 and is forecast by consultancy McKinsey to more than double by 2025.

China’s securities regulator officially accepted a recent application from Manulife’s asset management arm to increase its stake in the joint venture to 100% from the current 49%, said the sources.

Manulife shares fell 0.2% to C$22.46 at midday in Toronto, compared with a 0.85% decline in the Toronto stock benchmark.

Manulife Investment Management acquired the stake in Manulife Teda Fund Management in China in 2010 from ABN AMRO bank and teamed up with state-owned Tianjin TEDA International Holding, which owns the remaining 51% equity but is looking to sell it.

The move furthers Manulife’s stated goal of expanding both its Asian and asset management units, and its intention to deploy more capital in China.

Foreign companies are jockeying for position as China opens up the financial services sector, from investment banking to insurance, to global competition.

Manulife Investment Management and Manulife Teda Fund Management spokespeople declined to comment.

Since ownership caps for foreign companies in fund management JVs were scrapped in 2019, a growing number of foreign asset managers, including BlackRock and Fidelity, have set up operations in China to compete for a share of the country’s swelling mutual funds market.

The official acceptance of Manulife’s application by the China Securities Regulatory Commission (CSRC) means the Canadian company is “a step closer” to taking full control of the venture, which had around 60 billion yuan ($8.96 billion) in retail fund assets as of March. An approval could come soon, although the timing is unknown, one of the sources said.

A CSRC public disclosure on May 22 shows it had made a decision on whether it would consider a Manulife Teda application to change more than 5% ownership, but does not reveal its decision.

The CSRC did not respond to a request for comment.

Besides the fund management joint venture in China, Manulife also has a 51% stake in an insurance joint venture with Sinochem, and has been open about its aspiration to increase its share of that as well.

Manulife’s Asia CEO told Reuters earlier this month the regional unit was on track to account for half of the Canadian insurer’s core earnings by 2025 despite economic slowdowns and impact of COVID-19 on its key markets.

The change at the fund venture got underway in July last year when Tianjin TEDA put its stake on the block for around $263 million, one of the sources said.

The venture is also in the final stages of tapping the general manager of a rival foreign fund in China to head its operations, one of the sources said.

JPMorgan became the first global bank that filed with the Chinese regulator last year to convert its local fund joint venture into a wholly owned business, which has yet to receive regulatory approval.

June 28 – Shares in the Asia Pacific fall; Australia retail sales data ahead

• Shares in the Asia-Pacific fell on Wednesday after Wall Street’s negative performance on Tuesday.
• South Korea’s consumer sentiment index fell, standing at 96.4 for June 2022, down 6.2 points from May’s print, according to Bank of Korea’s survey.
• Elsewhere in the region, China cut the quarantine period for international travelers on Tuesday, in a step away from its strict Covid controls that have been in place for more than two years.

https://www.cnbc.com/2022/06/29/asia-markets-wall-street-consumer-confidence-currencies-and-oil.html

China’s economy didn’t bounce back in the second quarter, China Beige Book survey finds

• Chinese businesses ranging from services to manufacturing reported a slowdown in the second quarter from the first, reflecting the prolonged impact of Covid controls.
• That’s according to the U.S.-based China Beige Book, which claims to have conducted more than 4,300 interviews in China in late April and the month ended June 15.
• The analysis found few signs that government stimulus was having much of an effect yet.

https://www.cnbc.com/2022/06/28/chinas-economy-didnt-bounce-back-in-the-second-quarter-survey-finds.html

Premarket (June 28): Stocks, oil edge up as China relaxes quarantine rules

Global shares moved into positive territory on Tuesday while oil prices firmed following China’s decision to ease some quarantine requirements for international arrivals that raised hopes for stronger growth and a revival in demand for commodities.

China slashed the quarantine time for inbound travellers by half in a major easing of one of the world’s strictest COVID-19 curbs, which have deterred travel in and out of the country since 2020.

Asian shares rose after the announcement and European stocks opened firmly in the green which sent the MSCI’s benchmark for global stocks into positive territory and on track for its fourth consecutive daily gain.

China’s strict zero-COVID regulations have been a drag on activity in the world’s number two economy, but an easing of travel restrictions and reopening of major cities from lockdowns boost optimism that growth can get back on track.

“This is a good step forward,” said Hani Redha, multi asset portfolio manager at PineBridge Investments.

“It’s not enough to lead to a very robust recovery, but it’s definitely going to be positive incrementally.”

MSCI’s broadest index of Asia-Pacific shares rose 0.3%, while Hong Kong’s Hang Seng reversed earlier losses to rise 0.7% and China’s CSI 300 Index gained over 1%. China’s tourism stocks gained over 5.5%.

