EUROPE

UBS charged guilty of money laundering

UBS was found guilty of money laundering by the Paris Court which fined them $5.1 billion for helping wealthy clients stash funds in undeclared swiss accounts. As Brexit is approaching it’s interesting to see how France is setting the tone regarding financial fraud as Paris is preparing to substitute London as Europe’s Financial capital.

Source: Bloomberg

Italian assets outperforming European peers

Italy avoided a credit rating downgrade from Fitch, a news which was greeted with relief as Italian financials are major holders of the country’s debt. A cut on Friday’s market close, lower than BBB, would have left Italy’s rating on the brink of junk status, which could have triggered selling by other institutional holders of the debt.

Source: Financial Times

Keep an eye on

  • Brexit
  • EU – Arab League Summit
  • Red wave in Europe
  • Trump / Kim meetings

ASIA AND OCEANIA

US to postpone tariff rise

The US will delay an increase in tariffs on $200 billion worth of Chinese goods from 10% to 25% that was set for March 1, due to a progression in trade talks about intellectual property, technology, agriculture and currency. This will give the negotiators more time to craft a deal. The CSI 300 rose by 5.9% into bullish market, after a bearish 2018, making China the best performing equity market in 2019. The Chinese Renminbi also rose by 0.6 per cent to Rmb 6.67 per USD.

Source: Financial Times

Court ruling jolts Australian coal industry 

The court cited Climate Change as the reason for blocking a coal project, the first time in the A$67 billion export industry. The judgement was delivered in New South Wales by the Land and Environmental court. This might potentially halt the development of almost a dozen projects. The ruling could also have implications on other sectors of the economy.  

Source: Financial Times 

Fitch puts UK credit rating on negative watch.

AFRICA AND SOUTH AMERICA

IMF agrees to $4.2 billion fund for Ecuador 

Ecuadors struggling economy now gets a total of $10 billion funds to recoup against the external debt that grew due to oil-backed loans from China. President Lenin Moreno, who came to power in 2017, has sought to curb public spending and buttress Ecuador’s external accounts with bond issues, although a long record of past defaults made terms onerous. The price of Ecuador’s benchmark 2028 bond rose almost 2 per cent on Thursday, 21st, following the announcement. The country still owes China about $4bn in loans-for-oil, Nomura estimated.  

Source: Financial Times

Record bailout of South African Eskom

South Africa’s state-owned power corporation – Eskom is heading towards a record bailout of 69 billion Rands ($4.8 billion). Being mostly a nation driven by thermal power, the costs are rising and the bailout spread over three years is dependent on commitment to control the rising costs. Being a state-owned corporation, a collapse of Eskom could further downgrade South Africa’s credit rating from Baa3.

Source: Financial Times

Zimbabwe forced to ditch dollar peg.

NORTH AMERICA

Kraft-Heinz posts record losses in 4th quarter

Kraft-Heinz posted a staggering net loss of $25 billion in 2018 fourth quarter, the biggest loss in its history. The loss was largely due to a new accounting rule which requires companies to report changes in the value of investments as part of earnings. However, it is also imputed to the excessive cost cutting imposed by 3G since the merger in 2015, which hindered growth, and thus profits.

Source: Financial Times

Update on Pot in Canada 

The marijuana industry, which commodity was recently legalized in Canada for recreational use, has maintained growth since its October 17 decriminalization. Retail sales are consistently topping C$50 million monthly and some analysts estimate this figure could eventually top C$5 billion a year as the network builds. The upcoming introduction of edible cannabis products will soon widen the market horizontally and could be an interesting regulation to follow for speculative investors. 

Source: Bloomberg

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.