EUROPE

Alstom – Siemens Rail Merger under threat

The intention of the two European giants to form a rail network to compete against large Chinese competitors is under threat. Despite the concessions made by the two companies, it could still face the veto from the European Union Competition Commission which would re-open the debate on the EU competition rules drafted in the 1990s.

Source : Financial Times

Rise in sales of European Sovereign Bonds

With the Fed announcing its intention to reduce Balance Sheet signs, the European Bond Markets see it as a boon, as European governments have a lot of debt to sell and interest rates are likely to stay low. This is illustrated by Belgium’s 30-year 5 billion euros Bond issue being over subscribed by close to 5 times. Austria saw similar trends with a record 28 billion euros orders for a 5 billion euros debt of 10-year bonds.

Source : Financial Times

CHINA & JAPAN

Chinese GDP growth lowest since 1990

Chinese companies are being forced to adapt in the wake of the ongoing trade war with the United States. Confidence is falling and consumer demand within China is declining as well. Their 2018 Q4 GDP was 6.4%, representing the worst performing quarter since the financial crisis.

Source: Bloomberg

Huawei formally accused by the US of IPR theft and fraud

Huawei has been indicted by the United States on several counts of intellectual property theft and fraud. The company is the second largest phone seller in the world, surpassing Apple within the past months, but has been riddled with controversy from several foreign governments over their “sketchy operations”.

Source: CNET.com

EMERGING MARKETS

Confirmation of talks for a three-way merger of UAE banks

The merger of Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank last Tuesday has come at a time when the UAE banks in general are seeking to improve their cost-to-income ratios in a highly competitive market.

Financials for FY 2018 Q2 show that overall costs for the UAE banks continued to move up with the cost -to-income ratio at 33 per cent — up 70 bps from Q1 (32.3 per cent) for the top ten banks (ranked by assets) in the UAE. Data revealed that an increased level of sales and general and administrative expenses were the main reasons behind this increase.

Source: Gulf News

US & CANADA

US pulls out of cold war-era nuclear arms treaty

US pulled out of the Intermediate-range Nuclear Forces Treaty, accusing Russia of deploying mid-range missiles capable of delivering nuclear weapons, which is prohibited as per the treaty. The US will withdraw from the treaty entirely in six months, unless Russia addresses these concerns.

Source: Financial Times

Canada’s economy shrinks in November 2018

Canada’s economy contracted for the second time in three months on lower energy production. Gross domestic product declined 0.1 per cent in November from October

The Bank of Canada has said that low oil prices and a weak housing market were the factors behind the slow economic growth in the Q4 of FY 2018 and the first quarter of this year. Canadian oil exports plunged as much as 45% from October to December last year.

Money markets expect the Bank of Canada to leave its benchmark interest rate on hold at 1.75 percent throughout 2019, after the central bank hiked it five times since July 2017.

Source: Reuters

Written jointly by Kaushik PSK, Sahil Bansal, Sophia Boucher, Leo Bouvier, Deepak Chathoth Narayanan, Kaline Larousse, Nisham Hussain M, Anirudh Parthasarathy and Tejwinder Randhawa.

Disclaimer: This newsletter contains information about Financial markets and college events. This information is not advice and should not be taken as such.