The pan-European STOXX 600 was up 0.6%, boosted by oil & gas and mining stocks, but the outlook for developed market stocks remains challenging as central banks attempt to balance stubbornly high inflation with slowing growth.

“Equity markets will not be out of the woods until central banks shift their rhetoric to a less hawkish stance,” said Salman Baig, portfolio manager, cross asset solutions, at Unigestion.

“Unfortunately for many investors, such a pivot will likely not happen until after the economy has slowed down sufficiently to bring inflation on a sustainably downward path.”

The European Central Bank’s Forum on Central Banking in Sintra continued on Tuesday with a focus on a speech from ECB President Christine Lagarde.

Lagarde said the ECB will move gradually when it begins raising rates but with the option to act decisively on any deterioration in medium-term inflation, especially if there are signs of a de-anchoring of inflation expectations.

Euro zone government bond yields held near their highs after Lagarde’s comments, with Germany’s 10-year yield, the benchmark for the bloc, up 8 basis points at 1.63%.

The euro was little changed against the U.S. dollar following Lagarde’s initial comments, while China’s offshore yuan rose 0.1% after Beijing’s measures to ease travel restrictions.

The U.S. dollar index, which measures the greenback against a basket of six currencies, was little changed at 103.97.

Oil prices swung higher after China eased quarantine rules, with focus already on tight supply as G7 leaders agreed to study placing price caps on imports of Russian oil and gas.

U.S. crude rose 1.41% to $111.08 a barrel. Brent crude jumped 1.3% to $116.59 per barrel.

“A seam of tight supply news bolstered the (oil) market,” said analysts at Commonwealth Bank of Australia. “Political unrest might curtail supply from a couple of second-tier producers, Ecuador and Libya. And then there’s the G7′s proposed price cap on Russian oil.”

Gold was 0.2% higher with the spot price trading at $1,827 per ounce.

Bitcoin rose 0.8%, trading at $20,870 after falling as low as $17,588.88 earlier this month.

Reuters

One more blockbuster Supreme Court decision could still be coming even after Friday’s abortion ruling

Believe it or not, overturning Roe v Wade may not be the Supreme Court’s most dramatic decision this year. Instead, its ruling on West Virginia vs. the Environmental Protection Agency could prove far more consequential. It could literally upend how our government works.

West Virginia vs. the EPA asks whether important policies that impact the lives of all Americans should be made by unelected D.C. bureaucrats or by Congress. This SCOTUS could well decide that ruling by executive agency fiat is no longer acceptable.

The case involves the Clean Power Plan, which was adopted under President Barack Obama to fight climate change; the program was estimated to cost as much as $33 billion per year and would have completely reordered our nation’s power grid. The state of West Virginia, joined by two coal companies and others, sued the EPA, arguing the plan was an abuse of power. 

By deciding in favor of West Virginia, the court could begin to rein in the vast powers of the alphabet agencies in D.C. that run our lives and return it to legislators whom we elect to create…legislation. Just as the Supreme Court ruled in Roe v. Wade that abortion laws are more appropriately left up to the people’s elected representatives, it may decide in West Virginia vs. EPA that Congress, and not federal agencies, should write our laws.

A decision that puts Congress in charge would stall environmental rules intended to replace fossil fuels with renewable energy. Legislators, back in the driver’s seat, would have to debate and go public with the consequences – and costs — of regulations that are now adopted with little buy-in from the public. 

https://www.foxnews.com/opinion/one-more-blockbuster-supreme-court-decision-could-still-be-coming-after-fridays-abortion-ruling

Trudeau calls U.S. court decision overturning Roe v. Wade ‘horrific’

Prime Minister Justin Trudeau weighed in Friday on the U.S. Supreme Court’s decision to overturn decades-old jurisprudence on abortion, calling what’s unfolding south of the border a “horrific” development that threatens the right of women to choose what to do with their own bodies.

“My heart goes out to the millions of American women who are now set to lose their legal right to an abortion. I can’t imagine the fear and anger you are feeling right now,” Trudeau said in a social media post.

He said “no government, politician, or man” should force a woman to carry out a pregnancy, reiterating that, under his Liberal government, “women in Canada know that we will always stand up for your right to choose.”

Deputy Prime Minister Chrystia Freeland also condemned the ruling, saying she had a “visceral reaction” when she first heard of the court’s decision.

“I was just shocked and horrified and so worried, actually,” Freeland said in an interview with CBC’s Rosemary Barton Live airing Sunday.

https://www.cbc.ca/news/politics/trudeau-horrific-us-court-abortion-1.6500475

Four large US banks increase dividends following annual stress tests

Four U.S. banks — Wells Fargo, Bank of America, Goldman Sachs and Morgan Stanley — raised their dividends on Monday after clearing the Federal Reserve’s annual stress test exercise last week.

Wells Fargo said it expects to hike its dividend to 30 cents from 25 cents a share. Bank of America raised its dividend by 5% to 22 cents per share. Goldman Sachs said it would hike its dividend by 25%, to $2.50 per share, and Morgan Stanley said it plans an increase to 77.5 cents per share and a share buyback program of $20 billion.

A combination file photo shows Wells Fargo, Citigbank, Morgan Stanley, JPMorgan Chase, Bank of America, JPMorgan, and Goldman Sachs from Reuters archive. (REUTERS/File Photo / Reuters Photos)

The Federal Reserve said Thursday that the biggest lenders in the nation could easily weather a severe economic downturn, clearing the path for them to give extra capital to shareholders.

The results of the stress exercise gave banks the opportunity to hike dividends despite the Fed’s test being more difficult than last year, pushing up some lenders’ required capital buffers more than was anticipated.

ALL 33 MAJOR US BANKS PASS FED’S ANNUAL ‘STRESS TESTS’

But some other banks, like JPMorgan & Chase and Citigroup, said their dividends remained unchanged amid increasingly stringent capital requirements.

JP Morgan & Chase. (REUTERS/Mike Segar/File Photo)

The annual stress test exercise is different from the one created following the 2007-2009 financial crisis. For the current one, the Fed evaluates how banks’ balance sheets would perform against a hypothetical severe economic downturn. The results show banks how much capital they need to be healthy and how much they are able to give back to shareholders.

The test establishes each bank’s “stress capital buffer,” an extra capital cushion in addition to the regulatory minimum, with the size determined by each bank’s hypothetical losses under the exercise.

A Bank of America ATM is seen, Wednesday, Feb. 3, 2021, in Winchester, Mass. (AP Photo/Elise Amendola / AP Newsroom)

Citigroup, JPMorgan and Bank of America said their stress capital buffer would rise, which analysts had predicted. 

The increase for Bank of America and JPMorgan would be caused by higher credit provisions, while Citi would face higher trading losses, lower fee income and higher expenses, analysts said based on the tests’ results.

Reuters contributed to this report.

Oil prices edge higher ahead of G7 talks on new Russian sanctions

Oil prices edged higher on Monday in a volatile session as investors waited for any moves against Russian oil and gas exports that might come out of a meeting of leaders of the Group of Seven (G7) nations in Germany.

The prospect of even tighter supplies loomed over the market as western governments sought ways to cut Russia’s ability to fund its war in Ukraine, even though G7 leaders were also expected to discuss a revival of the Iran nuclear deal, which might lead to more Iranian oil exports.

Members of the Organization of the Petroleum Exporting Countries and their allies including Russia, known as OPEC+, will likely stick to a plan for accelerated oil output increases in August when they meet on Thursday, sources said.

But for now, pressing supply worries outweighed growing concerns over the potential for a global recession following a string of downbeat economic data from the United States, the world’s biggest oil consumer.

OPEC member Libya’s national oil company said on Monday it might have to halt exports in the Gulf of Sirte area within 72 hours amid unrest that has restricted production.

Brent crude futures rose 46 cents to $113.58 a barrel after rebounding 2.8% on Friday. U.S. West Texas Intermediate crude was at $107.82 a barrel, up 20 cents, or 0.19%, following a 3.2% gain in the previous session.

Both contracts fell last week for the second week in a row as interest rate hikes in key economies strengthened the dollar and fanned recession fears.

G7 leaders, who began their meeting on Sunday, are expected to discuss options for tackling rising energy prices and replacing Russian oil and gas imports, as well as further sanctions that do not exacerbate inflation.

These measures include a possible price cap on Russian oil exports to reduce Moscow’s revenues while limiting the damage to other economies.

“It’s unclear whether a price cap will achieve this outcome,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.

“There’s still nothing stopping Russia from banning oil and refined product exports to G7 economies in response to a price cap, exacerbating shortage conditions in global oil and refined product markets.”

The G7 will also discuss the prospect of reviving the Iran nuclear talks after the European Union’s foreign policy chief met senior officials in Tehran to try to unblock the stalled negotiations, a French presidency official said on Sunday.

US pledges $200B to G7 infrastructure project to counter China’s Belt and Road Initiative (Hunter Biden….collects a % ???)

https://www.foxbusiness.com/politics/us-biden-billions-g7-infrastructure-project-counter-china-belt-road-initiative